EXCHANGE RATES

Dominion, Volume 13, Issue 69, 15 December 1919, Page 5

EXCHANGE RATES

THE PRESENT POSITION. "Great Britain's export trade is still much below its pre-wor volume, and supplies in many lines of merchandise required by the Dominion arc not obtainable. and we luive to look largely to America to meet requirements,' saul tho acting-chairman (Mr. J. H. Upton) at the half-yearly meeting of the Bank at the half-yearly meeting ot the Bank- of New Zwiland. "Buying in America, however, owing to the rapidiyai)DreciatiiH{ cxclinn<*c valuo of the dol« laV, is becoming exceedingly costly, and a continuance of the present advei position must tend to diminish the volume of orders that will find their -.-ay thither. In .any case buyers will doubtless readilv resume purchasing in the Old Country as soon as Britain • is m a position to supply, because, m addition to tho exchange saving thereby effected. tho preferential Customs duty in favour of ivmpire products represents a further material advantage. American. manufacturers will ha.vo to cut prices very substantially if they are to counteract these influences favourablo to Britain. . "These exchange difficulties are not confined to America. They exist also with India, China, Japan, and other countries in a greater or lesser degree. They arc in evidence generally throuirhout ithe whole commercial world,ami are the result of the heavy liabilities incurred bv the belligerent nations lo neni trals and others for supplies of food I or war material during the_ years of war. Ileavv international floating indebtedness has in this way been created, and, until this floating indebtedness has been in sam way adjusted between the creditor and debtor countries, exchange rates between theni will I remain strongly adverse to 'the debtor. Under 'normal conditions any adverso international trade balanco is adjusted !>v a movement of gold; but Ihe existing debit balances awaiting settlement are so enormous that the supplies of available gold aro not adequate for the purpose, and some other mode of settlement will have tn lie devised. "Tho problem has been cngagina tho attention of leading financiers, in bolh America nnd Europe. The solution, it- ' may be, will 1-c in tiro creditor connfries granting loans for fixed periods to tho debtor - countries, or making investments therein, or extending credits thereto for terms of years. This will afford the debtor countries tho needed timo to reorganise their industries, redevelop I heir export" trade and gradually re-establish the financial position which tho "war has so seriously disturbed."