The Financial Editor of The Times,' in commenting on the above table on Aug. 29, wrote as follows: "The very interesting official table published yesterday, showing the fluctuations in value of the pound sterling in eighteen of the principal countries during the past five years, deserves a little study. It shows that on Aug. 22 last the average purchasing power of the pound sterling was over 278., or nearly 7s. above the average in 1914. If we eliminate the exceptionally high value of sterling in German and Finnish currency, the average value of the pound comes out at 22s. 3d. on Aug. 22 last, as compared with 20s. 6d. on July 30, 1914. Of course, the relative importance of the exchanges varies considerably, but it is nevertheless gratifyting to find that, despite the enormous debts incurred during the war, British currency demands a handsome premium, taking the average value in sixteen different currencies. The reason for this result is that we have resorted to inflation less than other countries, and that our economic losses have not been such as really to imperil our financial and commercial position, provided that we act with prudence. It is distinctly encouraging to observe that the issue of currency notes has been further reduced during the past week by 3 millions, following upon a reduction of 4 millions in the week before.' The American exchange is heavily against us, but it may be urged that this is not an unmixed evil. Owing 0 & 0 to the war an abnormal proportion of our external trade was diverted to the United States; and the adverse position of the American exchange will give our foreign trade a European or Eastern orientation and help us to take up again the disturbed channels of our Empire trade. A large part of the wealth which America acquired during the war is about to be moved back by the natural operation of economic laws from the United t States to Europe; and I am inclined to think that it is of far greater importance for us to devote our energies S to the re-establishment of the credit system of Europe than it is to bring the American exchange up to par. 0 SE S t I am of opinion that it is of the first importance that h all the World Powers should base their post-war economic policies upon the principle that their monetary t units have now one-half of the purchasing power in 8 terms of commodities and services that they had before the war. Our position in world trade, as reflected in the foreign exchanges, is such that we could establish this principle with comparative ease and a minimum of disturbance, a far smaller disturbance in fact than would be created if we attempted to go back to pre-war money standards. The adoption of some such policy is of even greater importance to our European Allies than it is to us, because in their case the burden of their war expenditure in relation to their national income is greater than it is in ours, and they have not yet made any serious attempt to bring their taxation into line with their liabilities. If this principle is established, the real burden of the National Debts in terms of commodities and services will be very much less than is commonly believed. In our case it will mean that the cost of National Government (say 800,000,0007. in a normal year) will only call for commodities and services equivalent to 400,000,000%. in prewar values; but, even on this basis, the burden of taxation will be doubled. International Trade.-During the second quarter of 1919 there has appeared a tendency to expansion in values of international trade, resulting from greater freedom of movement, a larger tonnage of shipping available, a rising level of prices, and other causes. The very large excess of imports over exports in the case of the European Allies is one of the outstanding features i t of the Board of Trade tables, this excess being in 1918, for the United Kingdom, six times as great as in 1913, and for France and Italy ten times as great. On the other hand, the United States could show in 1918 an excess of exports over imports amounting in value to four and a half times that of 1913; while in the first half of 1919 the monthly average excess of exports was six times as great as in 1913. The tables also indicate that such countries as Canada, South Africa, New Zealand, Spain and Brazil, which, in 1913, had an excess of imports, had turned their trade balance the other way, and in some cases to a notable extent. The countries named had in 1913 an average monthly excess of imports amounting in the aggregate to nearly 6,000,000l. During the first half of the current year the records available showed an aggregate monthly excess of exports amounting to 10,000,000Z. In this connexion the figures relating to our foreign trade for the first eight months of the current year, which are summarised hereunder, are significant: Much anxiety has been caused by the fact that the Board of Trade Returns appear to show that we now have an adverse balance of trade at the rate of 700,000,0007. per annum; and from this circumstance, coupled with our heavy national expenditure, it is inferred that we are on the road to ruin.' When the trade figures are analysed, they admit of no such inference; on the conrary, they point to the extraordinary strength of our economic position, and the rapidity with which we are re-establishing our former commanding position in international trade. For the first eight months of the present year the mports of foodstuffs and raw materials were valued at 1,018,300,000. In view of the world increase in comnodity prices this is not unduly alarming. It is natural hat, as a first step to the resumption of our foreign trade, Vol. 232.-No. 461. 2 L |