18 F. T,^ Lloyd-Dodd on 



unfavourable exchange tends to encourage exportation, and 

 discourage importation, and thus automatically adjust the rate 

 of exchange. 



The state of the American exchange is engaging the anxious 

 attention of many at present. We have already seen that the 

 par of exchange with U.S.A. is £1=$4'86. The steady down- 

 ward movement of the exchange is shown by the following 

 figures : — 



919. Aug. 1 



4-35 



Oct. 1 



4-18 



Nov. 15 



4-lOj 



„ 15 



4-28 



„ 15 



4-18 



„ 17 



4-08i 



Sept. 1 



4-19 



Nov. 1 



4-161 



„ 21 



4-04 



„ 15 



4-1 7i 



„ 8 



4-15 







The immediate cause of this drop lies in the recent financial 

 upheavals in G-reat Britain and the United States. The root 

 cause, however, lies in the balance of indebtedness between the 

 two countries. 



Let us compare the balances, at least as far as concerns 

 exports and imports for the years 1913 and 1918. 



Value of Exports and Imports in £ 



(00,000 omitted). 

 Twelve Months ended December 31st. 



Food, Drink Raw Manufactured Excess of 



1913. and Tobacco. Materials. Articles. Total 



Imports 



.. 290,2 



281,8 



193,0 



765,0 



Exports 



.. 32,6 



69,9 



411,4 



513,9 



1918. 











Imports 



.. 572,7 



458,9 



280,2 



1,311,8 



Exports . 



.. 12.1 



60,8 



403,7 



476,4 



Imports. 



133,9 



790,0 



The contrast between the figures is striking. While our 

 imports in 1918 are almost double the amount of those of 

 1913, our exports under every heading have decreased. Making 

 allowance for the re-export of foreign and colonial produce, the 

 net result is that while in 1913 our imports exceeded our exports 

 by £133,9 millions, in 1918 the excess of imports was £790 

 millions. We saw that in 1913 the excess of imports of £1339 

 millions, represented interest due upon our foreign investments, 



