England Tested

The greatest pressure upon the pound sterling in foreign exchange markets always comes in the autumn. During the fall season, the British regularly purchase large amounts of our cereals and cotton, and in consequence are forced to make heavy payments to the U. S. Even before the War, in the absence of other offsetting factors, sterling tended to sag in terms of U. S. dollars.

London bankers and British Government officials are, for this reason, looking ahead to the coming autumn season with considerable anxiety. Thus far it has not been so much of a feat to keep sterling at its gold par with the dollar. But the real test of Chancellor of the Exchequer Churchill's bold step in resuming gold payments this spring (TIME, May 11, COMMONWEALTH) will come this fall. Hitherto, Britain has not been forcd by her assumption of the full gold standard to export much gold --in fact, if anything, she has imported the yellow metal on balance from other countries.

In the event that, in the autumn, the strain of large gold shipments to the U. S. appears imminent, the first probable step of the British to retain their gold will be to raise the rate of redis-ount at the Bank of England. This step tends to draw investment funds from the U. S. to England--a money movement which offsets British payments for purchases of our goods, and thus obviates the decline in sterling exchange and the need of extensive gold shipments.