Page:EB1922 - Volume 31.djvu/61

Rh

(d). The approximate sterling equivalent of currency over- drafts " Nostro " abroad at banks in each country.

No British firm or institution was permitted to work in ex- change in joint account with a neutral firm or institution. It was not permissible to execute an order for a neutral to buy or sell foreign exchange unless it was stated for whose account the order was given. It was not permissible for exchange dealers to keep in foreign countries more than the minimum cash balances necessary for keeping their accounts open. An official list was sent period- ically to all exchange dealers from the finance section of the Minis- try of Blockade containing the names of persons and firms whose transactions it was undesirable to facilitate or finance. The last of these lists (colloquially known as "Black Lists"), which was circulated in Dec. 1918, contained no less than 10,000 names of persons or firms with whom it was not permitted to trade either directly or indirectly. It was not permissible to telegraph in cypher, though as a concession when ordering telegraphic trans- fers of money one private " check " word was permitted in each telegram, but this only to lessen the risk of fraud. (A few recognized codes in general use could, however, be employed, but the telegram had to commence with the name of the code and a small fee was charged by the censor.)

Troublesome these restrictions undoubtedly were, but they were not unreasonable; and foreigners, both Allies and neutrals, recognized that they were necessary and were not intended in any way to hamper them in carrying out their own legitimate trade. A large and increasing volume of orders to buy and sell foreign exchange came to the London market from the continent of Eu- rope and also from America, with the result that London never lost its preeminent position as the world's centre for foreign exchange. Indeed, the great increase in the volume of exchange transactions that started very shortly after the declaration of peace, when exchanges were decontrolled and all restrictions were removed, found England better equipped than ever before for maintaining its leading position.

In this connexion the three subjoined tables, A, B and C, for London business done on various foreign centres, are of interest. The first (A) shows the highest and lowest exchange quotations during a normal pre-war year, the second (B) gives similar quota- tions for a post-war year, and the third (C) is a record of the rates at which actual transactions took place on one day in 1921:

TABLE A. Pre-war Rates 1912.

Method of Quoting.

Lowest.

Highest.

New York.

Dollars per pound

4-84H

4-88i

Paris.

Francs per pound

25-I3

25-29!

Brussels

Francs per pound

25-31

25-40

Germany.

Marks per pound

20-41 i

20-55

Amsterdam

Guilders per pound

!2-o6f

12-ioJ

Italy.

Lire per pound.

25-34

25-63

Madrid

Pesetas per pound

26-58

27-34

Stockholm.

Crowns per pound

18-17

18-29

Christiania

11 11 11

18-17

' 18-29

Copenhagen Lisbon

11 11 11 Pence per milreis

18-17 4 6id.

18-29 49fd.

Vienna

Crowns per pound

24-065

24-25

Bombay

Pence per rupee

is. 3 Ud.

is.4^d.

Buenos Aires

Pence per gold peso

48 Ad.

4 8Md.

England was by no means the only country where foreign exchange transactions were subject to strict State control. In Germany, in fact, restrictions were far greater than in England. In that country dealings in foreign exchange were confined, officially, to certain firms and banks, numbering in all 28, who were granted licences by the German chancellor permitting them to do that kind of business. The offiqes where such transactions were authorized were known as Divisenstellen or " Foreign Ex- change Offices." Official rates governing exchange transactions were fixed by the State Bank. These varied from time to time. Table D (on p. 42) gives the highest and lowest official Berlin rates for the years 1916, 1917 and 1918.

It will be noticed how very steady were the Austrian, Hun- garian and Bulgarian exchanges, especially during 1917. Even that on Constantinople varied only about 5 % during that year. If one compares these with the variations in the French, Italian

and American rates of exchanges as quoted in London in 1917, one will find that the German control was, on the whole, rather more successful, for although the difference between the highest and lowest quotations for the " pegged " dollar was barely j of i %, that for the French franc was about 2 J % and that for Italy was as much as 31 per cent.

TABLE B. Post-war Rates 1920.

Percentage of Vari- ation.

Lowest.

Highest.

Method of Quoting.

2 5'75 Montreal

3-65

4-59

Dollars per pound

25-19 New York

3'2ii

4-025

11 ii ti

68-83 Pa"s

40-75

68-80

Francs per pound

32-90 Holland

8-65

11-50

Guilders per pound

112-00 Italy

50-00

106-00

Lire per pound

52-26 Spam

18-98

28-90

Pesetas per pound

247-82 Portugal

5fd-

20d.

Pence per milreis

44-21 Norway

18-57

26-78

Crowns per pound

8-44 Sweden

17-07

18-51

11 11 11

32-20 Denmark

19-60

25-91

11 11 it

205-08 Finland

59-00

180-00

Finnish marks per pound

204-16 Germany

I2O-OO

365-00

Marks per pound

20-26 Switzerland

I9-40

23-33

Francs per pound

57-55 Belgium

40-40

63-65

11 11 it

96-85 Greece

25-40

49-50

Drachmas per pound

170-83 Bucharest

I2O-OO

325-00

Lei per pound

233-33 Vienna

480-00

1,600-00

Crowns per pound

246-15 Prague

I30-00

450-00

11 11 11

521-62 Warsaw

370-00

2,300-00

Polish mks. per pound

90-77 Rio de Jan-

eiro

9*L

l8Hd.

Pence per milreis

44-68 Buenos

Aires

Sold.

73ld.

Pence per gold peso

100-00 India

is.4fd.

2s. 9|d.

Sterling per rupee

29-02 Japan

2s. 4d.

33. o\d.

Sterling per yen

145-16 Shanghai

33. lod.

93. 6d.

Sterling per tael

2-60 Singapore

2s. 3d.

2s.4M

Sterling per dollar

TABLE C. Rates on Jan. 25 1921.

Percentage of Variation.

Lowest.

Highest.

9-00 Paris.

50-00

54-50

0-17 Amsterdam

n-39

11-41

8-27 Belgium.

47-75

51-70

0-80 Spain

27-50

27-72

3-71 Italy.

IOI

104!

0-16 Switzerland

24-04

24-08

0-91 Stockholm

17-46

17-62

2-05 Christiania

19-55

19-95

3-78 Copenhagen

18-50

19-20

0-52 New York

3-8o

3-82

0-46 Canada.

4-3

4-32

4-00 Portugal.

6id.

0-50 Buenos Aires

49ld

5oU

i-oo Greece

so

I -80 Finland.

ill

"3

9-35 Germany.

203

222

8-33 Austria.

1,200

I,3OO

Among the other difficulties that the German trader had to contend with were these: No German current coins or bank- notes were permitted to be sent abroad unless permission had been obtained previously from the State Bank. No German or foreign money could be sent abroad for the purpose of acquiring securities or merchandise of any description without the per- mission of the State Bank. This prohibition also extended to barter. No foreign credits of any description in German currency were permissible without the sanction of the State Bank. The Imperial chancellor had the power to authorize the State Bank to requisition from the possessor any foreign currencies, foreign balances or other " means of payment abroad," giving in exchange their full value in German marks at the official exchange then ruling. Persons or institutions acquiring or disposing of foreign exchange in any shape or form were obliged to give full in- formation as to the nature of the business in question to the State Bank, and the Divisenstellen were empowered to make it a condition that this information should be given before doing business with them. Persons infringing any of these regulations or found to be giving false information, rendered themselves liable to fines varying from 100 to 50,000 marks and to imprison- ment for periods not exceeding one year. In addition to this, the money or goods in question might be declared forfeit to the State!.