Page:EB1922 - Volume 31.djvu/67

Rh On Sept. 1 1921 the London rates were as follows: New York, V73i: Montreal, 4-14!; Paris, 47-56; Belgium, 48-97; Italy, 84; Holland, 11-74; Spain, 28-61; Switzerland, 21-84; Stockholm, 17-16; Christiania, 27-55; Copenhagen, 21; Berlin, 319; Portugal, 6; Greece, 66i; Bucharest, 317; Finland, 258; Vienna, 3,100; Prague, 312- Warsaw, 10,650; India, Is. 4jd. ; Yokohama, 2s. 7sd. ; Buenos Aires, 43!; Riode Janeiro, yl; Serbia, 168; Bulgaria, 450; Budapest, 1,450.

Table G shows the changes that took place in the value of the pound sterling in different countries as between pre-war basis (1914) and Dec. 31 1920, the left section showing where the pound had risen to a premium and the right section where it had fallen to a discount.

In order to understand accurately the extent of the deprecia- tion of the various exchanges since they ceased to have a gold standard, it is better to take as a basis for comparison the American gold dollar rather than the British paper pound.

Table H shows the rates of exchange ruling in New York (a) immediately before the declaration of war, (b) just after America joined the Allies, and (c) when the Armistice was declared. Table I gives the rates ruling on Dec. 31 1920, and includes those of several countries not previously quoted in America.

Speculation. During the war speculation in foreign exchanges was almost entirely confined to the six neutral states of Europe Holland, Denmark, Sweden, Norway, Spain and Switzerland and to the United States, which was free to deal in all exchanges until it came into the war in 1917. These countries traded very extensively with both groups of belligerents, and quickly amassed very large profits through selling their produce and manufactures at high prices, and also through obtaining abnormally high freights with their steamers. Much of this money was paid in the currency of the purchasing countries and large foreign balances were thereby accumulated. The natural effect was to depreciate the value of the pound, the franc, the lira, the ruble, the mark and the Austrian crown, all considerably but in different degrees. Most of the neutral export merchants and shippers became large sellers of foreign credits, and had they not been able to do so they would have been obliged to cease exporting, but there are always people in every country willing to buy almost anything at a price, and it did not take long before the speculative habit which is the invariable result of sudden prosperity was turned in the direction of foreign exchange, and not only bankers and banks but also private individuals indulged in a perfect orgy of speculation.

Many of these speculators bought sterling exchange, others bought marks. They frankly backed the side they thought would win, and gained or lost accordingly, but there were others who thought it more prudent to " hedge " that is, to divide their risks and turn part of their money into pounds and part into marks. These persons omitted one very important factor from their calculations, i.e. that the prospect of loss in the value of the currency of the losing side must of necessity be immeasurably greater than the prospect of gain in that of the winning side.

TABLE H. New York Rates (in dollars).

Place.

Method of Quoting.

Pre-war Parity.

August 1914.

May 1917.

November 1918.

Rate of Exchange.

Per cent of pre-war Parity.

Rate of Exchange.

Per cent of pre-war Parity.

Rate of Exchange.

Per cent of pre-war Parity.

London ....

Dollars per I.

4-8665

5-50

113-02

4-7556

97-72

4-7575

97-76

Paris ....

Fes. 100.

19-3

21-74

112-64

I7-52

90-78

18-55

96-11

Milan ....

Lire 100.

19-3

20-41

105-75

14-28

73-99

15-75

81-61

Yokohama.

Yen 100.

49-85

49.90

IOO-IO

5I-I3

102-58

54-75

109-83

Petrograd

Rbs. loo.

SI'S

5I-56

IOO-I2

28-10

54-60

Berlin ....

' Mks. 400.

95-2

96-25

IOI-IO

59-537

60-83

58-520

61-47

Vienna ....

' Krn. 100.

20-3

20-37

100-34

9-593

46-09

8-10

39-90

Amsterdam.

Fls. 100.

40-2

41-25

102-61

41-25

102-61

42-25

105-10

Copenhagen.

Kr. loo.

26-8

27-50

102-61

28-70

107-09

27-00

100-75

Stockholm

Kr. 100.

26-8

27-50

102-61

30-00

ni-94

29-00

108-21.

Zurich

Fes. 100.

19-3

21-51

in-45

19-82

102-69

20-32

105-28

Madrid

Pts. 100.

19-3

20-85

108-03

22-75

117-88

20-70

107-25

Buenos Aires

' Pap. Pes. 100

42-45

44-26

104-26

45-253

106-60

Valparaiso

Pes. 100.

18-80

19-12

101-70

23-17

123-24

25-5I

I35-69

Bombay "Hong- Kong.

' Rps. 100. 'H.K. $100.

3 2 -44

33-oo 46-45

101-73

32-50 58-00

100-18

35-15 80-00

109-90

'Shanghai

' Taels 100.

64-00

86-50

124-00

New York.
 * Hong- Kong and Shanghai exchanges being on a silver basis

there was at no time a fixed parity between their currencies and that of

TABLE I. New York Rates, Dec. 31 1920.

Nominal Gold Value.

Dec. 31 1920.

Per cent of Dis- count.

4-8665 dollars to

England.

3-525 dollars for.

27-6

19-30. to I franc.

France.

i

5-89 cents for I franc.

69-3

23-8c. to

mark.

.

Germany

1-38 cents for i mark.

94-3

19-30. to

lire

Italy.

t

3-46' cents for I lira

82-1

4O-2C. to

guilder

Holland.

31-30 cents for i guilder

22-1

19-30. to

peseta

Spain

13-45 cents for I peseta.

30-3

19-30. to

franc.

Switzerland.

15-20 cents for i franc.

21-2

I -08 dol

ars to I escudo

Portugal

10-30 cents for i escudo

81-1

19-30. to

franc.

Belgium.

6-17 cents for i franc.

67-9

20-260. to

crown.

Austria.

0-24 cents for I crown

98-7

20-260. to

crown.

(

Czechoslovakia

t

1-15 cents for I crown

94-3

19-30. to

leu

Rumania

1-28 cents for i leu

93-3

19-30. to

drachma.

Greece.

7-25 cents for i drachma

62-4

26-80. to

crown.

Norway.

.

15-65 cents for i crown.

41-6

26-80. to

crown.

Sweden.

19-85 cents for i crown.

26-0

26-8c. to

crown.

,

Denmark

15-65 cents for I crown.

41-6

19-30. to

finmark

Finland.

2-90 cents for i finmark

84-9

23-80. to

mark.

Poland.

0-17 cents for i mark.

99-3

51-460. to

ruble.

Russia.

0-45 cents for i ruble.

99-1

1000. to

I ... .

Canada.

86-6 cents for $i.

13-4

42-450. to

peso.

Argentina

33-15 cents for i peso.

21-9

32-440. to

milreis

Brazil.

.

14-00 cents for I milreis

56-8

48-660. to

rupee

India

26-00 cents for i rupee.

46-5

49-850. to

yen.

Japan

48-37 cents for i yen

3-o