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, howing the fluctuations in value of the pound sterling in eighteen of the principal countries during the past five years, leserves a little study. It shows that on Aug. 22 last the verage purchasing power of the pound sterling was over 78., or nearly 7s. above the average in 1914. If we eliminate he 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 gratifyng to find that, despite the enormous debts incurred during the war, British currency demands a handsome premium, aking the average value in sixteen different currencies. The reason for this result is that we have resorted to inflation ess 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 motes 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 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 States to Europe; and I am inclined to think that it is of far greater importance for us to devote our energies to the re-establishment of the credit system of Europe than it is to bring the American exchange up to par. I am of opinion that it is of the first importance that all the World Powers should base their post-war economic policies upon the principle that their monetary units have now one-half of the purchasing power in 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 com modities and services equivalent to 400,000,000l. 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 of the Board of Trade tables, this excess being in 1918, or the United Kingdom, six times as great as in 1913, nd 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 our and a half times that of 1913; while in the first half of 1919 the monthly average excess of exports was six imes as great as in 1913. The tables also indicate that uch countries as Canada, South Africa, New Zealand, pain and Brazil, which, in 1913, had an excess of imports, ad turned their trade balance the other way, and in ome cases to a notable extent. The countries named ad in 1913 an average monthly excess of imports mounting in the aggregate to nearly 6,000,000l. During he first half of the current year the records available howed an aggregate monthly excess of exports amountng to 10,000,000. In this connexion the figures relating to our foreign rade 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 ave an adverse balance of trade at the rate of 700,000,000%. per annum; and from this circumstance, coupled with our heavy national expenditure, it is inferred that we on the road to ruin.' When the trade figures are nalysed, they admit of no such inference; on the conrary, they point to the extraordinary strength of our conomic position, and the rapidity with which we are e-establishing our former commanding position in international trade. re For the first eight months of the present year the mports of foodstuffs and raw materials were valued at ,018,300,000l. 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 we should obtain food for our workers and raw materials for our manufactures. It is obvious that the sellers of these commodities believe that we can pay for them; and it is equally obvious that our British buyers can see their way to reselling them at a profit. The fact is that we are in a better position than any other country in the world to pay world prices for commodities. The growth of exports is equally satisfactory, and gives some indication of what we shall be able to export when our transport machinery is in full working order and our factories have been fully transformed from war production to peace production. In considering the question of the amount of our exports it must be remembered that our manufacturers are naturally supplying the urgent home demands first. As to our excess of imports, we have to set the following credit items against our so-called adverse balance of 700,000,0007., viz. : Earnings of British Shipping in the carrying Interest on Investments abroad Million £. 350 100 150 600 Less Interest on British Government Securities held abroad 75 525 The bulk of the balance of 175,000,000l. may be held to represent commodities purchased by or through England on behalf of European countries; the effect of this is already apparent in the growth of our re-export trade. Our command of shipping, our credit and our machinery for the conduct of international trade render it inevitable that the restocking of Europe with raw materials should be effected through London, and we shall thus re-establish our extremely profitable entrepôt trade. External Assets and Liabilities.-The position with regard to our external capital, assets and liabilities, is approximately as follows: |