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