dan. 9
AS a consequence of the yis to the United States of the Governor of the Bank of England, American financial circles believe that an effort is being made to restore the pound sterling to its gold parity in the near future. At present it is about two per cent, below parity, as is seen from its relation with the gold dollar. Parity is 4.86, whereas yesterday the rate was 4.7). This latter figure, however, is extremely gratifying compared with the depths to which sterling descended in the immediate post-war years, and even compared with a year ago it shows a splendid recovery, completely demons, ing the' sound financial position of Great Britain notwithstanding the huge burden of debt which she has to carry. Most of the recovery is due to the steady improvement which British trade has shown in past months, but a proportion of it must undoubtedly be put down to sentiment—the jew that under a Conservative Government the country will be able to get properly to work without disturbance from Social istic nostrums for a long time tocome. So generally satisfactory is the present rate people are tolerably satis the position, and there is al certain amount of surprise that it should be thought advisable on the part of the British Government to take steps to secure an absolute parity. For one thing Britain is hampered in her foreign trade because of the depreciated currencies of her European business rivals, and the more our currency improves as against theirs, the greater is likely to be the difficulty which our manufacturers face. The impression is current that the present move is a direct result of the appointment of Mr. Churchill to the Exchequer, for surely it was he who a year ago expressed the view that there was no reason why the pound should not be at parity.
In considering this subject nothing can be more instructive than to follow the course of the pound sterling since August 4, 1914, Within a day or two of the outbreak of war it absolutely soared in reference to practically all other currencies, for a few! days for instance the American dollar being quoted at over six to the pound. Mr. Hartley Withe in a book on the subject has given a very interesting explain tion of this, but it is generally believed to be due to the fact that a very heavy shipment of gold, being sent across the Atlantic in German bottom, was recalled to America for fear of capture. American banks were therefore short of gold in London, and the pound responded in the manner shown to the unprecedented demand that ensued for gold. During the war Great Britain had to make very heavy purchases of material in the United States, and Messrs. J. P. Morgan & Ca. acted as British financial agents, floating loans and financing the purchases. Even their enormous Tesources, however, were inadequate to carry on such work beyond a certain point, and at the beginning of 1917 the British Government was seriously preoccupied with a danger to its currency which loomed up in ever more grisly fashion. British credits in the United States were to all intents and purposes. exhausted, and unless some new financial factor appeared a wholesale depreciation in the pound sterling and the frane was inevitable. The required factor} 's provided by America's entry the war in April, 1917. There was a specially sympathetic American Ambassador in London at the time, the late Dr. Page, and he urged that one of the leading British statesmen should
Text read from the printed page and cleaned; old type leaves the occasional error.