Windfall

U.S. importers of British raw materials and goods cheered the devaluation of the British pound to $2.80 (see INTERNATIONAL). Prices of British goods in the U.S. had been far too high; now they began to tumble. Fergus Motors, a Manhattan importer of British cars, slashed the price of the Austin automobile from $1,595 to $1,275, trimmed all other makes 20%. Rolls-Royce dealers trimmed that $20,000 job to $15,000. Dunhill's also jumped aboard, cut British pipes and cigarette cases 20%. The prices of British wool, rubber, cocoa and other commodities from sterling areas slumped on New York exchanges.

The quickest killing was made by those who had sold the pound short--speculators and merchants who have been buying in Britain. The merchants had done this to protect themselves, in case of devaluation, from losses on goods ordered at the old rate of $4.03. The speculators had simply gambled on a fast profit. They made it. They had been able to sell short by putting up margins of as little as 25%, thus doubling their money. No one knew how big the short position in pounds had been. (One Briton gave the ridiculous estimate of -L-2 billion.) But it was large and the profits ran to millions.

Despite devaluation, pound notes this week could still be bought cheaper than the official $2.80 rate in New York's "free market." (The notes could not be used in commercial transactions, were chiefly useful to tourists who could take -L-5 into Britain.) The notes, which had been selling at $2.90 before devaluation, were down to $2.60 to $2.70. However, the price gap was now so small that bankers thought Britain could clean up the supply of notes, if it wished, by removing the bars on taking them into Britain.

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