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tNDBOOK OF FOREIGN CURR
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-
—
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INTERNATIONAL PAYMENTS UNIT
SU REAL OF
ORE1GN A N D
D O M E S T IC COM M ERCE
*
x u . S. DEPARTMENT OF COMMERCE
”
R. P. LAMONT, Secretary
BUREAU OF FOREIGN AND DOMESTIC COMMERCE
W ILLIAM L. COOPER, D irector
Trade Promotion Series—No. 102 Ctr
* * '>
HANDBOOK
OF FOREIGN CURRENCY
AND EXCHANGE
P repared in th e Division of S tatistica l R esearch
BY
JAMES R. MOOD
UNITED STATES
GOVERNMENT PRIN TIN G OFFICE
W ASHINGTON : 1930
>r sale by th e S u p e rin te n d e n t of D ocum ents, W ashington, D. C.
- Price 30 cents
_
CONTENTS
Foreword__________________________________________________________
Introduction_______________________________________________________
Abyssinia. See Ethiopia.
Aden (British Arabia)_______________________________________________
Africa:
Belgian________________________________________________________
British________________________________________________________
French________________________________________________________
Italian________________________________________________________
Portuguese_____________________________________________________
Albania___________________________________________________________
Algeria____________________________________________________________
Andorra___________________________________________________________
Anglo-Egyptian Sudan______________________________________________
Angola_______________ ____________________________________________
Arabia, British. See Aden.
Argentina__________________________________________________________
Australia___________________________________________________________
Austria____________________________________________________________
Azores_____________________________________________________________
Bahamas. See British West Indies.
Barbados. See British West Indies.
Belgian Africa:
Belgian Congo_________________________________________________
Belgium___________________________________________________________
Bermuda. See British West Indies.
Bolivia____________________________________________________________
Brazil_____________________________________________________________
British Africa:
Anglo-Egyptian Sudan__________________________________________
British East Africa (Kenya, Uganda, Tanganyika, and Zanzibar)___
British West Africa (Nigeria, Gambia, Gold Coast, and Sierra Leone).
Nyasaland Protectorate.._______________________________________
Rhodesia, Northern and Southern________________________________
Somaliland Protectorate________________________________________
Union of South Africa__________________________________________
British Guiana_____________________________________________________
British Honduras__________________________________________________ _
British India_______________________________________________________
British Malaya:
Straits Settlements_____________________________________________
Federated and Unfederated Malay States______________ __________
British Oceania:
Fiji Islands____________________________________________________
British West Indies (Bahamas, Barbadoes, Bermuda, Jamaica, Trinidad
and Tobago, and Windward and Leeward Islands)__________________
Bulgaria___________________________________________________________
Canada____________________________________________________________
Ceylon______________________________ ______________________________
Chad (French Equatorial Africa). See French Africa.
Chile______________________________________________________________
China_____________________________________________________________
Chosen (formerly Korea)______________________________________, _____
Colombia____________________________________________________ 1_____
Congo:
Belgian_______________________________________________________
French (French Equatorial Africa). See French Africa.
in
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IV
CONTENTS
Costa Rica___________________________________________________________
Cuba_____________________________________________
Curacao________________________________________________
Cyprus..................................................................................
Cyrenaica (Italian Libya)____________________________
Czechoslovakia________________________________________
Dahomey (French West Africa). See French Africa.
Dakar (French West Africa). See French Africa.
Danzig, Free City of__________ J____________________ _______________
Denmark____________________________________________________________
Dominican Republic_______________________________
Dutch East Indies. See Netlierland East Indies.
Dutch Guiana. See Netlierland Guiana.
Ecuador____________________________________________________
Egypt............................................................................................................
Equatorial Africa, French_____________________________________________
Eritrea (Italian East Africa)___________________________________________
Estonia______________________________________________________________
Ethiopia (formerly Abyssinia)_____________________________
Federated and Unfederated Malay States..........................................
Fiji Islands___________________________________________________________
Finland______________________________________________________________
Formosa. See Taiwan.
France_______________________________________________________________
French Africa:
Algeria__________________________________________________________
French Equatorial Africa (Gabun, Middle Congo, Ubangi-Shari, and
Chad)................................................................................................
French Somaliland________________________________________________
French West Africa (Dakar, Senegal, French Sudan, French Guinea,
Ivory Coast, Dahomey, Upper Volta, Mauritania, and Niger)___
Madagascar______________________________________________________
Reunion_________________________________________________________
Tunisia__________________________________________________________
French Guiana_______________________________________________________
French Guinea (French West Africa). See French Africa.
French Indo-China_________________________________________
French Morocco______________________________
French West Indies (Martinique and Guadeloupe)_______________________
Gabun (French Equatorial Africa). See French Africa.
Gambia (British West Africa). See British Africa.
Germany_____________________________________________________________
Gibraltar____________________________________________________________
Gold Coast (British West Africa). See British Africa.
Great Britain. See United Kingdom.
Greece_______________________________________________________________
Guadeloupe. See French West Indies.
Guatemala_________________________________________________________
Guianas, The:
British Guiana_________________________________________________
French Guiana_________________________________________________
Netlierland Guiana (Surinam)_____________________________________
Guinea:
French (French West Africa). See French Africa.
Portuguese (Portuguese West Africa). See Portuguese Africa.
Haiti______________________________________________
Honduras____________________________________________________________
Hong Kong________________________________________________
Hungary___________________________________________________________
Iceland_____________________________________________________
India, British_____________________________________
Indo-China, French___________________________________________________
Iraq (formerly Mesopotamia)________________________________________
Irish Free State______________________________________________________
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CONTENTS
V
Italian Africa:
rage
Eritrea (Italian East Africa)____________________________________
99
Italian Libya (Cyrenaica and Tripolitania)_______________________ 100
Italian Somaliland_____________________________________________ 100
Italy._____ ___________
100
Ivory Coast (French West Africa). See French Africa.
Jamaica. See British West Indies.
Japan_____________________________________________________________ 105
Java. See Netherland East Indies.
Kenya (British East Africa): See British Africa.
Korea. See Chosen.
Latvia_____________________________________________________________ 108
Leeward Islands. See British West Indies.
Liberia__________________________________________________________
109
Libya, Italian (Cyrenaica andTripolitania)___________________________ 100
Liechtenstein_________________________________ i____________________ 109
Lithuania___________________________________________
110
Luxemburg_____________________•--------------------------------------------------- 111
Madagascar____________________________
74
Madura. See Netherland East Indies.
Malaya, British____________________________________________________
35
M alta...................
Ill
Martinique. See French West Indies.
Mauritania (French West Africa). See French Africa.
Mesopotamia. See Iraq.
Mexico--------------111
Middle Congo (French Equatorial Africa). See French Africa.
Monaco___________________________________________________________ 114
Morocco:
French Zone___________________________________________________ 114
Spanish Zone__________________________________________________ 115
Tangier (International) Zone___________________________
115
Mozambique_______________________________________________________ 141
Netherlands________________________________________________________ 115
Netherland East Indies (Java and Madura)___________________________ 118
Netherland Guiana (Surinam)________________________________
87
Netherland West Indies (Curacao)___________________________________ 120
Newfoundland_____________________________________________________ 120
New Zealand_______________________________________________________ 120
Nicaragua_________________________________________________________ 123
Niger (French West Africa). See French Africa.
Nigeria (Biitish West Africa). See British Africa.
Norway___________________________________
125
Nyasaland Protectorate_____________________________________________
20
Oceania, British (Fiji Islands)_______________________________________
37
Palestine____________________________________________:______________ 127
Panama________________________________ J__________________________ 128
Paraguay__________________________________________________________ 128
Persia_____________________________________________________________ 130
Peru______________________________________________________________ 130
Philippine Islands__________________________________________________ 133
Poland____________________________________________________________ 135
Portugal___________________________________________________________ 139
Portuguese Africa:
Angola and Portuguese Guinea (Portuguese West Africa)__________ 141
Mozambique (Portuguese East Africa)___________________________ 141
Reunion___________________________________________________________
74
Rhodesia, Northern and Southern____________________________________ 27
Rumania__________________________________________________________ 141
Russia, Soviet______________________________________________________ 152
St. Pierre and Miquelon____________________________________________ 144
Salvador, El_______________________________________________________ 144
Senegal (French West Africa). See French Africa.
Siam______________________________________________________________ 147
Sierra Leone (British West Africa). See British Africa.
VI
CONTENTS
Somaliland:
British________________________________________________________
French_____________________________________________________
Italian___________________________________________________ 1-----Soviet Russia______________________________________________________
Spain____________________
Spanish Morocco___________________________________________________
Straits Settlements__________________- ______________________________
Sudan:
,
Anglo-Egyptian________________________________________________
French (French West Africa). See French Africa.
Surinam (Netherland Guiana)--------------------------------------------Sweden_____________________________________________________________
Switzerland________________________________________________________
Syria________________________________________________________________
Taiwan (formerly Formosa)___________________________________________
Tanganyika (British East Africa). See British Africa.
Tangier__________________________________ '________________________
Trinidad and Tobago. See British West Indies.
Tripolitania (Italian Libya)___________________________________________
Tunisia____________________________________________________________
Turkey, European and Asiatic_________________________________________
Ubangi-Shari (French Equatorial Africa). See French Africa.
Uganda (British East Africa). See British Africa.
Union of Socialist Soviet Republics. See Soviet Russia.
Union of South Africa______________________________________________
United Kingdom_____________________________________________________
Upper Volta (French West Africa). «See French Africa.
Uruguay_____________________________________________________________
Venezuela___________________________________________________________
West Indies:
British________________________________________________________
French________________________________________________________
Netherland-------------------------------------------------Windward Islands. See British West Indies.
Yugoslavia________________________________________________
Zanzibar (British East Africa). See British Africa.
Appendix:
I. Monetary systems of principal countries summarized_________
Gold-standard countries________________________________
Silver-standard countries_______________________________
Nonfixed or nonmaintained basis countries_______________
II. Gold holdings of central banks and governments_____________
III. Legal-reserve requirements of some foreign central banks_____
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Since 1924, currencies in most of the countries of Europo and of
Latin America have been stabilized, and their conversion to United
States dollar equivalents is now simply a matter of knowing the par
value. From the outbreak of the World War in 1914 until recently,
however, inflation appeared in nearly every quarter of the globe,
with the result that exchange values in terms of United States dollars
were exceedingly unstable and tended to depreciate.
The purpose of this monograph, prepared by James R. Mood in
the Division of Statistical Research, is to furnish economists, bankers,
business firms, and men in the foreign field with a brief history of
world currency conditions and recent legislation, together with such
average exchange rates as are available since 1900.
The practical usefulness of a study of this character, covering 115
countries, is obvious. Commercial houses, banking institutions,
and construction companies doing a foreign business are vitally
interested in the monetary situation of the localities with which they
deal; and economists and statisticians should find the data herein
equally helpful, for understanding of the economic situation in any
area can not be complete without a thorough acquaintance with
currency and exchange conditions—factors essential to the computa
tion of economic and commercial indices and in the compilation of
foreign-trade values.
W il l ia m L. C o o p e r , Director,
Bureau oj Foreign and Domestic Commerce.
S eptem ber , 1930.
VII
HANDBOOK OF FOREIGN CURRENCY AND EXCHANGE
INTRODUCTION
Surprising as it may seem, up to this time there has been no stand
ardized system for converting the values of foreign currencies into
United States dollars uniform for all the branches of our Government.
While a slight variation in the rate employed is immaterial so long
as small sums are involved, the divergence becomes glaringly apparent
as the amounts increase. Actual values can be misinterpreted be
cause of the spread between the gold mint par and the commercial
value—for example, when converting Egyptian pounds, whose mint
par is $4.9431 and commercial value $4.9913; or through disregarding
disparities in quotations for currencies such as the rupee, the rate
for Ceylon not always being identical with that for India. Further,
silver currency can not always be converted simply at its actual
bullion worth, for sometimes back of it are gold or gold-exchange
reserves that practically guarantee its stability even when the market
price of silver is falling.
As is well known, paper currency seldom is used outside the issuing
country, and its actual value within the particular country is depend
ent, not only upon the amount of gold or foreign exchange behind it,
but also upon various internal factors.
The usual method of quoting exchange is: New York on a foreign
country, the exchange value in United States dollars; a foreign
country on New York, number of units to the United States dollar.
(Illustration: French franc at par—New York on Paris, $0.0392;
Paris on New York, 25.26 francs.)
An absolute exchange value can not be given for any extended
period; this is especially true of the months immediately following
the World War, when exchange fluctuated, not merely from day to
day, but from hour to hour. Wherever possible the rate in New
York on the country concerned has been used in the tables throughout
this study; when this rate was not ascertainable, then the rate in
that country on New York; in a few instances, when neither of these
figures was procurable, the rates given have been computed from
quotations on London or Paris. Official exchange quotations have
been used when available.
While the dollar mark ($) is uniformly employed herein to indicate
onty United States money, certain countries of the Western Hemi
sphere use that symbol to represent their own national currencies;
and in the Far East it often is employed for the various “ dollars”
(Hong Kong, Mexican, Straits) circulating there.
In the preparation of this monograph liberal use has been made of
official and standard yearbooks and statistics of the several countries,
of publications of the League of Nations, and of other general compila
tions, particularly: Monetary Units and Coinage Systems of the
1
2
FOREIGN CURRENCY AND EXCHANGE
Principal Countries of the World, compiled in the Office of the Direc
tor of the Mint, United States Treasury Department, Washington,
1929; Foreign Currency and Exchange Investigation, by John Parke
Young (Commission of Gold and Silver Inquiry, United States
Senate), Government Printing Office, Washington, 1925; Central
American Currency and Finance, by John Parke Young, Princeton
University Press, 1925; Exchange Rates of the World, by Emil
Diesen, Christiania, Norway, 1921; Foreign Exchange in Latin
America, and Latin American Monetary and Exchange Conditions,
by Charles A. McQueen (Trade Information Bulletins Nos. 316 and
430, issued by the Bureau of Foreign and Domestic Commerce, Wash
ington, 1925 and 1926); Indian Finance and Banking, by G. Findlay
Shirras, MacMillan & Co., London, 1920; and the Bulletin of the
Federal Reserve Board, Washington. Special acknowledgment is
made of the cooperation extended by the Division of Regional Infor
mation and the Finance and Investment Division of this Bureau.
ADEN (BRITISH ARABIA)
In the British settlement of Aden, Arabia, the monetary unit is the
Indian rupee, the present par value of which is SO.365 United States
currency. (See British India, p. 35, for average exchange rates, etc.)
Government accounts are kept in Indian rupees, and all trading
transactions also are on that basis. The circulating medium consists
of rupees and subsidiary coins. Among the native population a
small quantity of Maria Theresa dollars (thaler) still circulate.
There is a branch of the National Bank of India (Ltd.) at Aden.
ALBANIA
Albania’s monetary unit is the Albanian gold franc (plural, francs),
representing 322.58 milligrams of gold 0.900 fine (290.32 milligrams of
fine gold), the par value of which is 80.192948 United States currency.
On September 2,1925, the National Bank of Albania was established
in Rome, with branches in Albania (Tirana, Durazzo, etc.). This
bank, with a capital of 12,500,000 gold francs, has the exclusive
right of issuing paper money and metallic currency. This paper
money is freely convertible into gold coin. The bank already has
issued notes of 100, 20, 5, and 1 franc denominations, gold 100 and
20 franc pieces, and subsidiary coins of silver, nickel, and bronze in
franc and lek denominations. (1 lek = K franc.) Since the opening of
the bank exchange has been stable within the gold points. On Decem
ber 31, 1928, notes in circulation totaled 10,095,000 francs; on the
same date the bank held gold to the amount of 1,249,000 francs,
silver 315,000 francs, and foreign currency 16,403,000 francs.
From the close of the World War down to 1925 the circulating
media consisted of gold and silver coins of the several States of the
Latin Monetary Union 1 (the silver coins, however, being valued
only at the market price of their silver content) and Italian paper
currency.i
i Details of the formation of the Latin Monetary Union appear on p. 15.
FOREIGN CURRENCY AND EXCHANGE
ANDORRA
3
The Republic of Andorra, which is under the joint suzerainty of
France and the Spanish Bishop of Urgel, employs for its circulating
medium mainly French francs and Spanish pesetas. Local subsidiary
coins of both France and Spain also are current. (See France, p. 69,
and Spain, p. 157, for details.)
ARGENTINA
The monetary unit of Argentina as established by the law of Novem
ber 5, 1881, is the gold peso (plural, pesos) of 100 centavos, represent
ing 1.6129 grams of gold 0.900 line (1.4516 grams of fine gold). Its
par value is $0.9648 United States currency.
The principal circulating medium, apart from the metallic currency
(in peso and centavo denominations), consists of Government-issued
paper money.
Rapid depreciation of the paper currency after the Argentine
banking crisis in 1890 led to the currency reform of November 4, 1899.
By this law the value of the paper peso was fixed officially at 44 per
cent of the gold peso, and in order to maintain this ratio the Caia do
Conversion (Conversion Office) was authorized to pay out gold in
exchange for legal-tender notes at the rate of 44 centavos for 1 paper
peso. In practice, all domestic transactions in Argentina were con
ducted on the basis of paper money, known as moneda nacional
(designated by the suffix m/n), while trade statistics and transactions
with foreign countries were made on the basis of the gold peso (desig
nated by the suffix o/s, meaning oro sellado [“ coined gold”]).2 This
system continued in operation until the outbreak of the World War,
when by the laws of August 9 and September 30, 1914, the obligation
of the Caia de Conversion to deliver gold in exchange for notes was
suspended and the export of gold was prohibited.
W AR-TIM E EXCHANGE SITUATION
Before the World War Argentina’s trade was mostly with Europe
and practically no direct financial contact with New York existed.
Dollar exchange was nominal and was computed on the basis of settle
ment through London or other European centers. New York wras
used chiefly as a source from which European bankers might draw
gold for direct shipment to Buenos Aires when such course was advan
tageous. These conditions changed after the outbreak of hostilities;
Argentine imports from the United States expanded, direct trade rela
tions were established, and United States banks opened offices in
Buenos Aires.
An increasing world demand for Argentine food products was
noticeable early in 1915; at the same time the country’s imports
were much reduced, and a favorable trade balance was developed.
Argentina was in a position where it would normally have received
gold from abroad, but, in view of the dangers attending ocean trans
port at that time, an arrangement was made whereby foreign importers
could deposit gold to the credit of the Argentine diplomatic officers
in them respective countries. This gold was treated as though it
2 Official publications of the Argentine Government use the dollar mark as the symbol for the peso, writ
ing, for example, the sum of 1,234,567 gold pesos (or 1,234,567 pesos o/s) thus: $1,234,567 oro.
4
FOREIGN CURRENCY AND EXCHANGE
were actually in the vaults of the Caja de Conversion, and paper cur
rency was issued in Buenos Aires against it. Thus Argentine exporters
received their payment and exchange fluctuations were moderated.
By the end of 1915 gold deposited abroad totaled 68,000,000 gold
pesos.
After the United States entered the war the situation created by
the great volume of high-priced exports from Argentina to markets
that could not settle by ordinary means was accentuated. The
embargo upon gold exports from the United States was met by an
official arrangement providing that up to $100,000,000 might be
deposited in gold in the United States in payment of commercial
accounts due Argentine interests, such gold to be exportable after the
close of hostilities. During this period the prices of Argentine prod
ucts advanced considerably and productive and commercial activities
were pushed to the utmost. The value of the peso in American cur
rency rose, largely owing to the “ pegging” of the United States dollar
with the pound sterling and the franc. Following the armistice and
the resumption of gold shipments from the United States the peso
tended to lose the premium which it had enjoyed over the dollar.
During the first five months of 1920 the Caja de Conversion accumu
lated over 81,000,000 gold pesos against which no paper currency had
been issued.
POST-W AR GOLD HOLDINGS
A rapid appreciation of the United States dollar in terms of pesos
began in May, 1920, and soon the Argentine gold stock of about
$75,000,000 still on deposit in New York was exhausted. No gold
could be shipped from Argentina because of the embargo. The peso
fell rapidly and reached its lowest point in July, 1921, when it stood
at $0.65. Recovery from this point was consistent, except in 1923,
when Argentina’s merchandise imports were excessive.
During and immediately following the World War the gold holdings
of the Caja de Conversion increased rapidly and by the close of 1920
amounted to 471,000,000 pesos, as compared with 233,198,000 pesos
for 1913. The fiduciary circulation reached its maximum in 1920,
standing at 1,362,564,000 pesos, as compared with 823,000,000 pesos
in December, 1913. At the end of December, 1929, the note circula
tion stood at 1,246,800,000 pesos and the gold reserve in the Caja de
Conversion at 953,700,000 pesos.
GOLD PAYMENTS SUSPENDED
Resumption of gold payments in Argentina was accomplished by
a presidential decree effective August 27, 1927, reopening the Caja de
Conversion and reimposing upon it the obligation to redeem paper
pesos at the legal ratio of 44 centavos in gold for 1 peso in paper
currency. This action was made possible by Argentina’s favorable
balance of international payments during recent years, by the conse
quent strength of Argentine exchange, and by the growth of the
country’s stock of gold.
This situation held until the latter part of 1929, when, because of
continued heavy exports of gold, owing to a negligible trade balance
and no external loans, and heavy invisible items such as dividends,
debt-service payments, immigrants’ remittances, and Argentine
investments abroad, a presidential decree of December 11 again
brought into effect law No. 9479 of August 9, 1914, prohibiting the
5
FOREIGN CURRENCY AND EXCHANGE
exportation of gold, and ordered a moratorium on international
operations.
With the conversion of paper into gold suspended, the only duties of
the Caja de Conversion were (1) the exchange of new currency notes
for old, (2) the changing of currency notes for others of larger or
similar denominations, (3) reception and delivery of nickel coins,
(4) acceptance of gold currency in exchange for paper, and (5) the
acceptance of bonds deposited in guarantee of foreign insurance
companies.
The President of Argentina issued a decree closing the Caja de
Conversion December 16, 1929.
BASIS OF STATISTICS
In Tables 1 and 2 following the average rates of exchange are
given for both the gold and the paper peso. The basis is: For 19051913, Buenos Aires on London (pence converted at $0.02028); 19141918, dollar exchange in Buenos Aires (cable rates); 1919-1929, noon
buying rates for cable transfers, New York on Buenos Aires. Yearly
average rates, 1905 to 1918, are mid-points between the yearly high
and low rates; from 1919 to 1929, the averages are as computed from
daily rates by the Federal Reserve Board. Quarterly averages are
computed from monthly averages.
T able 1.— Y early A verage E xchange R ates
P aper P esos
Year
Average rate
Gold
Paper 1
Year
of the
A rgentine G old
Average rate
Paper 1
Gold
Year
and
Average rate
Gold Paper*
$0. 9638 $0.4241 1923.................. $0. 7857 $0. 3457
. 9390 .4132 1924- .............. .7813 .3438
.9724 .4278 1925.................. .9138 .4021
1.0144 . 4463 1926 ................ . 9215 . 4055
1. 0093 .4441 1927.....-.......... . 9630 .4237
. 9902 .4357 1928.................. . 9648 . 4245
. 9070 .3991 1929.................. .9513 .4186
. 7300 . 3212
.8182 .3600
1905.................. $0.9858 $0.4338 1914.
1906.................. . 9937 .4372 1915.
1907.................. .9937 .4372 1916.
1908.................. . 9880 .4347 1917.
1909.................. .9817 .4319 1918. 9833 . 4326 1919.
1910-.. 9795 .4310 1920.
1911..........
1912.................. , 9830 .4328 1921.
1913.................. .9829 .4325 1922.
1 Computed at 44 per cent of the gold peso.
T able 2.— Q uarterly and M onthly A verage E xchange R ates
A rgentine G old and P aper P esos
Period
1919
Gold
Paper1 Gold
1920
Paper 1 Gold
1921
of the
1922
Paper1 Gold Paper *
$0. 3490 $0. 8085
3567
First quarter............................. $1.0179 $0.4479 $0.9850 $0. 4334 $0.. 7932
7189 . 3163 .8167 10.. 3593
Second quarter........................ 1.0005 .4402 .9716 .4275
.8798 .3871 .6733 .2963 .8167 .3593
Third quarter........................... .9666 .4253
Fourth quarter.......................... .9748 .4289 .7899 . 3476 .7378 .3246 .8307 .3655
January....................................... 1.0191 .4484 .9823 . 4322 .7938 . 3493 .7719 .3396
February. .................................. 1. 0195 .4480 .9854 . 4336 . 8039 . 3537 .8258 . 3634
March........................................ 1.0150 . 4466 . 9872 . 4344 .7820 .3441 .8278 .3642
April........................................... 1.0030 .4413 .9831 . 4326 . 7396 . 3254 .8075 . 3553
May............................................ I.0083 .4437 . 9706 .4271 . 7185 . 3161 .8241 . 3626
June............................................. .9904 .4358 .9611 .4229 .6986 . 3074 .8186 .3602
July............................................. .9714 .4274 .9227 .4060 .6580 .2895 .8185 .3601
August........................................ .9627 .4236 .8710 .3832 . 6656 .2929 .8208 .3612
September.................................. .9658 .4250 .8457 .3721 . 6963 . 3064 .8108 . 3508
October....................................... .9648 . 4245 .8137 . 3580 .7308 .3216 .8141 . 3582
November.................................. .9766 .4297 .7687 . 3382 . 7347 . 3233 .8223 .3618
December................................... .9831 .4326 .7873 .3464 .7480 .3291 .8557 .3765
Computed at 44 per cent of the gold peso.
6
FOREIGN CURRENCY AND EXCHANGE
T able 2.—Q uarterly and M onthly A verage E xchange R ates
A rgen tin e G old and P a per P esos — Continued
Period
1923
Gold
1924
Paper 1 Gold
Paper1 Gold
1925
of the
1926
Paper 1 Gold Paper1
First quarter.............................. $0. 8437 $0.3712 $0. 7555 $0. 3324 $0. 9037 $0.3976 $0. 9258 $0.4074
Second quarter.......................... .8177 .3598 .7444 .3275 .8948 .3937
.4015
Third quarter............................ .7568 .3330 .7694 .3385 .9172 .4036 .9125
.9207 .4051
Fourth quarter.......................... .7238 .3185 .8578 .3774 .9400 .4136 .9280 .4083
January................... .................. .8474 .3729 .7365 .3241 .9108 .4008 .9413 .4142
February.................................... .8422 .3706 .7645 .3364 . 9033 .3975 .9327 .4104
March......................................... .8414 .3702 .7655 .3368 .8971 .3947 . 9033 .3975
April............................................ .8315 .3659 .7480 .3291 .8688 .3823 .9079 . 3995
May........................................... .8168 .3594 . 7463 .3284 .9024 .3971 .9131 .4018
June............................................ .8047 .3541 .7389 .3251 .9133 .4019 .9166 .4033
July............................................. .7774 .3421 .7412 .3261 .9175 .4037 .9205 .4050
August—..................................... . 7446 .3276 .7666 .3373 .9170 . 4035 .9196 .4046
September.................................. . 7485 .3293 .8003 .3521 .9171 .4035 .9220 .4057
October....................................... .7366 .3241 .8354 .3676 . 9336 .4108 . 9275 .4081
November................................. .7114 .3130 .8549 .3762 .9444 .4155 .9238 .4065
December................................ .7233 .3183 .8832 .3886 .9421 .4145 .9328 .4104
1927
Gold
First quarter..............................
Second quarter...........................
Third quarter............ ..............
Fourth quarter..........................
January.......................................
February.................................
March.........................................
April...........................................
May.................. -........................
June......................... -.................
July.............................................
August........................................
September...................— ........
October....................-.................
November..................................
December...................................
Paper 1 Gold
1928
1929
Paper1 Gold Paper1
$0. 9485 $0. 4173 $0.9717 $0.4275 $0.9570 $0.4211
. 9627 .4236 .9711 .4273 .9545 .4200
.9684 .4261 .9590 .4220 .9537 .4196
.9715 .4275 .9572 .4212 .9397 .4135
.9385 .4129 .9711 .4273 .9576 .4213
.9472 .4168 .9714 .4274 .9577 .4214
. 9598 .4223 .9725 .4279 .9556 .4205
.9617 .4231 .9719 .4276 .9556 .4205
.9620 . 4233 .9720 .4277 .9552 .4203
.9644 .4243 .9694 .4265 .9528 .4192
.9655 .4248 .9614 .4230 .9537 .4196
.9684 .4261 .9590 .4220 .9539 .4197
.9712 .4273 .9566 .4209 . 9534 .4195
.9716 .4275 . 9559 .4206 .9500 .4180
.9705 .4270 .9582 .4216 . 9392 .4132
.9723 .4278 .9575 .4213 .9300 .4092
* Computed at 44 per cent of the gold peso.
AUSTRALIA
Australia’s monetary unit is the Australian pound (symbol £) par
$4.8665. The metallic currency in circulation is practically the same
as in GreatBritain; there is little or no gold passing.
In addition to the metallic currency, the circulating medium consists
mainly of notes of the Commonwealth Bank, essentially a Government
institution.
Prior to 1910 the right to issue paper money was vested in private
banks, which paid for the privilege a tax of 2 per cent (3 per cent in
Queensland). In that year the Commonwealth Parliament passed
the Australian notes act (No. 11 of 1910), regulating the note issue
of Australia and providing for the emission of notes by the Common
wealth Treasury. The act imposed a tax of 10 per cent upon notes of
private banks and prohibited the issuance of notes by the Australian
States. Against these Treasury notes—which were declared legal
tender throughout Australia, but were redeemable only at the seat of
FOREIGN CURRENCY AND EXCHANGE
the Commonwealth Government—there was required a gold reserve
of not less than 25 per cent of notes issued up to £7,000,000 and of
100 per cent against any excess over this amount.
In December, 1920, the Australian note issue was handed over to
the Commonwealth Bank established under act No. 18, of December
22, 1911; the notes, however, still remained Treasury notes, and
required a gold reserve of at least 25 per cent of the notes outstanding.
The Commonwealth Bank became the central bank of issue for the
whole of Australia; the redemption of its notes is guaranteed by the
Commonwealth Treasury. On December 31, 1929, notes outstanding
totaled £42,423,000, against which was a gold reserve of £18,264,000.
The Australian pound normally fluctuates with the British pound,
(see p. 174) the difference being only a spread in the case of tele
graphic transfers, etc. The spread, however, increased considerably
immediately following the World War.
While yearly average exchange rates are not available, there are
quoted in the tabulation following such rates as could be obtained by
American Trade Commissioner E. G. Pauly, at Melbourne, from the
secretary of the Associated Banks. These rates represent selling rates
(telegraphic transfers) in Melbourne on London for £100 sterling;
the premium or discount is given in shillings and pence, the usual
method of quoting.
Selling rates (cable transfers) in Melbourne on London
1913:
s. d.
Oct. 17_____________________________premium.. 15 0
1914:
Aug. 19_______________________________ do_____25 0
Sept. 29............................................................... do____ 30 0
Oct. 24............................................................... do____ 35 0
1915:
May 14_______________________________ do____ 32 6
Oct. 1.................................................................. do____ 32 6
1916:
Jan. 6_________________________________do____ 32 6
Feb. 24................................................................ do____ 37 6
Nov. 16_______________________________ do____ 32 6
1917:
May 31_______________________________ do___ 27 6
Oct. 3........................................
do_226
1920:
Jan. 12________________________________ do___17 6
Aug. 10________________________________do-----17 6
Oct. 8_________________________________do___30 0
Oct. 14.........................................................
do______ 300
Nov. 1________________________________ do-----40 0
Dec. 1_________________________________do___50 0
1921:
Dec. 23________________________________do___45 0
1922'
Feb. 17............................................
do_350
Apr. 6_________________________________do___30 0
May 15_________________ ______________ do___ 25 0
July 14________________________________ do___17 6
Sept. 8________________________________ do___10 0
Oct. 10________________________________ do___ 5 0
Nov. 8________________________________ do___ 6 0
8
FOREIGN CURRENCY AND EXCHANGE
1924:
•Tan. 14_
Feb. 22.
Mar. 10.
May 6 ..
Sept. 5.
Sept. 29
Oct. 14.
1925:
May 6 ..
June 10.
Dec. 4 ..
1926:
June 9.July 12.
Aug. 5 ..
Oct. 1 ..
1927:
Apr. 20.
June 27.
July 25.
Nov. 7._
s. d.
.discount.. 10 0
___ do____15 0
___ do____20 0
___ do____30 0
___ do____35 0
___ do____40 0
___ do____50 0
___ do____10 0
__________ Par.
__________ Par.
premium.. 2 6
___ do____ 5 0
___ do____ 7 6
___ do____ 2 6
___ do____10 0
___ do____12 6
___ do____15 0
___ do____15 0
AUSTRIA
Austria’s monetary unit is the schilling (anglicized plural, schillings),
of 100 groschen, representing 235.2454 milligrams of gold 0.900 fine
(211.72086 milligrams of fine gold), the par value of which is about
SO. 1407 United States currency.
The schilling was adopted in accordance with the federal law of
December 20, 1924, some of the more important provisions of which
are:
Article 9: The Federal Government will coin on behalf of the Austrian Federal
State federal gold coins of 25 and 100 schillings.
Article 13: Silver coins in circulation must not exceed 10 schillings per capita
of the population. In business transactions no one is obliged to accept silver for
a larger amount than 50 schillings. The silver schilling contains 6 grams of silver
0.640 fine.
Article 16: Former Austro-Hungarian gold coins will not be legal tender after
December 31, 1925.
Article 17: The Austrian National Bank must discontinue the issue of kronen
notes after December 31, 1926.
Apart from the metallic currency (gold, silver, and subsidiary coins
of nickel and bronze in schilling and groschen denominations), the
circulating medium consists of the notes of the Austrian National
Bank. In December, 1929, notes outstanding totaled 1,094,000,000
schillings, gold reserve 169,000,000 schillings, and foreign-exchange
reserve 238,000,000 schillings.
CAPITAL, RESERVE, AND FUNCTIONS OF NATIONAL BANK
The Austrian National Bank came into operation on January 1,
1923; it was capitalized at 30,000,000 gold kronen and given exclu
sive note-issue privileges for 20 years. There were to be no advances
to the Government without deposit of an equivalent amount in gold
or foreign bills.
In regard to reserve requirements, it was provided that the total
bank-note circulation plus current liabilities (but exclusive of the ex
isting Federal debt, as evidenced by treasury bonds taken over from
the Austrian section of the Austro-Hungarian Bank) shoidd be cov
ered by a minimum reserve of gold and foreign-exchange holdings to
FOREIGN CURRENCY AND EXCHANGE
9
the extent of 20 per cent for the first five years, 24 per cent for the
next five years, 28 per cent for the next five years, and 33% per cent
thereafter. Whenever specie payments are resumed the proportion
of cover must be maintained at 33% per cent. It was provided that
specie payments must be resumed and maintained when the Govern
ment succeeds in reducing its debt to the bank, which amounted to
2,557,948,000,000 paper kronen when the new bank went into opera
tion, to an equivalent of 30,000,000 gold kronen—the latter amount
to constitute a permanent advance from the bank to the State.
As a nucleus for its reserves the bank received (1) the meager gold
and foreign exchange holdings of the Austro-Hungarian Bank and (2)
assets of the Devisenzentrale (Central Exchange Office), which insti
tution the bank took over in its entirety. The bank also received
the proceeds of the Government foreign loans. Furthermore the cap
ital of the bank was subscribed in gold or foreign exchange.
When the Austrian National Bank absorbed the Devisenzentrale
on January 1, 1923, it assumed likewise the function of regulating
exchange rates. During the first two months, however, conditions
altered and the demand for foreign exchange was again strong, owing
largely to a feeling that the obtaining of foreign credits for Austria
was doubtful. With the assurance brought by the short-term for
eign loan of February, 1923, and still more by the long-term inter
national loan of June, 1923, private capital flowed back more rapidly
toward Austria. In the spring of 1925 Austria abolished restrictions
on dealings in foreign currencies.
INTRODUCTION OF GOLD STANDARD
On January 24, 1857, Austria concluded with Prussia and other
German States a monetary convention by which it was agreed that
45 Austrian standard florins or gulden should be coined from the mint
pound of 500 grams fine silver. The silver florin, the monetary unit
at that time, thus weighed 12.34508 grams 0.900 fine. In 1879 Aus
tria abandoned the silver standard and placed itself legally on a paper
standard, not having at the time gold resources sufficient to establish
a gold standard.
In 1892 Austria introduced a monetary reform by which the gold
krone (there are 2 kronen to the florin) was substituted as a standard
for the silver florin of prior to 1879 and for the paper florin of after
that date. The krone was to contain 338.753 milligrams of gold 0.900
fine, which made it the equivalent of $0.2026 United States currency.
The Austro-Hungarian Bank experienced difficulty in establishing
the gold standard. A financial crisis in 1893 arrested progress toward
its adoption and gold commanded a premium of from 3 to 7 per cent.
The large holdings of silver amassed during the period of the silver
standard proved to be very embarrassing to the bank. The Govern
ment bought part of the metal, recoined it, and tried to substitute
silver coins for its own 1 and 5 florin notes; however, the people pre
ferred the bank notes to the bulky silver and the metal was returned
to the bank. It was not until 1900 that the currency of Austria was
actually established on a gold basis. In that year the Austro-Hun
garian Bank began gold payments. From 1900 until the outbreak of
the World War Austrian exchange was practically at par and its paper
money was protected by strong reserves.
1942°—30-----2
10
FOREIGN CURRENCY AND EXCHANGE
PERIOD OF INFLATION
Rapid increase in note issues in Austria-Hungary after August,
1914, constitutes the dominant feature of the recent monetary his
tory. The Austro-Hungarian Bank placed its facilities for financing
at the disposal of the Government upon the outbreak of the war. On
August 4, 1914, decrees authorized the disregarding of statutes of the
bank forbidding advances to the State; this was applicable to the
Governments of both Austria and Hungary. The bank was at the
same time freed from its obligation to buy gold at parity. The pro
visions for a 40 per cent gold cover against outstanding notes were
suspended and treasury bonds permitted as cover for notes; excess
circulation caused by advances to the Government was freed from the
5 per cent tax. The bank was authorized to print small notes to take
the place of metallic money. Finally it received permission to sus
pend publishing weekly statements.
From December, 1913, to December, 1918, the note circulation of
the Austro-Hungarian Bank rose from 2,494,000,000 to 34,889,000,000
kronen, or about 1,300 per cent, and advances to the State increased
from nothing to around 80 per cent of this latter sum. Meanwhile
the gold reserve declined from 1,241,000,000 to 261,000,000 kronen,
or about 79 per cent.
Beginning with the Czechoslovak revolution in October, 1918, the
old monarchy broke up into several states. A distinction as to the
money circulation in the different sections soon followed. Early in
March, 1919, Czechoslovakia stamped with its stamp the notes of
the Austro-Hungarian Bank found within its borders; Austria followed
the same course a few days later (March 12 to 24).
In Austria only 4,687,000,000 kronen were stamped out of the
total circulation of the Austro-Hungarian Bank of 37,965,000,000
kronen at the end of March, 1919. From this time on a separate
account was kept of the new notes issued for circulation in the Aus
trian Republic, and by December, 1919, these had increased to about
12.135.000. 000 kronen.
On January 1, 1920, the Austro-Hungarian Bank was placed in
liquidation, and the Oesterreichische Geschäftsführung (Austrian
Economic Administration) took over the central banking function
for the new Republic. Under the new system expansion of currency
did not cease. Compared with an estimated circulation in 1913 of
500.000. 000 kronen for what constitutes present Austria, the circula
tion stood at 8,387,767,000,000 kronen in December, 1924.
FINANCIAL RECONSTRUCTION
Soon after the signing of the armistice it was generally recognized
in Europe that something must be done by foreign nations to place the
new Republic of Austria on its feet economically. Various schemes
were tried out, but without success. In March, 1921, the case of
Austria was referred to the financial committee of the League of Nations,
which proposed a foreign loan sufficient to cover temporarily Govern
ment deficits and to provide for stabilization of tbe currency. In
order to sell the bonds to subscribers, however, it was necessary to
secure the loan upon revenues of the Austrian State; but these
revenues were already mortgaged to meet various claims (occupation
costs, reparations, relief credits, etc.), and the release of these prior
FOREIGN CURRENCY AND EXCHANGE
11
liens had to be obtained. The nations concerned were slow in accord
ing the release.
In December, 1921, conditions became very serious and the Allied
Nations granted further credits. On October 4, 1922, the Geneva
protocols were signed.
These protocols were three in number. The first assured political
independence to Austria, a step necessary to win the confidence of
future subscribers to Austrian loans. The second fixed conditions of
the loan of 650,000,000 gold kronen which the League of Nations
estimated would be necessary to carry out the reconstruction plan.
The third protocol, signed by Chancellor Seipel alone on behalf of
Austria, gave Austria’s promises of financial and economic reform.
An important section of the third protocol provided for the creation
of the new National Bank of Austria (Oesterreichische National
Bank), to take over the Austrian section of the old Austro-Hungarian
Bank and certain assets resulting from the liquidation of the latter.
In December, 1923, Austria introduced a new coin, the silver schil
ling, divided into 100 groschen. The Austrian schilling was given a
monetary value of 10,000 of the then outstanding paper kronen, or
about $0.1407 United States currency. This was done as a matter of
convenience inasmuch as, before its introduction, 10,000 paper kronen
had come to be regarded as a unit in quoting prices. The silver
schilling was first put into circulation in June, 1924, and was well
received by the public. It proved to be so useful that, on December
20, 1924, the gold schilling was adopted as the monetary unit.
During the early years of the World War, although Austria was
already issuing large amounts of notes, and although prices were
rapidly rising, the foreign-exchange value of the krone held compara
tively firm. Until the armistice the krone never fell lower than about
$0.08 United States currency. This lag in exchange depreciation was
largely the result of the vigorous control exercised over exchange rates
during the war and of the blockade (which kept down imports and,
consequently, the demand in Austria for foreign exchange).
EXCHANGE CONTROL
Control over exchange rates was first exercised by an association
of banks in Vienna established in February, 1916. However, since all
banks were not members, the plan was not a complete success, and on
December 19, 1916, a strict supervision was established by govern
mental decree. Free commerce in foreign exchange was abolished,
and a “ Devisenzentrale ” was formed under the direction of the
Austro-Hungarian Bank. On June 18, 1918, more stringent measures
were adopted. In April, 1919, the Government reorganized the
Devisenzentrale, separating it from the Austro-Hungarian Bank,
which was about to be liquidated, and placing it under the Ministry of
Finance. As depreciation became greater the effectiveness of ex
change control became less. An illegal market sprang up, and after
October, 1920, exchange restrictions were relaxed.
In December, 1921, the paper krone having fallen rapidly (the
value of the gold krone rose from 241 paper kronen in the first week of
September to 1,502 in the last week of November), exchange restric
tions were again introduced and in July, 1922, were made more
severe. Since December, 1922, however, they have been gradually
relaxed.
12
FOREIGN CURRENCY AND EXCHANGE
As a result of exchange control there came about the creation, by
the Devisenzentrale, of two kinds of accounts in Viennese banks—
(a) ausland (foreign) kronen accounts, which could be transferred
abroad as well as used within Austria, and (b) inland (home) kronen
accounts, which could be used only within the country. This was
done to prevent transfer of kronen to parties abroad except with the
permission of the Devisenzentrale, which had charge of transfers from
“inland” to “ ausland” accounts. Also, the crediting of sums to
“ inland” accounts of foreigners was forbidden, unless (a) Austrian
stamped bank notes had been imported, (b) foreign exchange and
stocks had been sold in Austria, or (c) the Devisenzentrale had give
its approval. Since “ ausland” kronen were free from restrictions,
they were more valuable than “inland” kronen; for example, toward
the end of 1921 the value of the gold krone was 1,228 “inland”
kronen and 510 “ ausland” kronen.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 3 and 4
is: January, 1914, to February, 1917, sight drafts, New York on
Vienna; March, 1917, to July, 1919, represent a combination of cable
rates, New York on Amsterdam, and spot quotations in Amsterdam
of Austrian currency; August-December, 1919, cable transfers, New
York on Vienna; 1920, sight drafts, New York on Vienna; 1921-1929,
noon buying rates for cable transfers, New York on Vienna. Yearly
average rates from January, 1914, to October, 1918, are computed
from mid-points between the monthly high and low rates; from
November, 1918, to December, 1929, the averages are as computed
from daily rates by the Federal Reserve Board. Quarterly averages
are computed from monthly averages.
For conversion purposes, the par value ($0.2026) may be used from
1900 to 1913, since deviations from par during that period were only
slight.
T able 3.— Y early A verage E xchange R ates
S chilling 1
Year
Average
rate
$0.1967
. 1539
.1371
.0973
.1040
.0314
Year
of the
Average
rate
1920................................ $0.00497
1921................................ .00170
1922................................ .000098
1923................................ .000014
1924................................ .000014
1925................................ .1406
A ustrian K rone
Year
1926................................
1927................................
1928..............................;
1929................................
and
Average
rate
$0.1407
.1408
. 1407
. 1406
1 1914-1924, krone: 1925—January-February krone ($0.000014), March-Deceraber schilling (average for the
last 10 months); 1926-1929, schilling.
13
FOREIGN CURRENCY AND EXCHANGE
T able 4.— Q uarterly and M onthly A verage E xchange R ates
A ustrian K rone and S chilling 1
Period
1914
1915
1916
First quarter........................ $0. 2024 $0.1659 $0.1310
. 1548
. 1310
Second quarter.....................- .2028
. 1516
. 1236
Third quarter........................ (>)
.1195
.1431
Fourth quarter....................... .1806
. 1743
.1263
January.................................. .2021
.2026
.1388
. 1665
February................................
.1278
. 1569
March..................................... .2026
.1548
.1308
April........................ ............... .2027
. 1558
. 1328
May................ ........................ .2030
.1295
.1537
June........................ ............ .2028
. 1514
.1268
July........................................ .2027
.1509
. 1233
August.................................... .2035
. 1206
. 1526
September..............................
«.1887
.1510
. 1194
October...................................
. 1767
. 1430
. 1180
November.........................
.1212
.1353
December............................... .1765
1917
1918
1919
$0.1073
.0946
.0895
.0978
.1123
.1088
.1009
. 0967
.0967
.0903
. 0896
.0902
.0887
.0872
. 0939
.1122
$0.1257
.1190
.0935
.0776
.1287
. 1260
. 1225
.1253
. 1212
. 1104
.1010
.0949
. 0S47
.0972
.0721
.0634
$0. 0528
.0394
.0242
.0093
.0623
. 0526
.0436
. 03S6
.0423
.0372
.0290
.0256
.0180
. 0129
. 0086
.0065
1927
Period
1922
1923
1924
1925
1926
Second quarter.......................
Fourth quarter.......................
January...................................
February................................
March.....................................
April........................................
May................................... .
June..................................... .
July........................................
August....................................
September..............................
October........................... .......
November...............................
December................................
$0. 000252
.000104
. 000023
.000014
. 000325
.000281
.000150
.000134
.000112
.000067
.000038
.000017
.000014
. 000014
. 000014
.000014
$0.000014
.000014
. (XXX)14
.000014
.000014
.000014
. 000014
. 000014
.000014
.000014
.000014
.000014
.000014
. 000014
. 000014
.000014
.$0. 000014
.000014
. 000014
.000014
.000014
.000014
. 000014
. 000014
.000014
.000014
.000014
.000014
. 000014
. (KMX)14
. 000014
.000014
(*)
«$0.1406
. 1406
.1406
«. 000014
* .000014
«. 1406
. 1406
. 1406
.1405
. 1405
. 1406
. 1407
. 1407
. 1406
.1400
$0.1406
. 1407
. 1408
.1408
. 1406
. 1406
. 1406
. 1407
. 1407
.1408
.1408
. 1408
. 1408
. 1408
.1408
.1408
1920
of the
1921
$0.0045 $0.0026
.0067 .0025
.0054 .0012
.0032 .0005
.0047 .0026
.0038 .0025
.0049 . 0026
. 0055 .0029
.0070 .0026
.0077 .0020
.0066 .0014
.0051 .0012
.0016 .0010
.0038 .0006
. 0032 . (XKM
.0027 .0004
1928
1929
$0.1408 $0. 1408 $0. 1405
. 1407 . 1407 . 1405
. 1407 . 1409 . 1406
. 1409 . 1406 . 1406
.1408 . 1409 . 1406
. 1408 . 1408 . 1405
. 1407. . 1407 . 1405
. 1407 . 1407 . 1405
. 1407 . 1407 . 1405
. 1406 . 1407 . 1405
. 1407 . 1409 . 1405
. 1406 . 1409 . 1407
. 1408 . 1408 . 1407
. 1408 . 1407 . 1407
. 1409 . 14(X5 . 1405
. 1409 . 1406 .1406
‘1914-1924, krone; 1925—January-February krone, March-December schilling; 1926-1929, schilling.
*Indeterminable.
lNot available.
4Schilling.
‘Krone.
AZORES
The Azores are regarded as an integral part of the Republic of
Portugal. Accordingly, the monetary unit is the Portuguese escudo
(gold) of 100 centavos, the par value of which is SI.0805 United States
currency. (See Portugal, p. 139.) This coin, however, is not in cir
culation although customs duties are estimated in it. The actual cir
culating medium is the Azorean paper escudo certificate, which is
frequently designated as “milreis” ; it is also termed the “ weak”
escudo, as compared with the “strong,” or Portuguese, escudo. The
strong escudo has the value of 1% weak escudos; this ratio has been
steadily maintained during recent years. For example, the average
exchange rate of the Portuguese, or strong escudo for 1929 was
$0.04471; the value of the Azorean, or weak, escudo was $0.03726.
BELGIAN AFRICA
BELGIAN CONGO
In the Belgian Congo the monetary unit is the Belgian franc of 100
centimes, the par value of which is $0.02784 United States currency
(but see Belgium, p. 14).
14
FOREIGN CURRENCY AND EXCHANGE
According to the law of October 18, 1908, gold and silver money
current in Belgium is also current in the Belgian Congo. These coins
were gold pieces of 20 and 10 francs and silver pieces of 1, 2, and 5
francs and 50 centimes. In 1914 most of the gold and silver dis
appeared, but by January 1, 1926, gold and silver pieces had reap
peared in circulation to the extent of about 18,000,000 francs; of this
sum gold pieces comprised 700,000 francs.
The conferences at Paris of March 25, 1920, and December 9, 1921,
authorized the Belgian Government to mint for the colony pieces
(of inferior metal) of 1 franc and of 50 centimes nominal value, which
are current neither in Belgium nor in any other country formerly
belonging to the Latin Monetary Union. The total amount minted
from the date of the law to January 1, 1926, was 144,250,000 francs
and the total amount in circulation on that date was 94,800,000 francs.
In addition to the metallic currency, the principal circulating
medium is the notes of the Banque du Congo Beige (capital 20,000,000
francs), established 1909, which was given the right of note issue by
the convention of July 7, 1911. The notes of the Banque du Congo
Beige are of 1, 5, 20, 100, and 1,000 franc denominations; they totaled
107,451,000 francs on June 30, 1927.
BELGIUM
The Belgian franc (plural, francs) of 100 centimes, stabilized under
the royal decree of October 25, 1926, is the monetary unit of Belgium.
The new franc represents 46.491 milligrams of gold 0.900 fine (41.842
milligrams of fine gold), the par value of which is SO.02784 United
States currency. The same decree created the belga (plural, belgas),
the equivalent of 5 new Belgian francs; it therefore represents 232.457
milligrams of gold 0.900 fine (209.211 milligrams of fine gold), and
its par value is $0.1392 United States currency. The belga serves
merely as the basis for foreign-exchange transactions; for all domes
tic business the new franc (not the belga) is the unit employed. The
former unit was the old Belgian franc of 100 centimes, representing
322.58 milligrams of gold 0.900 fine, the par value of which was
$0.192948. There are subsidiary coins of nickel and copper in franc
and centime denominations.
On October 5, 1926, an agreement was concluded between the
National Bank of Belgium and the principal banks of issue of other
countries by the terms of which the signatory banks undertook, in
case of need, to support the Belgian currency reform by means of
credits, advances, or rediscounts. On October 23, 1926, a loan of
$100,000,000 to Belgium was arranged between the Government and
an important group of foitngn banks. The loan was successfully
floated in New York, London, Amsterdam, Zurich, and Stockholm.
Additional support (if necessary) was made available in the form of a
rediscount credit of $35,000,000, obtained by the National Bank of
Belgium from the issue banks of nine large countries.
Notes of the National Bank of Belgium (La Banque Nationale de
Belgique), the sole bank of issue, founded by the law of May 5, 1850,
are the principal circulating medium. These notes, which had been
on an inconvertible basis since August 3, 1914, were made redeemable
at sight by the decree of October 25, 1926, and required to be covered
by gold and foreign exchange. This cover is fixed legally at 40 per
cent of the demand obligations, including both notes and deposits.
FOREIGN CURRENCY AND EXCHANGE
15
Gold must form a minimum of three-fourths of the reserve against
demand obligations; the remainder may consist of foreign exchange.
BIMETALLIC COINAGE
Currency conditions in Belgium have been closely allied with those
in France since about the middle of the nineteenth century. The
monetary law of Belgium, passed on June 5, 1832, is almost a literal
reproduction of the French law of 7 Germinal an XI (1799), in which
free coinage was proclaimed and a standard unit of 5 grams of silver
0.900 fine created under the name of the franc. Article 7 of the
Belgian law provided for the coinage of gold pieces of 20 and 40 francs
at a ratio between gold and silver of 15% to 1. In 1847 Belgium
broke away from this bimetallic ratio, discarded the 20 and 40 franc
gold pieces, which were the same as the French, and began the coinage
of new gold coins of 10 and 25 francs representing 286.409 milligrams
of gold 0.900 fine per franc, or at a ratio of 15.80 to 1. At about this
time gold discoveries in California and Australia had begun to show
their effects on the value of the yellow metal and the value of the
gold in the Belgian gold coins fell below the face value of the coins
in terms of silver. In December, 1850, gold coins were at a discount
of about 2 francs per thousand, As a result, the country was flooded
by the foreign gold currencies to which it had given legal-tender
quality (British sovereigns, Netherland florins, and French francs)
and experienced difficulty in retaining its silver coins.
During 1850 legal-tender quality was withdrawn from the abovementioned coins. Silver was recognized as the sole standard, the
coinage of gold ceased, and a royal decree of August 11, 1854, demon
etized gold coins struck under the law of 1847 and provided for their
payment into the Treasury for taxes.
FORMATION OF LATIN MONETARY UNION
A monetary commission appointed in 1859 found that French gold
had driven all silver out of Belgium except some French silver which
was underweight. The law of June 4, 1861, reestablished the legaltender quality of French gold, and Belgium returned to the double
standard of 1832-1850. The chief difficulty at the time was the
great scarcity of small silver coins. Informal discussions on the sub
ject between France and Belgium in 1865 gave the former nation the
opportunity of calling the monetary conference (held November 20
to December 23, 1865) which resulted in the formation of the Latin
Monetary Union. Since the relatively high value of silver had
placed all the participants on a gold basis, the presumption was they
would remain on the gold basis.
Article 4 of the agreement provided that subsidiary coins should
have a fineness of 0.835 and should not be issued to a greater amount
than 6 francs per inhabitant. The coinage ratio of these forms of
money was 15.80 to 1. Article 3 preserved the French ratio of 15K
to 1 for the 5-franc pieces and extended to the issues of all partici
pating powers either legal-tender quality or the promise of accepta
bility in unlimited quantities by the banks of issue of all nations
members of the Union.
IG
FOREIGN CURRENCY AND EXCHANGE
DISSOLUTION OF MONETARY UNION
The Latin Monetary Union in its original form, providing for the
free coinage of both silver and gold, lasted only nine years. Restric
tions on silver coinage were introduced in 1874, and in 1878 the Union
suspended indefinitely the coinage of silver. In 1885 France and
Switzerland served notice of an amendment in the shape of a liquida
tion clause which provided tha.t at the termination of the Union each
nation should reimburse, in gold or foreign exchange, the face value
of its silver 5-franc pieces found in circulation in other member coun
tries. France at that time had a considerable amount of Belgian
5-franc pieces and the cost of reimbursement by Belgium would have
inflicted a serious burden on Belgian finances. A compromise was
finally effected between Belgium and France by which a gradual
reimbursement by Belgium was made possible.
The Latin Monetary Union was denounced by Belgium 3 in Decem
ber, 1925 (see also under Switzerland, p. 165), but it was not until
October 1, 1927, that the circulation in Belgium of French, Swiss,
Italian, and Greek silver coins (which had been accepted in public and
private dealings by virtue of the law of December 30, 1885, ratifying
the monetary convention of November 6, 1885) was declared to be
no longer acceptable by Government institutions in Belgium. Since
that date only Belgian silver coins have been accepted by the Govern
ment.
NATIONAL BANK OF BELGIUM
The National Bank of Belgium (La Banque Nationale de Bel
gique), the sole bank of issue in the Kingdom, was founded by the law
of May 5, 1850, and was given a charter for 25 years. This charter
has been prolonged by laws of May 20, 1872, and of March 26, 1900,
each time with important modifications. On October 25, 1926,
the bank was reorganized and its charter extended to December 31,
1952. The original capital was fixed at 25,000,000 francs, but in
1872 this was increased to 50,000,000 francs. Prior to the World
War the bank was required to keep a metallic reserve equal to onethird of its demand liabilities; this provision was suspended in Aug
ust, 1914. Likewise the bank could not hold in its portfolio dis
counted Treasury obligations exceeding 20,000,000 francs; this
provision was suspended in 1918, when the bank undertook to ad
vance funds for the exchange of marks left in Belgium by the German
occupying forces. (Total borrowings for this operation amounted to
5.864.000. 000 francs.) The bank may redeem its notes in either
gold or silver, and it has constantly made use of this option to redeem
in the latter metal, retaining its gold and using its foreign portfolio
to reduce exchange fluctuations. Before the war the bank had
never been compelled to suspend specie payments.
At the beginning of the war in 1914 the National Bank of Belgium
passed through a most trying period. A run on private institutions
compelled the National Bank to absorb huge quantities of commer
cial paper. The bank was besieged by holders of notes who wished
to convert them into hard cash. From July 27 to August 1, 1914,
50.000. 000 francs in silver was paid out by the bank; between June 3
1While the Latin Monetary Union, consisting of Switzerland, France, Belgium, Italy, and Greece, was
in existence, other nonmember countries adopted monetary units of like value—Spain (peseta), ltumania
(leu), Bulgaria (lev), Serbia (dinar), and Venezuela (bolivar), and, later on, Latvia (lat). Switzerland is
the only one of the original signatories now actually adhering to the par value established by the Union,
and monetary units of like value are to be found only in Spain, Latvia, Venezuela, and, among the newer
conntries, Albania and Yugoslavia.
FOREIGN CURRENCY AND EXCHANGE
17
and December 31, 1914, the silver reserve fell from 74,000,000 to
4.800.000 francs.
On August 3, 1914, after receipt of the German ultimatum, the
Belgian Government declared a moratorium on commercial bills,
and established the forced circulation and inconvertibility of bank
notes. On the same day the Government also declared a moratorium
on bank deposits, limiting withdrawals to 1,000 francs per fortnight.
Thus began Belgium’s inconvertible-paper-money experience.
The Minister of Finance on August 3, 1914, ordered the bank to
transfer its metallic reserve, unissued notes, Government securities,
and the plates for printing the notes to Antwerp. Later on they
were sent to London and deposited in the Bank of England. The
German authorities demanded the return of the metal and plates,
and when this was refused they transferred the right of issue from
the National Bank to La Société Générale (Belgium’s largest private
banking institution) on December 24, 1914. Upon the withdrawal
of the Germans the Société Générale restored the issue privilege to
the National Bank.
WAR AND POSTW AR CURRENCY
During and immediately after the war the circulation was made up
of (1) notes of the National Bank of Belgium, (2) current-account
notes (issued by the National Bank), (3) notes issued by La Société
Générale de Belgique, (4) notes issued by the communes, and (5) Ger
man marks.
Because of the removal of bank notes and plates from the vaults of
the National Bank at the outbreak of the war, the National Bank
decided on August 26, 1914, at the request of the Brussels banks,
to issue a special form of bank notes known as “compte courant”
notes. This issue was made and carried along through five months;
at its maximum it amounted to 189,310,500 francs.
The notes of La Société Générale de Belgique increased rapidly
during the war and reached a maximum of 1,898,178,000 francs on
February 1, 1919, but by December 31, 1921, had dropped to only
45.712.000 francs. Both the National Bank and La Société Générale
de Belgique retained whatever German marks they received and
regarded them as gold in the Reichsbank. La Société Générale issued
its own notes against these marks. Upon the German withdrawal
La Société Générale changed its policy, and forced into circulation
all the marks it received, thus reducing the circulation of its own
notes and avoiding loans of marks to the German Government.
The communes became practically independent when the Germans
occupied Belgium, since the Central Government had left the country.
They issued notes to relieve the monetary situation. In August,
1915, there were in circulation—chiefly in the two Provinces of Flan
ders—57,000,000 francs of communal notes, based in large part on
Government securities. The serious danger of counterfeiting and
the nonacceptability of these notes outside the issuing commune led
to their withdrawal within a year.
The fifth kind of circulation in Belgium, and probably the largest
in amount, at least at the close of the war, was the German mark
notes; on October 3, 1914, these were declared by the German Civil
Administration legal tender for all payments. The rate of exchange
with Belgian francs was arbitrarily established at 1.25 francs for 1
18
FOREIGN CURRENCY AND EXCHANGE
mark. The number of marks introduced into Belgium is variously
stated at between 4,000,000,000 and 6,000,000,000.
In order to retire these marks at the close of the war, inasmuch as
they ceased to possess legal-tender qualities in Belgium, the National
Bank in 1919 loaned the Government 5,800,000,000 francs. As
cover for these notes the Government gave the bank its bonds, taking
the marks in return.
KETIREM ENT OF MARK NOTES
Belgium has held Germany responsible for the funds necessary to
cancel the indebtedness incurred in withdrawing the mark circula
tion. By the Erzberger agreement 4,000,000,000 marks (worth
about $540,000,000 in November, 1918) were to be reimbursed. On
July 13, 1929, an internationally binding agreement on the mark
claim was signed, following negotiations between plenipotentiaries of
the Belgian and German Governments. The official statement of
the Belgian Ministry of Foreign Affairs outlining the settlement is
as follows: Germany engages to pay to Belgium the following 37
annuities, with maturities as indicated below:
T able 5.— G erman A n nuities
for
R etirem ent
Period of payment
of
M arks
Belgian
francs
in
B elgium
Reichs
marks 1 - Dollars 1
Sept. 1, 1929, to Mar. 31, 1930 .......................................................
138.769.000 16, 200,000 3.859.000
184.169.000 21, 500,000 5.122.000
222, 716,000 26,000,000 6.194.000
172.177.000 20,100,000 4, 788,000
79,664,000
9.300,000 2.215.000
Apr. 1, 1949, to Mar. 31, 1966, annually.-.....................................
5, 204, 708,000 607,600,000 144,736,000
i The figures in the official statement are given only in terms of Belgian francs.
These annuities will have the same form as those provided for in
the Young plan.
EXCHANGE TREND—NOTE CIRCULATION
During the war there were no quotations for Belgian francs, as Bel
gium was under German occupation, but by the second week in Jan
uary, 1919, pounds sterling, United States dollars, and French francs
again were quoted in Brussels. Because of the artificial support given
by the United States Government the Belgian franc was at a fairly
high level during the early part of 1919; although this support was
withdrawn in March, the fall in the Belgian franc was somewhat
retarded owing to the fact that Belgium still held in New York a con
siderable amount of dollar credit. The course of the Belgian franc
followed rather closely that of the French franc from 1919 up to the
time of stabilization.
At the end of December, 1913, the note circulation of the Bank of
Belgium was 1,067,407,000 francs; the gold reserves totaled 249,027,000 francs, and the foreign assets 167,000,000 francs. By the close of
1919 the note circulation had increased to 4,785,916,000 francs and
the gold reserves to only 266,000,000 francs; there were no foreign
assets. On September 30, 1926 (just prior to stabilization), note
circulation amounted to 9,507,000,000 francs, the gold reserves to
19
FOREIGN CURRENCY AND EXCHANGE
274,000,000 francs, and foreign assets to 30,000,000 francs. While the
note circulation has increased somewhat since that date, it has been
adequately covered by gold and foreign exchange. At the end of
December, 1929, notes outstanding totaled 13,425,000,000 francs,
gold reserves 5,875,000,000 francs, and foreign assets 2,890,000,000
francs.
BASIS OF STATISTICS
The basis for the average exchange rates given in Tables 6 and 7 is:
1915-1918, the arbitrary rate, 1 reichsmark = 1.25 Belgian francs;
January-July, 1919, sight drafts, New York on Brussels; AugustDecember, 1919, cable transfers; January, 1920, to June, 1921, sight
drafts; July, 1921, to December, 1929, cable transfers (noon buying
rates). The rate for 1927 has been computed by taking the exchange
value of the belga for November and December as equivalent to 5
Belgian francs; the franc value was approximately $0.02784 for the
year. Average rates from 1915 to 1918 are computed from monthly
averages of daily rates; from 1919 to 1929 averages are as computed
from daily rates by the Federal Reserve Board.
For conversion purposes, the par value ($0.192948) may be used
from 1900 to 1913.
T able 6.— Y early A verage E xchange R ates
Average
rate
Year
of the
Average
rate
Year
B elgian F ranc
Average
rate
Year
1914.................................. (»)
1920................................ $0.0738 1926................................
1915.................................. $0. lf>49 1921................................ .0745 1927................................
. 1454 1922................................ .0768 1928................................
1916...
1917................................. .1258 1923................................ .0522 1929................................
1918.................................. .1374 1924................................ .0464
1919.................................. . 1277 1925................................ .0476
$0.0326
. 0278
.0278
.0278
1Indeterminable.
T able 7.— Q uarterly
and
Period
M onthly A verage E xchange R ates
B elgian F ranc
1919
First quarter...............................................
«
Second quarter............................................... $0.1551
Third quarter.................................................
o.1084
Fourth quarter...............................................
January............................................................ (>)
February.........................................................
March.............................................................. o«
April............................................................. .1587
May................................................................. . 1548
June................................................................. .1517
July................................................................. .1397
August..............................................-.......... o
September....................................................... .1247
October............................................................ .1175
November....................................................... .1115
December........................................................ .0961
1Not available.
1920
1921
1922
1923
$0. 0772 $0.0721 $0.0819 $0.0565
.0794
.0837
. 0738
. 0563
.0782
.0745
.0753
.0478
.0662
.0651
.0720
.0480
.0677
.0781
.0848
.0608
.0723
.0750
. 0832
. 0640
.0746
. 0735
. 0843
. 0548
.0667
.0744
. 0852
.0576
.0718
. 0836
. 0836
. 0572
.0830
.0803
.0822
.0540
.0864
.0764
.0781
.0488
.0767
.0753
.0754
.0455
.0716
.0717
.0723
. 0490
.0690
.0713
.0686
.0509
. 0694
.0637
. 0637
.0474
.0625
.0754
.0664
.0458
*Indeterminable.
of the
1924
$0.0388
. 0488
.0484
.0486
.0418
. 0384
.0386
. 0523
.0486
.0456
.0456
.0502
.0494
.0480
.0483
.0496
20
FOREIGN CURRENCY AND EXCHANGE
T able 7.— Q uarterly
Period
and M onthly A verage E xchange
B elgian F ranc — Continued
1925
1926
1927
R ates
1928
First quarter..................................................................... $0.0507 $0.0444 $0. 0278 $0.0279
.0492
. 0325
.0278
. 0279
Second quarter.................................................................
. 0263
.0278
.0278
Third quarter.................................................................. .0452
Fourth quarter................................................................. .0453
.0278
.0279
.0278
.0454
.0278
.0279
January.............................................................................
.0506
.0454
. 0278
.0508
.0278
February...........................................................................
March.................................................... .............. ........... .0507
.0423
.0278
. 0279
. 0367
. 0278
April........................ ............................................. .......... . 0505
.0279
.0312
.0278
May.................................................................................. . 0502
.0279
.0470
.0296
.0278
.0279
July............................ ..................................................... . 0462
.0242
.0278
.0279
. 0453
August............................................................................
.0275
. 0278
. 0278
.0272
September.........................................................................
. 0440
.0278
.0278
October............................................................................. .0453
.0278
.0278
.0278
.0453
.0278
November................................................................ ......
.0279
.0278
.0453
December........................................................................
.0278
.0280
.0278
of the
1929
$0.0278
.0278
.0278
.0278
.0278
.0278
.0278
. 0278
.0278
.0278
.0278
.0278
.0278
.0278
.0278
.0278
BOLIVIA
Bolivia’s monetary unit is the boliviano (plural, bolivianos) of 100
centavos, representing 610.19 milligrams of gold 0.900 fine (549.17
milligrams of fine gold), the par value of which is $0.364986 United
States currency. The new legal parity of the boliviano was estab
lished by the law of July 11, 1928, which law provided for the minting
of gold coins of 10 and 20 bolivianos, the former to be called a “ boli
var” and the latter a “ double bolivar.” (This bolivar is not to be
confused with the Venezuelan coin of that name.) British and Peru
vian gold coins are legal tender at the rate of 13K to 1. Gold coins
of the United States circulate at the ratio of 2.7398 bolivianos to the
dollar.
The principal circulating medium, apart from the metallic currency
(gold, silver, and copper-nickel coins in boliviano and centavo de
nominations), consists of the notes of the Banco de la Nacion Boliviana, which institution has the sole right of issue. The law pro
vides that these notes are convertible on demand into gold or foreign
exchange.
ADOPTION OF GOLD STANDARD
From 1900 to 1904 Bolivia was on the silver basis, the unit being
the silver boliviano (25 grams or 385.81 grains of silver 0.900 fine).
Soon after 1900, partly through the rise in tin production, the country
entered upon practically its first sustained period of prosperity.
To prepare the way for the gold standard, a law of November 30,
1904, gave British pounds and Peruvian libras (pounds) legal-tender
value at the fixed ratio of 12.50 bolivianos, and provided that 50 per
cent of the customs duties were to be paid in gold. The exportation
of silver was declared duty free and it* importation was prohibited.
This measure had the desired effect of stabilizing exchange.
By the law of December 31, 1908, British and Peruvian gold coins
were given unlimited and exclusive legal-tender power. The Govern
ment bound itself to purchase and retire all the old silver coins still
in the country; the banks were obligated to convert their outstanding
notes into gold on demand at the legal ratio of 12.50 bolivianos
21
FOREIGN CURRENCY AND EXCHANGE
to the pound sterling; and the further coinage of silver was to be
limited to subsidiary pieces of 50 and 20 centavos.
BANK OF THE BOLIVIAN NATION
The Banco de la Nacion Boliviana was established by the law of
January 7,1911. By a law of January 1, 1914, this bank was accorded
the sole right of note issue after December 31, 1924, the other banks
(the number of which had been reduced from six in 1910 to three in
1922, that is, Banco Francisco Argandona, Banco Nacional, and
Banco Mercantil) being required to gradually reduce their outstanding
notes. On June 30, 1928, the note circulation of the Banco de la
Nacion Boliviana stood at 38,981,000 bolivianos; the reserve con
sisted of gold to the amount of 17,788,000 bolivianos and foreign
exchange 6,253,000 bolivianos.
The Banco de la Nacion Boliviana was reorganized as a central
bank by the law of July 20, 1928, but on July 1, 1929, was superseded
by the Banco Central de Bolivia as the bank of issue.
BASIS OF STATISTICS
The basis for the average exchange rates given in Tables 8 and 9 is:
1904-1917, 90-day sight drafts, La Paz on London (pence converted;
see United Kingdom, p. 175); 1918-1925, sight drafts, La Paz on New
York; 1926-1929, cable transfers, New York on La Paz. Kates from
1904 to 1908 represent mid-points between the yearly high and low
rate; from 1909 to 1925, yearly averages are computed from monthly
averages; from 1926 to 1929, averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are com
puted from monthly averages.
T able 8.— Y early A verage E xchange R ates
Average
rate
1904.................................. $0. 3955
.4031
1905...
.4031
1906........
1907
.3980
1908 _
.3600
1909
.3782
1910
.3923
1911..
.3883
1912................................... .3752
1 ear
Year
1913................................
1914...............................
1915................................
1916.
1917...
1918...
1919__
1920__
1921................................
T able 9.— Q uarterly
and
Period
1914
Average
rate
$0. 3690
. 3210
.2985
.3711
.3781
.4115
.3484
.3174
.2334
of the
B oliviano
Year
1922................................
1923................................
1924................................
1925................................
1926................................
1927................................
1928................................
1929....................... ; ....
M onthly A verage E xchange R ates
B oliviano
1915
1916
1917
1918
1919
1920
A verage
rate
$0. 2770
.3086
.3086
.3439
. 3409
.3439
.3539
.3623
of the
1921
3834 $0. 3764 $0. 4149 $0. 3765 $0.3308 $0.2708
First quarter............................ $0. 4514 $0. 2970 $0..3842
. 3764 .4114 .3497 . 3312 .2407
Second quarter........ ............... . 4463 .3003
.
3152
.
3780 .3780 . 4225 .3394 .3174 . 2135
.4203
Third quarter...........................
Fourth quarter.......................- .3863 .3292 .3768 .4102 . 3974 .3316 .2776 .2179
.3693 .3764 .4149 .3790 .3086 .2825
January.................................... . 4514 .2970
. 4514 .2970 .3892 .3764 .4167 . 3802 . 3367 .2755
February.................................
.3704 .3472 . 2544
March...................................... .4514 .2970 .3916 . 3764 .4132
.4514 .3007 .3916 .3764 .4079 .3448 .3390 . 2481
.4115 .3509 .3311 .2445
May....................................... .4453 .3007 .3805 .3764
June....................................... .4422 .2995 .3805 .3764 .4149 .3534 .3236 .2294
July........................................... .4392 .3069 . 3805 .3764 .4202 .3460 .3280 .2193
4392 .3168 . 3768 .3764 .4219 .3390 .3106 .2130
August...................................... ..4026
. 3768 .3813 . 4255 .3333 . 3135 .2083
September. .............................. .4087 .3218
. 3267 .3768 . 3888 .4167 .3390 . 2817 . 2045
October....................................
November................................ .3843 .3292 .3768 .4061 . 3952 . 3333 .2732 .2146
December................................ .3660 .3316 .3768 .4358 .3802 .3226 .2778 .2347
22
FOREIGN CURRENCY AND EXCHANGE
T able 9.— Q uarterly
and
Period
1922
M onthly A verage E xchange R ates
B o l iv ia n o — Continued
1923
1924
1925
1920
1927
1928
of t h e
1929
First quarter.............................. $0. 2471 $0. 3227 $0. 303S $0. 3378 $0. 3450 $0. 3390 $0. 3480 $0. 3644
Second quarter.......................... . 2(142 .3100 .2953 . 3432 .3437 .3414 . 3480 .3650
Third quarter............................ .2901 .3109 .3145 .3352 .3377 . 3472 .3553 .3617
Fourth quarter.......................... .3131 . 2959 .3101 .3461 .3375 .3480 .3048 .3600
January....................................... .2439 .3175 .2900 .3378 . 3450 .3375 .3480 . 3033
February.................................... .2500 .3195 . 3100 .3378 . 3450 .3394 .3480 . 3050
March......................................... . 2475 .3311 .3049 .3378 .3450 . 3400 .3480 .3650
April............................................ . 2494 .3145 .2907 .3401 . 3450 .3400 . 3480 . 3650
May............................................ . 2557 .3086 .2932 . 3435 . 3450 .3400 .3480 .3650
June............................................ .2874 .3080 .2900 .3400 .3410 .3442 .3480 .3650
July............................................. .2941 .3100 .3100 . 3490 .3381 . 3400 . 3480 . 3650
August...................................... .2976 .3115 .3205 . 3490 .3375 . 3475 . 3530 .3000
September.................................. . 2907 .3100 .3125 . 3470 . 3375 . 3480 . 3049 .3000
October....................................... . 2900 .2924 . 3090 .3448 . 3375 .3480 .3649 .3000
November..............................
.3257 . 2941 . 3300 . 3466 .3375 . 3480 . 3049 .3000
December................................... .3175 .3012 .3086 .3470 .3375 .3480 .3647 .3000
BRAZIL
Theoretically the cruzeiro (of 100 centesimos), a gold coin repre
senting 2 grams of gold 0.900 fine (1.8 grams of fine gold), the par
value of which is $1.1963 United States currency, is the monetary
unit of Brazil under the law of December 18, 1926, which law provided
also that all the paper currency in circulation “ be convertible into
gold on the basis of 200 milligrams per milreis.” This new system,
however, has not been fully established and the milreis is still the
money of account. The milreis is written 1$000, and the conto
(1,000 milreis) is written 1,000$000.4 The Stabilization Bureau (Caixa
de Estabilisayao) was established under the above-mentioned law
for the purpose of effecting the stabilization of the currency.
At the end of December, 1929, Treasury notes totaled 1,952,000,000
milreis, Bank of Brazil notes 592,000,000 milreis, and Stabilization
Bureau notes 851,000,000 milreis. On the same date gold reserves
of the Bank of Brazil against note circulation amounted to £10,000,000
and those of the Stabilization Bureau to 851,000,000 milreis. (Since
its foundation tie reserves of the Stabilization Bureau balance with
its outstanding notes.)
ADOPTION OF GOLD STANDARD
Brazil adopted the gold standard in 1849; the milreis represented
821.778 milligrams of fine gold, and its par value was 26.934d., or
$0.5463 United States currency. The gold milreis up to the present
time has been exclusively a unit of account employed only in certain
official transactions, such as the payment of a portion of the import
duties. Payments nominally in gold milreis are made actually in
paper milreis, at a premium depending upon the exchange value of
the paper milreis.
Decree No. 18257 of May 23,1928 (published in the Diario Official of
July 6,1928), fixed the value of the gold milreis in relation to the paper
milreis for the payment of public dues. In accordance with the terms
of this decree calculations for the conversion of gold milreis in connec4Sums less than 1 milreis, for example, one-half milreis, are written either 500 reis or $500.
FOREIGN CURRENCY AND EXCHANGE
23
tion with the collection and repayment of duties, taxes, or any other
collections or payments in gold by Brazilian public administrative
branches will be made on the basis of 4.567 paper milreis to 1 gold
milreis.
PAPER CURRENCY
While a certain amount of foreign gold is in circulation, there are
no Brazilian gold coins. The circulating medium, since 1900, has
consisted of various paper currencies, which, with the exception of
Stabilization Bureau notes, are not redeemable in gold on demand
and have no legal or nominal par. The greater part of this currency
was issued by the Government and is known as treasury notes and
Conversion Office notes; the balance consists of notes of the Bank of
Brazil (Banco do Brasil) and the Stabilization Bureau. All kinds of
paper money are used indiscriminately.
Treasury notes consist of the balance of the old fiduciary circulation
which had its beginning in 1833, and, in addition, of now issues which
were authorized from 1914 to 1919. They also include notes is
sued by the rediscount department of the Bank of Brazil during
1921-1923, responsibility for which w7as subsequently assumed by the
Government.
The notes of the Conversion Office (Caixa de Conversao), which
was established in 1906, were known as convertible bills, to dis
tinguish them from the outstanding inconvertible Treasury notes
issued by the Government. The Conversion Office originally issued
paper money for deposits of gold at the ratio of 15d. per milreis
and redeemed them on demand. In 1910 the rate of conversion
was changed to 16d. The panic of 1914 brought a demand for the
redemption of convertible notes in gold and caused a diminution
of both gold and convertible notes in circulation until the Conversion
Office was closed by a decree of December, 1914. Thereafter, the
convertible notes still outstanding, covered by gold at the rate of
16d. per milreis, were held by the banks or hoarded by the people.
However, the Treasury gradually accumulated the majority of
them. A small quantity is still outstanding.
In 1921 an autonomous “rediscount department” was added to
the Banco do Brasil for the express purpose of furnishing rediscount
facilities and thus ameliorating the currency shortage, especially
troublesome at that time. The profits of this department were to
be shared equally by the Government and the bank. Under the
law, circulating notes might be issued by the rediscount department
against commercial paper on a self-liquidating basis. The original
issue was limited to 100,000,000 milreis, but w'as subject to expan
sion to 400,000,000 milreis conditioned upon approval by the Presi
dent of the Kepublic. The rediscount department later came to
be utilized chiefly as a means for turning into currency the Govern
ment notes or drafts representing operations in coffee valorization.
The maximum amount was soon issued, but the self-liquidation
theory was abandoned, with the result that these notes have remained
in circulation.
BANK OF BRAZIL
A contract between the Government and the Banco do Brasil
signed on May 2, 1923, gave the bank the sole right of note issue,
the notes to be secured by gold and commercial paper in the pro
portion of one-third and two-thirds, respectively. The Government
24
FOREIGN CURRENCY AND EXCHANGE
owns a 51 per cent interest in the bank in nontransferable shares.
The contract was to provide means for a steady reduction and the
ultimate withdrawal of the Treasury notes. During the term of
the agreement (10 years) the public Treasury is deprived of the
power of issuing notes. It was stipulated that when the reserve
fund of the Banco do Brasil reached 100,000,000 milreis a special
guaranty and conversion fund for the redemption of the Treasury
notes was to be formed from-the following sources: (1) The profits
of the bank, after setting aside 10 per cent thereof for the reserve
fund and 20 per cent for dividends; (2) the dividends paid on the
Government’s shares in the bank; (3) appropriations for the purpose
made in the national budget, in amounts at least equal to the profits
of the bank. In 1924 the reserve fund reached 100,000,000 milreis
and the guaranty and conversion fund was put in operation.
In settlement of part of the Government’s debt to the bank,
the latter received the gold stock of £10,000,000 held as a general
reserve against the paper money. This gold may not be exported
from the country nor used otherwise than as a reserve against the
paper currency. The gold was to have a hypothetical value of 12d.
per milreis in computing its status as a reserve, and, in general,
the aim was to attain eventually the exchange value of 12d. for the
milreis.
The note issue of the Bank of Brazil was reduced early in 1924,
but internal political disorders in the middle of the year brought
about conditions that required expansion of the bank’s note issue.
An emergency decree in September authorized the bank to issue an
additional 100,000,000 milreis. The net result for 1924 was an in
crease in the circulation of paper money despite the retirement of a
portion of the Treasury notes. In the first part of 1925 the bank
retired its extraordinary issues and brought its circulation down to
592,000,000 milreis, at which figure it has remained. Treasury
notes were reduced from 2,260,000,000 milreis in December, 1923,
to 1,952,000,000 milreis at the close of 1929.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 10
and 11 is: 1900-1909, 90-day drafts on London in Rio de Janeiro
(pence converted at $0.02028); 1910-1918, sight drafts, Rio de
Janeiro on New York; 1919-1929, noon buying rates for cable trans
fers, New York on Rio de Janeiro. The averages from 1900 to 1909
are the mean yearly averages as quoted in L’Annuaire Statistique du
Bresil, 1908-1912, Volume II; from 1910 to 1918, the averages are
yearly average rates; from 1919 to 1929, the averages are as com
puted from daily rates by the Federal Reserve Board. Quarterly
averages are computed from monthly averages.
25
FOREIGN CURRENCY AND EXCHANGE
T able 10.— Y early A verage E xchange R ates
Average
rate
Year
of the
Average
rate
Year
B razilian M ilreis
Average
rate
Year
1900 ................................ $0.1927 1910................................ $0.3247 1920................................
.2307 1911................................ .3228 1921................................
1901................................
.2427 1912................................ .3236 1922................................
.2434 1913................................ .3216 1923................................
1903 ................................
1904............................... . .2478 1914..................... .......... .2926 1924...............................
.3223 1915................................ .2467 1925................................
1905
.3280 1916................................ .2351 1926................................
1906...
.2501 1927................................
1907................................ - .3105 1917................ ...............
.3074 1918................................ .2534 1928................................
1908 .
.3071 1919................................ .2674 1929................................
1909...
T able 11.— Q uarterly
Period
and
M onthly A verage E xchange R ates
B razilian M ilreis
1919
1920
1921
1922
1923
$0. 2595 $0. 2674 $0.1529 $0.1317 $0. 1130
. 1368
. 2725
.2609
. 1047
. 1312
.0995
.2623
.2060
. 1153
. 1316
.0919
. 1645
. 1266
.1175
.2735
. 1258
.2753
. 1514
.1138
.2580
. 1325
. 1143
.2619
.1560
. 2596
1513
.
1367
. 1109
.
2650
.2610
.2684
. 1402
. 1357
. 1064
. 2620
. 1035
.2633
.1370
. 1374
. 2769
. 1043
.1165
. 1372
.2787
.2510
. 1355
.2280
. 1045
.1037
July. ............................................................... . 2732
. 0975
.2600
.2072
.1176
. 1338
.1237
. 0973
.2537
. 1829
. 1254
.0948
.1271
. 1135
. 1751
.2578
. 1195
. 0876
. 1260
.2752
. 1660
. 1267
. 1105
.0934
.2876
. 1525
Period
1925
1926
1927
1928
$0.1134 $0.1470 $0. 1179 $0. 1201
.1180
. 1474
. 1202
. 1061
. 1182
.1194
. 1537
. 1234
.1194
. 1193
. 1293
.1453
. 1484
.1168
. 1200
.1172
.1184
. 1201
.1127
.1478
.1184
. 1449
. 1203
.1104
. 1180
.1203
. 1401
. 1063
. 1203
. 1468
. 1181
. 1031
.1552
. 1180
.1199
. 1089
.1179
July............................ .......................................... ........... . 1136
.1194
. 1556
. 1537
. 1182
. 1194
. 1213
. 1186
. 1193
. 1352 .1519
. 1398
. 1192
. 1195
. 1481
.1297
.1193
. 1194
. 1461
.1185
.1197
.1189
. 1417
$0.2251
.1312
. 1295
.1023
.1094
. 1220
. 1444
.1184
. 1197
.1181
of th e
1924
$0.1143
. 1101
. 09*98
. 1140
. 1085
.1198
. 1145
.1123
.1105
.1075
.0992
. 0992
. 1009
.1122
.1147
. 1151
1929
$0.1189
.1185
.1186
.1164
.1192
.1192
.1182
.1183
. 1186
.1186
.1186
. 1186
.1186
.1187
.1175
.1129
BRITISH AFRICA
ANGLO-EGYPTIAN SUDAN
In the Anglo-Egypt.ian Sudan the monetary unit is the Egyptian
pound (gold) of 100 piastres or 1,000 millièmes, the gold mint par of
which is $4.9431 United States currency. (See Egypt, p. 65, for
exchange rates, etc.)
1942°— 30------3
26
FOREIGN CURRENCY AND EXCHANGE
BRITISH EAST AFRICA
KENYA, UGANDA, TANGANYIKA, AND ZANZIBAR
Kenya Colony, Uganda Protectorate, and Tanganyika Territory: The
currency is controlled by the East African Currency Board, which
maintains a stable rate of sterling exchange. The standard coin is
the East African shilling, introduced as from January 1, 1922, which
is legal tender to any amount.. (Par, $0.2433.) Other coins are silver
50-cent and bronze 10-cent, 5-cent, and 1-cent pieces. Paper cur
rency consists of notes of 5, 10, 20, 100, 200, and 1,000 shilling denom
inations. (For British currency, see United Kingdom, p. 170.)
Zanzibar: the monetary unit is the British Indian rupee of 16 annas,
the par value of which is $0,365 United States currency. (See
British India, pp. 34-35, for exchange rates, etc.) The rupee is legal
tender to any amount. The circulating media consist of rupees and
subsidiary coins and Protectorate Government currency notes; the
amount of the latter in circulation at the end of 1927 was 2,405,000
rupees. Accounts are kept by the Government in rupees and cents;
by the public, in rupees, annas, and pice.
BRITISH W EST AFRICA
NIGERIA, GAMBIA, GOLD COAST, AND SIERRA LEONE
In addition to British currency, a special silver coinage for British
West Africa was introduced in 1913, the denominations being 2
shillings, 1 shilling, sixpence, and threepence, of the same weight
and fineness as the corresponding coins of the United Kingdom.
The new currency, with adequate reserves in London, in gold and
securities, is under the control of the West African Currency Board.
A nickel coinage (penny, halfpenny, and tenth of a penny) is also in
use. In 1916 local currency notes of 1 and 5 pounds and 1, 2, and 10
shillings were introduced, and in 1920 an alloy coinage of the same
denominations as the silver coinage was added.
Exchange is quoted on London, there being a small spread. (See
United Kingdom, pp. 173-175, for exchange rates, etc.) The Bank of
British West Africa (Ltd.)45 and Barclay’s (Dominion, Colonial, and
Overseas) Bank (Ltd.)6 have branches in these territories.
NYASALAND PROTECTORATE
Throughout the Nyasaland Protectorate the monetary unit is the
British pound sterling, the par value of which is $4.8665 United States
currency. (See United Kingdom, pp. 173-175, for exchange rates, etc.)
The currency is the same as that in England; exchange is quoted on
London, there being only a small spread. There is no local paper
money in circulation. According to official statistics, the amount of
coin in circulation at the end of 1927 was between £250,000 and
£300,000. The banks are Barclay’s (Dominion, Colonial, and
Overseas) Bank (Ltd.) and Standard Bank of South Africa (Ltd.).7
4 The Bank of British West Africa (Ltd.), head office in London, was established in March, 1894, to
acquire the business carried on at Lagos by the African Banking Corporation (Ltd.), and Messrs. Elder,
Dempster <fc Co. From July 1, 1912* the business of the Bank of Nigeria (Ltd.) was taken over.
*»Barclay's (Dominion, Colonial, and Overseas) Bank (Ltd.), head office in London, was established by
royal charter June 1, 1886; reincorporated under the same title with wider powers and new constitution
by the colonial bank act, 1925; name changed September 15, 1925, upon acquisition, as from July l, 1925, of
undertakings of the Anglo-Egyptian Bank (Ltd.) and the National Bank of South Africa (Ltd.).
7 Standard Bank of South Africa (Ltd.), head office in London, was established in 1862; in November,
1920, absorbed the African Banking Corporation (Ltd.).
FOREIGN CURRENCY AND EXCHANGE
27
RHODESIA (NORTHERN AND SOUTHERN)
In both Northern and Southern Rhodesia the monetary unit is
the British pound sterling, par $4.8665. (See United Kingdom, p. 174,
for exchange rates, etc.)
Monetary conditions are the same as in the Union of South Africa.
SOMALILAND PROTECTORATE
In the Somaliland Protectorate the monetary unit is the Indian
rupee of 16 annas, the present par value of which is $0,365 United
States currency. (See British India, pp. 34-35, for exchange rates,
etc.) Government of India currency notes also circulate.
UNION OF SOUTH AFRICA
Enactments of the Union of South Africa in 1922 provided for the
issue of a Union coinage with denominations identical in name with
thcs«e of Great Britain. (See p. 170.) The unit is the South African
pound, containing 7.9881 grams of gold 0.916% fine, the par value of
which is $4.8665 United States currency. The minor metallic cur
rency is practically the same as that of Great Britain in weight and
fineness.
Establishment of a branch of the Royal Mint at Pretoria was author
ized by Union Act No. 45 of 1919. A royal proclamation of December
14, 1922, declared the Pretoria Mint to be a branch of the Royal
Mint, London, for the purpose of minting British sovereigns and
half-sovereigns. Act No. 31 of 1922 determines the powers of the
Ministry of Finance in respect to the coinage of South African silver
and bronze pieces and of the governor general in respect to dimen
sions and designs, etc.; provision is also made for the purchase of
metals for coinage. The sovereign and half-sovereign coined at
the Pretoria Mint bear on the reverse side “ S. A.” as a distinguishing
mark. The silver coins are of a fineness of 0.800; the bronze coins
are a mixture of copper, tin, and zinc.
Some gold is in circulation. In addition to British gold coins, gold
sovereigns issued by the Pretoria Mint from the time of its opening to
the end of 1927 amounted to £32,762,000, of which £15,943,000 was
issued during 1927. Half-sovereigns began to be issued in 1925;
at the end of 1927, the total amount issued was £876,000.
GOLD CERTIFICATES--- RESERVE BANK NOTES
The currency and banking act of 1920 gave authority for the Treas
ury to receive deposits of gold coin and bullion to the value of not
less than 10 shillings, and to issue therefor certificates, known as
gold certificates, legal tender for the payment of any amount up to
their face value. Whenever the market price of gold in the Union
exceeds £3 17s. 10%d. per standard ounce (0.916% fine), a proclama
tion may be issued suspending the redemption of gold certificates;
otherwise gold certificates are redeemable at the Treasury in gold
specie on demand.
In line with this authorization, redemption in gold of these certifi
cates wras suspended by Proclamation No. 220 of December 15, 1920,
with a stipulation that gold certificates should be convertible into
gold after June 30, 1923; but on the recommendation of the currency
28
FOREIGN CURRENCY AND EXCHANGE
conference of 1921 the period of inconvertibility was extended by an
amending act (No. 22 of 1923) to June 30, 1925. Owing, however, to
the return of the United Kingdom to the gold standard at the end of
April, 1925, gold certificates were proclaimed convertible into gold on
May 11, 1925 (Proclamation No. 110). They are now being with
drawn and cancelled.
The currency and banking act of 1920 as amended by Act No. 22
of 1923 provided for the establishment at Pretoria of the South African
Reserve Bank, capitalized at £1,000,000. The bank has the sole
right of note issue in the Union for 25 years. Its notes, which are
legal tender except when tendered by the bank itself, are in denomi
nations of 1, 5, 20, and 100 pounds. The note issue is secured to
an amount of not less than 40 per cent in gold, and the remainder in
commercial paper or trade bills, or, until June 30, 1928, in British or
Union Government Treasury bills, which must not exceed 35 per
cent of the total note issue nor 140 per cent of the commercial paper
or trade bills held by the bank. It is also secured by a first charge on
all the assets of the bank. The notes are now convertible into gold
on demand.
BASIS OF STATISTICS
The table of exchange rates and explanatory introductory note
below have been taken from the Official Yearbook of the Union of
South Africa, 1927-28. (For exchange rates of the British pound
sterling in terms of United States dollars see United Kingdom, p. 174.)
The average exchange rates, Soutli Africa on London, for eacli year for the
last 19 years are published below. The calculations have been confined solely
to the telegraph transfer, sight, and 90 days’ sight buying and selling rates. The
column headed “ Mean value of £100 sterling” has been calculated by taking the
mean point between the buying and selling T. T. rates and represents the average
price of sterling in terms of South African money. The column headed “Average
discount rate per annum” is calculated from the difference between the 90 days’
sight and the T. T. buying rates, the period allowed for sight being taken as 20
days; it represents the average annual discount rate charged by the banks on
money advanced on exporters' bills and excludes charges for exchange accom
modation.
During the 19 years, the highest mean value of sterling was £105; this took
place between November 30, 1920, and January 5, 1921; and the lowest, £92%
between May 1 and June 15, 1920.
The highest discount rate on 90 days’ sight was 11.614 per cent per annum,
between August 4, 1920, and August 7, 1921; and the lowest, 3.94 per cent per
annum, between March 1, 1911, and October 6, 1913, and again from February 16
to August 3, 1914.
The greatest margin between the T. T. buying and selling rates was 2% per
cent, between February 12 and March 7, 1920, and the smallest, % per cent,
between March 11 and April 25, 1910.
FOREIGN CURRENCY AND EXCHANGE
29
T able 12.— Average A nnual E xchange R ates , S outh A frica on L ondon ,
and P rice o f £100 in L ondon in T erms of S outh A frican M oney , 1910
to 1928
Buying rates
Year
Tele
graph
transfers
1910.............................. 99.626
1911.............................. 99. 562
1912............................. 99. 562
1913........................
99. 562
1914............................. 99.585
1915.............................. 99. 625
1910............................. 99. 625
1917.............. .............. 99. 625
1918.............................. 99. 625
1919............................ 99. 591
1920.............................. 98.070
1921.............................. 99. 762
1922.............................. 98. 296
1923.............................. 97.866
1924................... ......... 97.120
1925..............
99. 392
1926.............................. 100. 219
1927..................... ........ 100. 212
1928.......................... 100.238
1Not quoted after Auk. 3, 1914.
*Not quoted.
Selling rates
Tele
90 days’ graph
sight transfers
Sight
99.422
99.375
99.375
99.375
99.412
99.500
99.500
99.290
99. 250
99.374
97.515
99. 112
97.849
97.491
96. 745
99.019
99. 907
99.899
99.925
98.233
98. 324
98.375
98.316
98.0.53
97.750
97.750
97.540
97.500
97.605
9-1.978
96.512
95.840
95.874
95.182
97.462
98. 532
98. 524
98. 550
100.104
100.063
100.063
100.063
100. 248
100.382
100.313
100.313
100.313
100. 271
99.047
100. 762
99. 214
98. 741
97. 995
100.009
100.719
100.712
100. 738
Sight
Average
Mean discount
value of rate per
90 days’ sterling annum
sight
(per cent)
100.025 99.035 99.865
100.000 99.000 99.812
100.000 99.000 99.812
100.000 99.000 99.812
100.157 199.000 99.916
100.003
100. 257
99. 969
100.187
100.187
99. 969
100.187
99. 969
99. 931
100.154
(*)
98. 835 97. 672 98.558
100. 512 99.387 100. 262
98. 964 98. 084 98. 755
98. 521 97. 919 98.303
97. 807 97.432 97. 557
99. 827 99. 451 99. 700
100. 532 100. 157 100. 469
100. 524 100.149 100. 462
100.550 100.175 100. 488
1
4.62
4.11
3.94
4.12
5.08
6.22
6.22
6.92
7.05
6.59
10. »1
10. 78
8.15
6.61
6.43
6.40
5. 60
6.60
6.00
BRITISH HONDURAS
British Honduras employs the United States gold dollar as its
monetary unit. The British pound sterling and half-pound are legal
tender. Coins in circulation are the United States (juarter-eagle,
half-eagle, eagle, and double eagle; British pound sterling and halfpound; local subsidiary coins of silver, nickel, and mixed metal in
cent denominations.
In addition to the metallic currency, the circulating medium con
sists of currency notes issued by the central government. The face
value of Government currency notes in circulation at the end of
March, 1926, was $407,000; on the same date the currency reserve
amounted to $288,400—$153,500 in gold and $134,900 in British
and colonial investments.
The principal banking institution is the Royal Bank of Canada.
Financial accounts and trade statistics are kept in dollars and cents.
BRITISH INDIA
In British India the monetary unit is the silver rupee (of 16 annas),
containing 11.6638 grams (180 grains) of silver 0.916% fine. On
August 4, 1926, a royal commission appointed to study Indian cur
rency and finance recommended that the rupee be stabilized at Is. 6d.
sterling, or about $0.36499 United States currency, and in March,
1927, the Indian currency act made this stabilization statutory.
The circulating medium now consists of silver rupees and fractional
parts of the rupee—anna (Ke rupee), pice (b anna), and pie (%2anna)—
and paper notes which are mutually convertible. Notes of 1, 2%, 5,
10, 50, and 100 rupees are legal tender throughout British India.
The total value of notes in circulation on August 22, 1929, including
notes held in Government treasuries and the head office of the Impe-
30
FOREIGN CURRENCY AND EXCHANGE
rial Bank of India, was 1,859,257,000 rupees.8 The reserve of the
same date was made up of:
Coin and bullion:
Rupees
Silver coin............ .........
1,059,700,000
Gold bullion.............................................................. 322, 165, 000
Silver bullion under coinage________________
44, 613, 000
Securities (purchase price):
In In d ia .....................=............... ........................... 412,353,000
In England------------20,426,000
Total........... .............. ............................................ 1, 859, 257, 000
THE GOLD-STANDARD RESERVE
Under Act XVII, approved by the Governor General in Council on
August 17, 1835, to become effective on September 1, 1835, the silver
rupee (gross weight 1 tola, or 11.6638 grams [180 grains troy]), con
taining 165 grains troy (10.6918 grams) of fine silver and 15 grains
troy of alloy, was made the sole standard of value throughout British
India. From time to time during the succeeding 40 years efforts were
made to introduce gold into circulation, but with little result.
The period from 1874 to 1893 saw the agitation for bimetallism.
The final outcome was the legislation of 1893, which provided for the
closing of the Indian mints to the free coinage of silver, the Govern
ment retaining power to coin silver on its own account.
After the closing of the mints, rupee exchange advanced from about
14%d. to 16d., a speculative rate that could not be maintained, and
rupee exchange continued to fall throughout 1894 also, but recovered
in 1895 and again reached 16d. in 1898. Meanwhile suggestions were
being made for the establishment of a gold standard without a gold
currency.
On July 25, 1899, five recommendations of the commission sent out
by England under the chairmanship of Sir Henry Fowler were ac
cepted. The main features were that the British sovereign should be
legal tender and a current coin in India; that while Indian mints
should remain closed to the unrestricted coinage of silver, they should
be opened to the unrestricted coinage of gold; that the exchange value
of the rupee should be 16d.; that there be no legal obligation to give
gold for rupees; that while the Government should continue to give
rupees for gold, fresh rupees should not be coined until an adequate
reserve of gold had been built up; that any profit on the coinage of
rupees should be kept in gold as a special reserve, to be called the goldstandard reserve.
Thus the gold-standard reserve was established; but, instead of
holding the reserve in gold, it was invested in British securities, and
a part was kept in silver to facilitate the coining of rupees.
PART PLAYED BY “ COUNCIL BILLS ” AND “ REVERSE COUNCILS”
The cost in England of the Government of India, which at that
time amounted to about £17,000,000 a year, was met by the sale of
“ council bills” ; that is, the British Secretary of State for India in
London, acting on behalf of the Government of India, sold bills
(drafts) against gold deposited in the Bank of England. These bills
of exchange when presented in India were cashed at the Government*
* In this connection it is well to remember that 1 lakh is equal to 100,000 rupees (customarily written
1,00,000, in India) and 1 crore is equal to 100 lakhs (that is, 10,000,000 rupees, but written 1,00,00,000 in India),
FOREIGN CURRENCY AND EXCHANGE
31
treasuries. In these transactions the Government acts in the capacity
of an exchange bank.
Failure of the policy to encourage an active gold circulation to
support the gold standard caused gold to accumulate in India in
embarrassing quantities, owing especially to the shipments of gold to
cover India's favorable trade balances. In 1904, therefore, the
Secretary of State for India declared his intention of selling council
bills on India without limit at the price of Is. 4)£d. (the gold import
point). The effect of this was to limit the importation of gold into
India.
This system worked until 1907-8. A partial failure of the rains
in India in 1907 and the general financial stringency all over the world
which followed the United States financial crisis in the fall of that year
caused the Indian exchange to become weak in November. There had
been very heavy coining of rupees in India and the balance in the
gold-standard reserve was ample; but the reserve was in securities,
not in gold, and was therefore not in a liquid form, nor was the time
opportune for the realization of securities. There was an insistent
demand for the export of gold or the equivalent of gold. The Govern
ment of India refused and exchange fell to Is. 3% d.
REPO RT OF THE CHAMBERLAIN COM MISSION
Thus were gradually evolved the main principles of the Indian
currency system. It consisted of silver rupees and rupee notes in
India, with the sovereign and half-sovereign unlimited legal tender
at the rate of 15 rupees to the sovereign, or Is. 4d. (16d.) to the rupee.
The rate of exchange was prevented from rising above the goldimport point by the unlimited sale of council bills at the gold point in
London; it was prevented from falling below the gold-export point by
the sale of sterling bills (commonly called reverse councils) at the
gold-export point in India. As a matter of fact, it was not the goldexchange standard, but rather, so far as it amounted to a definite
standard at all, a standard of sterling exchange. It might possibly
be defined as the so-called “ limping standard.”
Criticism of this system brought about the appointment of a com
mission under the chairmanship of the Right Hon. Austen Chamberlain, which reported in February, 1914. The commission’s conclusions
were that it was unnecessary to support the gold standard by a gold
currency; that it was not to the advantage of India to encourage the in
ternal use of gold as currency; that the internal currency should be sup
ported by a thoroughly adequate reserve of gold and sterling exchange;
that no limit should be fixed to the gold-standard reserve, one-half of
which should be held in gold; that the silver branch of the goldstandard reserve should be abolished; that reverse councils should be
sold on demand; that the paper currency should be made more elastic.
The commission gave a passing commendation to the idea of a state
bank. Before the Government could deal with these recommen
dations the World War broke out.
EFFECTS OF THE WORLD WAR
The early effects of the war were precisely those anticipated. There
was a call for sterling remittances which was met by the sale of reverse
councils, £8,707,000 being sold up to the end of January, 1915. There
were withdrawals from the post office savings banks and a net sum of
32
FOREIGN CURRENCY AND EXCHANGE
80.000. 000 rupees was taken away. There was some lack of confi
dence in the note issue, and a demand for gold. Notes amounting to
100.000. 000 rupees were presented for cashing and the Government
was obliged to suspend the issue of gold. But there was no request
for a moratorium.
Difficulties which arose afterwards were of a serious nature. There
was a large balance of trade in favor of India caused by the demand
for Indian produce for the United Kingdom and the Allies and the
decline in the export trade from these countries; a heavy expenditure
in India on behalf of the British Government; and a phenomenal rise
in the price of silver. This balance of trade and expenditure for Im
perial purposes could be financed neither by the import of the precious
metals, owing to the universal embargo on the movement of gold and
silver, nor by credits in India; it could be financed only by the expan
sion of the note issue against sterling securities in England, chiefly
Treasury bills, and the issue of coined rupees. But at this time there
was a reduction in the output of the silver mines of the world and an
increased demand for this metal. The price of silver advanced from
27Kd. per standard ounce in 1915 to 78d. in December, 1919. The
main concern in India was, not to keep the rupee from falling below
the ratio of 15 to 1, but to keep it within any limits and to provide a
sufficiency to meet the demand.
Among the measures adopted by the Government of India to bring
exchange under control was the confining of remittances to the financing
of articles of national importance. It raised the rate for the sale of
council bills so that silver might be purchased at a price which would
allow rupees to be coined without loss. The minimum rate for im
mediate telegraphic transfers was raised as follows:
s. d.
Jan. 3, 1917........................ ............................. .............. - ............
Aug. 28, 1917.......
Apr. 12, 1918_________________
May 13, 1919.............
Aug. 12, 1919.......................................
Sept. 15, 1919..............- - - - - ........................................................
Nov. 22, 1919____________ ___________________________
Dec. 12, 1919_______ ____________ - ..........- ...........................
1
1
1
1
1
2
2
2
4'A
5
6
8
10
0
2
4
Silver for coining was purchased in large quantities and gold and
silver were taken under control and measures adopted to prevent ex
port and melting. Gold went to a premium and ceased to function
as currency. The note issue was expanded and small notes of 1 and
2% rupees were specially prepared to economize the use of silver rupees.
The gross note circulation increased from 661,200,000 rupees at the
end of March, 1914, to 1,796,700,000 rupees at the end of November,
1919. The percentage of total metallic reserve on the latter date was
44.6.
NEW RUPEE-STERLING RATIO INTRODUCED
Some of the more important recommendations of the BabingtonSmith Committee, appointed in 1919 to advise in regard to the future
of Indian exchange and currency, were that it was desirable to restore
stability to the rupee and to reestablish the automaticworking of the
Indian currency system; that the rupee should remain unchanged in
FOREIGN CURRENCY AND EXCHANGE
33
weight and fineness and should remain unlimited legal tender; that
maintenance of the convertibility of the note issue was essential; that
the exchange value of the rupee should be fixed in terms of gold rather
than in terms of sterling; that a stable relation should be established
between the rupee and gold at the rate of 10 rupees to the pound ster
ling; that the statutory minimum for the metallic portion of paper
currency reserve should be 40 per cent of thegross circulation.
The changing of the official monetary standard from 15 rupees to
10 rupees to the pound sterling occasioned the greatest fluctuations in
exchange of any solvent country, widespread disturbance of trade,
and heavy losses to the Government, and brought hundreds of big
traders to the verge of bankruptcy. While the rise in exchange weak
ened the export trade, it was a strong stimulus for increased imports.
Unexpected forces, such as the financial crisis in Japan, lack of buy
ing power on the Continent, and the movement for the transfer of cap
ital from India to England at the artificially high rate of exchange,
had a severe effect on Indian business. Exporters were loaded with
Indian produce for which there was no foreign demand; importers
were loaded with foreign goods, bought in the expectation of the con
tinuance of a high rate of exchange but delivered when it had fallen
considerably. The Government sold reverse councils amounting to
£55,000,000 before abandoning this effort to stabilize exchange at
the ncwr ratio; the loss on these was 350,000,000 rupees.
Left alone exchange established itself at about the old ratio of 15
to 1, or Is. 4d. to thé rupee. The three presidency banks of Bengal,
Bombay, and Madras were merged in the Imperial Bank of India, a
state bank in all but name, and the bank entered into a contract
with the Government to open a hundred new branches in the first
five years of its existence. The bank mobilized and widened Indian
credit. The metallic backing of the paper currency was strengthened
and the fiduciary portion of the reserve brought within negligible pro
portions. The Government of India now purchases sterling in India
to meet its London charges wrhen the conditions are favorable, instead
of relying entirely on the sales of council bills in London. A notable
feature has been the rise of exchange of its own strength, reaching Is.
6d. in 1924 and remaining there.
RECOM M ENDATIONS OF YOUNG COM MISSION
The currency system recommended by the compassion appointed
in the autumn of 1925 under the chairmanship of Commander Hilton
Young is a gold-bullion standard. The commission proposed that
gold should be bought and sold "without limit but in quantities of not
less than 400 fine ounces; that the ordinary medium of circulation
in India should remain, as at present, the currency note and the
silver rupee; that the stability of the currency in terms of gold should
be secured by making the currency directly convertible into gold for
all purposes, but that gold should not circulate as money; and that
stabilization of the rupee should be effected forthwith at a rate
corresponding to an exchange rate of Is. 6d.
Exchange was maintained at this figure by the Government. How
ever, as the w'holly artificial ratio of the rupee at 2s. remained on the
34
FOREIGN CURRENCY AND EXCHANGE
statute book, the demand for an authoritative inquiry to fix the
ratio of the rupee to gold or sterling was insistent, and the Young
committee was delegated to make further study of the subject.
In breaking away from any idea of a sterling-exchange or goldexchange standard, this commission was influenced by two factors—
the necessity for safeguarding the Indian system from the price of
silver rising above the- melting-down point of the rupee and the
desirability of establishing confidence by giving the country not only
a real but a conspicuously visible link between the currency and
gold. The commission proposed that, while the legal obligation to
convert into rupees all the notes in circulation should remain, this
obligation should not attach to the new notes to be issued by the cen
tral bank and that the 1-rupee note should be reissued.
The new ratio to the pound sterling was brought before the Legisla
tive Assembly in February-March, 1927, and the Indian currency
bill, establishing the ratio of Is. 6d., was accepted.
An essential part of the scheme formulated by the currency com
mission was the formation of a reserve bank to take over the note
issue and custody of Government remittances and to act as a true
banker’s bank. The Government accepted this recommendation and
in January, 1927, introduced a bill proposing a shareholders’ bank.
This bill came up for action in January, 1928, but failed to receive
the support of the Legislature and was withdrawn.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 13 and
14 is: For the fiscal years (ended March 31) 1900 to 1919, telegraphic
transfers drawn on India in London (pence converted; see United
Kingdom, p. 175); for the calendar years 1919 to 1929, cable transfers,
New York on Calcutta. The rates for the fiscal years 1900 to 1919
are average yearly rates as quoted in the Statistical Abstract of
British India; for the calendar years 1919 to 1929, the averages are
as computed from daily rates by the Federal Reserve Board. Quar
terly averages are computed from monthly averages.
T able 13.— Y early A verage E xchange R ates
Year
F IS C A L
Average
rate
Year
F IS C A L
Average
rate
of the
I ndian R u pee
Year
CALENDAR
1899-1900........................- $0.3258 1910-11....................A ,. $0.3257 1919 ...
1900-1........................... ..
.3239 1911-12........................... .3262 1920__
1901-2............................... . 3242 1912-13........................... .3257 1921.................
1902-3............................... .3245 1913-14........................... .3257 1922 ...
1903-4............................... .3255 1914-15........................... .3265 1923 ...
1904-5............................... .3254 1915-16........................... .3174 1924................
1905-0............................... . 8294 1916-17........................... .3201 1925 ...
1906-7............................... . 3292 1917-18........................... .3275 1926.............
1907-8............................... .3251 1918-19...........
.3534 1927
1908-9............................... .3237
1928 ...
1909-10 ............................
.3253
1929 ...
Average
rate
$0.4030/
~'.38$i
.2622
.2874
.3111
.3178
.3626
.3633
' .3631
.3647
.3620
35
FOREIGN CURRENCY AND EXCHANGE
T a b le
14.— Q u a r t e r l y
and
M onthly A v era g e E x ch a n g e R a tes of th e
I n d ia n R u p e e
Period
1919
1920
1921
1922
1923
1924
First quarter................................................... $0.3578 $0. 4647 $0. 2742 $0. 2792 $0. 3171
Second quarter............................................... .3805
.4371
.2577
.28-19
.3114
.2150
Third quarter................................................. .4241
.3613
.2888
. 3062
Fourth quarter............................................... .4417
.2900
.2725
.2907
.3097
January............................................................ . 3575
.4400
.2801
.2781
.3173
.2814
February........................................................ .3575
.4760
.2770
.3185
. 2595
March............................................................. .3583
.4780
.2782
.3156
.4082
April................................................................. .3552
. 2030
.2781
.3135
.4331
. 2047
May............................ ........ ............................ .3833
.2875
.3108
.4100
.2155
June....................... ......................................... .4210
.2891
.3099
.2889
.3838
.2306
July................................................................. .4100
.3080
.2422
August........................................................... .4170 .3010
.2901
. 3040
September...................................................... .4394
. 3301
.2639
.2874
. 3060
October............................................................ .4308
. 3059
.2742
.2884
.3106
.2970
. 2087
November...................................................... .4330
.2951
.3086
December........................................................ .4553
. 2690 .2745
. 3005
.3100
$0. 3021
.3049
.3201
.3446
.3045
.3032
. 2980
.3010
. 3058
.3049
.3125
.3226
.3252
. 3309
.3439
.3529
1925
192G
1927
1928
$0. 3570 $0. 3667 $0. 3034 $0. 3059
. 3054
. 3024
.3619
.3610
.3002
. 3033
.3619
. 3028
.3662
.3646
. 3008
.3653
.3571
. 3008
.3642
.3672
.3573
.3676
. 3030
. 3652
. 3507
. 3030
. 3053
.3658
. 3014
. 36.56
.3500
.3618
.3623
. 3059
.3023
.3026
.3048
.3029
.3620
.3046
. 3001
. 3029
.3026
.3611
. 3002
. 3630
.3012
.3025
. 3634
. 3003
.3633
.3033
. 3015
. 3000
. 3041
. 3045
.3602
. 3003
. 3045
.3046
.3674
.3604
.3005
.3646
1929
$0. 3039
.3017
. 3599
. 3026
. 3045
. 3036
.3631
.3118
.3003
. 3597
. 3597
. 30)03
. 3616
. 3025
.3036
Period
Fourth’quartSr................................................
July..................................................................
December.........................................................
BRITISH MALAYA
STRAITS
settlem ents
In the Crown colony of the Straits Settlements (comprised of the
islands of Singapore and Penang and their dependencies, the mainland
j
areas of Malacca and Province Wellesley, and the Dindings) the < y f '
monetary unit is the Straits dollar of 100 cents, containing 20,2123. !
grams (312 grains) of silver 0.900 fine, the value of which was fixed at
2s. 4d., or about $0.5678P TJnTEe3*’Sla£es currency, on January 29, ^ ,yV 1
1906.
By an’ order in council. of October 22, 1906, the pound sterling <-■ J
was made legal tender but the silver Straits dollar continued to be the
standard coin. Prior to 1906 the old British and Mexican dollars0
were current, but thereafter were revalued in terms of Straits dollars
and further importation prohibited. At the present time, the Straits
dollar, half-dollar, and pound sterling are legal tender for the pay
ment of any amount,
The present metallic currency consists of silver dollars and subsidi
ary coins of silver, nickel, and copper in denominations from 1 to 50
cents.
Currency notes make up the greater part of the actual circulation;
the legal minimum reserve requirement (currency guarantee fund)
is 40 per cent against notes in circulation.8
8See also under Hong Kong, p. 92»
36
FOREIGN CURRENCY AND EXCHANGE
The note circulation expanded steadily up to the outbreak of the |
World War, the rate of expansion being accelerated by the necessity
for financing the rubber boom at the end of the first decade of this
century. During the war it also increased steadily but at a greater I
rate than previously. Since the war its fluctuations have been extraor
dinary. On January 10, 1901, the gross circulation stood at 6,205,- |
000 Straits dollars; on December 31, 1908, it had risen to 25,671,000
Straits dollars; at the end of 1918, it was 86,409,000 dollars, and
reached its peak, 183,212,000 dollars, on March 4, 1920. On Septem
ber 30, 1923, it had fallen to 80,223,000 dollars, the lowest point in
recent years. During the 12 months ending September 30, 1927, note
circulation dropped from 163,361,000 Straits dollars gross (active,
114,066,000 dollars) to 117,396,000 dollars gross (active, 95,027,000
dollars); the active circulation is arrived at by subtracting from
the gross circulation the notes held by the government treasuries
and banks.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 15 and
16 is: 1900-1921, 4 months’ sight drafts, Singapore on London (pence
converted; see United Kingdom, p. 175); 1922-1929, cable transfers,
New York on Singapore. The rates from 1900 to 1921 are yearly
averages as quoted in the Straits Settlements Blue Book; from 1922
to 1929, the averages are as computed from daily rates by the Federal
Reserve Board. Quarterly averages are computed from monthly
averages.
15.— Y e a r l y A v e r a g e E x c h a n g e R a t e s
D o l la r
T able
-*
|o p c i
1900 .................................................................
1901 . . .
1902 ..............................
1903..............................
1904 ..............................
1905....................................................................
190(5 ...
1907 .................................................................
1908.............. ..............
1909....................................................................
Average
rate
h- ^ ^
Year
............................................................ »
O j C* C* g
4g
T able
16.— Q u a r t e r l y
S t r a it s S e t t l e m e n t s
Year
Average
rate
Year
1910....................................................................
1911................................
1912................................
1913................................
1914................................
1915.....................................................................
1916.................................................................
1917.....................................................................
1918.....................................................................
1919.....................................................................
$0.5792
. 5712
. 5754
. 5767
.5793
.5634
.5689
.5683
.5627
.5273
1920 ..............................
1921 ...
1922 .
1923 .........................
1924..................
1925 ................................
1926 . . .
1927 ...
1928 ...
1929 .......................
Average
rate
$0.4333
. 4546
.5078
.5350
.5125
.5615
.5(527
. 5605
.5(529
.5601
and M onthly A verage E x change R ates of the
S t r a it s S e t t l e m e n t s D o l la r
Period
1921
First quarter........................... «
Second quarter....................... «
$0. 4208
Fouith*quarter....................... .4W2
January.................................... c>
February...........................—
C)
March.........-........................... w
April......................................... (■ )
M ay........................................
June........................................ (■c))
July........................................... .4198
August..................................... .4181
September............................... . 4246
October................................... . 4392
November............................... . 4547
December................................ .4686
*Not available.
of th e
1922
$0. 4892
. 50(53
.5125
.5227
.4793
.4930
.4953
.4999
.5076
.5114
.5072
. 5140
. 5164
.5178
. 5201
.5301
1923
$0. 5460
.5428
.5324
.5185
.5414
..5485
.5481
.5473
.542(5
.5385
.5327
.5325
.5319
. 5298
. 5173
.5085
1924
$0.5010
.5041
.5126
.5298
.5035
.5056
.5028
.5050
.5053
.5019
.5052
.5176
.5151
.5183
..5311
.5399
1925
$0. 5525
.5612
. 5664
.5659
.5531
.5534
. 5510
. 55-12
. 5637
.5658
.5663
. 5670
. 5659
. 5651
.5663
.5663
1926
$0.5663
.5632
. 5614
.5600
.5662
.5663
.5663
.5655
.5620
. 5621
. 5621
. 5615
.5607
. 5607
. 5598
.5594
1927
$0. 559fi
.5597
. 5597
.5628
. 5596
. 5596
. 5596
. 5595
. 5599
. 5598
.5596
. 5597
.5599
.5003
. 5607
.5673
1928 1929
$0. 5660 $0. 5602
.5618 . 5596
. 5603
.5634 .5617
.5676 .5600
. 5670 .5597
.5635 .5608
.5625 . 5596
.5614 . 5598
.5614 .5593
.5604 .5588
558/
.5598 .. 5599
. 5607
.5634 . 5622
. 5644 . .5621
.5625 .5607
FOREIGN CURRENCY AND EXCHANGE
37
FEDERATED AND UNFEDERATED MALAY STATES
The same circulating media found in the Straits Settlements are
current also in the Federated Malay States of Perak, Selangor, Negri
Sembilan, and Pahang and in the Unfederated States of Johore, Kedah,
Perlis, Kelantin, and Trengganu.
BRITISH OCEANIA
FIJI ISLANDS
In the British Fiji Islands the monetary unit is the pound sterling, the
par value of which is $4.8665 United States currency. (See United
Kingdom, p. 174, for exchange rates, etc.) The currency is the same as
that of England. There also are current colonial government notes
and private bank notes; these, at the end of 1928, totaled £432,000
and £900, respectively. All accounts are kept in sterling. Ex
change is quoted on London, there being a small spread.
BRITISH WEST INDIES
BAHAMAS, BARBADOS, BERMUDA, JAMAICA, TRINIDAD AND TOBAGO. AND WIND
WARD AND LEEWARD ISLANDS
The unit of currency in all the islands of the several British West
Indian groups is the pound sterling, the par value of which is $4.8665
United States currency. (See United Kingdom, p. 174, for exchange
rates, etc.)
Bahamas .—Accounts are kept in sterling, but United States
money circulates freely. The Government has issued local currency
notes of £1 and 10 and 4 shillings; the amount in circulation on
January 10, 1929, was about £110,000, and the note-guaranty fund
consisted of coin to the value of £36,700 and investments to the value
of £80,500. Bank of England notes also are current.
Barbados .—Accounts are kept in sterling. British silver coins are
unlimited legal tender and constitute the principal medium of circula
tion. Little gold is available. There is also a local dollar paper
currency, the exchange value of which is fixed at 4.80 to the pound
sterling.
Bermuda .—Little gold is in circulation. Apart from the metallic
currency, the principal circulating medium is the £1 and 10s. notes
of the Bank of England and the Bermuda Government; the legal
limit to the latter is £40,000. A considerable quantity of United
States notes also is in circulation, being largely used for remittances
to the United States.
Jam aica .—British coins, gold and silver of all denominations, are
legal tender; also United States gold coins, the exchange value being
based on the United States dollar as equivalent to 4s. Id. Jamaica
minor coins—penny, half-penny, and farthing—also are in circulation.
On March 31, 1928, Government currency notes (which are legal
tender under section 5 of law No. 27 of 1904) amounted to £87,000;
on the same date the note-guaranty fund was £92,600.
Trinidad and Tobago.—British currency and United States gold are
legal tender. There is no colonial coinage, but the Government issues
1 and 2 dollar notes (4s. 2d. and 8s. 4d.) and 1,000-dollar notes.
38
FOREIGN CURRENCY AND EXCHANGE
Windward and Leeward Islands .—British currency and United
States gold are legal tender. In many of the islands trading accounts
are kept in dollars and cents at the ratio of 4.80 to the pound sterling.
BULGARIA
Bulgaria’s monetary unit is the lev (plural, leva) of 100 stotinki
(centimes), representing 12.0773 milligrams of gold 0.900 fine (10.8696 milligrams of fine gold), the par value of which is $0.00722 United
States currency. The lev was stabilized under the law of November
22, 1928; stabilization was effected at the actual rate of exchange
maintained for the preceding four years. Stabilization was made
possible by the 7% per cent loan dated November 15, 1928, for $13,000. 000. This loan was authorized and approved by the Council of
the League of Nations. The former lev represented 322.58 milligrams
of gold 0.900 fine, the par value of which was the same as the French
franc, $0.192948.
The principal circulating medium, apart from subsidiary coins of
silver and nickel, in lev and stotinki denominations is the notes of the
National Bank of Bulgaria. The legal minimum reserve requirement
is 40 per cent gold and foreign exchange against notes and other de
mand liabilities. According to article 10 of the law made effective
January 1, 1927, the bank must raise its discount rate whenever the
reserve falls below 33% per cent.
Bulgaria was nominally an adherent of the gold standard, which
was adopted in 1893; its currency, in the main, corresponded to that
of the Latin Monetary Union.10
The National Bank of Bulgaria, founded in 1879, was given the sole
right of note issue in 1885; its original capital was 2,000,000 leva,
provided by the Government. The bank was reorganized on January
1, 1927, in accordance with a special act the main provisions of which
are: The bank becomes exclusively a bank of issue of a special legal
character and is intrusted with the safeguarding of the national cur
rency. Its duty is to maintain the value of notes issued on a goldexchange standard. The share capital is to be increased from 500,000,000 leva (1924) to 1,000,000,000 leva. By a decree of the Repa
rations Commission, the issue of paper money is not to exceed 4,700,000,000 leva. At the end of December, 1929, the outstanding note
circulation of the Bank of Bulgaria amounted to 3,609,000,000 leva.
On the same date the gold reserve (in terms of the new lev) totaled
1,389,000,000 leva and foreign assets 1,307,000,000 leva.
From 1900 to 1912 the lev was practically at par. Minor fluctua
tions in 1913 and the beginning of 1914 reflect unstable conditions
during the Balkan Wars. The lev did not fall sharply until 1919,
chiefly owing to increased note circulation, representing, for the most
part, loans by the National Bank to the State.
BASIS OF STATISTICS
Rates given in Tables 17 and 18 represent: For 1910-1918, Sofia on
Vienna (kronen converted; see Austria, p. 13); 1919-1921, Sofia on
New York; 1922-1929, noon buying rates for cable transfers, New
York on Sofia. The rates from 1910 to 1921 are those quoted in Le
w Formation of the Latin Monetary Union is discussed on p. 15.
39
FOREIGN CURRENCY AND EXCHANGE
Bulletin Mensuel de Statistique of July, 1927 ; from 1922 to 1929,
those quoted by the Federal Reserve Board. Averages from 1922 to
1929 are as computed from daily rates by the Federal Reserve Board.
Quarterly averages are computed from monthly averages.
For conversion purposes the par value ($0.193) may be used from
1900 to 1909.
T a b l e 17.— Y e a r l y A v e r a g e E x c h a n g e R a t e s o f t h e B u l g a r ia n L e v
Year
Average
rate
Average
rate
Year
Average
rate
Year
1909.................................. 1 $0.1930 1916................................ $0.1581
1910.................................. . 1926 1917................................ . 1240
1911.................................. . 1930 1918................................ . 1276
1912..................................
. 1930 1919................................ .0427
1913.................................. .1879 1920................................ .0163
1914.................................. .1717 1921................................ .00887
.00688
. 1472 1922........
1915...............
1923................................ $0.00884
1924................................ .00728
1925................................ . 00732
1926................................ .00721
1927................................ .00724
1928................................ .00721
1929................................ .00722
■ Nominal.
T able 18.— Q u a r t e r l y
Period
1921
First quarter............. O
Second quarter.......... 0)
Third quarter............ $0. 00865
Fourth quarter......... .00691
January......................
February.................... <>)
March........................
April........................... «ci
May............................ ci
Juno............................ <■ )
July............................ . 00955
August....................... . 00SK0
September................. . 00759
October..................... . (X)681
November.................. .00670
December.................. .00722
■ Not available.
and
M o n th ly A v erage E x ch a n g e R ates o f th e
B u l g a r ia n L e v
1922
1923
1924
1925
1926
1927
1928
1929
$0. 00697
.00706
.00673
.00677
.00710
. 00693
.00688
.00690
. 00693
.00736
.00729
. 00652
. 00638
.00648
.00684
.00700
$0. 00662
.00916
. 01034
.00918
.00695
.00637
. 00654
.00774
.00798
.01175
.01185
. 009.58
. 00959
.01015
.00922
.00816
$0. 00728
. 00723
.00729
.00733
.00714
.00732
. 00738
. 00728
.00723
.00717
.00724
. 00733
. 00731
00732
. 00733
.00734
$0. 00733
. 00732
. 00733
.00729
.00734
. 00732
. 00734
.00732
. 00732
.00732
.00734
. 00733
.00731
.00729
.00728
.00729
$0. 00709
.00723
. 00726
.00726
.00701
. 00705
. 00720
.00723
.00724
.00722
.00727
.00726
. 00725
. 00726
.00727
. 00724
$0. 00724
. 00724
. 00724
.00723
.00723
. 00724
. 00725
. 00725
. 00724
.00722
.00723
.00723
. 00725
. 00723
. 00723
.00724
$0. 00722
.00720
. 00721
.00719
.00723
. 00721
.00722
.00721
.00719
.00720
.00721
.00721
.00721
. 00720
. 00719
.00719
$0.00720
.00721
.00722
.00724
.00719
. 00720
. 00721
.00721
.00721
.00722
.00721
.00722
. 00722
. 00724
.00724
.00723
CANADA
The Canadian dollar of 100 cents, representing 1.6718 grams of
gold 0.900 fine (1.5046 grams of fine gold), is the exact equivalent of
the United States dollar and its par value is the same ($1). This unit
was adopted by Canada in 1853. At the same time the British pound
sterling was made legal tender at 4.8665 Canadian dollars. A law
requiring all Government accounts to be kept in dollars and cents
came into force in the Provinces of Canada on January 1 , 1858; the
formal adoption of decimal currency in Canada dates from that time.
After confederation, the uniform currency act of 1871 extended the
decimal currency throughout the Dominion, the British sovereign
being made legal tender for 4.86/3 Canadian dollars and the United
States eagle for 10 Canadian dollars.
METALLIC CURRENCY
Gold.—Gold is used to an insignificant extent as a circulating
medium in Canada, its monetary use being practically confined to
reserves, but 5 and 10 dollar gold pieces have been coined; these were
40
FOREIGN CURRENCY AND EXCHANGE
first issued in 1912 under the currency act of 1910. By the same act,
British gold coin and the 5-dollar, 10-dollar, and 20-dollar gold coins
of the United States were made legal tender.
Token currency .—Canadian silver dollars to contain 23.3276 grams
(360 grains troy) of silver 0.925 fine were authorized by the currency
act of 1910, but no dollars of this fineness have been struck by the
mint. Silver 50, 25, 10, and 5 cent pieces, of weight proportionate
to their respective fractions of the dollar and of the same fineness,
are in circulation, but by the statutes of 1920 the standard of fineness
was reduced to 0.800 and coinage since that date has been to the
new standard. Coining of the silver 5-cent piece was discontinued
in 1921 in favor of the nickel 5-cent piece weighing 4.5359 grams
(70 grains), and a number of these coins have appeared.
DOM INION NOTES
After confederation, by act of 1868 authority was given for the
issue of Dominion notes to the extent of 8,000,000 Canadian dollars.
The gold reserve was fixed at 20 per cent up to a circulation of
5,000,000 dollars; beyond that, 25 per cent was required. Various
changes were made by later legislation both in the size of the note
issue and in the reserve ratio until 1880, when the basis of the present
standard—a reserve of 25 per cent in gold and guaranteed debentures,
three-fifths of which must be gold-—was established. Under the
Dominion notes act, 1914, the Dominion Government is authorized
to issue notes not exceeding 50,000,000 Canadian dollars against a
25 per cent gold reserve. In addition, by “ An act respecting the
issue of Dominion notes,” the Dominion Government in 1915 was
authorized to issue notes up to 26,000,000 Canadian dollars without
any gold reserve, 16,000,000 dollars of the notes to be against certain
specified Canadian railway securities guaranteed by the Government.
Further, the finance act of 1923 perpetuates the provisions of
the finance act of 1914. Part II, paragraph 5, of this law reads:
At any time when there is no proclamation in force under the authority of
paragraph (a) of section 4 of this act, the Minister may make advances to the
chartered banks and to the savings banks to which the Quebec savings banks
act applies by the issue of Dominion notes upon the pledge of the securities
hereinafter mentioned:
(a) Treasury bills, bonds, debentures, or stocks of the Dominion of
Canada, Great Britain, any Province of Canada, and of any British possession;
(fe) Public securities of the Government of the United States;
(c) Canadian municipal securities;
(d) Promissory notes and bills of exchange secured by documentary
title to wheat, oats, rye, barley, corn, buckwheat, flax, or other commodity;
(e) Promissory notes and bills of exchange issued or drawn for agricul
tural, industrial, or commercial purposes and which have been used or are
to be used for such purposes.
These advances shall be for a period not exceeding one year and interest
thereon shall be payable at such rate as may from time to time be fixed by the
Treasury Board.
Thus the Treasury statement of December 31, 1929, reads (in
Canadian money): Dominion notes outstanding, 234,287,000 dollars;
gold reserve, 62,757,000 dollars; loans to banks (under finance act),
112,900,000 dollars.
BANK NOTES
Bank notes represent the principal circulating medium in Canada.
Under the Canadian bank act of 1881 the banks are authorized to
issue notes of the denominations of 5 Canadian dollars and multiples
FOREIGN CURRENCY AND EXCHANGE
41
thereof to the amount of their paid-up capital. These notes are
not legal tender in normal times. In addition, during the period
of the movement of crops (September 1 to February 28) the banks
may issue “excess” circulation to the amount of 15 per cent of their
combined capital and “rest or reserve” funds. In the event of war
or panic, the Government may permit the “excess” to run the entire
year. The banks pay interest on this excess at 5 per cent. If a
bank desires to extend its circulation, it may also do so by depositing
dollar for dollar in gold or Dominion notes in the central gold reserves.
In case of insolvency, the notes of a bank are the first lien upon its
assets; they are further secured by the bank circulation redemption
fund, to which all banks contribute on the basis of 5 per cent of their
average circulation not covered by gold or Dominion notes deposited
in the central gold reserves established in 1913.
The bank act contains no specific provisions as to the amount
of gold to be held against either note circulation or general liabilities
of a bank. It requires, however, that 40 per cent of whatever cash
reserves a bank finds it expedient to carry shall be in Dominion
notes. A second provision instructs the Minister of Finance to
arrange for the delivery of Dominion notes to any bank in exchange
for specie. The other cash element in bank reserves is specie in hand.
In addition to this cash on hand, Canadian banks carry other kinds
of assets which are regarded as reserves—(1) cash balances in banks
outside Canada, (2) call and short loans in New York (the favorite
call-loan market), and (3) readily marketable securities.
Government notes are of denominations of 25 cents and 1, 2, 4,
5, 50, 100, 500, and 1,000 Canadian dollars. In addition “ special
notes” of the denominations of 500, 1,000, 5,000, and 50,000 Canadian
dollars (first emission of the last-mentioned, September, 1918) are
issued for use between banks only, the purpose being to safeguard
against theft.
BASIS OF STATISTICS
The Canadian dollar was practically at par from 1900 to 1914;
fluctuations since 1914 are given in Tables 19 and 20. The basis is
as follows: 1915-1918, sight drafts, Montreal on New York; 19191929, noon buying rates for telegraphic transfers, New York on Mont
real. From 1915 to 1918 the averages are computed from monthly
averages of daily rates; from 1919 to 1929, yearly and monthly av
erages are as computed from daily rates by the Federal Reserve Board.
Quarterly averages are computed from monthly averages.
T able 19.— Y early A verage E xchange R ates
1914___
1915___
1916..
1917...
1918..
1919..
Year
Average
rate
.
!$1.0000
.9957
.9980
.9982
.9834
.9560
1Nominal.
19420—30------ 4
Year
of the
Average
rate
C anadian D ollar
Year
1920................................ $0.8928 1926.........
1921................................ . 8955 1927........
1922.........
.9848 1928 ..
1923.........................
.9804 1929...
1924
.................. .9873
1925
................ . .9996
Average
rate
$0.9999
.9997
.9991
.9925
42
FOREIGN CURRENCY AND EXCHANGE
T able 20.-—Q uarterly
and
M onthly A verage E xchange R ates
C anadian D ollar
Period
1919
1920
1921
1922
1923
First quarter................................................... $0. 9798 $0. 8913 $0.8784 $0. 9600 $0. 9861
Second quarter................................................ .9725
.8995
.8916
.9846
.9787
Third quarter................................................. .9626
.8903
.8928
. 9758
.9953
Fourth quarter............................................... .9502
.8881
.9189
.9985
.9809
January............................................................ .9797
.8764
.9151
.9482
.9909
February....................................................... . 9805
. 8650
.8807
. 9867
.9631
March.............................................................. . 9792
.8938
.8780
.9686
. 9806
April................................................................. .9746
.9161
.8906
.9776
.9802
May.................................................................
.9716
.9004
. 9794
.8965
.9879
June................................................................ .9712
.8819
.8876
.9884
.9766
July................................................................... .9661
.8808
.8820
. 9892
.9742
August............................................................. .9584
.8864
.8978
.9975
.9767
September...................................................... . 9633
. 9037
. 9993
. 9765
.8985
October........................................................... . 9638
.9085
. 9139 1.0008
.9855
November................ ............ ...................... . . 9586
. 8927
.9151 1.0003
.9813
December....................................................... .9281
.8632
.9277
.9945
.9759
Period
First ouarter....................................................
Third quarter.................................................
Fourth quarter................................................
January............................................................
February........................................................
March...............................................................
April.................................................................
May................. .................................................
June..................................................................
July...................................................................
A ugust....................................................... .
September.......................................................
October............................................................
November..................... ..................................
December.........................................................
1925
1926
1927
1928
$0.9981 $0.9969 $0. 9986 $0.9988
. 9998 1.0007 1.0003
. 9990
1.0002 1.0014
.9995
.9994
1.0004 1.0004 1.0005
.9992
.9984
.9969
.9980
.9982
. 9986
.996,5
. 9984 .9981
.9987
. 9990 1.0000
. 9963
.9994 1.0004 1.0009 1.0003
1.0000 1.0007 1.0006
. 9991
.9994
1.0000 1.0010
.9976
1.0003 1.0013
.9985
.9979
. 9994 1.0000
1.0003 1.0014
. 9999 1.0014 1.0005 1.0004
1. 0009 1.0007 1.0011
.9997
1.0008 1.0013 1.0014 1.0000
.9996
.9993
.9990
.9979
CEYLON
of the
1„24
$0. 9708
. 9828
. 996.8
.9987
.9736
. 9694
. 9695
.9809
.9830
.9844
.9926
.9985
. 9994
. 9997
. 9998
.9965
1929
$0.9960
.9923
.9939
.9876
.9975
.9964
.9940
.9924
. 9930
.9916
.9948
.9944
. 9924
.9883
.9838
.9907
Ceylon’s monetary unit is the silver rupee of British India (par
$0.36499 United States currency), legal tender for any amount. (See
British India, p. 29.) There are also the half-rupee, the quarterrupee, and subsidiary coins of cent denominations. (In British India
the subsidiary coins are the anna, pice, and pie.)
The principal circulating medium consists of the Ceylon Govern
ment currency notes, issued in denominations of 1, 2, 5, 10, 50, 100,
and 1,000 rupees. These notes are legal tender for any amount.
Their emission was authorized by the Ceylon paper currency ordi
nance, No. 32 of 1884, as added to and amended by ordinances Nos.
12 of 1886, 13 of 1901, 6 of 1903, 11 of 1909, 33 of 1914, and 1 of 1917.
These notes on December 31, 1928, amounted to 57,416,000 rupees,
as against 62,471,000 rupees at the close of the preceding year.
The exchange value of the rupee in Ceylon is fairly close to that of
the Indian rupee; however, as there is more than a shade of difference
in some years, the average rates of the rupee in Ceylon are given in
Table 21 for such years as are available. These rates have been taken
from the Ceylon Blue Book.
The basis for the rates as given is as follows: 1902-1914, demand
drafts on London at the National Bank of India (Ltd.); 1915, 1916,
demand drafts on London at the Mercantile Bank of India (Ltd.);
43
FOREIGN CURRENCY AN1) EXCHANGE
1917, demand drafts on London at the Hong Kong & Shanghai Bank
ing Corporation. Since 1918 both buying and selling rates are given.
Prom 1918 to 1926, the rates are as quoted by the Mercantile Bank of
India (Ltd.); for 1927, by the Chartered Bank of India, Australia, and
China; for 1928, by the Hong Kong & Shanghai Banking Corporation.
All of the rates are as quoted in pence, converted in accordance with
the fluctuations of the pound sterling. (See United Kingdom, p. 175.)
T able 21.—Y early A verage E xchange R ates
Year >
Average
rate
o f the
Year
R u pee
in
C eylon
Average rate
Buying
1902 ........................................ .............. $0.3244 1918..................................................... $0. 3550
1903....................................................... - .3251 1919..................................................... .3934
1900........................................... ............. . 3201 1920..................................................... .3767
1907......................................................... .3258 1921.................................................. (*)
1908....................................................... .3231 1922..................................................... .2904
. 3259 1923..................................................... .3132
19 10-1 1.
1913........................................................ . 3204 1924................................................... . 3207
.3290 1925..................................................... .3070
1914...
1915......................................................... .3109 1920..................................................... .3001
1910 ...................................................... .3287 1927..................................................... . 3057
1917......................................................... .3283 1928..................................................... .3059
Selling
$0. 3520
.3894
.3681
(»).2879
.3108
.3175
. 3033
.3037
.3021
.3041
* For the years 1904, 1905, 1909, 1910, and 1912 no rate is quoted.
J Fiscal year ending June 30.
*Buying and selling rates not available.
CHILE
On October 14, 1925, Chile, adopted the peso (plural, pesos; sym
bol, $) of 100 centavos, representing 203.395 milligrams of gold 0.900
fine (183.057 milligrams of fine gold) and having a par value of 6d.,
or $0.12166 United States currency, as its monetary unit. The
condor, the equivalent of 10 pesos (written $10 m/1—that is, moneda
legal, or “lawful money”), represents 2.03395 grams of gold 0.900
fine. The terms “ peso” and “condor” may be used indiscriminately
in public or private financial obligations. A new gold currency,
consisting of coins of 20 and 40 pesos, is now being minted in accord
ance with the law of November 27, 1928. A decree of December 31,
1926, modified the silver-coinage specifications. Subsidiary coins are
of silver and nickel-copper in peso and centavo denominations.
c e n t r a l b a n k o f c h il e
The Central Bank of Chile (Banco Central de Chile), established
by the law of August 21, 1925, opened for business on January 11,
1926. The bank took over the fiduciary circulation and issues its
own notes, which henceforth are to be the only paper money (indicated
by the abbreviation m/c, that is, moneda corriente or “current
money”) in circulation. All of the paper money is convertible into
gold at 6d. per peso or, at the option of the bank, into demand drafts
or 3 days' sight drafts on London or New York, payable in gold.
The conversion fund of the Government, comprising the stock of
gold which had been accumulated over a long period of veal's to
provide for the ultimate redemption of the fiduciary issues, was turned
over to the bank.
The legal minimum reserve requirement is 50 per cent gold and
foreign exchange against notes and deposits; foreign exchange may
consist only of demand deposits payable in New York or London.
44
FOREIGN CURRENCY AND EXCHANGE
The bank is specifically authorized, subject to a tax, to permit the
reserve ratio to fall below the legal minimum.
TREASURY-NOTE ISSUE
From 1895 to 1898 Chile was on a gold basis, the unit of currency
being the gold peso, par 18d., or $0,365. From 1898 down to the
latter part of 1925 inconvertible paper money was the principal
circulating medium. This paper money consisted of various note
issues which, in all, amounted to 150,000,000 pesos in 1907.
There was no further note issue until 1914, when the outbreak of
the World War introduced disturbances which so affected generally
all branches of business and finance that a larger supply of currency
was necessary. On August 3, 1914, there was passed law No. 2912,
which provided for the issue of vales del tesoro, or treasury notes of
high denominations, to banks which secured such circulation by the
deposit of mortgage or other approved bonds. This measure, how
ever, was made use of only sparingly. In 1920 Government financial
stringency became oppressive, and law No. 3772 authorized a further
issue of these treasury notes, which amounted to 76,092,000 pesos
at the end of 1921. On March 12, 1929, there was 1,396,000 pesos
of these notes outstanding.
NITRATE ADVANCES
In the latter part of 1914 an entirely new form of currency, which
might be called “ nitrate advances,” was introduced. The procedure
was somewhat as follows: The producer would have a mortgage
drawn up in favor of the Government upon a quantity of his product
(nitrate) stored at the seacoast or at his plant in the interior. With
evidence of this, and with other necessary documents, he would draw
upon the national treasury at 180 days’ sight (since the duration of 1
each credit was fixed at six months) and either discount this draft 1
with a bank or, by going direct to the treasury, obtain the net pro
ceeds in treasury notes issued especially for the purpose. Law
No. 3795 of September, 1921, modified somewhat the procedure of
advances to nitrate producers and changed the designation of the
corresponding paper money from “ treasury notes” to “ fiscal bills.”
These notes, representing nitrate advances, reached their peak in
1920, totaling 75,895,000 pesos. At the close of 1927 they had
practically disappeared, amounting to only 765,000 pesos of 6d.
(255,000 pesos of 18d.).
NOTE CIRCULATION—EXCHANGE RECOVERY
The total amount of notes in circulation on March 12, 1929, was
374,366,000 pesos; of this sum, bank notes represented 358,195,000
pesos. On the same date, reserves totaled 474,573,000 pesos, of
which 60,700,000 pesos was actual gold. The reserve ratio on this
date (against notes and deposits) was 93.49 per cent.
Since no par value existed for the paper peso in terms of foreign
currencies, it was subject to violent fluctuations, caused largely by the
increase or decrease in exports of nitrate of soda, which, indirectly,
brought on currency inflation. Following the slump in 1914 and 1915,
recovery began in the latter year with a great increase in exports of
nitrate of soda. During the last quarter of 1918 and for the three
45
FOREIGN CURRENCY AND EXCHANGE
subsequent years the nitrate trade suffered a severe depression.
Since the Government obtained more than 50 per cent of its revenues
from the export duty on nitrate, the inactivity of the nitrate industry
in 1919/1920, and 1921 resulted in large Government deficits, which
were covered by fiduciary issues. Early in 1922 the nitrate trade
revived and this was reflected in exchange recovery. However, in
1924 and 1925, owing to political disturbances, exchange again
depreciated.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 22 and
23 is: 1900-1918, Santiago on London (pence converted; see United
Kingdom, p. 175); 1919-1929, noon buying rates for cable transfers,
New York on Santiago. From 1900 to 1918, the averages are com
puted from monthly averages; from 1919 to 1929, the averages are as
computed from daily rates by the Federal Reserve Board. Quarterly
averages are computed from monthly averages.
For conversion purposes, the rates given are applicable only for
financial transactions other than official trade statistics. Such
statistics, from 1900 down to the stabilization of the currency in 1920,
were expressed in pesos of 18d., which naturally fluctuated with the
pound sterling. Certain statistics for earlier years have in recent pub
lications been converted by the Government itself to the basis of the
peso of 6d. Since stabilization the peso of 6d. may be used.
Year
Average
rate
of the
Average
rate
Year
C hilean P eso
Average
rate
Y ear
1900
$0. 3407 1910................................ $0.2186 1920................................
1901
.3219 1911................................ . 2155 1921................................
1902..................................
. 3080 1912................................ .2053 1922................................
1903..................................
.3372 1913................................ . 1977 1923................................
.3321 1914. .
. 1833 1924................................
1904
. 1634 1925................................
1905
.3169 1915
1900.
.2915 1916................................ . 1878 1926..............................
1907............
.2586 1917................................ . 2522 1927................................
1(108 .............................
. 1952 1918................................ .2890 1928................................
.2256 1929................................
1909
.2186 1919__
T able 23.— Q uarterly
and
Period
1914
Second quarter..........................
Third quarter............................
Fourth quarter..........................
January.......................................
February....................................
March.........................................
April____ _________ _______
May.............. .
June............................................
July............................................
August........ .............. ..............
•September..................................
October.....................................
November.................................
December...................................
M onthly A verage E xchange R ates
C hilean P eso
1915
1916
1917
1918
1919
1920
s
T able 22.— Y early A verage E xchange R ates
of the
1921
$0. 2282 $0. 1509 $0.1685 $0. 2216 $0. 2842 $0. 2771 $0. 2J1R $0. 1449
.2356 . 1588 .1739 . 1303 .3271 . 2565 . 1998 . 1190
.2295 . 1664 . 1905 . 270fi . 3299 . 1882 . 1800 . 104«;
. 1865 .1769 . 2175 .2863 .2414 . 1933 . 1460 . 1118
.2188 . 1485 . 1691 .2310 .2771 .2584 .2074 . 1432
. 2310 . 1501 . 1673 . 2210 . 2756 .2770 . 2133 . 1440
. 2348 . 1541 . 1691 .2128 . 3000 . 2900 .2140 . 1470
.2371 . 1637 .1707 .2143 .3104 . 2040 .2120 . 1298
.2333 . 1559 . 172ii . 2316 . 3308 . 2474 . 1970 . 1187
. 2364 . 1568 .1785 . 2449 .3401 .2580 . 1898 . 1086
.2318 .1584 . 1835 .2498 .3346 . 1935 . 1911 . 1044
.2211 . 1624 . 1858 . 2621 .3288 . 1818 . 1810 . 1024
. 2350 . 1785 . 2022 . 2998 . 3202 . 1894 . 1679 . 1071
. 1900 . 1793 . 2081 . 2848 .27:10 . 2007 . 1559 . 1173
. 1845 .1784 . 2143 . 2870 . 2359 . 1920 . 1400 .1104
. 1845 . J731 . 2301 .2870 .2152 . 1873 . 1422 .1078
46
FOREIGN CURRENCY AND EXCHANGE
T able 23.—Q uarterly
and M onthly A verage E xchange R ates
C h ilea n P eso — Continued
op the
1924
1925
1927
1928 1929
Period
1922
1923
1926
First quarter.............................. $0.1064 $0.1249 $0. 1009 $0. 1110 $0.1208 $0. 1201 $0. 1221 $0.1206
Second quarter........................ .1193 .1284 . 1070 .1130 . 1207 . 1202 . 1220 . 1205
Third quarter............................ . 1348 . 1241 . 1018 .1187 . 1210 . 1204 . 1210 . 1205
Fourth quarter.......................... .1280 .1116 .1122 .1214 .1206 .1219 .1207 . 1208
January....................................... . 1013 .1282 . 1036 .1135 .1204 .1202 .1221 .1205
February................................... .1040 .1199 . 1013 . 1084 . 1212 . 1200 .1221 .1205
March......................................... . 1140 .1267 . 0977 . 1110 .1208 .1200 .1221 . 1206
April............................................ . 1128 . 1231 .1054 . 1117 . 1212 . .1203 .1220 . 1206
May............................................ . 1187 .1282 .1097 . 1140 . 1204 .1202 .1219 . 1204
Juno............................................ .1264 . 1340 .1060 . 1132 . 1204 .1202 . 1220 .1204
July............................................. .1297 . 1263 .1011 .1169 .1205 .1202 .1214 .1204
August........................................ .1375 .1221 .1000 . 1191 . 1212 . 1203 .1208 . 1206
September.................................. .1373 .1238 . 1044 .1202 . 1213 .1207 .1209 . 1206
October....................................... . 1361 . 1175 . 1105 . 1206 . 1210 . 1217 .1208 .1207
November.... ............................. .1238 .1108 . 1127 . 1219 .1205 . 1218 .1206 .1208
December................................... .1241 . 1066 .1133 .1216 .1204 . 1221 . 1207 .1209
CHINA
Many varieties of coins are in circulation in China, also notes of
several foreign national banks and provincial Chinese hanks.
Yuan Shih-kai dollar .—The theoretical standard coin of China is
the Yuan Shih-kai dollar, commonly known as the Yuan dollar or
simply the yuan. This coin (about 26.8567 grams [414.46 grains] of
silver 0.890 line), bearing the image of President Yuan Shih-kai, began
to be minted in 1914. Up to March, 1920, 383,903,000 Yuan dollars
had been minted. They are now widely circulated in the Northern
Provinces and the Yangtze Valley.
t h e s e v e r a l t a e l s in c o m m o n u s e
H aikwan or customs tael .—The word “ tael” signifies a weight and,
by extension, also a medium of currency in silver. The word “ tael,”
however, is not Chinese; it is derived either from the Malayan word
“ tahil ” or from the Indian word “ tola.” The Chinese word for “ tael ”
is “liang,” meaning a certain measure of weight.
All duties levied by the Maritime Customs are calculated in the
haikwan tael, which is an arbitrary standard of currency not used
for commercial or business transactions of any other kind. In theory
it is a pure silver tael weighing about 37.797 grams (583.3 grains).
The haikwan tael is entirely a money of account, duties being paid, as
a matter of fact, in the local currency of the port at a rate of exchange
established on the opening of the customhouse at each port. The
exchange rates of the haikwan tael in foreign currency are fixed each
month by the customs authorities. Par in terms of the United States
dollar varies with the price of silver.
Tsaoping or Shanghai tael.—The Tsaoping or Shanghai tael is the
tael in general use in Shanghai, in which foreign exchange rates are
quoted by the banks. This tael contains 35.332 grams (545.25 grains)
of silver 0.980 fine. Par in terms of United States dollars varies
with the price of silver.
Other well-known taels circulating in China are the Tientsin tael,
the Peking or Kungfah tael, the Hankow tael, and the Chefoo tael.
Exchange values of these are not at hand.
POPULARITY OF DOLLAR COINS
The silver dollar coin has become very popular in China and enjoys
an extensive circulation throughout the entire country. The Kemmerer Commission (composed of American experts invited by the
FOREIGN CURRENCY AND EXCHANGE
47
Chinese Government to advise upon financial matters) has recently
recommended the gradual adoption of the gold standard, with a silver
coin, to be called a “sun'-’ and to have a par value of $0.40 United
States currency, as the monetary unit.
In addition to the Yuan dollar, there are now in circulation the
Hong Kong dollar, the British dollar, and the Mexican dollar. The
Hong Kong dollar and British dollar each contain 26.957 grams (416
grains) of silver 0.900 tine; the Mexican dollar, 27.07 grams (417.74
grains) of silver 0.9027 tine. The Hong Kong dollar and British
dollar have the same exchange value. The Hong Kong dollar is con
fined more or less to Hong Kong and its vicinity. The British dollar
became popular in North China, where it was imported in considera
ble quantities until 1914, when it had to make way for the Yuan
Shih-kai dollar. It is reported that the Mexican dollar is fast dis
appearing from China, circulation thereof being now confined to the
Shanghai district. The par value of these coins, in terms of United
States dollars, varies with the price of silver.
BASIS OF STATISTICS
The basis for the exchange rates given in the tables following is as
follows:
For the Shanghai tael: 1900-1918, official quotations, bank’s selling
rate on London for cable transfers (pence converted to United States
dollars; see United Kingdom, p. 175, for the exchange value of the
penny); 1919-1929, cable transfers, New York on Shanghai. From
1900 to 1918 the rates are mid-points between yearly high and low
rates; from 1919 to 1929, averages are as computed from daily rates
by the Federal Reserve Board. Quarterly averages are computed
from monthly averages.
For the haikwan tael: 1900-1928, demand drafts on New York, as
settled each month by the customs authorities. Yearly averages are
computed from monthly averages.
For the Yuan dollar: 1922-1929, cable transfers, New York on
Shanghai. Yearly averages are as computed from daily rates by the
Federal Reserve Board. Quarterly averages are computed from
monthly averages.
For average exchange rates of the Hong Kong dollar and Mexican
dollar, see Ilong Kong, p. 94.
T able
24.— Y e a r l y A v e r a g e E x c h a n g e R a t e s
the
Year
1900..............................................
1901..............................................
1902...
1903...
1904.............................................
1905..
1906...
1907.........
1908..............................................
1909....
1910.........
1911.........
1912..............................................
1913......... .
1914...........
H a ik w a n T a e l
Average rate
Shanghai Ilaikwan
tael
tael
$0. 75
$0. 6819
.(»439
.72
. 5704
.63
. 5767
.64
.66
.6147
. 6604
.73
.7250
.80
. 6553
.79
.5818
.65
.5653
. 63
.66
.5869
.5869
.65
.6616
.74
.6591
.73
. 0004
.67
of the
S h a n g h a i T a e l an d
Year
1915..............................................
1916..............................................
1917..............................................
1918..............................................
1919..............................................
1920..............................................
1921..............................................
1922..............................................
1923..............................................
1924..............................................
1925..............................................
1926..............................................
1927..............................................
1928..............................................
1929..............................................
Average rate
Shanghai Ilaikwan
tael
tael
$0.5519
$0. 62
.7077
.79
.9187
1.03
1.1230
1.26
1. 2984
1.39
1.1860
1.24
.7078
. 76
. 7493
.83
.7202
.80
.7268
.81
.7577
.84
. 6842
.76
.6210
.69
.71
.(>430
.5842
.64
48
FOREIGN CURRENCY AND EXCHANGE
T able 25.— Q uarterly
and
M onthly A verage E xchange R ates
S hanghai T ael
1919
Period
1920
1921
1922
1923
First quarter................................................... $1.1839 $1.5700 $0. 0984 $0. 7235 $0. 7309
Second quarter.............................................. 1. 2048 1.2143
. 7729
.0731
. 7373
Third quarter..................................... ............ 1.2850 1.0752
. 0920
.7726
.7017
Fourth quarter............................................. 1. 5140
. 8902
.7054
.7259
.7099
January............................................................ 1.2430 1.6130
.7415
.7090
.7193
February............. ............................ ............. 1. 1870 1. 0100
.0840
.7215
.7182
March......... .............................................. .
1.1210 1.4870
. 0422
.7075
.7553
April............ ................................................ 1.1345 1.3840
. 0730
. 7394
.7450
May............................................................... 1.2311 - 1.1984
.7894
.0827
.7453
June................................................................ 1.2488 1.0605
.7903
.7217
.6035
July................................................................. 1.2350 1.0355
.6692
.7782
.7003
August........................................ ..............
. 0971
1.30(H) 1.1210
. 07S6
. 7096
September........... .................................. ...... 1.3219 1.0090
.7300
. 7701
.7078
October....................... ................................ 1.3800
.9874
. 7485
.7840
. 0995
November......................................... ........ . 1.5390
.7187
. 7076
.9130
.7590
December................................................... 1.0188
.7883
.7532
.7104
.7225
Period
1925
First quarter.-----------------------------------Second quarter................................................
Third quarter................... ...........................
Fourth quarter...............................................
January............................................................
February.................................................... . _.
March............ ................................................
M ay............................................. ...............................
June..................................... ...........................
July................................................................
August.................................................. .........
September................................................... .
October_____ ________________________
November........................................ ..............
December........................................................
1927
1926
1928
$0. 7405 $0. 7373 $0. 0198 $0. 0330
. 7101
.7453
. 0231
.6531
. 7744
. 08S0 .6129
.0404
. 7647
.5946
.6290
.0386
. 7534
.7475
.0167
.6375
. 7526
.7374
.0378
.0311
. 7336
.7271
. 0050
. 0305
. 7323
.7087
.0201
. 0325
. 7420
.7178
.0217
.6044
. 7609 .7217
.6274
.6623
.7656
.7130
.6228
.0523
. 7729
. 0809
. 0500
. 6038
.7847
. 6000
.0121
. 6309
.7790
. 5998
.(»404
. 0183
.7582
.5942
.6327
.0400
.7508
.5897
. 6379 .6355
T able 26.— Y early A verage E xchange R ates
of the
of the
1924
$0. 7049
. 7066
. 7342
.7625
.7027
.7120
.7000
. 6974
. 7088
.7137
.7167
. 7332
.7527
. 7098
.7030
.7547
1929
$0. 6252
. 5954
.5719
.5439
.0312
. 0220
.6223
. 6125
.5962
.5776
.5784
. 5769
. 5004
. 5477
. 5472
.5368
Y uan D ollar
Average
Average
Year
Year
rate
rate
1922.................................. $0. 5561 1925................................ $0. 5091 1928.........
1923.................................. .5262 1926................................ .4998 1929___
1924..................................
.4394
.5270 1927....
Average
rate
$0. 4614
.4190
T able 27.— Q uarterly
and
o f the
Period
1922
Year
M onthly A verage E xchange R ates
Y uan D ollar
1923
1924
1925
1926
1927
1928
1929
First quarter............................ $0.5415 $0. .1367 $0. 50.58 $0. 5603 $0. 5531 $0. 4398 $0. 4516 $0. 4486
Second quarter........................ . 5688 .5414 .5155 . 5579 .5278 . 4404 .4676 .4276
Third quarter......... ................ . 5713 .5151 .5303 .6814 .4932 .4314 . 4655 .4100
Fourth quarter.......................... .5398 .5108 .5567 .5767 .4253 .4470 .4602 .3896
January..................................... .5475 .5283 . 5041 . 5671 .5572 .4392 .4514 . 4541
February................................
. 5436 .5287 .5087 .5647, .5551 .4512
. 4456
March........................................ . 5335 .5531 .5046 .5490 . 5469 .4290 .4498
. 4537
A pril...-.................................... . 5505 . 5461 .5090 .5480 . 5254 . 4391 .4550 .. 4462
4398
M ay ......................................... .5798 . 5455 .5180 .5567 .5285
.4729 .4280
June............................................ .5762 .5327 .5194 .5691 .5294 .4370
.4452 .4748 .4149
July............................................. .5738 . 5216 .5231 .5746 .5082 .4358 .4685 .4155
August....................................... . 5705 . 5107 .5307 .5767 .4984 .4263 .4685 .4136
September.................................. .5697 .5131 . 5372 .5928 .4731 .432*2 .4595 .4010
October...................................... .5.564 .5110 .5515 . 5915 .4254 .4406
.3911
November.................................. .5348 .5092 .5567 .5721 . 4255 .4486 .4620
.4617 .3920
December................. ................ .5281 .5121 .5620 .5666 .4249 .4519 .4568 .3857
FOREIGN CURRENCY AND EXCHANGE
CHOSEN (KOREA)
49
The monetary unit of Chosen is the same as that of Japan, namely,
the yen of 100 sen, representing 833.33 milligrams of gold 0.900 fine
(750 milligrams of fine gold), the par value of which is $0.4985 United
States currency. (See Japan, p. 107, for exchange rates, etc.) The
currency consists of 5, 10, and 20 yen gold pieces and subsidiary coins
of silver, nickel, and bronze, in yen, sen, and rin denominations.
Notes of the Bank of Chosen (which was established in August,
1909) constitute the principal circulating ipedium. These notes are
convertible. Besides issuing, under its charter, convertible notes
on the security of gold specie, gold and silver bullion, and the con
vertible notes of the Bank of Japan, the Bank of Chosen is authorized
to issue notes, not exceeding 50,000,000 yen, on the security of
Exchequer bills and other reliable bills or trade paper.
COLOMBIA
The gold peso (plural, pesos) of 100 centavos, the equivalent of
one-fifth of the pound sterling, or $0.9733 United States currency,
was established as Colombia’s monetary unit by the law of June 12,
1907. The 5-peso gold piece is of the same weight and fineness as
the pound sterling (7.9881 grams of gold 0.916% fine). Gold coins
are of 2%, 5, and 10 peso denominations; there are also subsidiary
coins of silver (0.900 fine) and nickel in peso and centavo denomina
tions. Colombia uses the dollar mark ($) as the symbol for the peso.
The circulating medium in addition to gold and silver coins con
sists chiefly of notes of the Banco de la Republics and balances of
issues of old paper money not convertible into gold but circulating
indiscriminately and at parity with other currency. The legal
minimum reserve requirement of the Bank of the Republic is 60 per
cent gold and foreign exchange against notes and deposits; the actual
gold requirement is 36 per cent. The bank is specifically authorized,
subject to the payment of a tax, to permit the reserve ratio to fall
below the legal minimum.
During the three years of civil war (1899-1902) paper money was
issued in large quantities—estimated at the close of 1902 at some
850,000,000 pesos—by the central Government, by the various
provinces, and by military leaders in the field.
Law No. 59 of 1905 authorized the coinage of a new gold currency
and fixed the value of the paper money at 100 to 1 for the payment of
all obligations contracted in gold. The new peso was to be the exact
equivalent of the United States dollar, but it does not appear that
any of this money was actually minted.
OPERATIONS OF THE JUNTA DE CONVERSION
Law No. 69 of 1909 created a conversion board (Junta de Con
version) whose principal functions included the exchange of wom-out
paper currency for new standard notes, the issue of new subsidiary
coins, the stabilization of the value of the paper money, and the
charge of the conversion fund which was gradually to be formed
as a tangible backing for the fiduciary currency. The Junta de
Conversion began operations in January, 1910, and remained in
existence until it was superseded by the Banco de la Republics in
July, 1923. In 1910 the British gold coins were made legal tender
50
FOREIGN CURRENCY AND EXCHANGE
at the rate of 500 Colombian paper pesos to the pound sterling.
In 1913 the Junta de Conversion vas directed by law to replace tul
paper money in circulation with a new issue of notes representing
gold pesos, at the ratio of 100 to 1. The new notes were called
“ gold notes” (billetes representativos de oro). The entire issue
ultimately amounted to about 10,361,000 pesos.
Soon after the outbreak of the World War in 1914 gold disappeared
from the country, leaving in circulation only the paper money supple
mented by fractional silver and minor nickel coins. The stock of
actual money was only about 10,000,000 pesos.
The first new element to appear in the currency was the “ cédulas
hipotecarias,” or mortgage bonds of very small denominations bearing
nominal interest rates (2 or 4 per cent) ; these were put out by banks
which were legally authorized to issue interest-bearing bonds against
mortgages on real estate. Law No. 89 of 1920 provided that arrange
ments should be made by the Government and the banks for the
gradual withdrawal of these issues.
To provide more currency for general use, law No. 51 of 1918
authorized the issue of special notes (bonos bancarios). These were
all withdrawn by the middle of 1924.
The Government, although its finances were severely restricted
during the greater part of the World War, did not resort to the
issuance of paper money with which to balance accounts until 1919.
In that year 4,000,000 pesos of “cédulas de tesorería,” or Treasury
notes, were issued; these bore 2 per cent interest. They were put
into circulation in payment of accounts and services. The final
addition to the inconvertible paper circulation was made in 1922,
when the Government, to meet part of the deficit or floating debt,
issued 6,000,000 pesos in notes of small denomination, called “bonos
del tesoro,” or treasury bonds. (Law No. 6 of 1922.)
BANK OF THE REPUBLIC
In July, 1923, the Banco de la República took over the duties of
the Junta de Conversion. While it was designed to serve as the
cornerstone of the commercial banking system of the country, its
functions of note issue, unification of the currency, and stabilization
of exchange have overshadowed its general relation to the national
banking structure. Its capital was placed at 10,000,000 pesos, of
which the Government subscribed 5,000,000 pesos. The exclusive
right of note issue was granted the bank for the term of its charter,
20 years. The notes are not legal tender but are receivable in pay
ment of public dues so long as they are convertible into gold.
The bank acts as the instrumentality for the withdrawal from
circulation of the various kinds of fiduciary paper money. As a
matter of fact the inconvertible paper has been reduced from 23,397,000 pesos in June, 1923, to 7,930,000 pesos at the end of December,
1929; meanwhile the notes of the Banco de la República have in
creased from 10,180,000 pesos to 39,074,000 pesos, against which
latter sum it had reserves of: Gold at home, 22,371,000 pesos; gold
abroad, 15,377,000 pesos.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 28
and 29 is: 1900-1912, approximate rates, sight drafts, Bogota on
New York; 1913-1925, sight drafts, Bogota on New York; 1926-
51
FOREIGN CURRENCY AND EXCHANGE
1929, cable transfers, New York on Bogota. From 1913 to 1925,
yearly averages are computed from monthly averages; from 1926
to 1929, averages are as computed from daily rates by the Federal
Reserve Board. Quarterly averages are computed from monthly
averages.
T able 28.— Y early A verage E xchange R ates
Year
Average
rate
of the
Average
rate
Year
C olombian P eso
Average
rate
Year
1900.................................. i $0. 0950 1910................................ i $0.9709 1920................................
1901.................................. i . 0299 1911................................ i . 9709 1921................................
1902.................................. ».0150 1912................................ 1.9709 1922................................
1903...............................
» .0101 1913................................ .9664 1923................................
1904...............................
» .0103 1914................................ .9606 1924................................
1905......................
1.0101 1915................................ .9398 1925....................... .......
1906...............
».0100 1916................................ . 9706 1926................................
1907...............
1.0100 1917................................ . 9302 1927................................
1908......................
1.0100 1918...........................
1.0572 192S................................
1909.................................. 1.0100 1919................................ 1.1059 1929................................
$0.9019
.8809
.9239
.9518
.9917
.9835
.9845
.9769
.9769
.9655
1 Approximate. Paper peso, 1900-1909; gold peso, 1910-1929.
T able 29.— Q uarterly
and
Period
1914
M onthly A verage E xchange R ates
C olombian P eso
1915
1916
1917
1918
1919
1920
of the
1921
First quarter.............................. $0.9643 $0. 9524 $0. 9598 $0. 9457 $0.«R02 $1. 2739 $0. 9730 $0. 8052
Second quarter........................... .9700 . 9395 . 9763 . 9228 1.0804 1. 1409 . 9294 .8761
Third quarter........................... . 9578 . 9360 .9705 .9308 1.0496 1.0129 . 8680 . 8836
Fourth quarter.......................... .9449 .9315 .9753 . 9226 1.1401 1.0024 .8529 .9006
January....................................... .9740 .9459 . 9597 . 9588 . 9590 1. 2739 .9999 .8680
February.................................... . 9456 . 9658 . 9652 . 9460 . 9804 1. 2739 . 9734 . 8735
March......................................... . 9732 . 9456 . 9546 . 9323 1.0013 1.2739 . 94.58 . 8.540
April........................................... .9615 . 9396 . 9630 .9195 1.0030 1.2179 .9487 . 8467
May............................................ . 9683 . 9390 .9748 .9074 1.1797 1.1631 . 9285 . 8787
June........................................... . 9802 . 9398 .9911 .9416 1.0584 1.0417 .9111 .9028
July...................................... ...... . 9762 . 9372 .9687 . 9353 1.046,0 1.0297 .8981 . 8993
August........................................ . 9537 .9397 . 96,90 . 9346 1.0-142 1.0037 .8719 .8719
September.................................. . 9434 .9311 . 9737 . 9225 1.0585 1.0052 . 8339 .8797
October....................................... . 9390 . 9239 . 9794 .9114 1. 066,9 1.0015 .8163 .8X04
November.................................. . 9434 . 9289 .9804 . 9230 1.1111 1.0021 .8394 . 9039
December................................... .9524 .9416 .9660 . 9333 1.2422 1.0035 .9031 .9174
Period
1922
1923
1924
1925
1926
1927
1928
1929
First quarter.............................. $0. 9140 $0.9531 $0.9773 $0. 9(X)2 $0. 9802 $0. 9785 $0. 9794 $0. 9698
.9788 . 9872 . 9740 .9817 . 9640
Second quarter.......................... .9156 . 9407 .996,7
Third quarter............................ .9137 . 9501 .9961 . 9820 . 9898 . 9793 .9754 . 9645
Fourth quarter.......................... .9537 .9637 .9973 .9867 .9746 .9757 .9724 .9639
January....................................... .9194 .9588 .96,85 .9922 .9862 .9803 .9800 .9709
February. .................................. .9072 .9557 . 9756 . 9920 . 9862 . 9795 . 9804 .9709
March......................................... .9155 . 9449 . 9877 . 9865 . 9862 . 9757 .9779 . 9677
April.......................................... .9122 .9416 . <»950 .9874 . 9862 . 9732 . 9821 . 9639
May............................................ .9158 . 9352 1.0000 . 9804 . 9862 .9747 .9819 . 9639
June............................................ .9187 .9452 .9950 .9685 .9893 .9742 .9810 . 9643
July............................................. .9147 . 9455 .9974 .9762 .9929 .9753 .9810 . 9657
August........................................ . 9105 .9510 . 9957 .9842 . 9938 .9828 . 9726 . 9639
September.................................. .9159 . 9537 . 9952 . 9856 . 9826 . 9799 . 9726 . 9639
October...................................... .9430 . 9557 . 9961 . 9864 . 9766 .9747 .9751 . 9639
November.................................. . 9633 .9703 . 9976 . 9867 . 9732 . 9750 .9711 . 9638
December................................... .9548 .9651 .9983 .9871 .9740 .9774 .9709 .9639
52
FOREIGN CURRENCY AND EXCHANGE
COSTA RICA
Costa Rica has as its monetary unit the colon (plural, colones) of
100 céntimos, stabilized at $0.25 United States currency, and there
fore representing 417.95 milligrams of gold 0.900 fine. Prior to
March, 1924, the gold colon, representing 778 milligrams of gold
0.900 fine, had a par value of $0.4653. Since March, 1924, Costa
Rican exchange has been stabilized at 4 colones to the United States
dollar as the result of measures taken by the Government, including
the establishment of a conversion office (Caja de Conversion) in con
nection with the Banco Internacional, a Government-owned institu
tion.
The circulating media consist of paper money issued by the Banco
Internacional and of subsidiary coins in colon and céntimo denomi
nations. The paper currency is divided into two classes, inconvert
ible and convertible. Inconvertible notes are those issued in 1918
and 1919 by order of the Government. The convertible notes are
those issued by the conversion office attached to the Banco Inter
nacional against deposits of United States gold coin or sight drafts on
New York in equivalent amounts. All paper money circulates at the
new par; the total amount in circulation at the end of December,
1928, was 24,138,000 colones.
NEW MONETARY SYSTEM INAUGURATED
The monetary law of October, 1896, was adopted pursuant to a
contract negotiated between the Government and-the Banco de
Costa Rica in July of that, year which contained the details of a plan
of reform. This plan included the establishment of a new monetary
unit, the “colon,” which was to take the place of the old “ peso”
established in 1871. The colon was to be divided into 100 “ céntimos”
instead of “ centavos.” The gold value of the new monetary unit
was to be a little less than one-half that of the old peso. The Banco
de Costa Rica was to relinquish the exclusive privilege of note issue.
The Government estimated that to establish successfully the gold
standard about 4,000,000 colones in gold would be needed. Coining
of these was completed at Philadelphia by 1900; they were deposited
in the Banco de Costa Rica and the Government issued gold certifi
cates against them. The bank redeemed the certificates in silver
money and they were treated as the bank’s own notes. Meanwhile,
the various foreign silver coins in circulation were to be presented at
the treasury in exchange for national money. In May, 1900, the
President decreed that gold of the United States, England, France,
and Germany should be legal tender and circidate on an equal basis
with the colon at the following ratios:
Colones
United States dollar____________________________________
Pound sterling____ _____________________________________
20-franc piece__________________________________________
20-mark piece__________________________________________
2. 15
10.45
8. 25
10.20
In August, 1900, the importation of all silver coins, both national
and foreign, was prohibited, but the importation and exportation of
all gold coins remained free and untaxed. , Another important pro
vision of this decree was that individuals might present gold for coin
ing, paying a brassage charge of 1 per cent.
FOREIGN CURRENCY AND EXCHANGE
53
From the inauguration of the gold standard in 1900 until the middle
of 1914, the exchange rate of the colon was relatively stable at about
$0.4651, but the outbreak of the World War forced Costa Rica to re
sort to the expediency of irredeemable paper money. At that time
gold began to move out of the country.
NOTE-ISSUE PRIVILEGE ACCORDED BANCO INTERNACIONAL
The Banco Internacional was founded by executive decree of Octo
ber 9, 1914, its capital (about 2,000,000 colones) being contributed by
the Government. It was authorized to issue notes to the amount
of 4,000,000 colones; these notes were to be guaranteed by bonds de
posited in the National City Bank of New York, together with treas
ury bonds of 1914 which were guaranteed by customs duties and by
the national income from liquor. The bank was to loan 2,000,000
colones to the Government against the above treasury bonds; the
other 2,000,000 colones was to be available to the public as an emer
gency fund (such as for financing the harvesting of crops). The law
also provided that the bank accumulate a gold reserve by utilizing
its net profits to import gold from abroad. On October 31, 1916,
the gold reserve had risen to 750,000 colones. The notes of the Banco
Internacional were to be received in the Government offices on the
same basis as the other notes. In November, 1914, the exportation
of gold was prohibited.
After the revolution of January, 1917, the policy of the bank was
changed. The reserves were exhausted and its note issue in 1918 was
increased by 10,000,000 colones, of which amount 6,000,000 colones
was to be turned over to the Government without interest and
4,000,000 colones was to be loaned to individuals at 8 per cent interest.
In 1919 another issue of 15,000,000 colones was authorized, 10,000,000
colones to be turned over to the Government. However, before this
issue was effected came the overthrow of the Government in Sep
tember, 1919.
During 1917, to permit the Government to receive the benefit of
the rise in the price of silver, two laws were passed; the first, in June,
authorized the issue of silver notes (billetes de plata), with a metallic
reserve of only 40 per cent; the second, in September, authorized
the coining of silver of a fineness of only 0.500, instead of 0.900, as the
original monetary law provided.11 The amount of these silver notes
advanced from 618,750 colones in January, 1918, to 3,272,000 in
January, 1919; however, in July, 1924, they had been reduced to
about 900,000 colones and had practically disappeared in 1925.
CONVERSION OFFICE CREATED TO STABILIZE COLON
One of the first acts of the newTadministration that came into office
in September, 1919, was to grant to the Banco Internacional and the
public Treasury a moratorium of one year, and on March 31, 1921,
Congress decreed that the notes of the Banco Internacional should
continue inconvertible untd a later law. On July 15, 1921, the private
banks were deprived of their light of note issue. (This circulation
had risen to 3,136,000 colones in June, 1918, but was reduced tol43,000
colones in December, 1923.)1
11 The 50-centimo piece, the largest silver coin, contained 10 grams (154.3236 grains) of silver 0.900 fine, as
arranged by the monetary law of 1900.
54
FOREIGN CURRENCY AND EXCHANGE
To simplify the paper currency of Costa Rica a law was passed, on
May 19, 1922, by which the only paper money of the country was to
be the notes of the Banco Internacional, which institution was
authorized to increase its circulation by 4,282,000 colones in order to
take over the other paper money. In October, 1922, the Conversion
Office (Caja de Conversion) was created to provide the means for
stabilizing the colon at the new legal ratio of 4 to the United States
dollar. The Caja came into active operation in March, 1924.
BASIS OF STATISTICS
The basis for the exchange rates in Table 30 is: 1914-1929, sight
drafts on New York.
For conversion purposes the ratio of 2.15 colones to the United
States dollar, or $0.4651, may be used from 1900 to 1913; thereafter,
the rates as shown. However, trade statistics should be converted
in accordance with the rate as given in the Anuario Estadistico—that
is, at the ratio of 4 colones to the United States dollar.
T a ble
30.— Y e a r l y
Year
A v era g e E x c h a n g e R a tes o f t h e C osta R ica n C olon
Average
rate
Year
Average
rate
1914................................ $0.4545 1920.............................. $0. 2994
1915................................. .3891 1921.............................. .2257
1916................................ .3937 1922.............................. .2299
1917................................. .2653 1923.............................. .2217
1918................................ .2237 1924.............................. .2461
1919................................ .2551 1925.............................. >. 2497
i Approximate.
Year
Average
rate
1926............................
1927..................
1928...........................
1929...................
>$0. 2497
». 2497
i . 2497
1.2497
CUBA
Cuba’s monetary unit is the peso (plural, pesos) of 100 centavos,
representing 1.6718 grams of gold 0.900 fine (1.5046 grams of fine
gold—the same content as that of the United States gold dollar), the
par value of which is $1 United States currency. The gold peso was
established by the law of October, 1914, promulgated on November
7 of the same year. The gold coins are of 1, 2, 4, 5, 10, and 20 pesos.
There are also subsidiary coins of silver, nickel, and copper in peso
and centavo denominations. The coinage of gold is unlimited, but
that of silver is restricted to 12,000,000 pesos.
Apart from the metallic currency, bank notes of the United States
(mostly Federal Reserve notes) are the principal circulating medium;
these notes are estimated at about $150,000,000 at the present time.
There is no Cuban paper money.
UNITED STATES CURRENCY THE OFFICIAL MONEY OF ACCOUNT
Immediately after the establishment of Cuban independence by
the treaty of Paris (December 10, 1898) United States currency began
to circulate and was adopted as the official money of account, while the
old Spanish coins circulated side by side at approximate equivalence.
Dealings in foreign exchange in Cuba during the World War and
thereafter followed exactly the rates established in the United States.
Transfer of funds between Habana and New York in very small
amounts costs one-half of 1 per cent; for larger amounts, the rates are
from one-fourth to one-eighth of 1 per cent.
55
FOREIGN CURRENCY AND EXCHANGE
BASIS OF STATISTICS
While exact exchange rates from 1900 to 1921 are not available, the
par value may be used for that period. The rates as given in Tables
31 and 32 are quoted from the Bulletin of the Federal Reserve Board;
they represent noon buying rates for cable transfers, New York on
Habana. Yearly and monthly averages are computed from daily
rates; quarterly averages are computed from monthly averages.
T able 31.— Y early A verage E xchange R ates
Year
Average
rate
of the
Average
rate
Year
C uban P eso
Average
rate
Year
$0. 9985 1925................................ $0.9994 1928................................
. 9995 1926................................ .9993 1929................................
.9998 1927................................ . 9997
1922..........
1923............
1924............
T able 32,— Q uarterly
and
M onthly A verage E xchange R ates
C uban P eso
1921
1922
1923
1924
First quarter.......................... c)
Second quarter......................
Third quarter........................ $0. <•)
9922
Fouth quarter........................ .9957
January.................................. «
February................................ (■ )
March.................................... (>>
April....................................... 0)
May................ ......................
June........................................ to
«
July........................................ .9902
August.................................. .9932
September.............................. . 9932
October.................................. . 9952
November............................. . 9959
December.............................. .9960
$0.. 9983
9982
. 9985
.9990
.9972
.9985
.9989
.9981
.9985
.9984
.9980
.9987
. 9987
.9988
. 9988
.9994
$0.9996
.9999
. 9990
.9995
.9995
. 9996
. 9998
1.0000
1.0000
.9998
.9993
.9988
. 9988
.9991
.9999
.9995
$1.0000
1.0003
. 9993
.9995
.9997
.9997
1.0005
1.0004
1.0004
1.0001
.9994
. 9992
.9993
. 9994
. 9995
.9996
Period
1Not available.
1925
1926
$0. 9997 $0.9994
.9997 . 9993
. 9988 . 9993
.9992 .9993
. 9996. .9990
1. 0001 . 99%
. 9995 .9995
. 9993 . 9992
1. (KXK) . 9994
.9997 .9993
.9991 .9992
. 9989 . 9992
.9985 . 9i«>4
. 9992 . 9992
. 9994 . 9995
.9991 . 9992
$0.9996
.9996
of t h e
1927
1928
1929
$1.0002
. 9997
. 9996
.9993
. 9995
1.0007
1.0003
1. (XX)3
. 9996
.9992
.9993
1.0001
. 9995
9994
. 9993
.9992
$1.0001
. 9997
.9995
.9993
. 9992
1.0004
1.0006
.$>999
. 9990
.9995
. 9$>93
.9997
. 9%4
.9993
. 9993
.9993
$1.0001
. $>«>98
. i»$n>4
. $n>94
.9990
1.0003
1. 0003
. 9997
1.0001
.9995
.9991
. «>$>97
. $>993
. <>«>«>4
. 9996
.9993
CYPRUS 12
In the island of Cyprus the monetary unit is the pound sterling,
par $4.8665 United States currency (see United Kingdom, p. 174, for
exchange rates, etc.), which is the equivalent of 180 Cyprus piastres.
Coins current are gold sovereigns and subsidiary piastre pieces of
silver, copper, and bronze.
Currency notes of denominations from 5s. to £10 were issued by the
Government authorized by proclamation, under martial law, of the
high commissioner, dated September 5, 1917, and have been continued
in force by various succeeding orders in council. These notes are
limited to a maximum of £700,000. The amount of such notes out
standing at the end of December, 1927, was £474,000.
Government accounts and banking and commercial accounts are
kept in pounds sterling, shillings, and piastres.
,J In 1878 the island of Cyprus passed under the administration of Great Britain, and on the outbreak of
the war with Turkey in 1914 was definitely annexed to the British Crown by an order in council of Novenil*?r 5, 1914. This annexation was formally recognized by Turkey under the treaty of Lausanne, ratified
August 6, 1924.
56
FOREIGN CURRENCY AND EXCHANGE
CZECHOSLOVAKIA
Czechoslovakia has for its monetary unit the Czechoslovak koruna
(plural, koruny) of 100 heller, representing 49.53 milligrams of gold
0.900 fine (44.58 milligrams of fine gold), the new par value of which
is $0.0296 United States currency. The law stabilizing the Czecho
slovak koruna in relation to gold was enacted by the Standing Com
mittee of the Czechoslovak National Assembly on November 7, 1929,
and. became effective November 27. It was ratified by both houses
of Parliament February 5, 1930. The koruna has been stable at
$0.0296 since the opening of the National Bank of Czechoslovakia
on April 1, 1926. Prior to that date its nominal par was that of the
Austro-Hungarian krone, or $0.2026.
The principal circulating medium, apart from subsidiary coins of
nickel-bronze and bronze in koruna and heller denominations con
sists of the notes of the National Bank of Czechoslovakia, which is
the sole bank of issue. When this bank opened in 1926 the legal
minimum reserve requirement was 20 per cent gold (and silver) against
notes plus other demand liabilities, minus the amount represented by
debt in respect of State notes outstanding; this ratio was to be
increased 1 per cent each year over a period of 15 years; silver in
the reserve must not exceed one-fourth. Under the decision of the
cabinet council of October 16, 1929, the bank must hold a minimum
gold cover of 25 per cent by the end of 1929, 30 per cent by the end
of 1930, and 35 per cent by the end of 1935.
“ NATIONALIZATION” OF EARLIER NOTES
On attainment of national independence by the treaty of St.
Germain September 10, 1919, the notes of the Austro-Hungarian ,
Bank continued to circulate as before in the various sections of \
Czechoslovakia. Article 206 of the treaty required each of the
States which formerly had been a part of Austria-Hungary to stamp
the notes of the Austro-Hungarian Bank then circulating in its terri
tory. Meanwhile, the National Assembly of Czechoslovakia, antici
pating this move, closed its frontiers from February 26 to March 9,
1919; during this period all the notes of the Austro-Hungarian Bank
were ordered to be brought to the public offices and banks to be
stamped with the Czechoslovak stamp. After March 9, 1919, only
notes with the Czechoslovak stamp were legal tender.
There were presented for stamping about 8,000,000,000 kronen in
notes of the Austro-Hungarian Bank. The Government also took I
over the deposit accounts of the Austro-Hungarian Bank in its
branches in Czechoslovakia, which amounted to 1,617,000,000 kronen,
giving a total liability of about 10,000,000,000 kronen. Of the
8,000,000,000 kronen presented, 2,134,000,000 kronen was retained
by the Government in the form of a forced loan from the public, bear
ing interest at 1 per cent. Receipts given for these kronen were
declared acceptable by the Government in payment of the levy on
capital.
BANKING OFFICE REPLACED BY NATIONAL BANK
Administration of the currency system was delegated by the
Government to the Banking Office established under the Ministry of
Finance. By the treaty of St. Germain, Czechoslovakia was to
share in the distribution of the reserves and assets of the Austro-
FOREIGN CURRENCY AND EXCHANGE
57
Hungarian Bank, which went into liquidation in January, 1920.
Claims of the Government against the bank thus tended to offset the
liabilities assumed by the Government. The Banking Office endeav
ored to accumulate a metallic reserve, and by May, 1925, had built
up the gold and silver holdings to 1,000,000,000 Czechoslovak koruny
and the foreign currency and balances abroad to about 568,000,000
koruny.
During 1919 and 1920 the note circulation increased rapidly; at the
end of December, 1921, it amounted to 12,130,000,000 koruny; after
that, however, it began to decrease and stood at 8,810,000,000 koruny
at the close of 1924, and at 8,230,000,000 koruny by the end of
December, 1929. On the same date reserves consisted of: Gold,
1.258.000. 000 koruny; balances abroad and foreign bank notes,
2.270.000. 000 koruny.
The Banking Office of the Ministry of Finance was looked upon as
a temporary institution, and in March, 1925, a bill was submitted
to Parliament providing for the establishment of a national bank to
replace it. This bank was to have a capital of $12,000,000, of which
one-third would be subscribed by the State and two-thirds by domestic
subscribers. As already said, the National Bank of Czechoslovakia
opened for business on April 1, 1926.
COURSE OF EXCHANGE
Despite a rigid policy against further inflation and the currency
measures undertaken in 1919 when the circulation was reduced, the
Czechoslovak koruna continued to depreciate during 1919 and 1920
and was worth a little less than $0.01 United States currency early
in 1920. A sharp reaction took place in the spring of 1920, and in
May the koruna advanced to about $0,025. However, by the end of
the year it had fallen again to about $0.01. On the foreign exchange
markets the Czechoslovak koruna was worth practically the same as
the German mark until the latter part of 1921. This parallelism was
probably due to the close economic and trade relationship between
the two countries. In the fall of 1921 the koruna was depressed as a
result of the mobilization against Hungary upon the return of the
former Emperor Charles. During 1922 the koruna advanced
rapidly, reaching the high point of $0,035. This appreciation was
owing to better trade conditions, decreased currency circulation, and
low internal prices, so that the domestic purchasing power of the
koruna was much greater than it had been. Furthermore, the metal
lic reserve had increased during 1922, giving greater confidence to the
currency system. Since 1923 the koruna has remained fairly stable.
BASIS OF STATISTICS
The basis for the exchange rates as given in Tables 33 and 34 is:
July, 1919, sight drafts, New York on Prague; August, 1919, to
March, 1921, cable transfers, New York on Prague; April-June, 1921,
sight drafts, New York on Prague; July, 1921, to December, 1929,.
noon buying rates for cable transfers, New York on Prague. Average
rates from July, 1919, to June, 1921, are computed from mid-points
between the monthly high and low rates; from July, 1921, to December
1929, average rates are as computed from daily rates by the Federal
1942°—30----- 5
58
FOREIGN CURRENCY ANT) EXCHANGE
Reserve Board. Quarterly averages are computed from monthly
averages.
T able 33.— Y early A verage E xchange R ates of the C zechoslovak K oruna
Year
Average
rate
1910.................................. i $0.0343
1920.................................. . 0157
1921.................................. .0126
1922.................................. .0242
Average
rate
Year
Average
rate
Year
I 1923................................ $0. 0296 1927................................
: 1924................................ .0295 1928................................
; 1925................................ .0296 1929................................
1926................................ .0296
$0. 0296
. 0296
.0290
1July-December.
T able 34.— Q uarterly
Period
and M onthly A verage E xchange
C zechoslovak K oruna
1921
First quarter...........................
Second quarter___________ mc)
Third quarter......................... $0. 0123
Fourth quarter....................... .0111
January.................................... «
February.................................. w
March......................................
April......................................... <«■ )
M ay.........................................
June.......................................... 0)
«
July.......................................... .0131
A ugust..................................... .0122
September............................... .0116
October................................... .0105
November............................... . 0104
December................................ .0125
1 Not available.
R ates
1922
1923
1924
1925
1926
1927
$0. 0177
.0194
.0277
.0319
.0173
.0186
.0173
.0196
.0192
. 0193
.0218
.0290
.0323
.0328
.0318
.0310
$0. 0293
. 0298
.0297
.0293
.0286
. 0296
.0297
.0298
.0298
.0299
.0300
. 0293
.0299
.0297
.0291
.0292
$0.0290
.0295
.0297
.0300
.0290
.0290
.0290
.0296
.0294
.0294
.0295
.0298
.0299
.0298
.0299
.0302
$0. 0299
.0296
.0295
.0296
.0300
.0299
.0297
.0296
.0296
.0296
.0296
. 0296
. 0296
.0296
.0296
.0296
$0.0296
.0296
.0296
.0296
.0296
.0296
. 0296
.0296
. 0296
.0296
.0296
. 0296
. 0296
.0296
. 0296
.0296
$0. 0296
.0296
.02%
.02%
.0296
.0296
.02%
.0296
. 0296
.0296
.02%
.0296
.02%
.02%
. 0296
.0296
DANZIG
1928
of the
1929
$0.0296 $0.0296
.0296 .0296
.0296 .0296
.02% .0296
.0296 .0296
.0296 .0296
0296 . 0296
. 0296 .029«)
. 0296 .0296
.0296 . 029«;
.0296 .029«;
. 0296 . 0296
. 0296 . 0296
.02% . 0296
.0296 .029«!
.0296 .0297
In the Free City of Danzig the Danzig gulden (plural gulden)
of 100 pfennige, equivalent at par to SO.19466 United States currency,
is the monetary unit. Prior to 1924 the unit of currency was the
German mark, par $0.2382. Current coins are gold pieces of 25 and
100 gulden and silver pieces of 1, 2, and 5 gulden.
On April 28, 1925, the gulden—having been officially stabilized at
25 gulden to the pound sterling on March 17, 1924 (when the Bank
of Danzig opened under legal obligation to buy and sell sterling at
fixed rates)—came into fixed relation with gold when England returned
to the gold standard. The gulden although effectively on the gold
standard is, strictly speaking, on the sterling standard and therefore
represents 319.524 milligrams of gold 0.916% fine (292.912 milligrams
of fine gold).
The Bank of Danzig has the sole right of note issue to 1953. The
legal minimum reserve requirement is 33% per cent gold and foreign
%exchange against outstanding notes. The reserve held against notes
in circulation in excess of 100 gulden per capita must be 100 per cent.
Foreign exchange may consist only of demand claims on the Bank
of England. At the end of December, 1929, note circulation amounted
to 37,797,000 gulden; on the same date, balances with the Bank of
England amounted to 16,660,000 gulden and foreign bills, etc.,
12,433,000 gulden.
FOREIGN CURRENCY AND EXCHANGE
59
DENMARK
Denmark has for its monetary unit the krone (plural, kroner),
representing 448.03 milligrams of gold 0.900 fine (403.23 milligrams
of fine gold), the par value of which is $0.26798 United States currency.
The krone is divided into 100 0 rer. Gold coins are of 10 and 20
kroner; there are also subsidiary coins in krone and 0 re denomina
tions. Practically no gold coins are now in circulation, the same being
true of the period preceding the World War.
The principal circulating medium since 1818 has been the notes of
the National Bank of Denmark. The minimum legal reserve require
ment is 50 per cent gold and foreign exchange against outstanding
notes; of this 50 per cent, at least three-fifths must be gold. Foreign
exchange may consist only of the bank’s noninterest-bearing demand
balances with the Bank of Norway and the Swedish Riksbank,
less indebtedness to these two banks, and noninterest-bearing demand
balances in a special account with the German Reichsbank. The
bank, when authorized by royal proclamation, and subject to payment
of a tax, may permit the reserve ratio to full below the legal minimum.
PARITY OF CURRENCIES OF SCANDINAVIAN MONETARY UNION
Prior to the World War Denmark was a member of the Scandina
vian Monetary Union. Under the treaties of 1873 and 1875 the gold
and silver coins of any one of the three Scandinavian countries were
legal tender in all of them. In practice the bank notes of the Scandi
navian central banks were also accepted at par in all three countries.
After the outbreak of the war, the monetary units of Norway, Sweden,
and Denmark remained “ pegged” together until the autumn of 1915.
The notes of the National Bank of Denmark were redeemable in
gold on demand prior to August 2 , 1914. The issue was unlimited,
except that the bank had to maintain a cash reserve of 50 per cent
against the notes outstanding and liquid assets equal to 125 per
cent of the remainder.
The convertibility of notes of the National Bank of Denmark was
suspended on August 2 , 1914, and four days later an embargo was
placed on the exportation of gold. The gold reserve at that time
stood at 68,934,000 kroner and the note circulation at 194,187,000
kroner. In November, 1920, the gold reserve had risen to 227,581,000
kroner and the note circulation to 555,220,000 kroner. Government
financing contributed to the inflation during the war and afterwards,
since large amounts of Government paper found their way into the
assets of the National Bank and served as security for deposits and
notes in circulation. Since 1920 the note circulation of the Bank of
Denmark has been gradually reduced and redemption in gold was
resumed on January 1 , 1927. At the end of December, 1929, notes
outstanding amounted to 367,000,000 kroner; at the same time gold
reserves stood at 172,000,000 kroner and net foreign assets at
91,000,000 kroner.
EFFECT OF WAR ON DANISH EXCHANGE
In relation to the United States dollar, the krone reached the high
point of $0.3875 in November, 1917, and averaged about $0.31 during
the first nine months of 1918; this was due in some measure to the
difficulties in the way of the transfer of gold, to trade restrictions
on the part of the United States, and especially to the fact that
60
FOREIGN CURRENCY AND EXCHANGE
the United States dollar was “ pegged” with the currencies of the
European Allies. In the spring of 1919 the Allied exchanges were
“ unpegged.” United States Treasury advances to the Allied Govern
ments practically stopped, consequently the supply of dollar exchange
in other markets was greatly reduced. The reduction in the artificial
supply of dollars was coupled with the removal of restrictions in
the United States upon exports, which led to an increased demand for
dollar exchange generally to'buy the much-desired United States
goods at relatively low prices.
The sharp drop in the dollar value of the krone in 1920 was the
result largely of exchange crises in the United States. Merchants
and dealers in the United States had been holding large amounts of
foreign exchange on which they suddenly tried to realize. However,
the fundamental reason for the depreciation of the krone was the
reduced purchasing power of the krone in Denmark; that is, a rise
in prices relatively greater than in the United States. Additional
causes were the unfavorable trade balance, the reacquisition of the
South Jutland Provinces (which necessitated the mobilization of very
large capital sums), and the world-wide trade slump in 1920.
In the autumn of 1923 the Government agreed to a proposal to
establish (December 15, 1923) an exchange equalization fund, to con
sist of foreign credits against which a committee of control was to sell
drafts in times of emergency. Effective March 31, 1924, the Valuta
Central was established with power to regulate foreign-exchange
transactions.
STABILIZATION LAW OF 1924
The improvement of krone exchange following the establishment of
the central currency office (Valuta Central), however, was of brief
duration. In July, 1924, the Government called a conference of rep
resentatives of industry and trade and of the several political parties
to consider the exchange question; the outcome was the currency
stabilization law of December 20, 1924, exempting the National
Bank of Denmark from the obligation to redeem its notes in gold until
January 1, 1927. The bank at the same time agreed to sell United
States dollars (the par value of which is 3.73 kroner per dollar) at a
rate which up to July 1, 1925, should not exceed 5.74; from this date
to December 31, 1925, 5.64; and during the first half of 1926 at a rate
not exceeding 5.32. Thus it was intended gradually to raise the
exchange value of the krone. To assist in carrying out these measures
the National Bank obtained an exchange credit for one year in the
United States of $40,000,000, guaranteed by the Danish Government,
which also agreed to repay within two years to the National Bank a
loan of 40,000,000 kroner which it had obtained in 1922. The Gov
ernment was to procure this money from special taxes.
As a matter of fact krone exchange rose too rapidly, and on Decem
ber 15, 1925, the currency stabilization act was amended. The
National Bank was obligated to maintain a minimum dollar-exchange
rate of $0,238 per krone during 1926, with the proviso, however, that
if exceptional circumstances should arise the Minister of Commerce
might authorize a temporary lowering of the rate, but not below $0.23.
The exchange credit of $40,000,000, which had not been drawn upon,
was renewed for another year.
On January 3, 1927, the first business day after the return to gold,
the krone was quoted at $0.2668 and gradually rose until the average
for December, 1927, was $0.268192.
61
FOREIGN CUEHENCY AND EXCHANGE
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 35 and
3G is: January, 1914, to June, 1921, sight drafts, New York on Copen
hagen; July, 1921, to December, 1929, noon buying rates for cable
transfers, New York on Copenhagen. Average rates from January,
1914, to October, 1918, are computed from mid-points between the
monthly high and low rates; from November, 1918, to December,
1929, averages are as computed from daily rates by the Federal
Reserve Board. Quarterly averages are computed from monthly
averages.
For conversion purposes, the par value may be used from 1900 to
1913.
T able 35.— Y early A verage E xchange R ates
Year
Average
rate
$(). 2603
.2580
. 2815
.3008
. 3005
.2328
1916
1918 ..
1919 ..
Average
rate
Year
and
Period
1914
K rone
Average
rate
Year
1926...............................
1927................................
1928................................
1929................................
$0. 2623
. 2673
.2674
.2668
M onthly A verage E xchange R ates
of the
1920................................
1921 ...
1922....... .......................
1923................................
1924................................
1925................................
T able 36.— Q uarterly
of the D a n is h
$0. 1578
. 1780
. 2095
. 1836
. 1672
.2113
D a n is h K r o n e
1915
1916
1917
1918
1919
1920
1921
2780 $0. 30S8 $0. 2624 $0. 1658 $0. 1797
First quarter.............................. $0. 2682 $0. 2475 $0. 2793 $0..2861
. 2953.
.3122 . 2447 . 1724 . 1779
Second quarter.......................... . 2686 .. 2585
2583 . 2792 . 3000 .3087 . 2224 . 1513 . 1655
Third quarter............................ «
.2678 .2723 .3390 .2724 .2042 .1404 . 1897
Fourth quarter........................ . «
.2745 .3100 .2670 .1760 .1806
January...................................... .2678 .2485 .2758
February.................................... . 2685 . 2447 .2775 . 2743 .3075 .2613 . 1490 . 1854
March......................................... . 2683 . 2494 .2845 . 2S53 . 3088 . 2589 . 1723 . 1731
1809
April............................................ . 2686 . 2550 . 2930 .2850 .3138 . 2519 . 1801
May......... ................................. . 2686 .2585 . 3025 .2840 . 3125 . 2432 . 1683 . 1807
June............................................ .2686 .2619 .2905 .2893 .3103 .2389 .1687 . 1721
.2716 .2600 .2858 .2923 .3110 .2283 . 1642 . 1578
July.......................................
. 2805 . 3008 .3144 . 2186 . 1496 .1619
August........................................ . 2744 .. 2575
2575 .2713 . 3068 . 3008 . 2203 . 1401 . 1767
September.................................. (•)
. 3344 . 2775 . 2164 . 1387 . 1892
.
2605
.2725
October..................................... <>)
2703 . 3563 . 26‘K) .2083 . 1341 . 1847
November........... .............. ...... .2551 .2713 ..2740
.3263 .2706 . 1878 . 1485 . 1952
.2513
.2715
December................... ...............
1922
Period
First quarter_____ _________
Second quarter..........................
Third quarter............................
Fourth quarter..........................
January.......................................
February..................................
April............................................
May............................................
June............................................
July.............................................
August.......................................
September..................................
October....... ..............................
November...... ........................—
December................. .............
1923
1924
1925
1926
1927
1928
1929
$0. 1790 $0.2543 $0. 2665 $0. 2678 $0.2666
$0. 2057 $0. 1936 $0.1631
. 2143 . 1851 . 1678 . 1879 . 2628 . 26.69 . 2682 . 26.64
.2138. • 1806 . 1640 . 2306 . 2653 . 2676 . 2670 . 2663
. 2036 .1752 .1751 . 2477 .2661 .2680 .2667 .2679
.1997 .1979 .1694 .1781 .2480 .2665 .2678 .2667
. 2064 . 1909 . 1600 .1781 . 2538 . 2665 . 2677 . 2667
.2111 . 1919 . 1568 . 1807 .2611 . 2665 . 2679 . 2665
.2122 . 1891 . 1664 . 1844 . 2617 . 2667 . 2682 . 2665
.2140 . 1865 . 1692 . 1881 . 2620 . 2668 . 2682 . 2665
.216(5 .1796 .1678 . 1911 .2648 .2672 .2682 . 2663
.2154 . 1754 . 1605 .2136 . 2650 .2673 .2673 .2664
. 2153 . 1846 .1621 .2330 . 2654 .2678 . 2669 . 2662
. 2106 . 1816 . 1695 . 2452 . 2655 .2677 . 2667 . 2662
.2019 . 1753 . 1733 .2458 . 2657 . 2679 . 2666 . 2674
.2021 .1720 . 1755 . 2486 . 2662 . 2680 . 2665 . 2679
.2067 .1782 .1764 .2486 .2664 .2682 .2669 .2683
1Indeterminable.
*Not available.
62
FOREIGN CURRENCY AND EXCHANGE
DOMINICAN REPUBLIC
By law of June 21, 1905, the Dominican Republic adopted the
United States gold dollar as its monetary unit. The national silver
currency in use at that time was given the arbitrary value of $0.20
to the peso. In 1918 an arrangement was made whereby a large
portion of the old silver was exported by the Government to realize
upon its bullion value, then in excess of the legal parity, and United
States currency has been the principal circulating medium ever since.
There is no Dominican paper money in circulation.
ECUADOR
The new sucre (plural, sucres) of 100 centavos, representing 334.37
milligrams of gold 0.900 fine (300.933 milligrams of fine gold), the par
value of which is approximately $0.20 United States currency, is
Ecuador’s present monetary unit. This new sucre was adopted by
virtue of a law, passed March 4, 1927, embodying the recommenda
tions of a commission of experts from the United States under the
chairmanship of Prof. E. W. Kemmerer. Gold coins in denomi
nations of 25 sucres (or 1 condor) and 50 sucres (or 2 condors) are
authorized; also silver and subsidiary coins of nickel and copper in
sucre and centavo denominations.
By the monetary law of 1898, which went into force on June 4, 1900,
Ecuador fixed the value of the sucre at one-tenth of the pound sterling.
The gold sucre therefore represented 813.6 milligrams of gold 0.900
fine, and its value in United States currency was $0,486. The Gov
ernment issued no paper money and the actual coinage of gold and
silver was inconsiderable. Bank notes supplied the needs of the
country for a circulating medium. Properly constituted banks were
by law permitted to issue notes up to three times their paid-in capital,
against which a metallic reserve of 50 per cent Was required.
BANCO CENTRAL NOW SOLE BANK OF ISSUE
The law of March 4, 1927, provided for the establishment of the
Banco Central del Ecuador; this bank is granted a charter for 50
years and is to have the sole right of note issue during this period.
These notes are redeemable on demand in gold or in exchange on New
York or London. The minimum legal reserve requirement is 50 per
cent. The bank opened for business August 10, 1927.
Prior to the establishment of the Banco Central del Ecuador, the
note-issue privilege was enjoyed by a number of banks. In order to
amalgamate these issues, the note liabilities of the former banks of
issue were transferred to the Caja Central, created for that purpose
by the law of June 23, 1926. In compensation for the note liabilities
the Caja Central took over the metallic reserves held against these
notes, together with Government obligations and other assets, which
when added to the metallic reserves were sufficient to furnish a cover
of 100 per cent against the note liability thus transferred. The
Banco Central, on the day of its opening, took over the assets and
liabilities of the Caja Central, which thereupon ceased to exist.
The law abrogates, as of August 10, 1927, all restrictions upon the
free importation and exportation of gold and silver. On the same
date the moratorium which had been in force since 1914 was abolished.
FOREIGN CURRENCY AND EXCHANGE
63
GOVERNMENTAL CONTROL OF EXCHANGE TRANSACTIONS
The principal effects of the World War on Ecuador’s currency and
exchange were (1) a prohibition of the exportation of gold coin and the
liberation of the banks from the obligation to convert their notes into
gold, decreed immediately after the outbreak of the war; (2) the decline
in the exchange value of the sucre that took place after the end of
1918; (3) the increasing indebtedness of the Government to the banks;
and (4) a persistent effort at official control of exchange rate« and
dealings, carried to an extent not attempted elsewhere in Latin
America.
At various times since 1917 the Government has sought to fix an
official exchange rate, with practically no effect upon conditions.
By a law of November, 1922, an official commission was established
to which exporters were obliged to sell the drafts representing the full
value of their shipments at an official rate fixed by the commission;
this control was relinquished October 22, 1924.
BASIS OF STATISTICS
• The basis for the average exchange rates as given in Tables 37 and
38 is: 1914-1925, sight drafts, Quito on New York (rates as quoted
in the Comercio Exterior del Ecuador, 1916-1926, Quito, 1927);
1926-1929, cable transfers, New York on Guayaquil (rates as quoted
by the Federal Reserve Board from the New York Journal of Com
merce). Yearly averages from 1914 to 1925 are computed from mid
points between the semimonthly high and low rates (quotations by
the Banco de Descuento); from 1926 to 1929, averages are as computed
from daily rates by the Federal Reserve Board. Quarterly averages
are computed from monthly averages.
For conversion purposes, the par value ($0,486) may be used
from 1900 to 1913.
T able 37.— Y early A verage E xchange R ates
Year
1014..............................
1915..............................
1916.......
1917...............
1918..............................
1919............................,
Average
rate
$0. 4757 '
.4714
.4414
. 4000
.3874 !
.4647
T able 38.— Q uarterly
Year
1920..............................
1921..............................
1922..............................
1923..............................
1924..............................
1925..............................
and
of the
Average
rate
$0.4462
. 2833
»72
.. 2057
. 1948
.2314
E cuadorean S ucre
Year
1926..............................
1927.............................
1928..............................
1929..............................
M onthly A verage E xchange R ates
E cuadorean S ucre
Average
rate
$0. 2006
. 1897
. 1991
. 2000
of the
1917
1916
1918
1919
1914
1915
1920 1921
$0. 4808 $0. 4831 $0. 4237 $0. 4000 $0. 4104 $0. 4616 $0. 4721 $0.3419
.4808 . 5022 . 4393 .4000 .4115 . 4675 .4715 . 2597
Second q u a r te r ..........................
T h ird q u a r t e r .....................................
. 4765 . 4642 .4680 . 4000 .3795 .4651 . 4495 . 2773
.4419 . 4387 .4011 .3582 .4651 .4004 .2700
F o u rth q u a r te r ................................... .4651
J a n u a r y ...................
.4808 .4678 . 4237 . 4000 .4082 .4415 .4084 .3738
F e h ru a r y ................................................ .4808
.4872 . 4237 . 4000 .4115 . 4739 .4739 . 3524
M a rc h ...................................................... .4808
. 4944 .4237 . 4000 .4115
4695 .4739 . 2994
.4808 .5115 .4237 . 4000 .4115 ..4651
M m l ...........................................
. 4739 . 2632
M ay.........
.4808 .5161 . 4343 . 4000 .4115 . 4678 . 4739 . 2530
J u n e ____
.4808 .4790 .4598 .4000 .4115 . 4695 .4667 .2628
J u ly ..................
.4808
4651 . 4673 . 4000 .4115 .4651 . 4545 . 2730
.4808 .. 4603
A u g u st________
. 4684 .4000 . 3910 . 4651 . 4545 .2786
S e p te m b e r.................
_ ... . 4678 . 4673 .4684 . 4000 .3361 .4651 . 4396 .2803
O c to b e r..
. 4651 . 4673 . 4630 .4000 . 3298 . 4651 .4167 .2803
N o v e m b e r...............
. 4651 . 4348 . 4454 .4000 . 3562 . 4651 .4000 . 2729
■ December.............................................. .4651
.4237 .4077 .4032 .3887 .4651 .3846 .2567
P e rio d
64
FOREIGN CURRENCY AND EXCHANGE
T abi.e 38.— Q uarterly and M onthly A verage E xchange R ates
E cuadorean S ucre — Continued
Period
1922
1923
1924
1925
1926
1927
1928
of the
1929
First quarter.............................. $0.2541 $0.2203 $0.2150 $0. 2426 $0. 2250 $0.1831 $0.1964 $0.2000
Second quarter.......................... . 2601 . 2391 . 1891 . 2305 . 2199 . 1874 . 2000 .2000
Third quarter............................ . 2239 . 1833 . 1798 . 2265 . 1756 . 1945 . 2000 .2000
Fourth quarter.......................... .2171 . 1959 .1996 .2278 .1824 . 1938 .2000 .2000
January...................................... . 2469 .1966 .2078 .2424 .2250 .1831 . 1938 .2000
February.................................. .2477 . 1966 . 2192 . 2381 .2250 . 1831 . 1959 .2000
March........................................ . 2676 . 2677 . 2180 .2474 .2250 . 1831 . 1995 .2000
April......................................... . 2623 .2721 .2005 . 2360 .2250 .1831 . 2000 .2000
M ay..................................... ...... . 2609 .2410 . 1874 .2370 . 2250 . 1831 . 2000 .2000
June............................................ .2572 .2041 .1794 .2186 . 2098 .1960 .2000 .2000
July............................................. .2326 . 1932 .1774 .2089 .1768 .1958 .2000 .2000
August........................................ .2222 .1735 . 1802 . 2266 .1680 . 1938 .2000 .2000
September.................................. . 2168 . 1831 . 1818 . 2439 . 1819 . 1938 .2000 .2000
October...................................... . 2151 . 1937 . 1891 . 2299 .1819 . 1938 . 2000
November.................................. .2122 . 1980 . 1987 .2256 . 1821 . 1938 . 2000 .2000
.2000
December................................... .2241 .1961 .2111 .2279 .1831 .1938 .2000 .2000
EGYPT
The monetary unit of Egypt is the Egyptian gold pound (symbol,
£E or LE) of 100 piastres, or 1,000 millièmes, adopted by decree of
November 14, 1885. The Egyptian pound represents 8.50 grams of
gold 0.875 fine, or 7.4375 grams of fine gold. The gold mint par
value of the Egyptian pound in sterling is £1 0s. 6.154d., and in
United States currency $4.9431. By law No. 25 of October 18, 1916,
a new coinage was introduced replacing the monogram of the Sultan
of Turkey with that of the Sultan of Egypt. Coins in circulation
are the gold Egyptian pound and half-pound ; there are also subsidiary
coins of silver, nickel, and bronze (in piastres and millièmes).
According to the law of October 18, 1916, the pound sterling is
legal tender at the ratio of 975 millièmes, and gold coins of the Latin
Monetary Union that had (before stabilization) a value of 20 gold
francs are legal tender at the ratio of 771.5 millièmes; the Indian
rupee is made legal tender provisionally at the ratio of 65 millièmes.
Prior to 1916 the Turkish gold pound was also legal tender, at the
ratio of 877.5 millièmes.
NOTE CIRCULATION
By decree of June 15, 1898, the National Bank of Egypt was given
the sole right of note issue; tbe notes were not legal tender and those
in circulation were largely covered by gold. By decree of August 2,
1914, these notes were made legal tender and certain British and
Egyptian Government securities were made available as the reserve;
the total of these securities, with the gold, must equal the par value of
the notes in circulation.
Note circulation reached its peak in December, 1919, aggregating
67,300,000 Egyptian pounds; since that time it has gradually de
creased, being 25,100,000 Egyptian pounds at the end of May, 1929.
The reserves on the latter date included gold to the amount of 3,600,000
Egyptian pounds and foreign assets (mostly British Government
securities, and in addition foreign bills of exchange and net balances
of foreign accounts) to the amount of 26,400,000 Egyptian pounds.
FOREIGN CURRENCY AND EXCHANGE
65
BASIS OF STATISTICS
The exchange value of the Egyptian pound since 1900 has fluctuated
with the pound sterling (see United Kingdom, p. 174), maintaining
therewith a practically constant ratio. In Table 39 average exchange
rates of the Egyptian pound, computed on the exchange value of the
pound sterling at the ratio of 97K per cent, are given only for the
years 1914 to 1929, as the pound sterling was practically at par
from 1900 to 1913.
For conversion purposes, the par exchange value of the Egyptian
pound ($4.9913) may be used from 1900 to 1913.
T able
39.— Y e a r l y
A v e r a g e E x c h a n g e R a t e s o f t h e E g y p t ia n P o u n d
Year
Average
rate
Year
Average
rate
Year
1914__
1915...........
1916__
1917 .
1918...............................
1919..............................
$5.0312
4.8732
4.8808
4.8761
4.8766
4. 5393
1920..............................
1921...............................
1922....... .......................
1923..............
1924..............................
1925...............................
$3.7582
3.9478
4.5428
4.6921
4. 5303
4.9527
1926...............................
1927................................
1928...............................
1929................................
Average
rate
$1. 9828
4.9857
4.9910
4.9814
ESTONIA
Estonia’s unit of currency is the gold kroon (plural, krooni; angli
cized, kroons), established in accordance with a law passed on May
3, 1927, by the Estonian Government acting upon the recommenda
tions of the financial committee of the League of Nations. The
kroon 13 (divided into 100 sents) represents 448.03 milligrams of gold
0.900 fine (403.23 milligrams of fine gold) and is the equivalent of the
Swedish krona, the par value of which is $0,268. The estmark, or
Estonian mark, which has been practically stable for three years at
the ratio of 100 to 1 Swedish krona, will be temporarily retained as the
sent (cent).
The principal circulating medium, apart from subsidiary silver and
nickel coins in kroon and sent (cent) denominations, consists of the
notes of the Bank of Estonia (Eesti Bank), established in 1919. The
legal minimum reserve requirement is 40 per cent gold and foreign
exchange against notes and other demand liabilities; the power to
suspend this requirement is vested in the Government.
CURRENCY CONFUSION FOLLOWING WAR
Estonia, like most of the new States that entered upon separate
existence as a result of the World War, found itself with a hetero
geneous currency; there was not one monetary unit, but many. The
circulating medium consisted of Estonian marks, Czarist rubles,
Suma rubles, Kerensky rubles, ostmarks and ostrubles. Owing to12
12 Abbreviation for internal use, Kr. for “ kroon for international use, Ekr. for “ Estonian kroon”; for
both internal and external use, Ekr. for "sent” (that is, 15 sents is written Ekr. 0.15).
66
FOREIGN CURRENCY AND EXCHANGE
the existing chaos and the varying depreciation of these monetary
units, commercial transactions were also taking place on the basis of
the Finnish markka, Danish krone, and Swedish krona. At first the
ostmarks were fairly stable as they were based on the value of the
German reichsmark, but with that unit quickly depreciating it
became apparent that a new national monetary unit must be devised.
The law passed on May 3, 1927, was to become effective upon the
flotation of an international loan under the auspices of the League of
Nations. On July 20, 1927, an international loan of £1,350,000, as
approved by the financial committee of the League of Nations, was
floated by the Estonian Government. The sterling portion of the
loan was £700,000 and the dollar portion $4,000,000.
BANK OP ESTONIA TO UNIFY NOTE CIRCULATION
According to this law, the Eesti Pank is to be the sole bank of issue
for 25 years; its notes are made legal tender. Prior to the reform
there were two classes of notes in circulation—Treasury notes issued
by the State, against which a special reserve was held by the Govern
ment, and notes issued by the Eesti Pank. The present law provides
for the amalgamation of these two forms of notes. The Eesti Pank
will take over the note liability of the Treasury, and the latter will
turn over to the bank the reserve held against outstanding Treasury
notes. For that part of the note liability not covered by the reserve
the bank will be compensated through the transfer of the necessary
amount of Government securities or other assets.
The new Eesti Pank was opened for business on January 1, 1928.
For the first three years of its operation there will be associated with
the bank an adviser nominated by the Council of the League of
Nations.
At the end of December, 1929, outstanding notes totaled 34,042,000
kroons; gold reserves, 27,191,000 kroons. •
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 40 and
41 is: February, 1920, to December, 1929, Tallinn exchange on New
York. Yearly and quarterly averages are computed from monthly
averages.
T able 40.— Y early A verage E xchange R ates
K roon 1
Year
Average
rate
1920.............................
1921................................
1922. ..........................
$0.00587
Vear
ok the
Average
rate
E stonian M ark
Year
1924............................... $0.00255 1928............................
. 00283 1925................................ .00267 1929..............
.00292 192«............................... . 00267
.00268
. 002&9
1 Mark, W2U-1187; kroon, 102S, 102».
an d
Average
rate
$0. 2674
.2670
67
FOREIGN CURRENCY AND EXCHANGE
T able 41.— Q uarterly
and M onthly A verage E xchange R ates
E stonian M ark and K roon 1
Period
1920
1921
1922
1923
of the
1924
$0. 00315 $0.00285 $0.00293 $0.00261
First quarter............................ ....................................
c)
.00261
Second quarter......... ...................................................... $0. 01162 .00311 .00300 . 00293
. 00237
Third quarter................................................................... . 00498 .00258 .00293 .00288
. (K1264
Fourth quarter.............................................................. .00310 .00260 .00291 .00281
.00274 .00276 .00291
.00258
January........................................................................... <>)
.00262
February.......................................................................... .01149 . 00333 . 00290 .00294
. 0026,3
March........................................ ....................................... .01219 . 00339 . 00290 . 00295
. 00263
April......... ..................................................................... - .01403 .00317 . 00295 .00295
.01428 .00317 . 00302 .00293
.00261
.00649 .00298 . 00302 .00290
.00260
.00571 .00263 .00293 .00288
.00241
August............................................................................... . 00514 . 00247 . 00294 .00288
.00231
.00239
September....................................................................... .00410 .00263 .00291 .00287
October................................................................ ............ . 00369 .00256 .00290 .00287
.00258
November............................................................-............ .00314 .00256 .00291 .00286
. 00266
. 00267
December.......................................................................... .00204 . 00267 .00291 . 00260
1925
Period
1926
1927
1928
Fi'st. quarter..................................................................... $0. 00267 $0.00267 $0.00207 $0. 2681
. 2681
Second quarter.............................. -................................. . 00267 . 00267 . 00267
.2674
Third quarter..................................... ........................... . 00267 .00267 . 00267
.00267 . 00267 .00267
.2674
Fourth quarter..............................................................
.2681
January................................................-........................... .00267 . 00267 . 00267
.2681
February......................................................................... . 00267 . 00267 . 00267
. 2681
March....... ......................................................-.............. . 00267 . 00267 . 00267
April............................................................ -.................. .00267 . 00267 . 00267 .2681
.00267 . 00267 .00267
. 2681
.00267 . 00267 . 00267
.2681
.00267 . 00267 .00267
.2074
.2674
August--........................................................................... . 00267 . 00267 .00267
. 2674
September............................... ...................................... . 00267 . 00267 .00267
.
00267
.
00266
.
00267
.2674
October..............................................................................
. 2674
November............................................................ ........... . 00267 . 00267 . 00267
.00267
.00267
.00268
.2674
December............................................................ -............
1929
$0. 2007
. 2662
. 2662
. 2678
.2667
. 2667
. 2667
. 2(567
. 2660
. 2(560
.2660
. 2660
. 2665
. 2676
. 2679
.2680
i Mark, 1920-1927; kroon. 1928, 1929.
1Indeterminable.
1Not available.
ETHIOPIA (ABYSSINIA)
The current coins of Ethiopia are the Maria Theresa thalei
containing 28.0668 grams (433.1369 grains) of silver 0.833% fine, and
the Menelik dollar, containing 28.075 grams (433.2634 grains) of
silver 0.835 fine. The par value of each varies with the price of silver;
the nominal par, however, is about 2s., or approximately $0.45
United States currency. There are also subsidiary coins of silver
and copper. While the Menelik dollar has nominally the same value
as the Maria Theresa thaler, in certain places it is not taken at all.
Various articles (such as bars of salt) are used as media of exchange,
and in most places barter prevails.
The Bank of Abyssinia, established May, 1905, under Egyptian
law, with an authorized capital of £500,000 and a paid-up capital of
£125,000, has its head office in Addis Ababa and branches in other
cities; the National Bank of Egypt has an interest and appoints its
governor. The bank-note issue at’the end of December, 1928, was
1,324,000 dollars; these notes circulate mainly in Addis Ababa.
G8
FOREIGN CURRENCY AND EXCHANGE
FINLAND
Finland’s monetary unit is the Finnish markka (plural, markkaa)
of 100 pennia, representing 42.105 milligrams of gold 0.900 fine
(37.895 milligrams of fine gold), the par value of which is $0.025185
United States currency. The Finnish mark was stabilized under the
new monetaiy law confirmed by the President of the Republic on
December 21, 1925. The par value of the former Finnish mark was
the same as that of the French franc, $0.192948.
The principal circulating medium, apart from gold coins (100 and
200 markkaa) and subsidiary coins of aluminum-bronze, nickelbronze, and copper (in markka and penni denominations), consists of
the notes of the Bank of Finland, which bank has the sole right of note
issue. The legal minimum reserve requirement is 100 per cent gold
and foreign exchange against notes and other demand liabilities in
excess of 1,200,000,000 markkaa; foreign exchange may consist only
of undisputed balances with foreign correspondents; the gold stock
in reserve must be maintained at not less than 300,000,000 markkaa.
BANK OF FINLAND A GOVERNMENT INSTITUTION
The Bank of Finland, founded in 1811, is one of the oldest banks of
issue in Europe. Its ownership is entirely vested in the State and its
officials are appointed by the Government.
Prior to the World War the legal limit of the fiduciary issue was
40,000,000 markkaa; on April 24, 1914, the Diet extended the fiduciary
issue to 70,000,000 markkaa; on July 27, 1918, section 18 of the bank
act was amended, extending the fiduciary issue to 200,000,000 mark
kaa; on December 31, 1921, the fiduciary issue was extended to 1,500,000,000 markkaa and was not lowered until December 21, 1925.
Notes in circulation at the end of January, 1914, amounted to
110.314.000 markkaa; on December 31, 1921, to 1,356,108,000 mark
kaa, or somewhat less than the legal fiduciary issue. During the
same period the gold cover rose from about 36,204,000 markkaa to
42.625.000 markkaa; meanwhile, various other securities were used to
balance the note issue, more than 50 per cent of these consisting of
State obligations. At the end of December, 1929, outstanding notes
totaled 1,361,000,000 markkaa; gold reserves, 302,000,000 markkaa;
and balances abroad and foreign credits, 670,000,000 markkaa.
The exchange value of the Finnish markka did not take a precipitous
fall until the latter part of 1919, when (a) the increase in Russian
ruble assets, (6) an increase in the amount of home loans to commercial
banks and to the Government, and (c) losses sustained during the
Red Revolution in 1918 combined to cause a sharp drop. Gold pay
ment by the Bank of Finland was suspended by the edict of April 11,
1915, and was not resumed until December 21, 1925.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 42 and
43 is: 1900-1912, sight drafts, Helsingfors on London (pence converted
at $0.02028); 1913-1921, sight drafts, Helsingfors on New York;
1922-1929, noon buying rates for cable transfers, New York on Helsing
fors. From 1900 to 1921, the rates are as given by the Bank of Finland;
FOREIGN CURRENCY AND EXCHANGE
G9
from 1922 to 1929, yearly and monthly averages are as computed
from daily rates by the Federal Keserve Board. Quarterly averages
are computed from monthly averages.
T able 42.— Y early A verage E xchange R ates
of the
F innish M arkka
Year
Average
rate
Year
Average
rate
Year
1900 ...............
1901.........
1902 ..
1903 ..
1901 ...
1905 .........
1900 .
1907 .
1908 .......
1909.............
$0.1915
. 1919
. 1919
. 1919
. 1921
. 1918
. 1916
. 1911
. 1916
.1918
1910............-..............
1911..............................
1912 ...........................
1913..............................
1914..............................
1915..............................
1916 ..... ...................
1917..............................
1913 ...........................
1919.........................
$0.1918
.1919
. 1919
. 1912
. 1883
. 1548
. 13S3
. 1344
. 1208
.0012
1920..............................
1921..............................
1922..............................
1923..............................
1921..............................
1925..............................
192»..............................
1927..............................
1923..............................
1929..............................
T able 43.— Q uarterly
Period
and
Average
rate
M onthly Average E xchange R ates
F innish M arkka
1919
1920
1921
1922
1923
$0. 1059 $0. 0424 $0.0302 $0. 0193 $0. 0202
. 0506
. 0203
.0208
. 0270
.0981
. 0339
.0215
. 0000
.0152
.0275
.0377
.0236
.0176
. 0246
. 0200
.0358
.0314
.0189
.1109
.0248
.0103
.1059
.0328
. 0200
. 0202
. 0205
.0510
. 0206
. 1008
. 0270
. 0548
. 0226
.0193
. 1035
April................................................................
.0275
.0512
.0213
. 1014
.0203
. 0277
.0157
.0171
.0895
.0216
.0277
.0393
.0104
.0215
.0277
July.................................................................. .0700
.0310
.0213
. 0655
.0150
.0277
. 0309
.0141
.0217
. 0270
.0564
. 0254
.0153
.0232
.0152
. 0267
.0215
.0187
.0256
. 0204
.0371
.0189
.0251
.0307
.0248
.0240
Period
1925
1926
1927
1928
$0.0252 $0. 0252 $0.0252 $0. 0252
. 0252
. 0252
. 0252
. 0252
. 0252
.0252
.0252
. 0252
.0252
.0252
.0252
.0252
. 0252
.0252
. 0252
.0252
. 0252
.0252
. 0252
.0252
. 0252
.0252
.0252
.0252
.0252
. 0252
.0252
.0252
.0252
. 0252
.0252
. 0252
.0252
.0252
.0252
.0252
.0252
. 0252
. 0252
. 0252
. 0252
.0252
. 0252
. 0252
. 0252
.0252
.0252
.0252
.0252
.0252
.0252
.0252
.0252
. 0252
.0252
.0252
.0252
.0252
.0252
.0252
FRANCE
$0.0342
.0192
. 0216
.0208
. 0251
.0252
. 0252
.0252
.0252
.0252
of the
1924
$0. 0250
.0251
.0251
.0252
.0248
.0250
.0251
.0251
. 0251
. 0251
.0251
.0251
.0251
.0251
.0252
.0252
1929
$0. 0252
.0252
.0251
.0252
. 0252
.0252
.0252
.0252
.0252
.0251
. 0251
. 0251
.0252
.0252
.0252
.0252
The new gold French franc (plural, francs) of 100 centimes, representing 65.5 milligrams of gold 0.900 fine (58.95 milligrams of fine
gold), the par value of which is $0.039179 United States currency,
is the present monetary unit of France. This new unit was adopted
70
FOREIGN CURRENCY AND EXCHANGE
in accordance with the stabilization law executed at Paris on June 25,
1928. Prior to that date the unit of currency was the former gold
franc representing 322.58 milligrams of gold 0.900 fine, the par value
of which was 80.192948.
The Bank of France, founded in 1800, was given (in 1803) a monop
oly of note issue in Paris. In 1848 the departmental banks were
incorporated with the Bank of France, which then became the sole
bank of issue. The Bank of France suspended specie payments
during the revolution of 1S48 and again from 1870 to 1878 because
of the Fran co-Prussian War. In 1878 specie payments were resumed,
and from that time until August, 1914, the notes continued convertible
and were also legal tender.
GOLD STANDARD ESTABLISHED BY NEW MONETARY LAW
Before the World War the currency system of France was based
upon the gold franc, but the country was never completely upon the
gold standard. Until 1873, as a member of the Latin Monetary
Union,14 France had the bimetallic standard; but with the fall in the
price of silver, France closed its mints in that year to the free coinage
of the metal. This measure, however, did not establish the gold
standard, as there existed a large amount of silver coins which were
legal tender but which were not redeemable in gold. France, there
fore, was commonly said to be upon the “limping standard.”
Adoption of the gold standard and convertibility of Bank of France
notes into gold are two of the chief features of the law of June 25,
1928, that act providing:
(а ) The franc, the monetary unit, shall contain 65.5 milligrams of gold 0.900
fine.
(б ) The Bank of France shall guarantee the convertibility into gold of its notes
to bearer and at sight; this conversion may be effected either by redeeming its
notes in legal-tender gold coin or in gold bullion. Convertibility of the notes of
the Bank of Algeria shall be guaranteed under similar conditions.
(c) The Bank of France shall maintain a metallic reserve, in gold bullion and
gold coin, equal at the minimum to 35 per cent of the combined amount of its
notes in circulation and its liabilities on current account.
(d) There shall be struck by the mint gold pieces of 100 francs; these coins
shall be unlimited legal tender. Silver pieces shall also be coined, for the account
of the Government, of a nominal value of 10 and 20 francs, 0.680 fine; the total
amount of silver coined shall not exceed 3,000,000,000 francs. The token
currency of the chambers of commerce shall be replaced as it is retired from cir
culation by coins of the same denominations issued by the Government.
(e) The reserves of gold and silver at present held by the Bank of France and
banks which have received from the Government the privilege of note issue in
the colonies and protectorates where the franc is legal tender shall be revalued
on the basis of the new parity of the currency.
NOTE CIRCULATION
As already said, the paper money of France before the war con
sisted of notes of the Bank of France; these notes were redeemable
in either gold or silver at the option of the bank. Their maximum
circulation was limited in 1911 to 6,800,000,000 francs—at which
figure it stood in 1914. The gold reserve in the vaults of the bank
at that time was about 3,500,000,000 francs against all of its liabilities;
the silver reserve was about 500,000,000 francs.
m Formation of tbe Latin
Monetary Union is discussed under Belgium, p. 15.
FOREIGN CURRENCY AND EXCHANGE
71
To avoid a depletion of its reserve, the Bank of France suspended
specie payments on August 5, 1914, coincidentally with which action
its note circulation was raised to 12,000,000,000 francs. Other
measures raising the limit followed at frequent intervals:
May 11, 1915, raised to 15,000,000,000 francs.
March 15, 1916, raised to 18,000,000,000 francs.
February 15, 1917, raised to 21,000,000,000 francs.
September 10, 1917, raised to 24,000,000,000 francs.
February 7, 1918, raised to 27,000,000,000 francs.
May 3, 1918, raised to 30,000,000,000 francs.
September 3, 1918, raised to 33,000,000,000 francs.
February 25, 1919, raised to 36,000,000,000 francs.
July 17, 1919, raised to 40,000,000,000 francs.
July 31, 1920, raised to 43,000,000,000 francs.
September 28, 1920, reduced to 41,000,000,000 francs.
April 15, 1925, raised to 45,000,000,000 francs.
June 27, 1925, raised to 51,000,000,000 francs.
December 4, 1925, raised to 58,500,000,000 francs.
July 22, 1926, raised to 60,000,000,000 francs.
At the end of December, 1928, the note circulation was 62,181,000,000 francs, and at the end of December, 1929, 68,571,000,000
francs. On the latter date gold reserves totaled 41,668,000,000
francs; sight balances abroad, 7,249,000,000 francs; and foreign bills,
18,665,000,000 francs.
“SMALL CHANGE” NOTES
Gold disappeared from circulation soon after inconvertibility was
inaugurated in 1914. Silver continued to circulate, but these coins
also finally disappeared, the silver in them being worth more than
their face value.
To supply the demand for small currency resulting from the with
drawal of silver the French chambers of commerce were authorized
to issue small notes secured by equivalent amounts of bank notes
deposited with the Bank of France and later by funds in the Treasury.
About 465,000,000 francs of these notes were issued. At the end of
1922 they amounted to about 280,000,000 francs. Since then they
have been largely replaced by metal token coins (aluminum-bronze
and nickel-bronze) of 50-centime, 1-franc, and 2-franc denominations;
these token coins amounted to about 590,000,000 francs at the close
of 1923.
BANK ADVANCES TO THE GOVERNMENT
When the war started, the French Government was in need of im
mediate funds and turned to the Bank of France; the bank responded,
and by the end of 1914 had advanced nearly 4,000,000,000 francs to
the Government. At the end of each year the Government ordina
rily liquidated a portion of its debt to the bank, using the proceeds of
other forms of internal borrowing 1516for that purpose.
In December, 1920, by a convention between the Government and
the Bank of France it was agreed that the limit to the advances
from the bank to the Government should be reduced from 27,000,000,000 francs to 25,000,000,000 francs at the end of 1921 and that
thereafter they should be reduced 2,000,000,000 francs each year.
15The Government made arrangements to borrow internally by the issue of “bonsdela defense nationale”;
these were issued in small denominations and were of short maturity so that they often circulated as cur
rency. They were bought by the people generally and also by the banks.
72
FOREIGN CURRENCY AND EXCHANGE
However, the Government could not meet this obligation but, on the
contrary, because of increasing budget deficits, raised the legal limit
of advances from the bank until they reached 39,500,000,000 francs
on December 4, 1925. On January 1, 1926, these advances stood at
38,500,000,000 francs and on January 1, 1927, at 36,500,000,000
francs; but by the end of 1927 they had been reduced to 31,000,000,000 francs. The increase in the assets of the bank resulting from the
revaluation of the franc in June, 1928, is being applied to cancelling
the bank’s advances to the Government.
EXCHANGE STEADIED BY ‘•PEGGING”
The French franc did not fall precipitously until the latter part of
1919; this was owing to the concerted efforts of the French and Brit
ish Governments and later of the United States Government. In
April, 1916, an agreement was made between the two Governments
first named arranging for the stabilization of the franc, stabilization
being accomplished chiefly by gold exportation by the Bank of France
and loan operations. When the United States entered the war in
April, 1917, the rates improved somewhat. The United States co
operated with Great Britain and France in the stabilization, and
American credits sustained both the franc and the pound sterling in
relation to the dollar. Direct loans were made by the United States
Government to the French Government. The amount of these cred
its utilized by the French Government reached $2,997,478,000 in
September, 1920. As a matter of fact the franc was “pegged” with
the United States dollar until March, 1919. Immediately after the
“ unpegging” there was a sharp drop in the exchange value of the
franc; from an average of $0,175 in March, 1919, the franc declined
to $0.0625 in April, 1920.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 44 and
45 is: 1914-1929, noon buying rates for cable transfers, New York
on Paris. Average rates from January, 1914, to October, 1918, are
computed from mid-points between the monthly high and low rates;
from November, 1918, to December, 1929, averages are as computed
from daily rates by the Federal Reserve Board. Quarterly averages
are computed from monthly averages.
For conversion purposes the par value ($0.192948) may be used
from 1900 to 1913.
T able 44.— Y early A verage E xchange R ates
Year
Average
rate
Year
1914................................
1915...............................
1916................................
1917 ...
1918................................
1919...............................
$0.1952
. 1798
. 1697
.1780
. 1780
. 1368
1920................................
| 1921................................
1922................................
1923................................
1924................................
1925................................
Average
rate
$0. 0704
. 0746
.0820
.0608
.0524
.0477
of the
T rench F ranc
Year
1926................................
1 1927................................
1928................................
1929..........................
Average
rate
$0. 0324
. 0392
. 0392
.0392
73
FOREIGN CURRENCY AND EXCHANGE
T a b le 45.— Q u a r t e r l y a n d M o n t h l y A v e r a g e E x c h a n g e R a t es o f t h e
F r en ch F ranc
1914
Period
1915
1916
1917
1918
1919
1920
1921
First quarter.............................. $0.192S $0.1910 $0. 1698 $0.1710 $0.1748 $0.1810 $0. 0757 $0.0688
Second quarter------ ------------ . 1938 . 1847 . 1682 . 1740 .1750 . 1605 .0701 .0789
Third quarter______________ . 1990 . 1732 . 1697 .1732 . 1788 . 1297 . 0735 .0762
. 1952 .1702 .1710 .1740 .1833 .1049 .0615 .0743
Fourth quarter....................
January.......................... ........... . 1925 .1930 . 1710 .1710 . 1745 .1830 . 0S4S .0643
February.................................... . 1930 . 1910 . 1700 . 1710 . 1750 . 1S30 .0704 .0717
March........................................ . 1930 . 1890 . 1685 . 1710 . 1750 .1770 .0719 . 0703
April.......................................... . 1935 . 1880 . 1670 . 1735 . 1750 . 1669 . 0625 . 0724
May.......................... ................ . 1940 . 1860 . 1685 . 1745 . 1750 . 15S0 . 0686 . 0837
June....................... .................... .1940 .1800 . 1690 .1740 .1750 . 1565 .0792 .0807
July............................................. . 2050 .1780 . 1690 .1740 .1750 .1439 .0813 .0781
August....................................... . 1955 . 1715 . 1695 . 1730 .1790 . 1276 .0718 . 0776
. 0674 .0728
September.................................. . 1965 . 1700 . 1705 . 1725 . 1825 .1176
October...................................
. I960 . 1700 . 1710 . 1740 . 1825 . 1162 . 0653 .0725
November.................................. . 1950 . 1695 . 1710 . 1735 . 1838 . 1062 . 0601 .0720
December.................................. . 1945 .1710 . 1710 . 1745 . 1836 . 0924 .0592 .0784
1922
Period
1923
1924
1925
1926
1927
1928
1929
First quarter...................... ....... $0.0863 $0.0638 $0. 0459 $0.0528 $0. 0368 $0.0393 $0.0393 $0.0391
Second quarter.......................... . 0904 . 0654 . 0573 . 0.104 .0316 . 0392 . 0394 .0391
Third quarter_____________ . 0795 . 0580 . 0529 . 0470 . 0272 . 0392 .0391 .0391
Fourth quarter.......................... .0715 .0557 . 0530 .0404 . 0344 . 0393 . 0391 . 0394
January.......................... ........... . 0816 .0668 . 0466 . 0539 . 0377 .0396 . 0393 . 0391
. 0392 . 0393 . 0391
February......................... ........ .0873 .0614 . 0442 . 0528 .. 0368
0358 .0391 . 0393 . 0391
March......................................... . 0900 . 0632 . 0468 .0518
April........................................... . 0923 . 0667 .0616 .0519 . 0339 . 0392 . 0394 .0391
May........................................... .0912 . 0664 . 0579 .0516 .0315 . 0392 . 0394 . 0391
June............................................ .0876 .0630 .0525 .0477 . 0294 . 0392 .0393 . 0391
July............................................. .0824 . 0589 .0512 . 0470 .0247 .0391 .0392 . 0392
August....................................... . 0796 . 0565 . 0546 . 0469 . 0283 . 0392 .0391 . 0.391
September___ ______ _____ . 0766 . 0586 . 0530 .0471 . 02S5 . 0392 . 0391 . 0391
October..................... ................ .0737 . 0595 . 0523 . 0443 . 0294 . 0392 .0391 . 0393
November.................................. . 06 6 . 0552 . 0528 . 0396 . 0342 . 0393 .0391 . 0394
December................................... .0723 .0525 .0540 . 0374 .0395 . 03b4 .0391 .0394
FRENCH AFRICA
ALGERIA
In the French colony of Algeria the monetary unit is the franc of
100 centimes (representing 65.5 milligrams of gold 0.900 fine), the par
value of which is $0.039179 United States currency (but see also
France, p. 69).
Variations in the exchange value of the paper currency in Algeria
since 1914 have been approximately the same as in France.
The circulating media consist of French metallic and paper currency
and the notes of the Banque de 1’Algerie, the sole bank of issue,
established in 1851. Notes of the bank in circulation on August 31,
1929, totaled 1,981,686,000 francs.
FRENCH EQUATORIAL AFRICA
G A B U N , M ID D L E CO N G O , U B A N G I- S H A R I, AND CHAD
French Equatorial Africa, or French Congo, comprising the colonies
of Gabun, Middle Congo, Ubangi-Shari, and Chad, employs as its
monetary unit the French franc of 100 centimes, recently stabilized
at $0.039179 United States currency. (See Table 45, above, for ex
change rates.)
1942°— 30-------6
74
FOREIGN CURRENCY AND EXCHANGE
La Banque de l’Afrique Occidentale (capital 6,000,000 francs),
established in 1901, is authorized to issue notes in denominations of
5 to 1,000 francs; these notes are receivable as legal tender at its
branches where they are payable. The decree of March 9, 1920,
fixed provisionally the amount of note circulation at three times the
bank’s metallic reserve and its balance at the Treasury in Paris.
FRENCH SOMALILAND
In the colony of French Somaliland the monetary unit is the French
franc of 100 centimes, the par value of which is $0.039179 United
States currency. (See France, pp. 72-73 for exchange rates, etc.). The
French franc has recently replaced almost entirely the Indian rupee
and Maria Theresa thaler. A branch of the Bank of Indo-China is
the bank of issue. The present note circulation is about 2,500,000
francs.
FRENCH W EST AFRICA
DAKAR, SENEGAL, FRENCH SUDAN, FRENCH GUINEA, IVORY COAST, DAHOMEY, UPPER
VOLTA, MAURITANIA, AND NIGER
The French West African colonies of Dakar, Senegal, French Sudan,
French Guinea, Ivory Coast, Dahomey, Upper Volta, Mauritania,
and Niger use the French franc of 100 centimes, recently stabilized
at $0.039179 United States currency, as their monetary unit. (See
France, pp. 72-73, for exchange rates, etc.)
La Banque de l’Afrique Occidentale, established in 1901 (capital
6,000,000 francs), is authorized to issue notes in denominations from
5 to 1,000 francs; these notes are receivable as legal tender at its
branches where they are payable. The decree of March 9, 1920,
fixed provisionally the amount of note circulation at three times the
bank’s metallic reserve and its balance at the treasury in Paris.
MADAGASCAR
In the French colony of Madagascar the monetary unit is the French
franc of 100 centimes, recently stabilized at $0.039179 United States
currency. (See France, pp. 72-73, for exchange rates, etc.) All coins
and notes which are legal tender in France are legal tender in
Madagascar also.
The Bank of Madagascar, established February 5,1926, was granted
the sole right of note issue for a period of 20 years. Notes outstanding
on December 31, 1928, totaled 294,015,000 French francs.
REUNION
In the French island of Reunion the monetary unit is the French
franc of 100 centimes, the par value of which is $0.039179 United
States currency. (See France, pp. 69-73, for details and exchange
rates.) The circulating medium consists of local nickel token currency
and notes of the bank of issue, La Banque de la Reunion, established
in 1851 at Saint-Denis, whose central office is in Paris. On June 30,
1928, notes in circulation totaled 36,538,000 francs. Exchange is
nominally the same as in France.
TUNISIA
The French monetary system was established in Tunisia in 1891 The French franc of 100 centimes (new par, $0.039179 United States
currency) is the unit of currency. (See France, pp. 72-73, for exchange
rates, etc.) La Banque d’Algerie et dc Tunisie is the bank of issue.
75
FOREIGN CURRENCY AND EXCHANGE
FRENCH INDO-CHINA
In French Indo-China (comprising the colony of Cochin China, the
protectorates of Annam, Cambodia, Tongking, and Laos, and the
territory leased from China) the monetary unit is the silver piastre
(plural, piastres) of 100 centimes struck at Paris and known as the “pias
tre of commerce.” This piastre contains 27 grams (416.6736 grains)
of silver 0.900 fine. The Indo-China piastre was stabilized at 10
French francs (10.392) May 31, 1930.
Apart from the metallic currency, the circulating medium consists
of the notes of the Bank of Indo-China, established in 1875.
PIASTRE "PEG GED ” FOR A SHORT TIME
Owing to the rapid rise in the price of silver, especially during the
latter part of 1919 and the first part of 1920, the Government of IndoChina was compelled to decree a legal value (cours forcé) in March of
the latter year. At the same time a commission was appointed to
consider monetary reform. This commission advised the adoption
of the gold standard and of a gold piastre as the unit of currency.
However, before this plan had been acted upon by the Government,
the price of silver had fallen considerably and the project was aban
doned. The “ cours forcé” lasted only until the close of 1921.
La Banque de l’lndo-Chine has the sole right of note issue; its\ ^ J"'*'
authorized capital is 72,000,000 French francs, and it has reserve and
redemption funds amounting to 80,000,000 French francs. The
limit to its note issue was set in March, 1926, at 140,000,000 piastres.
On December 31, 1927, the total circulation of paper and metallic
currency was 129,902,000 piastres; the metallic reserve of the bank
was 38,878,000 piastres.
0
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 46 rs<*
and 47 is: 1900-1922, sight drafts, Saigon on Paris (French francs F\C.
converted; see France, p. 73); 1923-1929, sight drafts, selling rate,
Saigon on New York. From 1900 to 1922 yearly averages are com
puted from mid points between monthly high and low rates; quarterly
averages from 1914 to 1922 are computed from monthly averages.
From 1923 to 1929 yearly and quarterly averages are computed
from monthly averages.
T able 46.— Y early A verage E xchange R ates
I ndo -C hina
Year
1900___
1901...
1902..........
1903..........
1904__
1905........
loor,..........
1907...
1908___
1909.............
A'rate
' " f c j|!
Year
of the
Average
rate
P iastre
of
Year
$0.4979 1910............................... $0.4458 1920................................
.4844 1911................................ . 4100 1921................................
.4265 1912................................ .4806 1922................................
.4169 1913................................ .4902 1923................................
.4478 1914................ ............... . 404.7 1924................................
.4671 1915................................ .4423 1925................................
. 5250 1916................................ .5210 1926................................
.5365 i 1917................................ .6211 1927................................
.4748 1] 1918................................ .7583 1928................................
.4613 1919................................ .8495 1929................................
F rench
Average
rate
$0. 8206
. 5135
. 5528
. 5186
. 5228
.5648
.5454
. 5025
.5008
.4482
76
T able
FOREIGN CURRENCY AND EXCHANGE
47.— Q u a r t e r l y
a n d M o n t h l y A v e r a g e E x c h a n g e R a t e s of the
P ia s t r e o p F r e n c h I n d o -C h in a
Period
1914
1915
1916
1917
1918
1919
First ouarter.............................. $0. 4676 $0. 4377 $0. 4599 $0. 5501 $0. 6935 $0. 8203
Second quarter.......................... . 4830 .4432 .5115 .5757 . 7452 .8437
Third quarter............................ . 4612 .4343 .5076 . 6925 . 8229 . 8872
Fourth quarter.......................... .4408 .4453 .5372 .6743 .7728 .9964
January...................................... . 4668 .4391 . 4531 .5472 .6849 .8212
February.................................... .4680 .4345 .4548 .5515 . 6825 .8212
March......................................... .4680 . 4394 .4718 . 5515 .7131 .8186
.4741 . 4465 .4926 . 5595 .7262 .8136
May............................................ .4898 . 4510 .5350 .5715 .7438 .8334
June............................................. .4850 . 4320 .5070 .5960 .7656 .8842
July............................................. . 4869 . 4406 .4901 .6351 .7831 .8778
August........................................ .4399 . 4330 .5085 .6834 .8324 .8900
September....................... ......... . 4569 .4292 . 5243 . 7590 . 8532 .8938
October....................................... .4410 .4335 . 5258 .6612 .7984 .9122
November.................................. .4388 .4492 . 5301 .6680 . 7306 1.0328
December................................... .4425 .4532 .5558 .6936 .7895 1.0441
Period
1922
1923
1924
1925
1926
1927
1920
1921
$1. 0748 $0. 4807
. 8663 . 4S88
. 7377 .5087
.5932 .5610
1.0905 .5224
1.0912 .4750
1.0426 .4446
. 9844 .4923
.8918 .4959
.7227 .4781
.7520 .4979
.7449 .4986
.7161 . 5296
.6530 .5728
.6085 . 5508
.5180 .5684
1928
1929
First quarter.............................. $0. 5318 $0. 5302 $0. 5017 $0. 5566 $0. 5814 $0.5112 $0. 5107 $0. 4836
Second quarter.......................... . 5699 . 5318 .5164 . 5597 .5671 . 5059 .5110 . 4591
Third quarter............................ . 5617 . 5076 .5282 . 5705 . 5466 . 4928 .4921 .4378
Fourth quarter......................... .5302 .5017 .5445 .5715 .4863 .5001 .4891 .4089
January....................................... .5365 .5319 .4975 . 5525 .5848 .5076 .5088 .4860
February........... ............-.......... . 5325 .5181 . 5051 . 5587 . 5780 .5208 .5112 .4817
March......................................... .5265 . 5405 .5025 . 5587 . 5814 . 5051 .5121 .4831
. 5653 . 5319 .5128 . 5556 .5714 . 5102 .5121 .4717
May..................................... ....... .5837 . 5405 .5208 . 5618 . 5618 . 5051 .5131 .4630
June............................................. .5606 .0319 .5155 .5618 .5682 .5025 .5079 . 4425
.5208 .5587 .5587 .5051 . 5024 .4425
July............................................. .5665 .5102
. 5435 . 4902 . 4943 .4419
August........................................ .5672 . 5051 .5319 .5714
5814 . 5376 .4831 .4797 .4291
September.................................. . 5515 .5076 . 5319 ..5714
. 4926 . 4902 . 4865 .4168
October .................................. . 5417 . 5025 .. 5435
5464 . 5650 .4808 . 5025 .4914 .4119
November.................................. .5282 .5025
December................................... .5206 .5000 .5435 .5780 .4854 .5076 .4895 .3980
FRENCH WEST INDIES
MARTINIQUE AND GUADELOUPE
In the French West Indies Islands the monetary unit is the French
franc of 100 centimes, the new par value of which is 80.039179 United
States currency. (See France, pp. 72-73, for exchange rates, etc.)
In Martinique, La Banque de la Martinique, established in 1851,
is the bank of issue. At the end of June, 1928, the note circulation
was 42,749,000 French francs.
In Guadeloupe, La Banque de la Guadeloupe, established on 1853,
is the bank of issue. At the end of December, 1928, the note cir
culation was 38,330,000 French francs.
GERMANY
The monetary unit of the German Republic is the new gold reichs
mark (plural, reichsmark; anglicized, reichsmarks) of 100 pfennige,
which represents 398.25 milligrams of gold 0.900 fine (358.42
milligrams of fine gold) and the par value of which is 80.2382
United States currency. This new gold reichsmark was established
by the law of August 30, 1924, which came into operation on October
11, 1924. By this law provision was made for gold coins of 10 and
20 reichsmarks, silver coins of 1, 2, 3, and 5 reichsmarks, and sub-
FOREIGN CURRENCY AND EXCHANGE
77
sidiary coins in pfennig (“reichspfennig”) denominations. The new
gold reichsmark is identical with the former gold mark (established
by the legislation of 1871-1875), which practically disappeared from
circulation soon after the World War.
The principal circulating medium apart from the metallic currency
consists of the notes of the Reichsbank. The bank is required to
maintain a 40 per cent reserve against its notes in circulation. At
least three-fourths of the reserve must be in the form of gold held
either in the vaults of the bank or with foreign banks of issue at the
free disposal of the Reichsbank; the remainder may be in the form of
foreign exchange (devisen). While the law explicitly laid down the
principle that the notes of the Reichsbank must be redeemed in gold
or in foreign exchange upon presentation, the practical application of
this principle has been deferred and will require the assent of the
Government. According to the law concerning the retirement of
Rentenbank notes (assumed by the Reichsbank), the Reichsbank
must liquidate these notes within 10 years.
SILVER, THEN GOLD, THE BASIS
Prior to 1870, the German currency system was very complicated.
Silver, which constituted the principal metallic stock of the German
States and of the cash resources of the local note-issuing banks, was
the basis of the monetary system. The thaler, equivalent to about
SO.70 at that time (with silver at about $1.30 per ounce), was the
current unit. Although there was some gold in circulation, it was
not legal tender.
It was not until the payment of the indemnity by France (after
the Franco-Prussian War) furnished the necessary gold reserve
that Germany actually adopted the gold standard. The legislation
of 1871-1875 by providing for free coinage of gold and its full legaltender power—after a necessary period of transition—placed Germany
completely on the gold standard.
To effect the change from the silver to the gold standard gradually,
Germany adopted the “limping standard.” The thaler widch were
still in circulation when the gold standard was adopted were declared
legal tender at the rate of 3 gold marks per thaler, despite the fact
that the bullion value of the thaler was less than 3 gold marks. These
thaler remained in circulation until 1900. From that time until the
outbreak of the World War, Germany was completely on the gold
standard, and the variations in exchange rates were only those of a
commercial character.
REICHSBANK FOUNDED
It was also necessary that Germany reform its banking system.
In place of the numerous local banks of issue, whose notes, without
legal-tender quality, circulated in all the German States, it was
essential to have a central bank of issue. The Reichsbank, founded
in 1875, was authorized, by an act of the same year, to absorb tho
circulation of the other note-issuing banks in Germany whenever
they relinquished this privilege. Whereas in 1875 only 16 of the 33
note-issuing banks decided to accept this Federal legislation, by 1891
only 8 remained and in 1913 there were only 4.
The law of 1875 provided for a fixed limit of authorized note circu
lation of the Reichsbank known as the “kontingent.” Against this
78
FOREIGN CURRENCY AND EXCHANGE
“kontingent,” which at the date of the organization of the bank was
250.000. 000 marks, the Reichsbank was to hold one-third in cash and
two-thirds in bills of exchange. Cash might consist of money (gold,
silver, nickel, and copper coins) having circulation in Germany,
reiehskassenscheine (imperial treasury notes), gold bullion, or foreign
gold coins; after the amendment of 1909 the cash counted as reserve
was to consist of gold only. For amounts of notes beyond the
“ kontingent” the bank was required to have actual cash in full (gold
after 1909). However, in times of stress the Reichsbank and other
banks of issue might, on payment of a 5 per cent tax, exceed the
statutory limit without metallic reserve.
Before the World War the paper money in circulation in Germany
thus consisted of notes of the Reichsbank and the four local banks
still enjoying the privilege of note issue, and of Government paper
money (reiehskassenscheine) designed to provide notes of small
denominations. The notes of the Reichsbank and local banks of
issue were redeemable on demand in gold and were legal tender
(amendment of 1909).
WAR-TIME EXPANSION OF NOTE CIRCULATION
To maintain the gold standard during the years of Germany’s great
industrial expansion the Reichsbank pursued the policy of accumu
lating gold. At the beginning of the World War Germany possessed
about 4,000,000,000 gold marks, of which about 2,750,000,000 marks
were in circulation and the remainder served largely as cover for the
notes and deposit liabilities of the Reichsbank. The note circulation
at that time totaled about 2,000,000,000 marks. The bank notes were
all redeemable in gold on demand and there were no restrictions on the
exportation of gold.
Immediately after the outbreak of the war the German Government
adopted various financial measures with a view to liquefying all assets.
To meet the need for increased currency, the law governing the reserves
of the Reichsbank was changed. In place of bills of exchange as twothirds cover for its notes, the Reichsbank might substitute discounted
3-month treasury bills. The 5 per cent tax provision was repealed.
“ Cash,” which was to consist only of gold (amendment of 1909),
might include reiehskassenscheine and darlehnskassenscheine (Gov
ernment paper money); the latter are loan bureau notes, issued by
Government loan bureaus, or darlehnskassen, against the pledge of
commodities or securities. The net effect of this legislation was to
place Germany on an inconvertible paper basis.
The German Government also resorted to borrowing soon after the
outbreak of the war. At the end of December, 1918, commercial bills,
checks, and treasury bills held by the Reichsbank had risen to 27,416.000. 000 marks; at the same time the note circulation amounted
to 22,188,000,000 marks and the circulation of Government paper
money (reiehskassenscheine and darlehnskassenscheine) totaled
10,465,600,000 marks. Meanwhile the gold reserve continued at
slightly less than 2,500,000,000 marks.
POST-WAR INFLATION
After the armistice, the German Government continued to rely on
the Reichsbank for funds. Slow at first, the pace of Government
borrowing and currency expansion became ever swifter until in 1923,
after the Ruhr occupation by the French, the increases assumed
FOREIGN CURRENCY AND EXCHANGE
79
extreme proportions. Commercial bills, checks, and treasury bills
held by the Reichsbank reached 229,331,045,000,000,000,000 marks
by the middle of November, 1923, and Reichsbank notes reached
92,844,721,000,000,000,000 marks; however, darlehnskassenscheine
amounted then to only 8,700,000,000 marks. Total note circulation
reached 496,507,425,000,000,000,000 marks at the end of December,
1923, and at the end of September, 1924, stood at 1,520,511,000,000,000,000,000 marks, the gold value of which on the basis of the rate of
exchange at that time was only $361,900,000.
Recognizing the hopelessness of the prevailing currency system and
realizing the impossibility of the new combined gold and paper mark
method of calculation (German business early in 1923 began to reckon
in terms of ideal or imaginary gold marks), the Federal Government,
especially after 1921, attempted to stabilize the mark. After many
tentative, artificial schemes, ranging from foreign-exchange regula
tion and gold-note issues to proposals for rye and currency banks
(roggenbank and wahrungsbank), the German Government by decree
of October 15, 1923, established the Rentenbank. This new bank was
intended only as a measure of transition to the ultimate gold standard.
By the Rentenbank decree Germany officially enacted the devalua
tion of the mark. The rentenmark, issued by the Rentenbank, was
proclaimed equivalent to 1,000,000,000,060 paper marks.
RENTENBANK A TEMPORARY DEVICE
Since Germany had adequate amounts of neither gold nor foreign
exchange upon which to base its new currency, the decree of October
15, 1923, provided for a total mortgage of 3,200,000,000 gold marks on
the entire German production, industry, and trade. Upon this
security, the Rentenbank was permitted to issue notes up to, but not
exceeding 3,200,000,000 marks. Of the total, 1,200,000,000 marks were
for the use of the Government. By limiting the maximum amount
of Rentenbank credit available to the Treasury to 1,200,000,000 *
marks and at the same time prohibiting further Government borrow
ing at the Reichsbank, the Rentenbank decree laid the foundation for
the stabilization of the mark.
In April, 1924, special assistance was accorded the industrial and
foreign-trade interests by the opening of the so-called Gold Discount
Bank (Golddiskontobank), established by the law of March 19, 1924,
which was expressly limited to providing the means of carrying on
trade by securing necessary foreign credits. Its authorized capital
was £10,000,000. This bank was given the privilege of issuing notes,
expressed in terms of pounds sterling, but no use was made of this
privilege.
Although the volume of note circulation of the Reichsbank con
tinued to increase for several months after the introduction of the
new currency (rentenmark), the devaluation of the former bank notes
was so drastic that this increase in circulation did not threaten the
stability of the Rentenbank. However, the Government realized
that the Rentenbank was a mere temporary device to enable it to
reorganize its finances.
REICHSBANK REORGANIZED UNDER DAWES PLAN
On August 20, 1924, in close agreement with the recommendations
of the Dawes Committee as modified slightly by the London conference,
the Reichstag passed the laws providing for the reorganization of the
80
FOREIGN CURRENCY AND EXCHANGE
old Reichsbank and the reform of the currency. For this purpose
Germany received an international loan of about 800,000,000 gold
marks. The remodelled bank, which began operations under the old
name on October 11, 1924, was given a practically exclusive right of
note issue for a period of 50 years. The further issue of Rentenbank
notes was stopped, while the issue privilege of the Gold Discount
Bank was revoked. Besides gold coins the notes of the Reichsbank
were made the only unlimited legal tender in the country.
At the end of December, 1929, Reichsbank notes totaled 5,044,000,000 reichsmarks and Rentenbank notes totaled 410,000,000
rentenmarks (4,930,000,000 and 537,000,000, respectively, at the end
of December, 1928). The reserves of the Reichsbank consisted of
gold to the amount of 2,283,000,000 reichsmarks and foreign assets
totaling 404,000,000 reichsmarks (2,730,000,000 and 155,000,000
respectively, at the end of December, 1928).
COURSE OF EXCHANGE
Prior to the World War, when Germany was on a gold basis, Ger
man exchange fluctuated only within the limits determined by the
cost of shipping gold, or between the “gold points.” From the begin
ning of the war, when inconvertibility began, until the close of 1923
depreciation became continually greater and fluctuations in exchange
rates were very wide. Like the Allied countries, Germany tried dur
ing the war to stabilize its exchange, but not so successfully. At the
close of 1914 the mark was only about 97 per cent of parity, and by
December of the following year only about 84 per cent. On January
20, 1916, the Federal Council proclaimed the “ devisenordnung”
(decree for the regulation of foreign exchange). By the creation of a
“ Devisenzentrale” this decree placed all dealing in foreign exchange
under the supervision of the Reichsbank. In January, 1917, the
general importation and exportation of gold was prohibited, and in
February of the same year the sanction of the Reichsbank was required
for remittances to foreign countries of bills payable in marks.
When the United States entered the war in April, 1917, the mark
was worth about $0.16; in June, 1917, it had fallen to about $0.14.
There was a rise in February, 1918, owing to the armistice with
Russia and the successful German offensive, but with the reversal of
military fortunes the mark again declined and was worth only about
$0.12 in December, 1918. In the post-armistice years almost every
political and economic event had an effect upon exchange rates. In
addition to the swiftly increasing volume of paper-mark issues, there
was the uncertainty concerning reparations, internal disorders, and
the fear of a change of government; all these factors were reflected in
the downward trend of the exchange value of the mark. After a
brief rally from May to September, 1920, the mark gradually declined
until September, 1921, after which date there was a precipitous fall,
increasing in intensity until the collapse in 1923.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 48 and
49 is: January, 1914, to March, 1917, sight drafts, New York on
Berlin; April, 1917, to June, 1919, a combination of cable rates,
New York on Amsterdam, and spot quotations in Amsterdam of
German currency; July, 1919, to December, 1919, cable transfers,
81
FOREIGN CURRENCY AND EXCHANGE
New York on Berlin; January, 1920, to June, 1921, sight drafts,
New York on Berlin; July, 1921, to December, 1929, noon buying
rates for cable transfers, New York on Berlin. Average rates from
January, 1914, to October, 1918, are computed from mid-points
between the monthly high and low rates; from November, 1918, to
December, 1929, averages are as computed from daily rates by the
Federal Reserve Board. Quarterly averages are computed from
monthly averages.
For conversion purposes, the par value ($0.2382) may be used
from 1900 to 1913.
T able 48.— Y early A verage E xchange R ates of the G erman M ark ,
R entenm ark , and R eichsmark 1
Average
rate
Year
1914...............................
1915...............................
1916..............
1917............................
1918...............................
1919...............................
Average
rate
Year
1920................................ $9.0175
1921................................ .0121
1922................................ .0023
1923................................ .000019
1924................................ .2308
1925................................ . 2880
$0. 2346
. 2LG1
. 1817
. 1572
. 1718
.0070
Average
rate
Year
1926................................
1927................................
1928................................
1929................................
$0. 2380
. 2376
. 2386
.2386
>Mark, 1914-1923; rentenmark, January-Oetober, 1924; reichsmark, 1824 (November)-1929.
T able 49.— Q uarterly and M onthly A verage E xchange R ates
G erman M ark , R entenm ark , and R eichsm ark 1
P e rio d
Second q u a i t e r ..................................
Third q u a r t e r ...............................
Pourtli q u a r t e r ............................
J a n u a ry ..............................................
F e b ru a ry ............ ............ ............... - .
M arch .................................. ...............
A pril ........... ..........................................
M ay ......................................................
June....................................................
Ju ly ......... ..........................................
A u g u st................................... ...............
S ep tem b er.........................................
O c to b e r.............................................
N ovem ber.........................................
D ecem ber..........................................
P e rio d
First q u a r t e r ...................................
Second q u a r t e r ..........................
T h ird q u a r t e r .................................
F o u rth q u a r t e r . . ..........................
Ja n u a ry ..............................................
F e b ru a ry ............
M arch ..........
A p ril.................................................
M a y .....................................................
Ju n e.........
J u ly ...
A u g u st_______
S e p tem b e r____
O c to b e r.. .
N o v e m b e r___
D ecem b er............
1914
1915
1916
1917
1918
1919
1920
of the
1921
0 2375 $ 0 .2 1 2 7 $0. 1854 $0. 1724 $ 0 1926 $0. 1094 $ 0 .0 1 3 3 $0.0 1 61
.0 2 1 4
. 1512
. 0 .6 3
.0 1 5 5
.2 3 8 2
. 70 »8 . 1882
. 1925
.0 Y ,9
.0 2 1 2
. 2397
. 7018
. 1611
.0 1 1 5
. 1788
. l< 0 !
.0 2 8 2
.2 2 3 0
.2 0 1 2
. 1379
.0 1 3 9
.00.53
. 1743
. 1576
.2 3 7 1
.2 3 7 6
. 2379
. 23t>l
. 2383
. 2382
.2 1 3 8
.2 1 1 8
.2 0 7 4
. 2054
.2 0 7 0
. 2049
.2 3 9 2
.2 0 1 2
. 2407
. 2010
.2 3 9 3
.2 0 2
. 2 278 ! . 2071
. 2180
. 2018
. 2232
. 1947
1922
$ 0 .0 0 1 5
. 0 034
.0 0 1 2
.0 0 0 2
1872
1882
1808
1855
1914
1876
.1 7 0 7
. 1722
. 1744
. I f 00
. 1523
. 1414
.
.
.
.
.
.
1935
1926
1918
1957
1945
1872
. 1221
. 1097
. 0964
. 0795
.0 7 7 9
.0 7 1 5
.0 1 6 9
.0 1 0 5
.0 1 2 6
.0 1 6 7
. 0219
.02.56
. 0160
.0 1 0 4
.0 1 6 0
.0 1 5 7
.0 1 6 3
.0 1 4 4
.00.52
.0 0 «
. 0 036
. 0035
. 0034
.0 0 3 2
. 182
. 1785
. 1751
. 1755
. 1718
. 1755
. 1415
. 1410
. 1396
. 1382
. 1520
.1 8 2 5
.
.
.
.
.
.
1732
1649
1542
1581
1348
1209
. 0664
.0 5 3 1
.0 4 2 3
.0 3 7 1
. 0264
.0 2 1 0
. 02.53
. 0210
.0 1 7 2
.0 1 4 8
.0 1 3 2
.0 1 3 7
.0 1 3 0
. 0119
. 0 090
. (XX',8
. 0039
.0 0 5 3
.0 0 2 0
. 0010
. (XX)7
. (KX>3
. (XXJ1
.0 0 0 1
1926
1927
1928
.
.
.
.
.
.
1924
1123
$0. 00005
. 00002
.0 0 0 0 0 1 1 2
. 00000000022G S9
2
1925
$0. 2213 $0. 2380 $0. 2380 $0. 2371 $ 0. 2386
*. 2257
. 2 380
. 2 380
. 2369
. 2391
. 2384
*. 2383
. 23b 0
. 2381
. 2377
» .2380
.2 3 8 1
.2 3 7 8
.2 3 8 7
. 23*2
1929
$0. 2374
.2 3 7 7
. 2382
.2 3 9 1
.0 0 0 0 7
.0 0 0 0 4
. (XXK15
. 00001
.0 0 0 0 2
.0 0 0 0 1
>. 2200
» .2180
*. 2200
». 2200
2. 2230
*. 2340
.2 3 8 0
. 2380
. 2380
. 2380
. 2380
.2 3 8 0
.2 3 8 0
.2 3 8 1
. 2380
.2 3 8 0
.2 3 8 0
.2 3 8 0
.2 3 7 2
.2 3 7 0
.2 3 7 1
. 27470
. 2369
.2 3 0 9
.2 3 8 3
. 2380
. 2390
. 2391
. 2393
.2 3 9 0
.2 3 7 7
. 2373
. 2372
. 2370
. 2.376
.2 3 8 4
.0 0 0 0 0 3
. 000(X)034
. (;0000001S8
. 0000000000.8
. 00000000000043
. 00000000000023
*. 2 3 M
*. 2380
*. 2380
». 2380
». 2380
> .2380
.2 3 8 0
. 2380
. 2380
.230
. 2381
.2 3 8 1
.2 3 8 0
.2 3 8 1
.2 3 8 1
.2 3 8 0
. 2 375
.2 3 8 0
.2 3 7 4
.2 3 7 8
. 2380
. 2380
.2 3 8 6
.2 3 8 9
.2 3 8 6
.2 3 8 3
.m 3
.2 3 8 1
. 2382
.2 3 8 3
.2 3 8 3
. 2381
.2 3 8 1
. 2387
. 2392
.2 3 9 4
'Mark, 1914-1923; rentenmark, January-Oetober, 1924; reichsmark, 1924 (Novemberi-1929.
2 Rentenmark.
1 Reichsmark.
82
FOREIGN CURRENCY AND EXCHANGE
GIBRALTAR
By an order in council of August 9, 1898, British currency was
established as the sole legal tender in Gibraltar. (See United King
dom, p. 170, for exchange rates, etc.) A great deal of business, how
ever, is transacted in Spanish gold, silver, and bronze coins; notes of
the Bank of Spain also circulate.
On the outbreak of the World War in August, 1914, an issue of
local sterling notes was made by the Government through the AngloEgyptian Bank (Ltd.) to the extent of £100,000; this amount was
subsequently increased to £250,000, but reduced later on. British
Treasury currency notes also are current, the total on March 31,
1927, being roughly estimated at £800,000.
GREECE
The monetary unit of Greece is the drachma (plural, drachmai;
anglicized, drachmas) of 100 lepta, representing 21.696 milligrams of
gold 0.900 fine (19.526 milligrams of fine gold), the new par value of
which is $0,013 United States currency. Prior to stabilization, the
drachma had a par value of $0.192948. On May 14, 1928, the reestab
lishment of the drachma on a gold basis became effective.
The principal circulating medium, apart from subsidiary coins of
nickel, nickel-copper, aluminum alloy, and bronze in drachma and
lepton denominations, consists of the notes of the Bank of Greece.
This bank was opened on May 14, 1928.
MEASURES TAKEN TO RELIEVE FINANCIAL SITUATION
From 1875 down to the World War Greece was a member of the
Latin Monetary Union.16 Provision was made for minting gold and
silver pieces, but these coins have practically disappeared. The
principal circulating medium prior to May, 1928, consisted of the
notes of the National Bank of Greece, founded in 1841 and given the
sole right of note issue.
Up to 1899 the right accorded the National Bank of Greece to
issue bank notes for its own use was limited to 60,000,000 drachmas.
Since 1900, however, by various decrees and confirmatory laws the
limit has been raised until in December, 1925, the amount outstanding
had reached 5,339,000,000 drachmas.
In addition to extending the limit of notes of the National Bank in
circulation, the Greek Government, in March, 1922, finding it neces
sary to procure 1,600,000,000 drachmas to meet the needs of the
Treasury without increasing the fiduciary circulation, submitted
for the approval of the National Assembly a proposal for an internal
forced loan up to 1,600,000,000 drachmas. The assembly ratified
this arrangement by law No. 2749, dated March 25, 1922. The net
product of this forced loan was only about 1,288,000,000 drachmas.
(For a description of the economics and mechanical development of
this forced loan, see Trade Information Bulletin No. 321, “ Public
Debt of Greece,” issued by the Bureau of Foreign and Domestic
Commerce, Washington, 1925.)
» Formation of the Latin Monetary Union is discussed under Belgium, p. 15.
FOREIGN CURRENCY AND EXCHANGE
83
Again, in January, 1926, to relieve the situation of the finances of
the State and of the National Bank the Government imposed two
new forced loans, one on the holders of bank notes at the rate of onefourth of all the notes of 50 drachmas and over, and the other on the
holders of the national defense bonds, the service of which was to be
met, as it matured, half in cash and half in bonds of the new loan.
BANK OF GREECE ORGANIZED UNDER LEAGUE PROTOCOL
The final step in the program of monetary reform was effected in
accordance with the protocol of the League of Nations accepted by
Greece the latter part of 1927. Under the terms of the protocol a
new and independent bank, known as the Bank of Greece, was to be
established. The Bank of Greece opened its doors for business on
May 14, 1928. It has the sole right of note issue and must maintain
the stability of its notes in gold values. The Government may not
hold shares of the bank aggregating more than one-tenth of the nom
inal issued capital. The minimum reserve requirements of the bank
are 40 per cent of the amount of its notes in circulation and other de
mand liabilities. Power to suspend this requirement is vested in the
Government. (For further particulars, see Federal Reserve Bulletin,
June, 1928.)
In December, 1929, the note circulation of the Bank of Greece
outstanding was (in terms of the stabilized drachma) 5,193,000,000
drachmas; its gold reserve, 640,000,000 drachmas; and foreign assets,
| 2,474,000,000 drachmas.
BASIS OF STATISTICS
The basis for the average exchange rates given in Tables 50 and 51
is: 1914-1921, sight drafts, Athens on New York; 1922-1929, noon
buying rates for cable transfers, New York on Athens. The rates
from 1914 to 1921 are the yearly average rates (drachmas to the
United States dollar) as given in the Report of the Twenty-seventh
Session of the Financial Committee of the League of Nations; from
1922 to 1929, the averages are as computed from daily rates by the
Federal Reserve Board. Quarterly averages are computed from
[ monthly averages.
For conversion purposes, the par value ($0.192948) may be used
from 1900 to 1914.
T able 50.— Y early A verage E xchange R ates
Year
1914........
1915.
1916.
1917...
1918.......
1919.......
Average
rate
$0.1925
. 1868
. 1919
. 1929
. 1930
. 1806
of the
G reek D rachma
Year
Average
rate
Year
1920..............................
1921 .
1922..............................
1923..............................
1924..............................
1925..............................
$0.1047
.0547
. 0331
.0171
.0179
.0156
1926..............................
1927..............................
1928..............................
1929..............................
Average
rate
$0.0126
.0132
.0130
.0129
84
FOREIGN CURRENCY AND EXCHANGE
T able 51.— Q uarterly
Period
and
1921
First quarter........................ (>)
Second quarter...................... 0)
TO. 0545
Fourth "quarter....................... .0422
January.................................. O)
February................................. 0)
M arch.................................... (■ )
April.............................. ........ (>)
May------------------------------ (■ >
June....................................
0)
July
August..................................... . 0555
September_____ ________ . 0524
October________________ - . 0438
November..............................- . 0414
December....................... ........ .0414
* Not available.
M onthly A verage E xchange R ates
G reek D rachma
1922
1923
1924
1925
1926
1927
$0. 0444
.0419
. 0344
.0174
. 0436
.0451
.0*144
.0447
. 0427
.0383
.0296
.0308
.0427
. 0239
.0159
.0123
$0. 0116
.0199
.0203
.0167
.0122
.0117
.0110
.0117
.0169
.0310
.0255
.0175
.0179
.0154
.0156
.0190
$0.0176
.0186
.0176
.0178
.0194
.0170
.0163
.0184
.0201
.0173
.0171
.0179
.0178
.0174
.0178
.0181
$0. 0164
.0174
.0153
.0133
.0176
.0161
.0155
.0178
.0179
.0166
.0160
.6154
.0146
.0136
.0134
.0129
$0. 0138
.0126
.0115
.0123
.0135
.0143
. 0137
.0128
.0127
.0124
.0118
.0112
.0116
.0121
.0123
.0126
$0. 0129
.0133
.0132
.0133
.0129
.0130
.0129
.0133
.0132
.0134
.0132
.0131
.0132
.0133
.0132
.0133
1928
of the
1929
$0.0132 ?0. 0129
.0131 .0129
.0130 .0129
.0129 .0130
.0132 .0129
.0132 .0129
.0132 .0129
.0132 .0129
.0130 .0129
.0130 .0129
.0130 .0129
.0130 .0129
. 0129 .0129
.0129 .0130
.0129 .0130
.0129 .0130
GUATEMALA
Guatemala’s monetary unit is the quetzal (plural, quetzales) of 100
centavos, representing 1.67185 grams of gold 0.900 fine (1.504G65
grams of fine gold) and is nominal!}' equal to the United States dollar.
The quetzal was adopted in accordance with the law of November 26,
1924.
Gold coins in circulation are pieces of 5,10, and 20 quetzales. There
are also subsidiary coins of silver and copper-aluminum in quetzal,
peso, and centavo denominations.
In addition to the metallic currency, the circulating medium con
sists of notes of the Banco Central de Guatemala and earlier issues of
bank notes in pesos which circulate at the ratio of 60 pesos to 1 quetzal.
United States currency also is in use.
EARLY METALLIC CURRENCY
By a decree of September, 1870, the silver peso (25 grams of silver
0.900 fine) was adopted as the unit of currency; the peso was divided
into 100 centavos. Although gold coins were provided for in the law,
the silver peso was made the unit of currency. By a decree issued in
December, 1871, the gross weight of the silver peso was increased
from 25 grams to 25.40 grams. The Guatemalan peso now contained
40 centigrams of silver more than the generally accepted pesos of other
countries. The result was that the Guatemalan pesos began to be
exported and replaced by lighter-weight pesos of Peru and Chile.
Coining of the 25.40-gram pesos (“ pesos fuertes”) was discontinued
in 1878, and in April, 1881, a law was approved which provided for
the return to the peso of 25 grams.
FOREIGN CURRENCY AND EXCHANGE
85
About 1875, gold onzas 17 began to be taken out of circulation
and by 1879 had practically all disappeared. By this time the smaller
gold coins also began to be withdrawn, so that by 1880 there was
practically no gold in circulation. For the next two decades the
chief metallic currency in Guatemala was silver.
BANK NOTES REPLACE HARD MONEY
In 1890, the gold price of silver rose, bringing about the exportation
of some of the silver money. To check the exodus of silver currency,
a law was passed in October, 1890, taxing the exportation of silver
coin or bullion. The situation changed in 1891, when the gold price
of silver began to fall. The result was that silver currency from Chile
and Peru began to flow into Guatemala. In July, 1894, the importa
tion of foreign silver was prohibited. After 1894 silver once more
began to leave the country, the chief cause of which was the excessive
amount of paper money.
Six banks of issue were operating in Guatemala at this time—
Banco Internacional, founded in 1877; Banco Colombiano, 1878;
Banco Occidente, 1881; Banco Agrícola-Hipotecario, 1894; Banco de
Guatemala, 1895; and Banco Americano, 1895. The banks were
authorized to issue notes (billetes), redeemable on demand but not
legal tender.
The years from 1897 to 1923 may be described as the period of
paper-money inflation, during which the note circulation outstanding
increased from about 10,000,000 pesos to about 370,000,000 pesos.
Meanwhile the gold reserve had all but disappeared.
EXCHANGE STABILIZATION THROUGH CAJA REGULADORA
In September, 1923, the “ Caja Reguladora” was established to
stabilize exchange rates, which naturally had fallen sharply. The
Caja was to buy and sell in paper currency foreign gold drafts. Its
resources were to consist of a share in the gold export tax on coffee;
this share was $0.50 United States currency per quintal (about 100
pounds). A large part of its activities was simply the exchange of
local money for United States currency (generally used throughout
the Republic, except in the rural sections), and vice versa, at the
prescribed ratio of 60 to 1. Notwithstanding the limited scope of
its operations the Caja was successful in maintaining stability. The
finances of the Government at the same time were so improved as to
17 “ The Spanish system of currency which was transplanted to the American continents was based upon
the real as a unit. The real dates from 1369 and was a mixture of silver and copper. (The real was origi
nally Hoof a mixture of 1 marc ol ilver [3550.16 grains troy] and 3 marcs of copper.) it was divided into
34 maravedí, which were small coins for minor transactions. Under the Spanish laws of 1497 silver pieces
of eight reales were coined, which later came to be known variously as pesos, duros, duros fuertes, or pieces*
of-eight. These silver pieces originally contained 423.716 grains troy, 930.55 fine, which would give them
a pure-silver content of about 394.829 grains. However, the amount of silver in the peso was reduced at
different times, and a mint test in 1626 indicated that it contained only about 386 grains of pure silver.
Later tests showed still smaller amounts, and by 1800 they contained only about 371 grains on the average.
The reales were also often debased, so that the pieces-of-eight were not always rated as the equivalent of
8 reales. * * •
“ In addition to silver coins, Spanish gold coins were brought over to America. The common gold coin
was the onza. The onza, as its name implies, was supposed to contain about an ounce of gold, but in
practice this was not the case. The onzas with which the American colonies were familiar appear to have
contained about 27 grams of gold gross (an ounce troy is the equivalent of about 31.1 grains), and circu
lated as the equivalent of about 16 silver pesos. According to Spanish records they were coined first in
1615 by Phillip III. Another familiar gold coin was the doblón, or doubloon, as it is often called. It was
of various denominations and was coined in multiples of the escudo, especially in the denominations of 2,
4^nd 8 escudos. These were known respectively as ‘doblones de 4 dos,' ‘doblones de 4 cuatro,’ and
‘doblones de 4 ocho.’ In America the onza was frequently known as a doblón.”—Young’s “ Central
American Currency and Finance,” pp. 12 and 13.
FOREIGN CURRENCY AND EXCHANGE
86
enable it to dispense with bank loans, thus removing the likelihood of
renewed currency inflation.
The Caja was reorganized by the decree of December 3, 1924, and
its directorate was made up of three representatives of the Gov
ernment, two of the old banks of issue, one of the chamber of com
merce, and one of the Association of Agriculturalists. Its income
came from a sliding surtax (collected in gold) upon coffee exports and
a similar duty on exports of sugar. Under the monetary law the
reserve fund to be accumulated under the charge of the Caja Regu
ladora was placed at 40 per cent of the outstanding bank notes
(revalued at the ratio of 60 to 1). It was provided that when the 40
per cent reserve had been accumulated the banks should deliver
other values sufficient to cover their entire note circulation, which
should then be redeemed or assumed by the contemplated central
bank of issue. CENTRAL BANK OF GUATEMALA ORGANIZED
By a decree of December, 1925, the organization of a central bank
of issue was proposed. This bank, Banco Central de Guatemala, was
actually established on July 6, 1926. The Government subscribed
and paid in 1,000,000 quetzales; the public subscribed a like amount.
The duration of the concession is to be 30 years, subject to exten
sion; the exclusive right of note issue, however, is granted for only
10 years. The responsibility for the existing bank notes is assumed
by the Banco Central, which must redeem them in metallic currency
or in drafts on New York. The assets and liabilities of the Caja
Reguladora were taken over and this institution dissolved. The Banco
Central is gradually to replace the present paper money with its own
notes issued against a gold reserve of 40 per cent. The notes will not
be legal tender but will be accepted in payment of public dues.
On December 31, 1928, the total note circulation outstanding was
9,935,000 quetzales, of which 4,715,000 quetzales (282,929,000 pesos)
represented notes of the old banks.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Table 52 is:
1900-1929, sight drafts on New York in Guatemala- From 1900 to
1921, the rates are the average rates as given in Boletín de la Dirección
General de Estadística, No. 2 (Ministerio de Fomento), 1922; for
1922 the rate has been computed at the ratio of 56 pesos to the
United States dollar; for 1923, at the ratio of 60.5 pesos; and for the
remaining years at the ratio of 60 pesos to the quetzal.
The rates given are for the Guatemalan paper peso; the quetzal
has been stable since its establishment.
T able
52.— Y early
i Year
1900..............
1901................
1902................
1903................
1904 ..............
1905................
1906...............
1907................
1908 _ __
1909................
A verage E xchange R ates
P eso
of the
j Average il
I Average
Y'ear
rate
rate
______ I $0.1618 I 1910...
_____ 1 $0.0386
.............j .1572! 1911..
...........
.0562
.............' . 1155 ¡1 1912..
. 0544
.............Í .0676 ¡j 1913..
...........
.0514
_____ • .0383
.............Í .0717 ¡I 1914..
............., .osoi ; 1915..
...........! .0231
.............! .0921 1916..
...........: .0241
....................... 0805 1917..
...........| . 02-54
.............; .0652 i 1918..
.0276
...........| .0367
::::::::
.« w l!11919...
G uatemalan P aper
Y'ear
1920.....................
1921.....................
1923.....................
1924.....................
1925.....................
1926.....................
1927.....................
192S
1929.....................
Average
rate
$0.0330
.0202
.0179
.0165
. 0167
.0167
. 0167
.0167
.0167
.0167
87
FOREIGN CURRENCY AND EXCHANGE
THE GUIANAS
BRITISH GUIANA
In British Guiana the monetary unit for Government and com
mercial accounts is the British Guiana dollar, divided into 100 cents.
The British Guiana dollar is equivalent to 4s. 2d., or about SI.014
United States currency. In circulation are British gold, silver, and
bronze coins, with some local silver “ bits”—fourpenny pieces.
United States gold coins also are current and are legal tender.
In addition to Government currency notes of 1 and 2 dollars, there
are notes issued by the Royal Bank of Canada, Barclay’s Bank, and
the Colonial Bank in denominations of 5, 20, and 100 dollars. At
the end of 1927 Government currency notes amounted to 500,000
dollars and bank notes to 1,034,000 dollars.
From 1908 (the earliest statistics at hand) to 1920 exchange on
New York was governed by quotations in New York for sight bills
or 60-day bills on London; for the same period the rate on London
was arranged by banks in concert and governed by bank rate of
interest in London. The nominal 90-day selling rate on London for
£100 has varied as follow's:
1908-1917.........................................................................................
1918 .........................................................- ............ - ...................—
1919 .............................................................................................
1920 (Jan. 1-Aug. 9) (Colonial Bank)___________________
1920 (Aug. 10-Dec. 31) (Colonial Bank)________________
1921 (Colonial Bank)_______________________ __________
1922 (Jan. 1-Sept. 3) (Colonial Bank)__________________
1922 (Sept. 4-Dec. 31) (Colonial Bank)_________________
1923-1927 (Royal Bank of Canada)____________________
Dollars
481. 00
475. 00
402. 50
470.00
480. 00
480. 00
480. 00
482. 50
482. 50
FRENCH GUIANA
In French Guiana the monetary unit is the new' revalued French
franc of 100 centimes, par SO.039179. (See France, p. 73, for rates
of exchange, etc.)
La Banque do la Guyane is the sole bank of issue; its notes on
June 30, 1925, amounted to 10,600,000 French francs and the metallic
reserve was 3,600,000 French francs. Under the law of June 25, 1928,
(see p. 70 for text of this enactment) the reserves of gold and silver
at present held by the Bank of France and banks which have received
from the Government the privilege of note issue in the colonies and
protectorates where the franc is legal tender must be revalued on the
basis of the new parity of the currency.
NETHERLAND GUIANA (SURINAM)
In the Netherlands colony of Surinam the monetary unit is the
Oorin (also termed gulden; plural, gulden) of 100 cents, representing
672 milligrams of gold 0.900 fine (604.8 milligrams of line gold), the
par value of which is about SO.402 United States currency. Exchange
is determined by that of the Netherlands. (See Netherlands, p. 118,
for exchange rates, etc.)
The bank of issue is De Surinaamsche Bank, established in 1S65;
its head office is in Amsterdam, Netherlands. On December 31, 1928,
bank notes in circulation amounted to 1,701,000 ilorins.
88
FOREIGN CURRENCY AND EXCHANGE
HAITI
Haiti has adopted for its monetary unit the gourde (plural, gourdes)
of 100 centimes (cents), stabilized in September, 1915, at $0.20 United
States currency; it therefore represents 334.36 milligrams of gold
0.900 fine (300.92 milligrams of fine gold). The treaty of September
16, 1915, between the Governments of the United States and Haiti,
whereby the United States undertook to assist Haiti in effecting a
thorough financial rehabilitation, resulted in the establishment of a
monetary and exchange stability which has existed up to the present
time.
The currency of Haiti now consists of bank notes issued by La
Banque Nationale de la Republique d ’Haiti (an affiliate of the
National City Bank of New York since 1916), which has the sole
right of note issue, and nickel and copper subsidiary coins in centime
denominations. In the seaboard towns and commercial centers
United States paper, gold, and subsidiary currency circulate freely
at the established ratio of 5 gourdes to the dollar. There has been
no fluctuation of exchange rates in Haiti since 1915.
Before the negotiation of the treaty of September 16, 1915, the
nominal value of the gourde was 4s., or about $0.97344. The circu
lating medium consisted of paper money, issued by La Banque
Nationale d’Haiti under the control of the Government, and nickel
and bronze coins. The currency of Haiti depreciated to such an
extent that the premium on gold in 1905 was over 500 per cent, and
there was little or no improvement up to 1916. On August 19, 1912,
a law was approved providing for the withdrawal of 6,000,000 gourdes
from circulation within two years (the circulation at that time con
sisted of bank notes amounting to about 8,000,000 gourdes and socalled nickel coins to the amount of 7,000,000 gourdes) ; however, no
effective steps were taken until the signing of the treaty in 1915.
By an agreement between the Government and La Banque Nationale
in April, 1919, the latter was authorized to issue notes up to three
times the amount of its paid-in capital, with the proviso that a cash
reserve be maintained in United States currency equal to at least onethird of the amount of the notes outstanding and that the difference
between the cash reserve and the total amount of circulating notes be
represented by two-name commercial bills maturing within four
months. The Government withdrew the fiduciary paper money that
had previously served as the medium of exchange.
HONDURAS
The unit of currency actually in use in Honduras at the present
time is the silver peso (plural, pesos; symbol, $) of 100 centavos,
representing 25 grams of silver 0.900 fine, the par value of which
theoretically would fluctuate with the price of silver. However,
inasmuch as the Government prohibits the importation of silver, and
since the scarcity of silver currency for commercial transactions
makes the demand greater than the supply, the rate which was
officially adopted in 1918—2 pesos to the United States dollar—has,
with the exception of fluctuations caused almost entirely by revolu
tionary disturbances, remained fairly constant.
A decree of April 3, 1926, designated the lempira of 100 centavos,
representing 835.906 milligrams of gold 0.900 fine (752.3154 milli-
FOREIGN CURRENCY AND EXCHANGE
89
grams of fine gold, as the official monetary unit of the Republic.
The par value of the lempira is $0.50 United States currency. The
same decree authorized the minting of silver and copper coins of 50,
25, 5, and 1 centavo denominations. This system, however, has not
yet been put into actual operation, and the peso is still the money of
account.
Honduras has never felt the consequences of paper-money inflation.
FORMER MONETARY SYSTEM OF THE REPUBLIC
Until the promulgation of the decree of April 3, 1926, the monetary
system of Honduras was based upon the law of 1879. Prior to that
time, Honduras had a varied collection of coins (mostly silver) which
included the old “ macacas” (pieces of silver cut into odd shapes and
bearing the official stamp), reales and half-reales, and a miscellaneous
mixture of foreign money from Chile, Peru, Mexico, and other coun
tries.
The law of 1879 provided that the unit of currency was to he the
silver peso of 100 centavos containing 25 grams of silver 0.900 fine.
It also provided for the reestablishment of the mint, which had not
been in operation for over 20 years. Coinings by the mint in Tegu
cigalpa, though fairly large, were not sufficient to meet the demands of
trade nor to displace completely the foreign coins. Furthermore,
the Honduran silver coins, made from gold-hearing silver ores, con
tained such a large proportion of gold that most of them were promptly
withdrawn from circulation and exported for the extraction of the
gold.
The circulation of foreign money was recognized officially in 1894
when money of Nicaragua and El Salvador was made legal tender and
Peruvian money might be received at the option of the public.
Although the law recognized no other moneys, coins of other Latin
American countries, especially those of Guatemala and Chile, vrere
imported in considerable amount. Most of the fractional coins
imported were 0.835 fine or less, and the result was that Honduran
coins were exported.
REGULATORY MEASURES AFFECTING SILVER
To remedy the situation a law was passed in 1909 placing a tax of
25 per cent upon the importation of foreign silver coins of a weight
and fineness less than the peso, and prohibited altogether the intro
duction of coins of a fineness less than 0.835.
In the latter part of 1915 the price of silver began to advance and
silver money was exported in such quantities that business was em
barrassed by a lack of sufficient currency. The law of 1909 was
strengthened by a new law of January, 1916, placing an export tax
of 15 per cent on the exportation of silver bullion proceeding from the
melting down of silver money, but as the price of silver continued to
advance this law proved to be ineffective. The scarcity of currency
became so acute that in April, 1916, the exportation of silver money in
any form was prohibited, but clandestine exportation continued.
On the northern coast of Honduras, where United States companies
have the preponderant position in the economic life, a certain amount
of United States money has been in circulation for several years, but
1942°—30------7
90
FOREIGN CURRENCY AND EXCHANGE
little of this money has found its way into the interior. The northern
coast was therefore not affected by the exodus of silver to the same
extent as the interior.
CONTRACT WITH AMERICAN-CONTROLLED BANK
Various remedies for alleviating the monetary situation were sug
gested. Owing to the fact that a certain amount of United States
money wras already circulating in the country, the Banco Atlantida,
controlled by United States capital and with its main office at La
Ceiba on the northern coast, proposed that this circulation be in
creased and extended to the entire country. Accordingly on March
21, 1918, a contract was negotiated between the bank and the Govern
ment which provided that, in addition to granting further credits to
the Government, the bank “will exchange its notes at the option of
bearer in current silver money, United States money, or in bank drafts
at 2 to 1 as long as quotations of soles (pesos) in New York do not go
below 53 cents.” This phraseology was unsatisfactory to the bank,
and on May 1,1918, it was changed to read: “ The bank will exchange
its notes in current silver money, United States currency, or in bank
drafts at 2 to 1 as long as quotations of soles (pesos) in New York do
not go below' 53 cents.” This change gave the bank relief from the
obligation to meet its notes in a class of money which was being
rapidly withdrawn from business channels and was the first step
toward the adoption of United States money.
The contract provided further that the Government wTould receive
notes of the bank in payment of 50 per cent of fiscal dues, the other
50 per cent to be payable in silver or in United States money at the
rate of 2 pesos to 1 United States dollar. On September 13, 1919, a
decree was issued to the effect that the Banco Atlantida was to guar
antee its notes in United States money in the same proportion estab
lished in its concession, that is, with a reserve of 50 per cent; this
decree also relieved the bank of the obligation of redeeming its notes
for a period of six months, during which time it would be able to
import a sufficient quantity of United States money.
INDIVIDUAL UNITS OF TWO BANKS OF ISSUE
The Banco Atlantida is now' firmly on the gold basis and since
January, 1920, has transacted its business in terms of United States
money, although it receives silver for deposit and does a certain
amount of business in terms of silver, keeping the accounts separate
and paying in the same currency as deposited.
Meanwhile, the Banco de Honduras, owned and controlled by
native capital, has been meeting its obligations in silver. -Vs United
States money came into circulation and wras adopted by the country
at the ratio of 2 local pesos to 1 United States dollar, the bank re
ceived and paid out the new currency, but it still transacts the bulk
of its business in terms of silver pesos and has remained on the silver
basis.
DOLLARS USED IN THE NORTH, PESOS IN THE SOUTH
The fall in the price of silver in 1920 and 1921 complicated the situa
tion in the southern part of the country by inducing a return to cir- j
culation of many of the old silver coins which had been hoarded. For '
a time this tendency threatened to destroy the existing standard, but
FOREIGN CURRENCY AND EXCHANGE
91
the fear of demonetization by the Government checked it, and in spite
of the reduced amount of United States currency in circulation silver
has since remained at a discount.
The situation in Honduras at the present time is somewhat as fol
lows: On the northern coast all business is done on a dollar basis,
since the large companies producing bananas and sugar are American
organizations and require United States currency for their operations.
The money in circulation is that of the United States and the notes of
the Banco Atlamida redeemable at 2 p< ao io 1 United States dollar,
and exchange on Men York is purchasable in these notes at a premium
of one-fourth of 1 per cent. In the southern part of the country are
found the silver currency (plata); notes of the Banco de Honduras
(at Tegucigalpa), the other bank of issue (redeemable in silver); and,
to a smaller extent, United States money, which usually is called
simply “gold” (oro). BASIS OF STATISTICS
The basis for the average exchange rates of the peso as given in
Table 53 is: For fiscal years 1899-1900 to 1912-13, the rates represent
exchange on London, pesos to the pound sterling, as quoted from the
annual reports of the Corporation of Foreign Bondholders, London
(for sterling rates see United Kingdom, p. 174); for the calendar years
1913 to 1929, the rates are the yearly average bank selling rates of
New York sight drafts in Tegucigalpa.
For conversion purposes, from 1918 to 1929, the ratio of 2 pesos
to the United States dollar ($0.50) may be used for the northern coast
of Honduras.
T able 53.— Y early A verage E xchange R ates
P eso
Year
FISCAL
1899-1‘MW.......................
1900-1(01.......................
1901-2..........................
1902-3
1903-4............................
19M-5............................
1905-«.......................
1906-7............................
1907-8 ...
1906-9...........
1909-10..........................
1910-11..........................
As r
1
Y*»r
i *
$0. 1424
.3393
.4055
. 4055
.4320
.4424
.4424
.4055
.3743
. 3893
.3893
FisCAi.—cont inued
1911-12..........................
i 1912-13 .........................
1
1913................................
1914...............................
! 1915.............................
i 1916__
| 1917................................
1918................................
! 1919................................
of the
Average
rate
H onduran S ilver
Year
calendar continued
$0.4055 1920................................
.4055 1921..............................
1922....... .....................
1923.......
1924................................
.4184 1925................................
.40K1 1926 _____ _______
. 3378 1927................................
.3831 ; 1928.......................
. 4525 1929................................
. 4926
.4950
HONG KONG
Average
rate
$0.4950
. 1950
.4784
.. 4717
4762
. 4673
In the British colony of Hong Kong the monetary unit is the Hong
Kong dollar of 100 cents, containing 26.957 grams (416 grains) of
silver 0.900 fine. There are also current the British silver dollar, of
the same weight and fineness, and the old Mexican dollar, containing
27.07 grams (417.74 grains) of silver 0.9027 fine. The Hong Kong
dollar and the British dollar have the same exchange value, but their
par of exchange in terms of the United States dollar varies with the
price of silver.
There is no Colonial Government paper money. However, notes
issued by private banks (Hong Kong & Shanghai Banking Corpora-
92
FOREIGN CURRENCY AND EXCHANGE
tion; Chartered Bank of India, Australia, and China; Mercantile
Bank of India) outstanding at the close of 1928 totaled 61,966,000
Hong Kong dollars, as against 64,806,000 dollars for the preceding
year. These notes are backed by strong reserves.
HISTORY OF HONG KONG CURRENCY
Spalding, in his “ Dictionary of World’s Currencies and Foreign
Exchanges,” gives an interesting account of the sources and develop
ment of Hong Kong's present circulating media. At pages 92-94 he
says, in part:
The existing currency of Hong Kong recalls the earliest phase of currency in
seventeenth-century America; and, just as the old silver piece-of-eight 18 was
found to be dominating the currency of the West Indian colonies, so the dollar,
lineal descendant and modern representative of the piece-of-eight, in one form or
another is still found to be the dominating currency of Hong Kong. * * *
The circulation of silver trade dollars in Hong Kong was in a fairly advanced
stage long before the advent of the British into the colony. The old Spanish
dollars >• had drifted to various parts of China—Amoy, Canton, Ningpo—in
connection with the trade instituted by the Spaniards with the Chinese in 1575.
The Spanish base was at Manila in the Philippine Islands, from which a desultory
trade was carried on with China, and in course of time the Spanish dollar perco
lated to Hong Kong.
After the British took over the island from the Chinese in 1842 currency matters
were allowed to drift for a short period; but on March 29, 1842, a proclamation
was issued making legal tender Spanish, Mexican, and other silver dollars, the
rupee of the East India Co., and the copper “cash” of China. This was applica
ble to all bazaar dealings but not to mercantile transactions. On April 27, 1842,
a further proclamation was issued making “Mexican and other Republican dollars ”
the standard in all Government and mercantile transactions at Hong Kong.
* * * On November 28, 1844, a new proclamation was issued revoking the
former one and fixing British silver as the nominal standard. * * *
In course of time the Mexican dollar became the recognized standard coin of
the colony. The Chinese thus came to regard the coins with favor; they were
practically obliged to, for the stock of old Spanish dollars, which previously had
reached them from the Philippines, had rapidly decreased in proportion to the
increase in trade in the East.
However, Hong Kong was not formally and finally recognized as outside the
currency area of Great Britain until January 9, 1863, when a new proclamation
was issued cancelling all former proclamations and making the Mexican dollar or
other silver dollar of equivalent value, as authorized from time to time, the only
unlimited legal tender. Provision was also made for the minting in London
of certain subsidiary coins of silver and copper. The authorities did not leave
the position at that; soon they became convinced that the way was open for the
introduction of a British dollar, and legal sanction was given for the opening of
mints and the coinage of dollars in Hong Kong. * * * Provision was there
fore made for the minting of British dollars of a weight of 416 grains, 0.900 fine;
half-dollars were also struck of proportionate weight and fineness; and of the
subsidiary coins, a 20-cent piece and a 5-cent piece were issued.
These Hong Kong dollars were moulded after the fashion of the Mexican
dollar, but they failed to meet with the favor of the Chinese. Other circum
stances, to wit, an adverse exchange at the time of their introduction and a mint
ing charge (seigniorage) of about 2 per cent, combined to make the new issue a
failure, and before very long the dollars were accepted by the Chinese only at a
discount of 1 per cent or more.
This failure led the Colonial authorities to abandon the idea of coining their
own dollars. * * * The mint had been open from May, 1866, to May,
1868. Some years afterward, it is recorded, British dollars were to be found
circulating at par with the Mexican coin; while the sub-coin, which at one time*1
11 See footnote 17, p. 85.
11Spanish dollar = the piastre or peso of 8 reales.
FOREIGN CURRENCY AND EXCHANGE
93
had depreciated to no less than 35 per cent, gradually rose until par was reached.
* * * As a matter of interest, it may be mentioned that 2,108,054 dollars
were minted at Hong Kong. * * *
However, as British dollars did eventually find favor in 1895, a new currency
measure was passed in that year. Under this enactment a British dollar was
coined at the Royal mints in Bombay and Calcutta, and these have continued to
pass freely in Hong Kong. The British dollars have also been coined in fairly
large quantities from time to time at the Royal mint in London. These dollars
are all identical in weight and fineness with the former British dollars, viz, 416
grains 0.900 fine. * * *
At the present day, however, Mexican dollars and “chopped” dollars remain
legal tender. “ Chopped” dollars are taken by weight and not by count, 717
Canton taels weight being equal to 1,000 dollars. The Mexican dollar is now a
disappearing quantity, and the coin has practically disappeared from circulation
in Hong Kong. The coins officially circulating in Hong Kong are: The British
silver dollar, weighing 416 grains 6.900 fine = 374.40 grains pure; 50-cent silver
piece, 209.52 grains 0.800 fine, 20-cent silver piece, 83.81 grains 0.800 fine, 10-cent
silver piece, 41.90 grains 0.860 fine, and 5-cent silver piece, 20.95 grains 0.800
fine. This group of subsidiary coins is known as “sub-coin.”
The term "chopped” dollar requires explanation. The difference between a
“chopped” dollar and a “clean” dollar is this: The Chinese stamp or place their
seal on all dollars coming into their possession, the object * * * [being] to
guarantee that the dollar is a proper dollar. A dollar without any of these marks
is termed a “clean” dollar; and when it is realized that dollars which have been
stamped many times lose their “ring” in addition to part of their original worth,
it will be readily understood that they are inferior in value to clean dollars, which
for that reason frequently command a premium in Hong Kong over chopped
dollars.
BASIS OF STATISTICS
The basis for the average exchange rates given in Tables 54 to 56 is:
1914-1921, demand drafts on London in Hong Kong (pence con
verted; see United Kingdom, p. 175, for the exchange value of the
penny); 1922-1929, cable transfers, New York on Ilong Kong. From
1914 to 1921, yearly averages are taken from the Hong Kong Blue
Book; from 1922 to 1929, yearly averages are as computed from daily
rates by the Federal Reserve Board. From July, 1921, to December,
1929, the quarterly and monthly averages are computed from the
rates given by the Federal Reserve Board.
T able 54.— Y early A verage E xchange R ates op
and M exican D ollar
the
H ong K ong D ollar
A verage rate 1
$0.4548
.4306
(2)
<*).7676
.8252
.6833
.5133
$0.4548 1922.......................................
.4306 1923.......................................
1925.......................................
8.7676 1924.......................................
1926.......................................
.8252 1927.......................................
.6833 1928......................................
.5133 1929.......................................
Hong Kong Mexican
dollar
dollar
$0.5571
.5290
.5247
.5652
.5333
.4921
.5007
.4717
s
£iÌÌg§g|]
1914.........
1915...
191«....
1917..
1918.......
1919.........
1920....
1921....
Hong Kong Mexican
dollar
dollar
Year
A * A C Ü» y
Average rate1
Year
1It will be noted that for demand drafts on London 1914-1921 the exchange values of the Hong Kong
dollar and Mexican dollar are identical.
*No quotations.
94
FOREIGN CURRENCY AND EXCHANGE
T able 55.— Q uarterly
Period
M onthly A verage E xchange R ates
H ong K ong D ollar
and
1922
1921
1923
$0. 5405 $0. 5392
First quarter .....................................
. 5074 . 5428
Second quarter............. ............ 0C ))
Third quarter ------------ ------------- *0. 5001 . 5700 . 5210
Fourth quarter....................... . 54% .5434 '.5119
. MOO
. :r . t?
.'«».nuarr....................................
. ;T.«*0
. 52*7
0)
. .'J i 8
. 5538
O)
. [ t i l \j
. 54S2
A p r i l .........................- .................................
0)
.5778 . 5180
May.........................................
.5772 .5321
June.......................................... 0(•))
July....................... .................. .4932 .5 7 9 4 .5204
August ............................... ..5007 . 5754 . 5187
.September............................... .5244 .5731 . 5238
October. __..............................
. 5596 .5185
.5382 . 5080
December................................ .5420 .5323 .5080
i Not
1924
$0. 5944
. 5102
.5303
.5482
. 59-1
.
9
.5 1 1 5
.5180
.5194
. 5230
. 5332
.5346
.5436
.5486
.5525
1925
1926
1927
$0.5506 $0. .1741 $0.4937
.5491 . 5498 .4934
.5783 . 5335 .4855
.5829 .4761 .4965
....
. 5i07 . <906
. 5-V;5
. 57S ; . ,5030
. 5-427
. .V:;; * .4 MVJ
. «>->04 .4 9 0 9
.5 4 1 0
.5462 . 5508 .4927
.5602 .5522 .4907
..5685 ..5459 .4898
. 5731 . .5319 . 4810
. 5932 .5228 .4850
. 5934 . 4777 .4880
.5781 . 4746 . 4979
.5771 .4759 .5031
of the
1928
1929
$0. 4989 $0. 1918
. .5048
.4830
.4987 .4792
.4991 .4320
. 5041
.m 2
. 4946
.4R*i8
. 49*4)
. 48>t
. 49S7
.4870
. 5102 . 4834
.5054 .4786
.4999 .4812
. 4990 .4794
.4971 .4770
. 499.5 .4415
. 4998 .4322
.4979 .4223
available.
T able 56.— Q uarterly
Period
1921
First quarter ......................... Q
Second quarter........................
.5023
Third quarter ..................... >0. (>)
Fourth quarter....................... .5535
January.................................. 0)
February............................... <•>
M arch.................................. -. (')
A pril...................................... (>)
May......................................... 0)
(1)
July.......................................... .4867
August ........................... . 4943
October,. ........................... .5 6 8 6
Decern ber............................... .5460
* Not available.
M onthly A verage E xchange R ates o r
M exican D ollar
the
1922
1923
1924
1925
1926
1927
1929
$0.5282
.5616
. 5639
.5302
.5410
.5274
.5163
. 5392
.5738
.5719
.5675
. 5620
! 54.55
. 5248
.6203
$0.5296
.5326
.5083
.5092
.5230
. 5205
. ,5453
.5382
.5384
.5213
.5083
.5050
! 5069
. .5074
.5134
$0. 5059
.5104
. 5269
.5520
.5037
. 5101
. 5039
. .5052
.5131
.5128
. 5146
. 5272
. 5508
. 5.531
.5521
$0. 5475
.5456
. 5675
.5613
. 5550
. 5.509
. 5365
. 5356
..5423
.5589
.5014
. 5055
. 5743
.5577
.5518
$0.5363
.5193
. 5004
.4407
.5429
. .5375
.5285
. 5144
.5207
.5227
.5171
. 5015
. 4467
. 4377
.4377
$0.4529
. 4555
. 4398
.4542
.4521
. 4053
.4413
. 45.54
. 4561
. 4551
.4460
. 4338
. 4474
.4591
and
HUNGARY
1928
$0.4557 $0.4512
.4713 .4321
. 4674 .4111
. 4039 .3916
. 4574 . 4568
. 4.536 . 4479
.4.561 . 4489
. 4580 . 4423
. 4779 . 4328
.4779 .4211
.4708 .4163
. 4090 .4144
14656 . 3937
. 3937
.4605 .3873
The pengo (plural, pengo), of 100 filler, representing 292.10 milli
grams of gold 0.900 line (263.16 milligrams of fine gold), the par value
of which is $0.1749 United States currency, was adopted by act No.
XXXV of November 4, 1925, as the monetary unit of Hungary; it
came into official use on December 27, 1926. The pengo is equiva
lent to 12,500 paper korona. The former unit was the korona of 100
filler, representing 338.75 milligrams of gold 0.900 fine, the par value
of which was $0.2026. The korona was adopted in accordance with
the gold standard law of 1892. There are subsidiary nickel-copper
and bronze coins of 1, 2, 10, 20, and 50 filler.
The principal circulating medium is the notes of the National Bank
of Hungary. This bank is modeled along the same lines as the
National Bank of Austria. It must maintain a reserve against its out
standing notes and demand liabilities of 20 per cent during the first
five years of its existence, 24 per cent during the next five years, 2S
per cent during the next five years, and thereafter 33K per cent. It
lias the sole right of note issue; its notes are legal tender in respect to
FOREIGN CURRENCY AND EXCHANGE
95
all payments, public and private, with the exception of those which
specifically call for metallic currency. This legal-tender quality is to
lapse with the introduction of specie payments. The Government
is not permitted to borrow from the bank except against foreign cur
rency or foreign bills given over to the bank to the extent of 100 per
cent of the loan. The bank’s statutes also provide for the ultimate
resumption of specie payments and the introduction of the gold
standard.
CURRENCY OF THE DUAL MONARCHY
Before the break-up of the Austro-Hungarian Monarchy in October,
1918, currency and banking were not identical in Austria and in Hun
gary, although in actual practice the two countries by agreement had
adopted similar systems. The old Austrian National Bank, founded
in 1816, was made the Austro-Hungarian Bank in 1878.
Prior to 1892 Austria-Hungary had three different currency units,
the gold florin, the silver florin, and the paper florin. The gold florin
was equivalent to about S0.48 United States currency.
On account of the large amount of silver and paper currency in
circulation the transition to the gold standard did not take place
until January, 1900. The silver and paper florins were made the
equivalent of 2 gold korona. None of the silver or paper currency
of Austria was over made legally redeemable in gold.
In addition to the metallic money, the notes of the Austro-Hunga
rian Bank circulated freely. The bank had the sole right of note issue
and its notes were legal tender except for payments which specifically
stipulated coin. The bank was required to hold a metallic reserve
against its notes outstanding to the extent of 40 per cent in gold or
silver. The notes of the bank were never redeemable in gold, although
in practice the bank maintained them at a parity with gold. When
the first Balkan war broke out in 1912 gold was hoarded and was
replaced in common use by silver. During that war the notes of
the bank were at a small discount in terms of both gold and silver.
When the World War broke out in 1914 restrictions on note issues
of the Austro-Hungarian Bank were relaxed. The Government
turned to the bank for funds, and, as Government borrowing increased,
the result was inflation of currency. The note circulation expanded
from about 2,000,000,000 korona in July, 1914, to over 35,000,000,000
korona at the beginning of 1919. Meanwhile the metallic reserves
diminished from 1,500,000,000 korona to 342,000,000 korona.
KAROLYI AND BOLSHEVIST RÉGIMES
Political conditions in Hungary were disturbed immediately follow
ing the World War. Count Michael Karolyi was proclaimed provi
sional president on the abdication of King Charles. Karolyi had been
president only about four months when a Bolshevist government was
set up under Bela Kun; Bela Kun was overthrown by a Rumanian
army. In March, 1920, the Government of Hungary formally declared
the country a monarchy.
The Bolshevist government used the plates of the Austro-Hunga
rian Bank to print paper money, which was put in circulation. The
Bolshevists also printed their own money in larger denominations.
The larger notes were known as “white notes,” being printed on white
paper, and were redeemed at only 25 per cent of their face value.
96
FOREIGN CURRENCY AND EXCHANGE
HUNGARIAN NATIONAL CURRENCY INTRODUCED
After 1918 the Austro-Hungarian Bank continued to operate and
to issue notes which were current in Hungary. The treaty of St.
Germain, signed September, 1919, provided that each State which
had formerly been a part of Austria-Hungary should stamp the notes
of the Austro-Hungarian Bank then in its possession with the stamp
of its own Government. Inasmuch as Hungary was the last State
to stamp these notes, those which had not been presented for stamping
in other States were brought into Hungary. On January 1, 1920,
the Austro-Hungarian Bank was divided into two sections, the Aus
trian section and the Hungarian section. In August, 1920, liquidators
were appointed, as provided in the treaties, and the bank has now
passed completely out of existence.
A national system of currency was introduced in Hungary by the
law of May 4, 1921. This law provided for the withdrawal of the
paper currency then in circulation and the substitution of a national
currency. It also provided for a State Note Institute, which was to
be under the control of the Ministry of Finance. This institute was
to be a more or less temporary organization to take over the business
of the Austro-Hungarian Bank, etc.
NOTE ISSUE OF STATE INSTITUTE
The State Note Institute opened for business on August 1, 1921,
and began immediately to issue its own notes in exchange for the
stamped notes of the Austro-Hungarian Bank; these amounted to
about 20,689,000,000 korona, of which 15,827,000,000 korona were
later exchanged for State notes and the remainder retired. State
notes were also issued in exchange for 793,000,000 korona in notes
with the Yugoslav stamp which had been circulating in territory
regained from Yugoslavia, and in exchange for 87,000,000 korona of
counterfeit or forged notes of 1 and 2 korona issued during the Bol
shevist rule. The total amount of State notes issued to retire other
circulation was about 18,396,000,000 korona.
Notwithstanding the passage of the law of May, 1921, limiting the
issues of the State Note Institute, advances continued to be made to
the Government (chiefly to meet budgetary deficits). In order to
provide a more stable unit for business, the Government early in 1924
endeavored to introduce the so-called “sparkrone.” The number of I
paper korona contained in the theoretical “sparkrone” was to be
fixed daily by a committee under the State Note Institute. In
determining the rate for the “sparkrone,” three factors were to be
considered—(a) the rate for United States dollars in Budapest, (b)
the rate for Hungarian korona in Zurich and Vienna, and (c) the
relative quotations of securities in Budapest and Vienna. The
“sparkrone” wras used only a short time.
STABILIZATION ACHIEVED IN 1924
Upon its opening on June 24, 1924, the National Bank of Hungary
took over the activities of the State Note Institute. The bank, a
part of the reconstruction plan undertaken by the League of Nations,
was to serve as a central bank of issue. The bank was organized with
a capital of 30,000,000 gold korona. (A reconstruction loan of
250,000,000 gold korona wras floated by Hungary in the leading
financial centers in July, 1924.) At the time of the opening of the
bank, the total note circulation was nearly 3,000,000,000,000 korona.
FOREIGN CURRENCY AND EXCHANGE
97
According to the annual report of the bank, the note circulation on
December 31, 1929, totaled 500,600,000 pengo; of which amount
1,993,000 pengo represented 24,912,500,000 korona notes; the metallic
reserve totaled 209,751,000 pengo.
On account of the intimate financial relations between Hungary and
Great Britain, the korona was stabilized in the middle of 1924 with
reference to the pound sterling (which at that time was not a gold
unit) in preference to gold. The original stabilization rate adopted
was 360,000 korona to the pound sterling, which meant about 83,000
korona to the United States dollar since the exchange value of the
pound sterling was then about $4.32. As conditions in Hungary
improved the exchange value of the korona advanced, so that a rate
of 346,000 korona to the pound sterling (the same as the Austrian rate)
was adopted, which is the equivalent of about 71,000 korona to the
United States dollar, or about $0.000014. As the exchange value of
the pound sterling advanced, practically reaching par in April, 1925,
the korona also rose in value and remained stable at $0.000014 until
the adoption of the pengo as the monetary unit.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 57 and
58 is: From January, 1914, to June, 1921, the rates represent the ap
proximate averages of rates on the New York market; from July, 1921,
to December, 1929, noon buying rates for cable transfers, New York
on Budapest. Average rates from July, 1921, to December, 1929, are
as computed from daily rates by the Federal Reserve Board. Quar
terly averages are computed from monthly averages.
For conversion purposes, the par value of the korona ($0.2026)
may be used from 1900 to 1913.
T able 57.— Y early A verage E xchange R ates
and
Pengo1
of the
H ungarian K orona
Average
Average
Average
Year
Year
Year
rate
rate
rate
1914..........................
$0.1756
i $0.1900 1920................................ $0.00366 | 1926...............................
1915.........
. 00253 1927................................
. 1747
J. 1550 1921....
. 1744
1916................................ >. 1300 1922................................ . 000908 192S................................
1917.......
. 000166 1929................................
. 1744
*. 0950 1923 ..
1918.......
*. 0825 1924................................ .000017
.000014
1919.......
*. 0314 1925................................
i Korona, 1914-1925; pengS, 1926-1929.
1 Approximate.
T able 58.— Q uarterly and M onthly A verage E xchange R ates
H ungarian K orona and P engo 1
P e rio d
1923
1924
1922
$0. 00143 $0. 00035 $0.000029
.00120 .00018 .000012
. <XX)59 . 000069 .000013
. 00041 .000053 .000013
.00152 . 00C39 .000039
. 00150 . 00038 . 000033
.00126 . 00029 .000015
.00126 . 00022 .000014
.00126 .00019 .(XXX)12
.00108 .00014 .000011
.00076 .000097 .000012
. 00060 . 000056 . (XXX)13
. 00042 . 000055 .(XXX)13
.00040 . 000054 . 000013
.00041 . 000054 . 000013
.00043 .000052 .000013
* Korona, 1921-1*25; pengd, 1926-1929.
1921
First q u a r t e r ............
(>)
Second q u a r t e r .............
(?)
T h ird q u a r t e r ............... $0. 00263
F o u rth q u a r t e r ............ .00134
J a n u a ry .............................
(*)
F e b ru a ry ..........................
(*)
M arch ................................
in
April...........
(*)
M ay....................................
(*)
Ju n e ..
in
Ju ly .
. 00332
A u g u st.............................. . 00263
S e p tem b e r....................... .00194
O cto b er____
. 00143
. 001OK
N o v e m b e r___
D ecem b er........................ .00151
1925
$0. 000014
.000014
.(XXX)14
.000014
.000014
. (XXX)14
.000014
. 000014
.000014
.000014
. 000014
.000014
.000014
.(XXX)14
.000014
.000014
of the
1926 1927 1928 1929
$0.1756 $0. 1752 $0. 1747 $0. 1743
. 1756 . 1746 . 1746 . 1743
. 1756 . 1745 . 1743 . 1744
.1756 . 1747 . 1742 . 1748
. 1755 . 1753 .1747 *. 1742
. 1756 . 1753 . 1747 . 1747,
. 1756 . 1751 . 1747 . 1743
. 1756 . 1748 .1746 . 1742
. 1756 . 1746 . 1746 . 1743
. 1756 . 1744 .1745 .1743
.1757 . 1744 .1744 . 1743
. 1756 . 1744 . 1743 . 1744
.1756 . 1747 . 1742 .1744
. 1756 . 1746 . 1742 . 1745
. 1756 . 1746 . 1742 . 1748
. 1756 . 1748 .1742 .1751
* Not available.
98
FOREIGN CURRENCY AND EXCHANGE
ICELAND
Iceland’s monetary unit in the krona (plural, kronur) of 100 aurar,
representing 448.03 milligrams of gold 0.900 line (403.227 milligrams
of line gold), the par value of which is identical with that of the coun
tries belonging to the Scandinavian Monetary Union,20 or $0,208
United States currency.
Apart from the subsidiary currency, consisting of copper coins of
krona and aura denominations, the circulating medium consists of
bank notes issued by the Bank of Iceland (Islands Banki), established
1904, and the Government Treasury notes issued by the National
Bank of Iceland (Landsbanki Islands), established 1886. By the
law of June 7, 1902, the Bank of Iceland was granted the monopoly
of note issue for 30 years, the National Bank of Iceland, however,
retaining the right to continue the circulation of Treasury7 notes to
the amount of 750,000 kronur. By the law of May 4, 1922, it is
provided that if a further issue of notes is required to meet the demands
of legitimate home trade the Government may authorize the National
Bank of Iceland to put the necessary7 amount of Treasury notes in
circulation; but on notes thus issued in excess of 750,000 kronur 2 per
cent interest is to be paid the Treasury.
NOTE CIRCULATION
Under the bank act of 1905 the Bank of Iceland was granted the
exclusive privilege of note issue, sufficient to meet the demands of
commerce but not exceeding 2,500,000 kronur, payable in gold to
bearer on demand. The reserves must consist of a metallic fund
(legal tender, gold, and credit balances) covering three-eighths of the
amount of notes outstanding; the remainder to be covered by con
vertible securities. Because of conditions created by the outbreak of
the World War, on August 3, 1914, the Bank of Iceland was exempted
from redeeming its notes in gold, and this exemption has been extended
from year to year. By the law of November 30, 1914, the Bank of
Iceland was authorized to increase its note issue by 500,000 kronur,
provided that at least one-half of the cover for its outstanding notes
beyond 2,500,000 kronur be gold according to the bank act of 1905
and that the bank at the close of each month pay interest at the
rate of 2 per cent a yrear on the excess issue for wliich there is no gold
cover. By the law of August 16, 1920, the bank was allowed to
extend its note issue to 12,000,000 kronur without increasing the gold
cover, subject to its complying with certain regulations fixed by the
Government.
Notes in circulation increased from 2,062,000 kronur on June 30,
1913, to 9,336,000 kronur on December 31, 1920, when circulation
reached its peak. On December 31, 1928, the total amount of notes
outstanding was 8,100,000 kronur, on wliich date the gold reserve
was 2,200,000 kronur.
POST-WAR EXCHANGE RATES IN REYKJAVIK
Before the World War the Icelandic krona w'as practically stable
at par (as were the monetary7 units of the countries belonging to the
Scandinavian Monetary Union); from 1914 to the first part of 1920
it followed the fluctuations of the Danish krone (see Denmark, p.
** Formation of the Scandinavian Monetary Union is discussed under Denmark, p. 69.
99
61, for exchange rates); but from the latter half of 1920 to June, 1922,
it was quoted (though not officially) independently of the Danish
krone and at a lower rate. These rates, however, are not available.
The following áre the rates as officially quoted at Reykjavik
(yearly averages are computed from quarterly averages):
FOREIGN CVRKENCl AND EXCHANGE
T able 59.— Y e a r l y and Q u a r t e r l y A v e r a g e E x c h a n g e R a t e s o f t h e
I c e l a n d ic K r o n a
1922
Period
Year............................................
First quarter.............................
Second quarter..........................
Fourth quarter..........................
1923
1924
1925
1926
1927
1928
1929
$0. 1.561 $0. 1419 $0. 1912 $0.2209 $0.2209 $0.2205 «
«
. 1638 . 1316 . 1740 .2214 .2206 .2208 $0.219
«
. 1613 . 1341 . 1815 . 2206 .2208 . 220S (9
o
. 1520 . 1417 . 1919 .2208 . 2208 . 2203 (»>
. 1748 .1472 . 1600 .2174 .2208 .2214 .2200 (>)
i Tndel pi mi nable.
* Not available.
IRAQ (MESOPOTAMIA
In Iraq (former Mesopotamia) the monetary unit is the Indian
rupee of 16 annas, par $0.36499 United States currency. (See British
India, p. 35, for exchange rates, etc.) It is reported, however, that
the rupee will shortly be displaced by a new national Iraq currency
and note issue.
IRISH FREE STATE
By the currency act of August 20, 1927, the Irish Free State estab
lished the Saorstat pound as its monetary unit. This pound is a legaltender note backed, pound for pound, by British Government securi
ties and directly convertible into sterling, and therefore it has the
same par value as the British pound, $4.8665 United States currency,
ind represents 7.9881 grams of gold 0.916$ fine (7.3224 grams of fine
gold). Coder the coinage act of'April 13, 1936, the Government hi:issued silver, nickel, and bronze tokens distinctively Irish in design to
replace the British token coinage then in use; however, no State mint
will be set up.
Apart from the metallic currency and legal-tender notes referred to
above, there is in circulation the consolidated bank-note issue, an
obligation of the Government Currency Commission, protected by a
lien on the entire assets of the eight issuing banks. A tax of 1$ per
cent per annum is levied on the entire consolidated note issue. On
January 25, 1930, the notes outstanding amounted to £6,466,000.
For exchange rates, see United Kingdom, p. 174.
ITALIAN AFRICA
ERITREA (ITALIAN EAST AFRICA)
In the colony of Eritrea the monetary unit is the Italian lira,
recently stabilized at $0.0526 United States currency. (See Italy,
p. 105, for exchange rates, etc.) The legal currency consists of Italian
coins and Eritrean thaler. (The Italian mint in 1918 issued a new
silver coin, the tallero d’ltalia, the silver content of which is 28.0668
grams 0.835 fine, for circulation in Eritrea.)
100
FOREIGN CURRENCY AND EXCHANGE
ITALIAN LIBYA
CYRENAICA AND TRIPOLITANIA
Cyrenaica, which forms part of the Italian colony of Libya in
northern Africa, employs as its monetary unit the lira of 100 centesimi,
the present par value of which is SO.0526 United States currency.
(See Italy, below, for exchange rates and details.) The Banca d’ltalia
and Banco di Roma take care of financial operations.
In Tripolitania, while the official currency is that of Italy, British
pounds sterling and French francs are also used in commercial
transactions.
ITALIAN SOMALILAND
In the colony of Italian Somaliland the monetary unit is the Italian
lira of 100 centesimi, the par value of which is SO.0526 United States
currency. (See Italy, p. 105, for exchange rates.) The Italian lira
replaced the Indian rupee as legal tender on July 1, 1925. A branch
of the Bank of Italy at Mogadiscio is the bank of issue.
ITALY
Italy’s monetary unit is the lira (plural, lire) of 100 centesimi,
stabilized, effective December 22, 1927, at SO.0526315 United States
currency. The new lira represents 87.9901 milligrams of gold 0.900
fine (79.1911 milligrams of fine gold).
Apart from the subsidiary metallic currency in lira and centesimo
denominations the principal circulating medium consists of the notes
of the Bank of Italy, which was given the sole right of note issue on
June 30, 1926; on that date it took over the circulation of the Bank
of Naples and the Bank of Sicily, which previously had shared with
it the issue right. The legal minimum reserve requirement is 40 per
cent gold against notes and deposits exclusive of the Treasury fixeddeposit account.
BIMETALLIC STANDARD
After unification in 1859, Italy adopted a single monetary system
to take the place of the separate standards of coinage of the various
States, patterning its currency after that of France. By the law of
August 24,1862, the new monetary unit, the gold lira, was made exactly
equivalent to the French gold franc (322.58 milligrams of gold 0.900
fine), the par value of which was $0,193 United States currency.
The metallic currency consisted of gold and silver pieces, which
were full legal tender. Italy then was on the double standard.
The law granted the coins of France, Belgium, and Switzerland
(which countries, together with Italy and, later, Greece, constituted
the Latin Monetary Union; see p. 15) legal circulation in Italy and
decreed the retirement of all nondecimal gold, silver, and bronze
coins still circulating in the Kingdom.
Owing to the difference in fineness of the subsidiary coins of the
four countries—Belgium, 0.900 fine; France, some 0.900 and some
0.835; Italv, 0.835; and Switzerland, 0.800—Belgian coins, proving
Gresham’s law,21 disappeared from circulation. Trade and commerce
suffered. To remedy tills difficulty, the convention of 1865 provided
for a standard fineness of 0.835, for the mutual redemption of sub- i
n Gresham's law as stated by H. D. Macleod: “ The worst form of currency in circulation regulates the
value of the whole currency and drives all other forms of currency out of circulation.”
FOREIGN CURRENCY AND EXCHANGE
101
sidiary coins, and for the limitation of their output. In all other
points the convention maintained the status quo, free coinage of
both gold and silver at 15K to 1 with mutual acceptance by the States
of each other’s coins.
“ LIMPING STANDARD”
About this time war broke out with Austria, and Italy was compelled
to suspend specie payments. On May 1, 1866, Italy decreed the
forced legal tender of its paper currency (corso forzoso). The im
mediate result was a premium on gold; Italian paper money depre
ciated; Italian coins therefore were exported and flooded the other
States of the Latin Monetary Union.
In 1875 Italy abrogated the right of free coinage of silver for private
account, after a conference with Belgium, France, and Switzerland,
which limited the amount of silver coinage for each country. By
this law Italy practically adopted the “limping standard.” In
1878 coinage of 5-lira silver pieces was completely suspended.
In 1883, with the aid of a foreign loan Italy abolished, as from the
beginning of 1884, the “ corso forzoso ” established in 1866 and resumed
specie payments in both gold and silver. Customs dues were made
payable only in gold. Italy also decreed that at least two-thirds of
the bank reserves should be gold.
In 1892, owing to the building crisis and the accompanying banking
difficulties, Italy again suspended specie payments and consequently
lost the larger part of its silver to the other countries of the Union.
At a conference in 1893 it was arranged that the other countries
should return the Italian subsidiary coins to Italy for redemption.
After this time, to avoid recurrence of the trouble, Italy held its
silver in reserve and issued notes of small denominations against it.
Thus silver ceased to circulate.
BANKS OF ISSUE
At the time of the unification of Italy six banks—the National
Bank of Italy, the Roman Bank, the National Bank of Tuscany,
the Tuscan Bank of Credit, the Bank of Naples, and the Bank of
Sicily—had the right of note issue. When specie payments were
suspended in 1866 full legal-tender quality was accorded the National
Bank notes; the notes of the other banks of issue were legal tender
only within their own Provinces and redeemable in coin or National
Bank notes. This gave rise to the technical distinction between
“ forced” currency (corso forzoso) and “ legal tender” currency
(corso legale) peculiar to Italian currency and banking, the distinction
being only that between the notes of the National Bank and notes
of the other banks of issue. Notes of the National Bank were not only
receivable by the Government for all public dues, but were lawful
legal tender for all private obligations throughout Italy as well;
whereas notes of the other banks, although receivable for all public
dues, were not legal tender for the discharge of private obligations
outside their local territory.
In 1893 the Italian banking system was reorganized. In 1894 the
Roman Bank was liquidated, the National Bank of Tuscany and the
Tuscan Bank of Credit were consolidated with the National Bank of
Italy to form the new Bank of Italy; only the new Bank of Italy,
102
FOREIGN CURRENCY AND EXCHANGE
the Bank of Naples, and the Bank of Sicily were to have the right
of note issue. During the continuance of the forced-legal-tender
policy, the maximum limit of circulation was not to exceed 1,097,000,000 lire for the three banks; this amount was to be reduced by
1907 to 864,000,000 lire, or three times the paid-in capital of the
banks. This maximum limit was to be covered by 40 per cent reserve,
thirty-three fortieths to be in specie and the remainder in prime
foreign bills of exchange.
REVISION OF BANKING CODE
In 1900 the Government undertook the task of codifying most of
the laws relating to the banks of issue. Partial changes were made
during subsequent years, especially in 1908 and 1909, following the
financial crisis of 1907. In 1910 another codification was undertaken,
which embodied the principal provisions regarding reserves, redemp
tion, and note issues which prevailed before the World \\ ar. The
notes issued by the three issuing banks were either for the needs of
trade or for account of the Government; a so-called “normal maximum
limit” of issue was fixed at 908,000,000 lire during the period immedi
ately preceding the World War. The Bank of Sicily was authorized
to issue an additional 10,000,000 lire to assist the sulphur industry.
Against the normal issue a minimum cash reserve of 40 per cent must
be maintained; at least three-fourths of this must consist of gold
coin or bullion. Any excess circulation above the “normal” limit
must either be covered by metallic reserve to the full face value
of the excess issue or be subject to a graduated supertax.
The banks were under obligation to make advances to the State at
1% per cent interest up to a maximum of 155,000,000 lire, against
which a metallic reserve of one-third was required. No issue of
notes for account of the State had been made by the banks when Italy
joined the Allies. In addition to bank notes there were in circulation
(iovernment notes, limited r<>.’410.0 0 0 ,0 u0 lice, aifaiust wlm h ,-i reserve
of not less than 100,000,000 lire, in gold u ,-- required. These notes
had been inconvertible since 1894.
The Bank of Italy has a joint-stock form of organization; the Bank
of Naples and the Bank of Sicily represent a type of institution not
found in other countries and are unique in that they have no stock
holders. Their capital was partly secured originally by gifts. Their
profits go to increase the capital and surplus and are also distributed
for public and charitable purposes. .The Bank of Sicily and the Bank
of Naples are described in the bank law as “ autonomous public
credit institutions operating under the supervision of the Government
and owning their own capital or property” (patrimonio). On June
30, 1914, circulation totaled 499,000,000 lire of State notes and 2,199,000,000 lire of bank notes; against this total circulation there was a
metallic reserve of 1,644,500,000 lire, of which 1,510,400,000 fire was
gold.
WAR AND POSTWAR NOTE CIRCULATION
On the outbreak of the World War the maximum “normal” issues
of the three banks were doubled; a special annual tax of 1 per cent was
imposed on the first two-thirds of the excess over the old normal and of
2 per cent on the last third. The statutory advances to the State were
raised from 155,000,000 to 485,000,000 lire; a metallic cover of one-
FOREIGN CURRENCY AND EXCHANGE
103
third was required. The Government paid Iji per cent interest on
these advances. Other bank advances to the Government increased
considerably when Italy entered the war in May, 1915. By a series
of nine decrees between June 27, 1915, and June 28, 1918, the banks’
“extraordinary” advances were gradually increased from 200,000,000 to a maximum of 4,850,000,000 lire. Notes issued on this
account were not covered by any metallic reserve and the Treasury
paid interest on these advances only at a nominal rate of one-fourth
of 1 per cent per annum to cover cost of printing. There were also
“notes supplied to the Treasury” amounting to 700,000,000 lire
issued at the outbreak of the war to enable the State Deposit and
Loan Institution (Cassa Deposit! e Prestiti) to grant loans, mainly to
local authorities for public wrorks.
In addition to the war issues, several other issues were made for
account of the Government to meet postwar exigencies, such as
804.000. 000 lire in substitution of the kronen notes circulating in the
former Austro-Hungarian provinces and 1,000,000,000 lire to effect
the retirement of an equal amount of Treasury bonds.
During 1919, following the armistice, Treasury requirements for
demobilization and rehabilitation were extremely heavy and note
circulation for State account increased accordingly. Commercial
circulation also expanded considerably at the close of 1921 owing to
the suspension of payments by the Banco Italiano di Sconto and the
difficulties of other important Italian banks. About this time diffi
culties befell the Credito Italiano and the Baneo di Roma.
At the end of 1918 total circulation amounted to 13,874,000,000
lire; at the end of 1919, to 18,552,000,000 lire; and at the end of 1920,
to 22,000,000,000 lire. In December, 1929, the note circulation of
the Bank of Italy stood at 16,774,000,000 lire; the reserves (in terms
of the stabilized lira) consisted of gold at home to the amount of
5.190.000. 000 lire and credits and balances abroad 5,151,000,000 lire.
STABILIZATION OF LIRA
At the beginning of the World War Italy called in funds from
abroad, with the result that the exchange value of the lira advanced
markedly (on account of the demand for lire); but exchange fell at
the end of 1914 and continued to decline until the United States
entered the war in 1917, when, through the use of credits obtained
from the United States Government, the lira rallied When this
artificial support was withdrawn in March, 1919. the lira again fell
rapidly—to less than 4 cents United States currency in April, 1920;
and from that time until 1927 exchange fluctuated considerably.
At the international conference held m Genoa in 1922 it was
recognized to be an essential condition for the economic reconstruction
of Europe that each country should attain a stable value for its cur
rency. ' Thereafter, one country after another proceeded toward the
achievement of that object, and by 1927 Italy was numbered among
the nations having a sound currency on a goid basis.
The royal decree of December 21, 1927, stabilized the lira, effective
December 22. The Bank of Italy has the option of converting its
notes either into gold or into the currency of foreign countries where
104
FOREIGN CURRENCY AND EXCHANGE
convertibility of bank notes into gold is in force, at rates to be fixed—•
which, rates must not exceed the gold-export points. Moreover the
bank is required to regulate the circulation of its notes and the foreignexchange market in order that the rate of the lira may always remain
within the gold points,22 which have been fixed against the United
States dollar at 19.10 lire for export and 18.90 lire for import. The
new currency system, by which the inconvertibility of notes is re
pealed, is known as the “gold-exchange standard.” The conversion
of notes into foreign currencies is effected in accordance with the ro3ral
decree of February 26, 1928.
By article 3 of the decree of December 21, 1927, the Bank of Italy
is authorized to include among its assets in Italian lire, on the basis
of the new gold parity, all of its existing gold or equivalent reserves
which formerly were entered in the balance sheet at the old gold parity.
To insure the complete success of stabilization, it was considered
desirable to obtain a foreign credit for a substantial amount. Conse
quently arrangements were made with the Federal Reserve Bank of
New York, the Bank of England, and the central banks of a number
of other countries for a 12-month credit, with option of renewal for
a further 12 months by mutual consent, for an aggregate amount
equivalent to $125,000,000.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 60 and
61 is: 1914-1918, sight drafts, New York on Milan; 1919-1929,
noon buying rates for cable transfers, New York on Milan. The
yearly averages from 1914 to 1918 are computed from monthly aver
age rates; from 1919 to 1929 the averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are com
puted from the monthly averages.
For conversion purposes, the par value ($0,193) may be used from
1900 to 1913, inasmuch as in no one of these years did the rate vary
more than 1 per cent.
T able 60.—Y early A verage E xchange R ates
Year
Average
rate
Year
Average
rate
1914................................
1915................................
1916................................
1917................................
1918................................
1919................................
$0.1926
.1655
.1529
. 1S31
. 1311
. 1137
19211...............................
1921................................
1922................................
1923................................
1924................
1925............................
$0.0497
.0429
.0476
.0460
.0436
.0398
of the I talian
Year
1926 _
1927 ...
1928__
1929__
L ira
Average
rate
$0.0389
.0516
.0526
.0523
i : “ The gold points are the rates of exchange at which gold will flow into or out of a country. * • *
Generally speaking, the jierson who requires to purchase exchange, whether in the shape of telegraphic
transfers, bills of exchange, or other form of remittance, will do so only so long as the price does not exceed
the cost of shipping gold; and the point at which it is just as cheap to send the mital to a foreign country
as to remit through other exchange media will, in normal times, mark the limit of premium on exchange.
If the sellers of exchange demand a price above this point, bankers and exchange operators will send gold
rather than pay the enhanced premium/’—Spalding’s “ Dictionary of World’s Currencies and Foreign
Exchanges,” pp. 79, 80.
105
FOREIGN CURRENCY AND EXCHANGE
Table 61.— Q uarterly
and
1915
1914
Period
Fourth quarter..........................
May............................................
June............................................
July.............................................
September................ ................
November.................................
Decern ber...................................
M onthly A verage E xchange R ates
I talian L ira
1916
1917
1918
1919
o f the
1920
1921
15-19 $0. 0599 $0. 0368
$0. 1923 $0. 1791 $0. 1501 $0. 1354 $0.1166 $0.. 1293
.05 IS . 0496
. 1933 . 1696 . 1564 . 1394 . 1114
1099 .0500 . 0435
. 19»;1 . 1583 . 1549 . 1349 .1390 ..0865
.0368 .0418
.1889 . 1549 . 1495 .1226 .1572
.0355
.1919 .1862 .1502 .1410 .1183 .1575 .0714
. 1575 . 0551 . 0365
. 1923 . 1785 . 1487 . 1361 .1157
. 1927 . 1727 . 1515 . 1291 . 1159 . 1497 . 0532 .0385
.1124 . 1366 .0446 .0460
. 1929 . 1716 . 1546 .. 1376
1421 .1104 . 1258 .0517 . 0530
. 1934 . 1713 . 1580
. 1935 .1658 . 1567 . 1386 .1114 . 1255 .0591 .0498
. 1985 . 1605 .1554 .1385 .1192 .1190 . 0578 .0453
.0432
. 2021 . 1568 . 1544 . 1357 .1410 . 1087 .0489
. 1S77 . 1575 . 1550 . 1305 .1568 . 1021 .0434 .0420
0394 .0397
. 1909 . 1577 .1519 . 1274 .1572 . 0984 .. 0362
. 1806 . 1545 . 1495 . 1187 . 1573 .0846 .0349 .0-412
.0444
. 1892 . 1524 . 1471 .1217 .1572 .0766
1923
1922
Period
1924
1925
1926
1927
1928
1929
0432 $0.0412 $0.0403 $0. 0439 $0. 0529 $0.0523
First quarter.............................. $0. 0480 $0. 0485 $0.. 0440
.0100 . 0385 . 0533 . 0527 . 0524
Second quarter.......................... . 0520 .. 0-179
0544 . 0523 . 0523
. 0-145 0430 .0437 . 0380 . 0344 ..0543
Third quarter--------- ----------- .0457
. 0524 . 0524
.0440 .0433 .0401 .0426
Fourth quarter.........................
.0434
. 0523
.0488
.0404
.0529
.
0134
.0417
January....................................... .0437
0529 . 0523
.0491 .0182 . 0435 .0111 . 0403 . 0432 ..0528
. 0.r 24
.0511 .0480 .0428 .0107 . 0402 .0151
. 0524
. 0537 . 0190 .0444 .0110 . 0402 . 0.502 .0528
.
0527
. 0524
.
0387
.0444
.
0407
.
0540
.
0484
.
0525
May............................................
June............................................ .0496 .0457 . 0133 .0383 . 0366 . 0558 . 0526 . 0523
.0545 . 0524 . 0523
llllv
. 0457 . 0433 .0130 . 0367 .. 0335
0330 . 0544 . 0523 . 0523
. 0366
Aueust...................................... .0451 .0431 .0444
.0106 . 0367 . 0544 . 0523 .0523
September................................. .0427 . 0144 .. 0438
0435 . 0399 .0112 . 0546 . 052-1 . 0524
October....................................... .0417 .0451
.November................................. .0451 . 0430 . 0133 .0400 . 0121 . 0545, . 0524 . 0524
December..................... ............ . 0503 .0434 .0130 .0103 .0444 .0538 . 0524 .0524
JAPAN
Japan’s monetary unit is the yen (plural, yen) of 100 sen, repre
senting 2 fun (750 milligrams) of fine gold—the equivalent of 833.33
milligrams of gold 0.900 fine—the par value of which is $0.4985 United
States currency. This unit of value was established in 1897 when
the gold standard was adopted. The new gold yen, however, is not
coined.
The metallic currency consists of gold pieces of 5, 10, id 20 j’cn
and silver pieces of 1 yen and 1)0 and 50 sen (the. forpiej 5.
50 sen pieces are allowed'To' circuTatq)'? fterearealso ot er subsid¡ary coins of nickel-copper and bronze in sen and rin denominations.
The gold pieces are 0.900 fine; the silver pieces, 0.720 fine.
Apart from the metallic currency, the principal circulating medium
consists of the notes of the Bank of Japan, established in 1882. In
May, 1884, the convertible bank notes law’ was enacted, providing
for the issuance by the Bank of Japan of notes which were to be con
vertible into silver; but with the adoption of the gold standard in
1897 the existing bank notes became convertible into gold. v
1942°— 30-
cl
j- o
", c
n
tf "
I «
*i
iJt
it
i<
I, 0 0 0
0, lo *
1,
KvtT»r«i'
-e .
>1
'I
n
106
FOREIGN CURRENCY AND EXCHANGE
NOTE ISSUES
Emission of notes by the Bank of Japan is subject to the following
regulations: The bank is required to hold as reserve against its out
standing notes an equal amount of gold and silver coins or bullion;
silver coins and bullion, however, must not exceed one-fourth of the
entire reserve. The bank may, in addition, issue notes, not exceeding
120,000,000 yen in all, against Government loan bonds, Treasury
bills, commercial bills, or other reliable security; if, to increase the
circulating medium, it is found necessary to exceed this sum, the bank
must pay an issue tax of poj lej^s than 5 per cent per annum on the
amount so issued, 'December, 1939, outstanding notes of the
Bank of Japan totaled tywkkJMWfJfeo- ven; and gold reserves, l-yffffr,000,000 yen.
bVH,
To make up the deficiency of subsidiary silver coins caused by the
World War, an imperial ordinance promulgated on October 29, 1917,
authorized the issuance of paper money of small denominations.
These notes reached their maximum, 218,000,000 yen, in February,
1922: the volume has since been greatly diminished by the minting
of new subsidiary coins and in October, 1929, stood at 12,100,009 yen.
METALLIC CURRENCY
The real currency of Japan, before the opening of the country to
foreign trade, consisted of gold, silver, and copper coins. The gold
coin was called “ kobang.” It weighed about 200 grains troy but
appears to have varied greatly in fineness. The silver coin was called
“ boo” and was reckoned at one-fourth of a kobang.
Since 1871 the legal monetary unit has been the silver yen of 100
sen. The basis of the new monetary system was to be the Mexi
can dollar, whose equivalent, the new silver yen, weighed 27.07
grams (416 grains troy) 0.900 fine. At the same time gold yen pieces
were coined of 0.900 fineness and containing 1.5 grams of fine gold;
hence, the double valuation was established in Japan at the ratio of
about 1 to 16. As this ratio gave to gold a higher value than its
bullion value, it was more advantageous to coin gold and in 1872
silver ceased to be coined. Since 1872, however, the value of gold
advanced considerably in its relation to silver, with the result that
gold yen were exported to Europe and the actual standard was silver.
ADOPTION OF GOLD STANDARD
In 1875 the Japanese Government resumed coinage of silver in the
form of a “ trade dollar” weighing 27.216 grams (420 grains troy)
0.900 fine, the exact equivalent of the United States trade dollar.■'
Japan afterwards attempted to introduce this coin as a monetary
unit instead of the Mexican dollar, and in 1878 made it legal tender
in all public and private transactions; however, it did not succeed in
driving out the Mexican dollur, which, although weighing only about
» “ Besides the silver legal-tender dollar [of 412.5 grains troy, 0.900 fine] the United States coined between
1*7;* ami 1*8* the ‘trade dollar.' a commercial money intended to enter into competition with the Mexican
and Spanish dollars in the Eastern trade, principally in China. This trade dollar weighed 420 grains 0.900
fine fanout 4 grains more than the Mexican dollar), but as it did notanswer expectations it was withdrawn."—
Spalding's “ Tate’s Modern Cambist," p. 308.
107
FOREIGN CURRENCY AND EXCHANGE
26.957 grams (416 grains troy), circulated on a parity with the
Japanese trade dollar.
In September, 1879, the silver yen of 26.957 grams (416 grains
troy) 0.900 fine was declared by the Government to be legal tender
and was to circulate on a parity with the Mexican dollar. This coin
ubsequently supplanted the Mexican dollar.
In 1897 the gold standard was adopted. When the United States
astituted an embargo on gold in September, 1917, Japan found its
hief source of gold imports cut off and immediately put down an
mbargo on gold shipments, which was not lifted until January 11,
930 (law of November 21, 1929).
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 62 and
J3 is: 1900-1918, buying rates for demand bills, Tokyo on San
Francisco and New York; 1919-1929, cable transfers, New York on
Tokyo. The average rates from 1900 to 1918 are the averages as
Quoted in Le Resume Statistique de l’Empire du Japon; from 1919
to 1929, the yearly and monthly averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are com
puted from monthly averages.
T
0 2 .— Y e a r l y A v e r a g e E x c h a n g e R a t e s
able
Year
&900 .
hoi _
1902
100.1
! «0 . .
1HC.................
Average
rate
$0. 4935
. 495.0
. 4985
.4981
.. 4916
4941
Average
rate
\ ear
1910..............................
1911................................
1912................................
1913.......
1914 .............
191 ....... ..
. b.U‘4
.
. VJttt 19i0................................
T a b i .e 0.3.— Q u a r t e r l y
P e rio d
F irs t q u a r te r ........................................
Second q u a r t e r ..................................
Third q u a r te r .....................................
F o u rth q u a r t e r ..................................
J a n u a ry ...................................................
F e b ru a ry _______ _____________
M a rc h ......................................................
A pril......................... ...............................
M av _ _ .....................................................
J u n e ................... ............................... ..
Ju lv _ _ .....................................................
A u g u st....................................................
■ September............................................
O c to b e r...................................................
N o v e m b e r............................................
iDecem ber..............
...............
and
1914
of the
$0. 4954
. 4949
. 4954
. 4952
. 4934
.4*9°.
. rot*
. : On,
. ;.i *:
..‘lib
J apa nese Y en
1920................................
1921................................
1922................................
1923................................
1924 ..............................
192*
V .'
:• '.
1:2 ...... .......... ...........
.............................
■
M onthly A verage E xchange R
J apa nese Y e n
1915
1916
1917
Average
rate
Year
1918
1919
$0.5037
. 4825
. 47SO
. 4858
.4119
. 4104
. - .12
. 474 j
.0 41
. 4610
ates of th e
1920
1921
$0. 4867 $0. 4866
•SO. 4938 $0. 4901 $0. 4988 $0. 5050 $0. 5100 $0.5153
. 4945
.4888 .4997 . 8086 .5110 .5153 . 5049 .4834
. 5165
. 5099
. 5154
. 4819
.4911 .4873 . 5030 .5071
. 4913
. 4933 .5048 . 5092 .5213 . 5076 .5080 .4783
.4938 .4913 .4988 .5050 .5100 .5199 .4997 .4870
. 5050
. 4902
. 4988
.8100 .51.54 . 4854 .4869
. 4938
.4888 .4988 . 5050 . 5100 . 5106 .4751 . 4859
. 4938
.4888 .4988 . 5050 . 51(X) .5138 . 4862 .4850
. 4938
.4888 .4998 . 5055 .5106 . 5174 .5145 . 4855
. 4938
.4888 . 5006 . 5063 . 5125 . 5146 .5141 .4797
. 4960
. 4963
.4888 . 5020 .5063 .5144 .5110 .5162 .4801
.5163 .5100 .5158 .4837
. 4868
. 5031
. 5075
. 49-47
..5075 .5188 .5087 .6141 .4820
. 4913
. 5038
. 48ti2
.4766
.5086 .5194 . 5091 .5130
. 4913
.4913 .5045 .5089
. 5219
.5094 ..5075 . 4790
. 5050
. 4913
. 4920
.4913 .4966 .50.50 .5100 . 5225 • NM2 . 5034 .4792
106
FOREIGN CURRENCY AND EXCHANGE
NOTE ISSUES
ADOPTION OF COLD STANDARD
o o n tlm a e
■
The real currency of Japan, before the opening of the country tj
foreign trade, consisted of gold, silver, and copper coins. The gol<
coin was called “ kobang.” It weighed about 200 grains troy bu
appeai-s to have varied greatly in fineness. The silver coin was callec
“ boo” and was reckoned at one-fourth of a kobang.
Since 1871 the legal monetary unit has been the silver yen of 1(
sen. The basis of the new monetary system was to be the Me>
can dollar, whose equivalent, the new silver yen, weighed 27.(
grams (416 grains trov) 0.900 fine. At the same time gold yen piee
were coined of 0.900 fineness and containing 1.5 grams of fine gob
hence, the double valuation was established in Japan at the ratio
about 1 to 16. As this ratio gave to gold a higher value than i
bullion value, it was more advantageous to coin gold and in 187
silver ceased to be coined. Since 1872, however, the value of gol
advanced considerably in its relation to silver, with the result tin
gold yen were exported to Europe and the actual standard was silve
G o v ern m en t f r a c t i o n a l
METALLIC CURRENCY
__ t o
d lm ln le b
by
ix E i t I t n t I o n
Emission of notes by the Bank of Japan is subject to the following
regulations: The bank is required to hold as reserve against its out
standing notes an equal amount of gold and silver eoins or bullion;
silver coins and bullion, however, must not exceed one-fourth of tU/'
entire reserve. The bank may, in addition, issue notes, not exceedi
120,000,000 yen in all, against Government loan bonds, Treasu
bills, commercial bills, or other reliable security; if, to increase t
circulating medium, it is found necessary to exceed this sum, the ba
must pay an issue tax of po^ le^s than 5 per cent per annum on I
amount so issued.
December, 195$, outstanding notes of 1
Bank of Japan totaled UOJSJfOOTOOO-veil; and gold reserves, f-Jfti
000,000 yen.
bV»G
To make up the deficiency of subsidiary silver coins caused by t
World War, an imperial ordinance promulgated on October 29, 19
authorized the issuance of paper money of small denominatioi
These notes reached their maximum, 218,000,000 yen, in Februai
1922: the volume has since been greatly diminished by the minti
of new subsidiary coins and in October, 1929, stood at 12,100,000 vt
In 1875 the Japanese Government resumed coinage of silver in th
form of a “ trade dollar” weighing 27.216 grams (420 grains troy
0.900 fine, the exact equivalent of the United States trade dollar!
Japan afterwards attempted to introduce this coin as a monetar
unit instead of the Mexican dollar, and in 1878 made it legal tender'
in all public and private transactions; however, it did not succeed in
driving out the Mexican dollar, which, although weighing only about
ii “ Resides the silver legal-tender dollar [of 412.5 grains troy, 0.900 fine] the United States coined between
1873 and 1886 the ‘trade dollar/ a commercial money intended to enter into competition with the Mexican
and Spanish dollars in the Eastern trade, principally in C hina. This trade dollar weighed 420 grains 0.900
fine (about 4 grains more than the Mexican dollar), but as it did not answer expectations it was withdrawn.”—
Spalding’s “ Tate’s Modern Cambist,” p. 308.
107
FOREIGN CURRENCY AND EXCHANGE
26.957 grams (416 grains troy), circulated on a parity with the
Japanese trade dollar.
In September, 1879, the silver yen of 26.957 grams (416 grains
troy) 0.900 fine was declared by the Government to be legal tender
and was to circulate on a parity with the Mexican dollar. This coin
subsequently supplanted the Mexican dollar.
In 1897 the gold standard was adopted. When the United States
instituted an embargo on gold in September, 1917, Japan found its
chief source of gold imports cut off and immediately put down an
embargo on gold shipments, which was not lifted until January 11,
1930 (law of November 21, 1929).
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 62 and
63 is: 1900-1918, buying rates for demand bills, Tokyo on San
Francisco and New York; 1919-1929, cable transfers, New York on
Tokyo. The average rates from 1900 to 1918 are the averages as
quoted in Le Resume Statistique de l’Empire du Japon; from 1919
to 1929, the yearly and monthly averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are com
puted from monthly averages.
T a b l e 6 2 .— Y e a r l y A v e r a g e E x c h a n g e R
Y ear
1900..........................................
1901 .
1902
1903
1904 .....................
" v n ................................
1 v«i7 '**?*
’’
\ /
lv»w............. .......................
A v e ra g e
ra te
$0. 4935
. 4950
. 4985
.4981
. 4916
. 4941
. VÏ54)
. «WM
. 49/.0
. 4364
1 9 1 0 ........................................
1911..........................................
1912..........................................
1913..........................................
1914.........................................
191?. ....................... .............
191 ; .............. ....................
1918 ..................... ..............
and
Period
1914
F irs t q u a r te r ............
S econd q u a r t e r ___
T h ird q u a r te r ..........
F o u rth q u a r t e r ____
January..................
F e b r u a r y .................. .
M a rc h ..........................
A p ril...............,.............
M a y ..............................
J u u e ...............................
July........................
August....................
S e p te m b e r................. .
O c to b e r.........................
N o v e m b e r.................
D e cem b er..............
A v e ra g e
ra te
> ear
T a b l e 6 3 .— Q u a r t e r l y
ates of t h e
$0. 4954
. 4949
. 4954
. 4952
. 4934
499?
. *0 1.6
. ,51*7
. .5118
J apanese Y en
1920..........................................
1921..........................................
1922..........................................
1923..........................................
1924.........................................
1925
J :,;;
1 ' •'*
!V.d ........................................
M onthly A verage E xchange R
J apa nese Y en
1915
1916
1917
A v e ra g e
ra te
Y ear
1918
$0.4938 $0. 4901 $0. 4988 $0.5050 $0. 5100
. 494.r> .4888 .4997 .5056 .5110
.4941
.4873 . 5030 .5071 . 5165
.4913
. 4933 . 5048 . 5092 . 5213
.5100
. 4913 .4988 .. 6050
.4938
5050 .5100
. 4938 . 4tK)2 .4988
.4888 .4988 .5050 .6100
.4938
. 4938 .4888 .4988 . 5050 .5100
.4888 .4998 . 5055 . 6106
.4938
.4888 .5006 . 5063 .5125
. 4960
.4888
..5020 .5063 .5144
.4963
.4868 .5031 . 5075 . 5163
.4947
. 4913 .4862 .5038 . 5075 .5188
. 4913
.4913 .5045 .5086 .5194
.4913
.4920 . 5050 .5089 .5219
.4913
.4966 .5050 . 5100 . 5225
1919
$0.5037
. 4825
. 4780
. 4858
.4119
. 4104
.4719
. 474 1
.4*‘4i
. 4610
ates of th e
1920
1921
5153 $0.4867 $0.4866
.5163 . 5049 .4834
. 5099
. 5154
.4819
. 5080
. .5076
.4783
. 6199
.4997 .4870
. 4864
.4869
. 5154
.4751 .4859
. 5106
.5138 .4862 .4850
.5174 . 514.5 . 4855
.3146 .5141 .4797
.5110 .5163 .4801
. 5100
.5158 .4837
.5141 .4820
. 5087
. 5091
. 5130
.4766
.5094 . 5075 .4790
..5042 . 5034 . 47V2
$ 0.
108
FOREIGN CURRENCY AND EXCHANGE
T a b l e 6 3 .— Q u a r t e r l y
Period
and M onthly Average
J a p a n e s e Y e n -—
E xchange R ates
Continued
1922
1923
1924
1925
1926
1927
1928
o f the
1929
First quarter.........:................... $0. 4745 $0. 4855 $0. 4441 $0. 3950 $0. 4499 $0. 4893 $0. 4696 $0.4508
Second quarter......................... .4749 .4894 .4073
.4681 . 4738 . 4698 . 4438
Third quarter............................ .4786 .4876 .4107 .4150
.4094 .4776 .4709
. 4651
Fourth quarter.......................... .4843 .4806 .3858 .4216 .4889 .4625 .4556
.4615 .4848
January....................................... .4762 .4875 .4490 .3845 .4417 .4881 .4688 . 4551
February .................................... .4737 .4844 .4543 .3908 .4.540 .4884 .4687 . 4521
March........................................ .4735 .4846 .4290 .4097 . 4539 .4914 .4715 . 4452
April..... .................................... .4736 .4869 .4093 .4176 . 4664 . 4837 .4771 . 4462
May........................................... .4736 .4908 .4019 .4191 . 4695 .4708 . 4661 . 4465
June............................................ .4775 .4904 .4108 .4083 .4685 .4669 .4661 .4388
July............................................. .4777 .4879 .4135 .4108 .4707 .4713 .4585 .4556
August.......................................
.4888 .4126 .4099 .4780 .4733 . 4505 . 4669
Septem ber.............................. . .4771
.4862 .4060 .4075 .4840 . 4682 .4578 .4727
October....................................... .4810
.4807 .4881 . 3879 .4097 . 4866 . 4657 . 4620 .4776
November.................................. .4837 .4837 .3852 . 4233 . 4905 . 4598 . 4635 .4873
December................................... .4885 .4701 .3844 .4319 .4894 .4619 .4589 .4896
LATVIA
In August, 1922, the Republic of Latvia adopted the lat (plural,
latos; anglicized, lats) of 100 santimi (anglicized plural, santims)
as its monetary unit. The lat, the equivalent of the former French
franc, represents 322.58 milligrams of gold 0.900 fine (290.322 milli
grams of fine gold), the par value of which is $0.192948 United States
currency.
The principal circulating medium, apart from subsidiary coins of
silver, nickel, and copper in lat and santim denominations, consists of
notes of the Bank of Latvia, which is the only bank of issue. The
legal minimum reserve requirement against the issue of 100,000,000
lats must be 50 per cent gold and stable foreign exchange; the re
maining cover to consist of prime short-term bills of exchange. Any
excess over 100,000,000 lats, but not more than 50,000,000 lats, must
be covered by 75 per cent gold and stable foreign currency and 25 per
cent prime short-term bills of exchange; bank notes in excess of
150,000,000 lats must be covered in full by gold or stable foreign
currency.
NOTE CIRCULATION
The former units of currency were the Russian ruble and the Lat
vian ruble. After the establishment of the Republic in November,
1918, the Latvian Government first issued notes in rubles, guaranteed
by all the property of the State. The exchange rate of these notes
fluctuated to a certain extent and was finally stabilized at 50 Latvian
rubles to the lat.
When the Bank of Latvia opened for business on November 1,1922,
it issued 10-lat notes by simply imprinting the existing 500-ruble
notes. To do away with the dual monetary system, the Government
decided to withdraw all ruble notes and replace them by notes in de
nominations of 1, 2, 5, 10, and 20 lats. Later on Government notes
totaling 10,000,000 lats were replaced by subsidiary coins of nickel
and copper.
Notes in circulation at the end of December, 1929, consisted of
Government notes to the amount of 34,500,000 lats and Bank of
Latvia notes 48,500,000 lats; the cover, on the same date, consisted
109
FOREIGN CURRENCY AND EXCHANGE
of gold coin and bullion to the value of 23,933,000 lats and foreign
assets 45,290,000 lats. BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 64 and
65 is: Sight drafts, Riga on New York. The yearly and quarterly
averages are computed from the monthly averages quoted in the
Annuaire Statistique, Latvian Economist, and Bulletin Mensuel de
Statistique de l’Etat Letton.
T a b l e 6 4 .— Y e a r l y A v e r a g e E x c h a n g e R a t e s
L at 1
Year
Average
rate
Period
L a t v ia n R u b l e
Average
rate
Year
1920................................ $0.00909 1924................................
1921............
. 00323 1926................................
1922..............
. 00396 1926................................
1923................................ .1961 1927...............................
‘ Latvian ruble, 1920-1922; lat, 1923-1929.
T a b l e 6 5 .— Q u a r t e r l y
of the
1921
1922
1923
First quarter........................ $0. 00166 $0.00114 $0. 19fil
Second quarter.................... .00232 . 00391 . 1942
Third quarter...................... . 00248 . 00389 . 1953
Fourth quarter.................... . 00349 .00388 . 1947
January................................ .00183 .00418 . 1969
February.............................. . 00613 . 00433 . 19.63
March.................................. . 00398 . 00.392 . 1961
April..................................... .00274 . 00391 . 1957
May...................................... . 00218 . 00391 . 1916
June...................................... .00203 . 00391 . 1953
July....................................... .00218 .00389 .1953
August................................. . 00258 . 00389 . 19.63
September........................... . 00268 . 00389 . 19.63
October............................... .00279 . 00389 . 19.63
November............................ . 00357 . 00386 . 1946
December............................ .00110 .00388 . 1942
1 Latvian ruble, 1921 and 1922; lat, 1923-1929.
Average
rate
Year
$0.1931 1928...............................
.1928 1929...............................
.1929
.1928
and M onthly A verage E xchange
L a t v ia n R u b l e a n d L a t 1
R ates
1924
1925
1926
1927
$0. 1935
. 1931
. 1931
.1928
. 1942
. 1931
. 1931
. 1931
. 1931
. 1931
.1931
. 1931
. 1931
. 1931
. 1927
. 1927
$0. 1927
. 1927
. 1930
. 1930
. 1927
. 1927
. 1927
. 1927
. 1927
. 1927
. 1927
. 1931
. 1931
. 1931
. 1931
. 1927
$0.1931
. 1931
. 1927
. 1927
. 1931
. 1931
. 1931
. 1931
. 1931
. 1931
. 1927
. 1927
. 1927
. 1927
. 1927
. 1927
$0. 1927
. 1927
. 1928
. 1931
. 1927
. 1927
. 1927
1927
. 1927
. 1927
.1927
. 1927
. 1931
. 1931
. 1931
. 1931
and
1928
$0.1932
.1928
of the
1929
$0. 1H32 $0. 1927
. 1938 . 1927
. 1931 . 1927
. 1928 . 1931
. 1931 . 1927
. 1931 . 1927
. 1934
1927
. 1938 . 1927
. 1938 . 1927
. 1938 . 1927
. 1931 . 1927
. 1931 . 1927
. 1931 . 1927
. 1931 . 1931
. 1927 . 1931
. 1927 .1931
LIBERIA
The current money in the Republic of Liberia is chiefly British
gold and silver; there is, however, a Liberian coinage in silver and
copper. The Liberian dollarisfixed at 4s. 2d., or about $1,014 United
States currency. The Liberian coins actually circulating consist of
10, 25, and 50 cent silver pieces and 1 and 2 cent copper pieces.
Official accounts generally are kept in United States dollars and
cents; commercial accounts in English currency.
LIECHTENSTEIN
The Swiss franc of 100 centimes, representing 322.58 milligrams of
gold 0.900 fine (290.322 milligrams of fine gold) and whose par value
is $0.192948 United States currency, was adopted by the principality
of Liechtenstein as its monetary unit in February, 1921. (See Switz
erland, pp. 166-167, for exchange rates, etc.) Since January, 1924,
Liechtenstein has been included in the Swiss Customs Union.
110
FOREIGN CURRENCY AND EXCHANGE
LITHUANIA
Lithuania’s monetary unit is the lit (litas) (plural, litu; anglicized,
lits), representing 167.18 milligrams of gold 0.900 fine (150.462 milli
grams of fine gold), the par value of which is $0.10 United States cur
rency. The lit was adopted by a law passed by the Constituent As
sembly on August 9, 1922, and promulgated on August 16 of the same
year. The lit is divided into 100 cents (patterned after the United
States dollar).
The former units of currency were the ost-mark, ost-ruble, and
German mark; these were to be exchanged for lits on or before Jan
uary, 1923.
The principal circulating medium, apart from subsidiary coins in
lit (litas) and cent denominations, consists of the notes of the Bank of
Lithuania, established in August, 1922. The bank has the sole right
of note issue; its notes are to be covered by 33% per cent gold and
66% per cent stable foreign currencies or short-term securities. The
note circulation in December, 1929, totaled 94,829,000 lits; the re
serve, at the same time, was made up of gold to the amount of 35,079,000 lits and balances abroad, foreign bills, and bank notes, 76,210,000
lits.
The basis for the average exchange rates as given in Tables 66 and
67 is: From January, 1923, to April, 1925, monthly averages repre
sent buying rates on New York at Kovno; May, 1925, to December,
1929, buying rates of United States dollar exchange at Kovno.
Yearly and quarterly averages are computed from monthly averages.
T a b l e 66.— Y e a r l y A v e r a g e E x c h a n g e R a t e s o f t h e L it h u a n ia n L it a s
Average
rate
Year
Average
rate
Year
$0.0992 : 1P27..................................
.09s*7
Ùu*'-..................... ........ ......................
T able
67.— QPeriod
arterly and
1923
M o n t h l y A v e r a g e E x c h a n g e R a t es o f t h e
L it h u a n ia n L it a s
1924
1925
1926
1927
Ì
1928
$0.0986 $0.0989 $0.0991 $0.0996
First quarter...............................- $0. 0997 $0.099.1
. 0994
.0987
.0989
Second quarter................ -.......... .0993
.0992 ' .0998
.09*9
.0989
. 0989
.0992
Third quarter............................. .098.1
. 0996
.0991
. 0989
. 0992
.0996
Fourth quarter............................ .0693
.0995
.0985
.0996
.0989
.0989
January..................-..................... .0997
.0997
.0988
.0994
. 0989
. 0992
February..................................... .0996
.0996
. 0999
.0986
March...........................................
. 0996
. 0989 . 0993
.0996
.0997
. 0996
. 0984
.0989
.0992
April..................-........ ...............
.0997
.0995
. 098*
.0989
.0992
.0999
May............................................. - .0996
.0989
.0990
.0989
.0992
June............................................. - .0988
.0099
.0989
.0988
July............................................... . 0986
.0989
. 0992
.0998
. 0989
. 0989
August.......................................... . 0985
. 0989
.0992
.0996
.0990
September....................................
. 0085
.0988
.0990
.0995
.0993
.0991
October.....................................
. 0988
. 0990
.0991
. 099.1 . 0995
.0989
November..................................... . 099.1 . 0993
.0993
. 0996
. 0995
. 09*8
.0989
December................ ................... .0990
. 0992
.099«
.0995
1929
$0.0995
.0995
. 0996
.1001
. 0995
.0995
. 0995
.0995
.0995
.0995
.0996
. 0996
.0997
.1000
. 1002
.1001
FOKE1GM CU1UUSKCV AMD EXCHANGE
LUXEMBURG
111
The monetary system of the Grand Duchy of Luxemburg is the same
as that of Belgium. (See Belgium, p. 14, for details.)
Since the establishment of the Belgian-Luxemburg Customs Union
on May 1, 1922, when the Belgian Government undertook to guaran
tee the Luxemburg currency, the rates of exchange have been identical,
but the currencies of neither country have circulated freely in the
trade of the other and an exchange charge has always been made
except in actual border towns.
Under a ruling of the National Bank of Belgium effective Decem
ber 15, 1927, Luxemburg bank notes presented to the National Bank
of Belgium in Brussels or to its agencies throughout the Kingdom
have been honored without discount or charges; the same acceptances
are extended to Belgian notes by the Luxemburg banks and Luxem
burg Treasury.
MALTA
In Malta the monetary unit is the British pound sterling, par
$4.8665. (See United Kingdom, p. 174, for exchange rates, etc.)
Exchange is quoted on London and the spread is very small; the
monthly rates for 1927 ranged from par to one-fourth of 1 per cent
premium.
By order in council of September 24, 1886, British coins were made
the only legal tender in the island, with the proviso that silver coins
and bronze coins were legal tender for tho payment of amounts not
exceeding £5 and 1 shilling, respectively.
By ordinance No. V of 1915 and proclamation No. X of June 16,
1915, paper currency notes issued by the British Treasury under the
currency and bank notes act of 1914 were also made legal tender in
the island for the payment of any amount as from June 17, 1915.
Treasury notes in circulation on March 31, 1928, were estimated
roughly at £700,000.
Maltese coins in circulation prior to 1886 have been demonetized.
MEXICO
Mexico’s monetary unit is the peso (plural, pesos; symbol, $) of
100 centavos, representing 833.33 milligrams of gold 0.900 fine (750
milligrams of fine gold), the par value of which is $0.4985 United
States currency. This unit was adopted by a decree of November
13, 1918—which decree also changed the weight and fineness of the
silver coinage.
Gold coins in circulation are pieces of 2, 2’/,, 5, 10, 20, and 50 peso
denominations; their fineness is 0.900. United States gold dollais
also are legal tender, at the ratio of 2 pesos to the dollar. There aie
subsidiary coins of silver, nickel, and bronze in peso and centavo
denominations. A decree of October 27, 1919, further reduced the
fineness of the silver coins and established the new silver peso at
16.6667 grams (257.206 grains), 0.720 fine.
In addition to the metallic currency, the notes of the Bank of
Mexico (Banco de Mexico, S. A.), the central bank of issue, go to
make up the circulating media.
EARLY METALLIC CORKENCY
Mexico had formerly a silver currency; gold coins for a limited
amount were in circulation but stood at a premium. The gold coin
112
FOREIGN CURRENCY AND EXCHANGE
was the old “ onza” or “ doblón,” 24 which represented 418 grains
troy of gold 0.875 fine. Its value was about $15.75.
,
The silver dollar, or peso, was of an average weight of 26.989 grams
(416.5 grains troy) 0.898 fine and was legally the equivalent of the
old Spanish silver dollar as coined (1772-1848), containing 24.433
grams of fine silver. The coin was formerly a principal article of
export from Mexico, and under its familiar name of “ Mexican dollar”
was known throughout the world. In many parts of the East it
became the chief medium of exchange.
The gold dollar, or peso, represented 1.692 grams of gold 0.875 fine,
but after 1890 was 0.900 fine, so that the ratio between gold and silver
was 1 to 16.
NEW STANDARD ADOPTED
By a law of December 9, 1904, the old currency was abolished and
from May 1, 1905, a gold currency was established. The unit was
the peso, equivalent to 750 milligrams of fine gold, or about $0.4985
United States currency. The gold 1-peso piece, however, was never
coined, although multiples were minted and were in general use.
There was also a silver peso, equivalent by law to the gold peso, and
subsidiary coins. Business in the cities was conducted chiefly with
bank notes issued by the various banks established under the law of
1897.
In 1913 there were 20 such banks of issue. In that year the banks
were required to issue notes in excess of the legal limit, and these were
declared inconvertible by the Government. At about this same time
revolutionary paper money issued by the various factions in control
began to flood the country. By August, 1914, practically all metal
lic currency had disappeared, and until the end of 1916 there was
monetary confusion.
A monetary recovery marked 1916-17, owing partly to Mexico’s
domestic production of gold and silver and partly to its exceptional
natural resources. Circulation of gold and silver was reestablished
and no new paper money of any kind was issued down to the estab
lishment of the Banco de Mexico in 1925.
SILVER COINS AT A DISCOUNT
Between 1916 and 1920, the remarkable advance in the price of
silver caused the fineness of the silver peso to be reduced from 0.898
to 0.800, and still further to 0.720. During this same period silver
corns disappeared from circulation, partly because of hoarding and
partly through exportation. The shortage of currency in many parts
of the Republic became so acute that United States paper and silver
were drawn into general use.
Conditions were reversed in 1921 as the result of the lower price of
silver and a more plentiful supply of subsidiary currency, and after a
period of comparative equilibrium silver coins began to go to a dis
count in relation to gold. In January, 1923, the discount was 1.5 per
cent, probably owing to overcoinage (more than 33,000,000 pesos in
silver had been minted in 1922). At this time the preferential use of
silver for all transactions and the mechanical labor involved in hand
ling large quantities caused the banks to charge a commission for
handling silver accounts. Gold and silver accounts were carried sep
arate^ by the banks. During July a maximum of 4.8 per cent dis** See footnote 17, p. 85.
FOREIGN CURRENCY AND EXCHANGE
113
count on silver in relation to gold had been reached; however, owing
to the cessation of minting, the premium on gold was only about 2 per
cent at the close of the year. The mint’s output of silver during 1923
was over 35,000,000 pesos. In the latter part of 1923 and during the
first part of 1924 silver coinage was resumed, with the result that the
premium on gold reached 5.12 per cent.
In July, the Government announced a reduction in the minting of
silver to 50,000 pesos daily; thereafter the discount on silver was re
duced to between 2.5 and 3 per cent. In December, while banks
were still paying 2 per cent premium for gold over silver, the trans
actions of the Government Monetary Commission were effected at par
' MEASURES TO ARREST DEPRECIATION
Various measures have been taken by the Government to arrest the
depreciation of the silver currency. No foreign currency except gold
may circulate in Mexico. The exportation of gold coins has long
been prohibited, and this embargo was extended by a law of March,
1924, to include gold bullion. The most effective of the official meas
ures has been the employment of the Comisión Monetaria (the
Monetary Commission, a Government banking agency organized
early in 1916) as a seller of exchange at rates better than those quoted
in the open market. The chief prop of the silver currency has been
its acceptance by the Government in payment of taxes.
During recent times of disparity between gold and silver currency,
the foreign-exchange value of the peso-—or rate for United States dol
lars, in which practically all dealing is effected-—has depended on
whether silver or gold is offered. To reduce the surplus stock of
silver coins the Government during 1927 and 1928 called in and melted
down 2,730,500 silver pesos; this helped to reduce the discount on
silver; in all 5,000,000 pesos will be demonetized in order to bring the
silver currency nearer to par.
ORGANIZATION OF BANK OF MEXICO
In 1925 the Bank of Mexico (Banco de Mexico, S. A.) was estab
lished as an official bank of rediscount and issue; it opened for busi
ness on September 1. The bank, which is, in fact, a reorganization
of the Comisión Monetaria, is under Government control, although
49 per cent of the stock may be sold to the public. Its notes are con
vertible into gold on demand and are issued against gold coin or
bullion or bills of foreign exchange or short-term commerical bills
(payable in gold). The gold reserve must be at least 50 per cent of
the outstanding notes. The notes are not legal tender but are re
ceived in payment of public dues. The total issue of paper money for
the time being is limited to 10,000,000 pesos in 10, 20,50 and 100 peso
denominations. The notes of the Bank of Mexico now in circulation
compose a very small percentage of the currency and are seldom seen
in everyday business. BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 68 and
69 is: 1901-1921, sight drafts, Mexico City on New York; 19221929, cable transfers, New York on Mexico City. From 1901 to 1921,
yearly averages are computed from the monthly average rates as
quoted in the Anuario de Estadística Fiscal; from 1922 to 1929, from
114
FOREIGN CURRENCY AND EXCHANGE
daily rates as quoted by the Federal Reserve Board. From July,
1921, to December, 1929, monthly averages are as computed from
daily rates by the Federal Reserve Board. Quarterly averages are
computed from monthly averages.
T
able
0 8 .— Y e a r l y A v e r a g e E x c h a n g e R a t e s
Y ear
1900................................
1901................................
1902................................
1903..................... .........
1904................................
1905.............. ................
1900................ ...........
1907...............................
190K-................ .............
1909................................
1 Not ftv ihble.
T
able
Average
$0.0)4077
.4137
.4170
.4504
. 4950
. 5022
. 4979
. 4973
. 4973
Period
and
1921
First quarter........................... O
(*)
Third quarter....................... *0. 4867
Fourth quarter....................... .4837
January.................................. c)
February............. .. . ----- 0)
March. _______ _________ (>>
April................................ ... <■ >
M a y ...............
(>>
June........................ ............. O
July.......................................... .4891
August.............-........ ............. .4850
September................. ........... .4800
October......................... ........ .4841
November................................ . 4829
December.......................... . . 1842
* N o t a v a ila b le .
$0. 4979
. 4971
.4908
.4241
*. 3396
(»)
(»)
«.5000
«. 5000
.5067
M e x ic a n P e s o
Average
rote
Y ear
ra te
1910................................
1911................................
j 1912.............
1913................................
1914................................
1915................................
1910...............................
1917................................
1918..................
1919...............................
* January-March.
6 9 .— Q u a r t e r l y
Average
Y ear.
ra te
of the
1920.............
1921
$0. 4961
.4891
.4872
.4855
.4851
.4939
.4831
.4720
.4811
.4818
1924. .
1925
1926
1927
1928
1929
* Xo quotations.
* Approximate.
M onthly A verage E xch an ge R ates
M e x ic a n P e s o
1922
1923
$0. 4893
. 4897
. 4845
. 4850
.4809
.4881
. 4929
. 4930
.4y08
.4848
.4852
. 48.53
. 4830
.4829
. 4870
.4845
$0. 4893
. 4842
.4843
.4842
.4891
. 4902
. 4880
. 4845
. 4843
.4837
.4837
. 4834
.4857
. 4843
.4834
.4850
1924
1925
1926
1927
$0.4817 $0. 40.40
. 4824 . 4981
.4883 . 4920
.4882 .4890
.4807 .4888
. 4822 . 4927
.4823 . 4974
.4827 .4987
. 4823 .4990
.4822 .4980
.4860 .4908
.4S‘»0 .4958
. 4898 . 4935
.4880 . 4917
. 4878 . 4879
.1881 .4875
$0.4852
. 4879
.4731
. 4850
. 4850
. 4856
. 4800
. 4828
.4885
.4887
. 487S
.4873
. 480.5
.4720
. 4067
$0.4097
. 4722
.4801
. 4683
.4707
.4701
. 4087
. 4059
.4642
.4654
. 4739
.4772
.4767
.4791
. 4845
1928
o f the
1929
*0. 4870 $0. 4829
. 4754 . 4830
.4781 . 4800
. 4809 . 4837
. 4807 . 1X40
.4874 . 4805
.4874 .4X24
.48.50 .4797
.4783 .4785
.4729 . 4809
.4749 . 48.57
.4785 . 4843
. 4757 .4810
.4789 . 4X01
.4798 .4801
MONACO
Tn the principality of Monaco the currency is the same as that of
France. (See France, p. 69, for details.)
MOROCCO
FRENCH ZONE
The monetary system of the French zone of Morocco is the same as
that of France. The unit of currency is the French franc of 100
centimes recently stabilized at $0.039179. (See France, p. 73, for
exchange rates.)
Adaptation of the monetary régime of French Morocco to that of
France was agreed upon a few months after the passage of French
stabilization law of June 25, 1928. Two new conventions—one
between the State Bank of Morocco and the Moroccan Government,
and the other between the bank and the French Treasury—were
FOREIGN CURRENCY AND EXCHANGE
115
signed. The latter agreement has for its object the maintenance of
the Moroccan franc [notes of the State Bank] on a parity with the
French franc.
Since withdrawal of the old Hassani (or native silver) currency in
1920, the franc has been the sole currency in the French zone. The
note-issuing bank is the State Bank of Morocco; its notes have been
maintained at parity with the French franc since 1921 by a currentaccount arrangement.
S P A N IS H ZONE
In the Spanish zone of Morocco Spanish currency circulates along
with the old Hassani silver currency. The value of the Hassani silver
currency has undergone many changes since it became legal tender
concurrently with the Spanish money under the Act of Algeciras in
1906. The Hassani peseta is now relatively stable at about $0.10
United States currency. (See Spain, p. 157, regarding Spanish
currency.)
TANGIER (INTERNATIONAL) ZONE
Moroccan francs and Spanish currency are legal tender in the
Tangier zone of Morocco. However, the Hassani peseta continues
to circulate freely.
NETHERLANDS
For its monetary unit the Netherlands employs the florin (plural,
florins), also termed the gulden (plural, gulden), of 100 cents, repre
senting 672 milligrams of gold 0.900 fine (604.8 milligrams of fine
gold), the par value of which is about $0.402 United States currency.
(The coin is also known as the guilder.) Gold 5 and 10 florin pieces
are in circulation. There are also current subsidiary coins of silver,
nickel, and bronze in florin and cent denominations.
Apart from the metallic currency, the principal circulating medium
consists of the notes of the Netherland Bank (Nederlandsche Bank).
The Netherland Bank, founded in 1814 under a charter from King
William I, was successor to the old Bank of Amsterdam (Amsterdamsche Wisselbank), one of the famous early banks, founded in
1609. The charter of the Netherland Bank has been renewed from
time to time, the latest renewal running until March 31, 1934.
NETHERLAND BANK THE SOLE BANK OF ISSUE
The Netherland Bank is the sole bank of issue; although a private
institution as regards ownership, the president and secretary are
appointed by the Crown.
From 1864 until July 31, 1914, the obligatory minimum metallic
cover of the demand liabilities of the bank was fixed at 40 per cent.
On July 31, 1914, this ratio was reduced to 20 per cent as an emergency
measure, to allow the bank greater liberty of action in the extraordi
nary circumstances then prevailing. During the first few months
of the war the actual metallic cover of the bank’s demand liabilities
did fall below 40 per cent, but reached 40 per cent again in December,
1914. Since then the actual metallic cover has always been above 40
per cent; as a matter of fact, since 1918 it has been above 50 per cent.
By royal decree of January 4, 1929, the obligatory minimum metallic
cover was once more set at 40 per cent.
There is no fixed limit to its note issue so long as reserve require
ments are met. The bank is the fiscal agent of the Government and
116
FOREIGN CURRENCY AND EXCHANGE
is required to make temporary advances to the Government without
interest to a maximum of 15,000,000 florins.
GOLD STANDARD ADOPTED
The Netherlands, like most other European countries, experienced
currency difficulties during the nineteenth century, resulting chiefly
from efforts to maintain a bimetallic standard. The mint act of
September 28, 1816, fixed the' 10-florin gold piece at 6.0565 grams
(93.465 grains) of fine gold and the 1-florin silver piece at 9.615 grams
(148.39 grains) of fine silver. This gave a bimetallic ratio of 15.88
to 1. In 1847 gold was demonetized in the Netherlands, the silver
standard was adopted, and the metallic content of the silver florin
lowered to 9.451 grains (145.85 grains). The Netherlands continued
on the silver standard until 1875, and during this period large quan
tities of silver were minted.
About 1875 the price of silver declined, and on June 6 of that year
the free coinage of silver was definitely suspended by a law which
established the gold florin as the monetary unit, with metallic content
of 672 milligrams of gold 0.900 fine—the same weight and fineness as
the present gold florin.
The large quantity of silver in circulation was a menace to the gold
standard, and inasmuch as coins could not be exported profitably
gold bullion was exported instead to meet the demands resulting from
unfavorable exchange rates. The gold reserve of the Netherland
Bank declined from 57,000,000 florins at the end of 1880 to 5,000,000
florins in February, 1883. In April, 1884, the melting down of
25,000,000 florins in silver coins was authorized; however, about this
time gold began to flow back into the country, and the Government
did not find it necessary to melt down this amount of silver currency.
Gold continued to be the monetary standard in the Netherlands
down to the outbreak of the World War.
The Netherlands, simultaneously with the United Kingdom,
announced on April 28, 1925, that the country was returning imme
diately to the gold standard. Before the war not much gold was in
circulation in the Netherlands. The policy of the Netherland Bank
was to discourage the hand-to-hand circulation of gold and retain its
gold reserve, as far as possible, to meet foreign demands. This policy
has been continued.
NOTE EXPANSION OF WAR PERIOD
Although the Netherlands was a neutral nation, the outbreak of
the World War caused considerable disturbance to the economic life
of the country. The financial centers, London, Paris, and Berlin,
recalled credits, so that exchange rates on these cities advanced and
gold began to leave the Netherlands. The Government promptly
placed a prohibition upon the exportation of gold and exempted the
Netherland Bank from the obligation of redeeming its notes in specie.
The only paper money in the Netherlands for some time had been
the notes of the Netherland Bank. However, soon after the outbreak
of the war the Government, under agreement with the bank, issued
currency notes known as silver bonds (zilverbons) in denominations
of 1, 2}i, and 5 florins. These Government notes were unlimited
legal tender and were to be withdrawn so soon as the Netherland
Bank could place a sufficient supply of silver currency at the disposal
FOREIGN CURRENCY AND EXCHANGE
117
of the Government. On October 17, 1914, the amount outstanding
was 16,906,000 florins, but most of these notes have now been with
drawn.
To meet the crisis in the middle of 1914 some 30 municipalities,
including Amsterdam and Rotterdam, issued emergency currency
after consultation with the Netherland Bank; these municipal notes
were withdrawn when the crisis subsided.
The note circulation of the Netherland Bank increased very greatly
on the outbreak of the war and continued to expand until the armi
stice. The circulation prior to the war totaled about 300,000,000
florins; at the end of 1918, about 1,069,000,000 florins. However, the
gold reserve also increased during the same period from about 160,000,000 florins to about 689,000,000 florins. In December, 1929, the
notes of the Netherland Bank outstanding totaled 851,000,000 florins;
the gold reserve was 448,000,000 florins, and the foreign assets stood at
220,000,000 florins. The corresponding figures for 1928 were 854,000,000, 435,000,000, and 220,000,000 florins.
POSTWAR EXCHANGE RECOVERY
Prior to the war exchange rates on New York remained practically
at par inasmuch as gold movements were free; fluctuations were
confined within narrow limits marked by the “gold points.” -’5 The
rise in exchange rates on the Netherlands during the war was partly
due to the flight of capital from the belligerent countries to the
Netherlands. Inasmuch as exchange rates between the European
Allies and the United States were “ pegged” after tlie United States
entered the war, these different currencies moved in more or less
parallel lines in Amsterdam. In August, 1918, the florin was quoted
in New York at about SO.53. After March, 1919, when the artificial
support to the pound sterling, the franc, and other currencies was
withdrawn, the United States dollar pursued an independent course
in the Netherlands and the florin went to a discount in New York.
This decline was attributable largely to the relatively greater shrinkage
of the purchasing power of the florin in the Netherlands than of the
dollar in the United States. The exchange value of the florin reached
its lowest point in November, 1920, when the average rate for the
month stood at SO.3019. Since then it has gradually recovered,
reaching par in 1928. BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 70 and
71 is: 1914-1918, sight drafts, New York on Amsterdam; 1919-1929,
noon buying rates for cable transfers, New York on Amsterdam.
Average rates from January, 1914, to October, 1918, are computed
from mid-points between monthly high and low rates; from Novem
ber, 1918, to December, 1929, averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are computed
from monthly averages.
For conversion purposes, the par value of the florin ($0,402) may
be used from 1900 to 1913, since variations in exchange rates during
that period did not exceed 1 per cent.21
21 See footnote 22, p.104.
118
FOREIGN CURRENCY AND EXCHANGE
T able 70.— Y early A verage E xchange R ates
1j A ™r a t«e « «
Y fta r
1 ear
]<>18...............................................................4 '8 0
»010...............................................
. 3941
T
a b l e
71.— Q i
Period
a
. . it , r
l v
A v e ra g e
r a te
Y ear
1 920...............................................
1921 .............................................
1 9 22 ...............................................
1 023...............................................
1924 .............................................
1 9 9 ' .............................................
a n i*
M
op the
o n t h ly
A
y p d ia g e
1914
1915
1916
1917
A v e ra c e
r a te
Y ear
$ 0 .3 4 4 2
. 3365
.3 8 5 0
. 3910
. 3821
. 4016
N etherland F lorin
N etherlaxd F lown
1 926................................................
1 927................................................
1 9 28 ...............................................
1 9 29 ...............................................
E
x c h a n g e
1918
1919
R
a tes
1920
$0. 4010
.4011
. 4022
. 401*.
o p
tue
1921
$0.4002 $0.4298 $0.4059 $0. 4471 $0.4151 $0. 3730 $0.3383
quarter ......................... $0.4024
4029 . 39.54 .4189 .4111 . tv.;*; .3979 .3305
. 3662 .3453
Second quarter........................ ..4101
.4120 .4175 . 5046 .3758
Third quarter........................ .4092 .4004
.4177 .4092 .4402 .4307 .3787 .3067 .3148
.3491
Fourth quarter ......................
4078 . 4363 .4231 .3780 .3288
January................................. .4022 .4028 .4419 .. 4057
.4475 .4135 . 3730 . 3420
.4025 . 4003 . 4226
February......................... ........ .4025
. 3975 .4250 .4041 . 4575 . 1087 .3679 . 3440
. 4738 . 4043 .3711 . 3175
.3941
.4116
.
4031
.
4263
April...........................................
i\,i a v
. 4031 . 3950 .4144 .4103 .4913 . 3983 . 3660 .3556
.4025
.
3972
.4160
.4113
.5038 .3912 .3614 .3328
June............................................
.4000
.4130
.3800 .3497 .3178
.4141
.4072
July............................................. .4138 . 4022 .4125 .419-1 .5113
.5188 . 3722 .3290 .3100
August......................................
37.53 .3127 .3166
September.................................. . 4094 . 3991 . 4094 .4201 . 4838 ..3800
. 3087 . 3345
October ..................................... .4157 . 4094 . 4107 . 4394 .4438
November.................................. . 4009 .4109 .4088 .4413 .4215 . 3776 .3019 .3497
December................................... .4051 .4269 .4082 .4400 . 4267 .3785 .3095 .3631
F ir s t
Period
1922
1923
1924
1925
1926
1927
1928
1929
$0.3728 $0. 4017 $0.4011 $0.4000 $0.4028 $0.4007
First quarter.............................. $0.3738 $0.3953
Second quarter........................ . . 3843 .3884 . 3735 . 4009 .4017 . 4002 . 4033 .4017
Third quarter ...................... . 3880 .3929 .3840 .4018 .4012 .4007 . 4015 .4010
Fourth quarter........................ .3936 .3840 .3986 .4021 . 3999 .4033 .4013 .•1032
. 3735 . 4041 .4018 .3999 . 4033 .4011
January.................................... .3668 .3956
. 4008 .4000 . 402 »; . 4005
February.................................. . 3761 . 3953 .3742 .4017
3706 . 3992 .4007 .4001 .4025 .4005
March...................................- . 3784 . 3949 ..3719
. 3995 .4013 .1000 . 1031 .4014
. 3918
April......................................... .3793
May.......................................... . 3865 . 3913 .3741 . 4018 . 4020 . 4002 . 4035 .4020
June......................................... .3871 .3920 .3744 .4014 .4018 .4005 .4033 .4015
.3923 . 3794 . 4010 .4018 . 4006 .4025 .4014
July ........................................ .3877
.3881 . 4024 .4011 . 4007 .4011 .4006
August..................................... . 3885 .3934
.4008 .4009 . 4009
September............................... .3879 . 3930 .3845 . 4021 .4007
.3913 . 3910 . 4020 . 4000 . 4019 . 4009 . 4025
.
4005
.3998
November......... ........................ . 3927 .3802
. 4036 .4014 .4035
.4023
December................................. .3984 .3804 .4042 .4019 .3999 .4044 .4017 .4036
NETHERLAND EAST INDIES
JAVA AND MADURA
In the Netherland East Indies the monetary unit is the florin of
100 cents, representing 672 milligrams of gold 0.900 fine (604.8 milli
grams of fine gold), the par value of which is $0.402 United States
currency. (See Netherlands, above, for exchange rates.)
The principal circulating medium (apart from gold, silver, and sub
sidiary coins in florin and cent denominations) consists of the notes
of the Bank of Java, established in 1828. The Government has
control over its administration. From 1864 until July 31, 1914, the
obligatory minimum metallic cover for demand liabilities was fixed at
119
FOREIGN CURRENCY AND EXCHANGE
40 per cent, the metallic reserve including silver as well as gold; on
the latter date this ratio was reduced from 40 per cent to 20 per cent
as an emergency measure. At the end of June, 1928, the legal
reserve ratio of 40 per cent was restored. The actual ratio of coin
and bullion to demand liabilities has been below 40 per cent for brief
periods only, and in recent years it has been well in excess of that
figure.
According to the annual report of the Java Bank the note circula
tion outstanding on March 31, 1929, totaled 310,904,000 florins.
The reserve consisted of gold and silver coin and bullion, 185,848,000
florins, and foreign bills, 28,023,000 florins.
The basis for the yearly average exchange rates, as given in Table
72 is: 1913-1928, cable transfers, Batavia on New York; the figures
represent mid-points between the yearly high and low rates. The
quarterly and monthly averages from 1926 to 1929, given in Table 73,
represent noon buying rates for cable transfers, New York on Batavia;
they are as computed from daily rates by the Federal Reserve Board.
T able 72.— Y early A verage E xchange R ates
N ew Y ork )
Y ear
A v e ra g e
r a te
Y ear
1913................................ . $0.4021 1919................................
1914.......................
. 4019 1920................................
I«15__
. 3990 1921 .
1916................................
. 41or» 1922................................
1917................................
* 1923................................
1918................................ ».. 4038
4692 1924................................
of the
A v e ra g e
ra te
$0. 3957
. 3398
. 3305
. 3738
. 3752
.3702
F lorin (B atavia
on
A v e ra g e
ra te
Y ear
1925................................
192.1................................
1927 ..............................
1928................................
$0. 4000
. 4020
.4010
. 4023
T able 73.— Q uarterly and M onthly A verage E xchange R ates
F lorin (N ew Y ork on B atavia )
of the
1 Sitçht d ra fts, B a ta v ia o n N e w Y o rk .
Period
1926 »
1927
1928
First quarter........................................................................................ $0.4050 $0. 4020 $0.4ms
.4017
. 4023
Second quarter..................... -............. .............................................. . 4042
.4018
. 4005
Third quarter...................................................................................... . 4042
. 4040
. 4028
.4013
Fourth quarter...................................................................................
. 4056
. 4075
. 4024
. 4053
.4018
. 4052
. 4039
. 4035
.4017
. 4036
. 4015
. 4022
. 4048
. 4016
. 4024
. 4043
.4021
. 4023
July...................................................................................... ............... . 4047
. 4020
.4015
. 4047
. 4017
. 3998
.4003
. 4032
. 4017
.4031
. 4026
.4012
October.......................
.
.................................................
. 402X . 4041
.4012
.4014
. 4025
. 4053
1929
$0. 3997
. 4005
. 4000
.4021
. 4006
. 3992
. 3994
.3999
.4010
. 4005
. 4003
. 3996
. 4000
.4014
. 4023
. 4025
1 F ig u res for e a rlie r y e a rs a re n o t a v a ila b le ; h o w e v e r, it is su g g e ste d th a t for o rd in a ry c o n v e rsio n s
to U n ite d S ta te s d o llars th e ra te s for th e N e th e rla n d flo rin may c o n v e n ie n tly be u se d .
Yearly average rates, New York on Batavia, work out at: 1926,
*0.4042; 1927, *0.4024; 1928, *0.4022; 1929, *0.4006.
That exchange rates in Batavia, Java, have run closely parallel to
exchange rates in Amsterdam, is shown in the following table giving
120
FOREIGN CURRENCY AND EXCHANGE
the highest and lowest cable transfer quotations at Batavia on
Amsterdam, 1913-1928:
T able 74.— E xchange R ates
Y ear
1913...........................
1914..........................
1915...........................
1916...........................
1917...........................
1918...........................
High
Low
MH
my,
99 K
9S )J
«8
9 9'A
99 'A
99 'A
99 H
•m
i
9 9?i
Y ear
1919...........................
1920____..................
1921...........................
1922...........................
1923...........................
1924...........................
in
B atavia
High
Low
9 8 JÎ
99
95M
9CJÎ
98
95J4
102
103 X
&>U
99K
98M
98K
on
A msterdam
Y ear
1925...........................
192 »...........................
1927...........................
1928...........................
High
98J4
99 V»
99M
99H
Low
100s*
100s*
100
m
NETHERLAND WEST INDIES
CURACAO
In the colony of Curacao the monetary unit is the florin (also
termed gulden) of 100 cents, representing 672 milligrams of gold
0.900 fine (604.8 milligrams of fine gold), the par value of which is
about $0,402 United States currency. Exchange is determined by
that of the Netherlands. (See Netherlands, p. 118, for exchange
rates, etc.)
The bank of issue is the Curayaosche Bank, established in 1828. On
December 31, 1928, bank notes in circulation amounted to 5,208,000
florins.
NEWFOUNDLAND
Bv an act passed in 1863 Newfoundland adopted a single gold
standard. The unit of currency, although not coined, is the gold
Newfoundland dollar of 100 cents, which contains theoretically
1.664165 grams of gold 0.916% fine (1.52548 grams of fine gold),
and the par value of which is 4s. l%d., or about $1.00048 United
States currency. Exchange fluctuates with the Canadian dollar. (See
Canada, pp. 41-42, for exchange rates, etc.)
Current local coins are silver pieces of 5, 10, 20, 25, and 50 cents,
and copper 1-cent piece.
In addition to the local money, the circulation consists of Canadian,
United States, and some British currency.
NEW ZEALAND
The British pound sterling, par $4.8665 (see United Kingdom,
p. 170), is the monetary unit of New Zealand. The metallic currency
in use is practically the same as in Great Britain; gold has all but
disappeared from circulation.
The paper money7 of the Dominion consists of the notes of the
six banks of issue—Bank of New Zealand, National Bank of New
Zealand (Ltd.), Commercial Bank of Australia (Ltd.), Union Bank
of Australia (Ltd.), Bank of New South Wales, and Bank of Australia.
BANKING LEGISLATION OF THE DOMINION
The banking act, 1908, deals with the issue of notes generally. The
Governor General may empower any bank to issue and circulate
notes, subject to the provisions and restrictions contained in the
charter or letters patent under which the bank is incorporated;
FOREIGN CURRENCY AND EXCHANGE
121
all such notes to be payable in gold only at the office of the bank
at the place of issue, and to be a first charge on all assets of the
bank.
On August 5, 1914, immediately after the outbreak of the World
War, an amendment to the banking act empowered the Governor
General in Council to declare, from time to time, by proclamation,
“that the notes payable on demand by any bank therein named,
and then issued or thereafter to be issued or reissued within New
Zealand under any lawful authority in that behalf, shall during the
period limited by the proclamation be everywhere within New Zealand
a good and legal tender of money to the amount therein expressed
to be payable.” The bank may be required to give adequate security
that it will redeem the notes in gold on the expiration of the period
covered by the proclamation. Provision is also made for payment
by the state treasury in case of default by the bank. During the
period fixed by the proclamation coined gold must not be exported
except with the consent of the Minister of Finance. Between August
5, 1914, and November 5, 1919, this prohibition applied also to
uncoined gold.
Immediately on the passage of this amendment, a proclamation
was gazetted declaring notes of the six banks of issue doing business
in New Zealand to be legal tender from August 6, 1914, to September
6, 1914; further extensions were made from time to time, and the
present authority expires on January 10, 1932.
NOTE CIRCULATION- EXCHANGE
Notes outstanding at the end of June, 1929, amounted to about
£6,100,000; the metallic reserve on the same date amounted to
about £7,200,000.
The pound in New Zealand ordinarily fluctuates with the pound in
Great Britain, the difference being only a spread in the case of tele
graphic transfers, etc. This spread increased considerably immediately
after the World War. For ordinary conversions, however, the rates
for the British pound (see p. 174) may be used.
BASIS OF STATISTICS
The rates in Table 75 and the schedule following have been secured
by Julian B. Foster, American trade commissioner at Wellington,
through the courtesy of the secretary of the Associated Banks, at Well
ington. The table gives the monthly and yearly average rate, of the
pound in New Zealand from 1916 to 1927. The monthly averages
have been compiled from such quotations during the month as could
be obtained; they are therefore only approximate. The schedule
gives, for the dates stated, the bank exchange in Wellington for cable
transfers on New York; the premium or discount on £100 is stated
in shillings and pence, the usual method of quoting.
1942°—30-----9
FOREIGN CURRENCY AND EXCHANGE
122
T able 75.— C onversion R ate in N ew Z ealand for S terling B ills R eceived
from the U nited S tates
Period
1916 i 1917 1918 | 1919 1920 1921 1922 1923 1924 1925 1926 1927
Annuftl a vernice ............ *4. 740 $4. 740 U . 742 $4.403j$3.612 $3. 787 $4. 380 $4. .54' $4.389 $4. 806 $4. 844 $4.847
. 4. 740 4. 740 4. 74o|
3.653 3. 630 4.180 4. 633 4.234 4.7501 4.850 4.840
4.740 4.740 4.740
3.405 3. 825 4. 285 4.663 4.283 4.746 4.850 4.835
. 4.740' 4.740 4.740;
3. 618 3.843 4.313 4. 670 4.270 4.750 4.843, 4.840
4.740 4.740 4. 740|
3.884 3.883 4.350 4.640 4.313 4.770 4.850 4.840
J 4. 740 4. 40 4.740 4.650 3.834 3. 892 4. 380 4. 693 4.317 4.825 4.843 4.840
4. 740j 4. 740 4. 740 4. 617 3.907 3. 750 4.384 4. 565 4.307 4.835 4.850 4.840
4. 740' 4.740 4.740 4. 463 3. 792 3.570 4. 407 4. 580 4.343, 4.840 4.850 4.845
4. 740 4.740 4.740 4. 226 3.540 3. 590 4.445 4. 530 4. 481 4.830 4.840 4.850
4. 740 4.740
4.740 4. 140 3.452 3.666 4.385 4. 515 4. 436 4.830 4.840 4.850
...................,
4.740 4.740 4.740 4.1.50 3.420 3. 799 4.390 4. 485 4.455 4.830 4.835 4.860
4. 740 4.740 4. 750 4. 060 3. 396 3. 900 4.473 4. 355 4.555 4.830 4.835 4.857
4. 740 4.740 4.750 3. 785 3. 448 4.092 4.563 4.340 4.672 4.840 4.837, 4.870
January---February
____.
March.............
April.............
May................June................
July.................
August--------September__
October........November___
December___
Bank exchange for cable transfers on New York
1913:
Oct. 1 ..
premium-.
1914:
July 20.
___ do____
Aug. 17.
___ do____
Aug. 27 .
___ do____
Oct. 7 ..
___ do____
Oct. SI
___ do____
1915:
Feb. 10.
___ do____
Mav 4 .
___ d o ....
1910:
Mar. 16.
___ do____
1917:
July 24.
___ do____
Dec. 6 ..
___ do____
1920:
Oct. 7. _
___ do____
Nov. 2 .
__ ,.do___
Dec. 8 ..
___ do____
1921:
Jan. 20.
___ do____
Aug. 22 _
___ do____
1922:
Feb. 24.
___ do____
Apr. 19.
___ do____
Mav 17.
___ do____
July 21.
___ do___
Sept. 18
___ do____
Nov. 9.
___ do____
1924:
Aug. 18.
Oct. 6 ..
.discount. _
Nov. 28
___ do____
1925:
May 8..
___ do____
June 11.
premium _.
192(5:
Aug. 12.
___ do____
Oct. 6. _
___ do____
1927:
May 9______________________________________do.
July 6______________________________________ do.
July 27--------------------do.
s. d.
17 0
12 06
20
25 0
30 0
35 0
30 0
25 0
30 0
25 0
20 0
30 0
40 0
50 0
00
0
50 0
35 0
30 0
25 0
17 Ö
105 00
Par.
10
20 00
5 0
5 0
7 6
5 0
12 6
15 0
17 6
FOREIGN CURRENCY AND EXCHANGE
NICARAGUA
123
Nicaragua’s monetary unit is the cordoba (plural, cordobas) of 100
centavos, adopted under the law of March 20, 1912. The cordoba
contains theoretically 1.G72 grams of gold 0.900 fine (1.5048 grams of
fine gold) and is approximately the equivalent of $1 United States
currency. (The Nicaraguan unit contains a fraction more gold than
the United States dollar—1.5048 grams as against 1.5046 grams).
The above-mentioned law provided for gold coins of 2}i, 5, and 10
cordobas and for subsidiary coins of silver, nickel, and copper in
cordoba and centavo denominations.
In addition to the metallic currency, the circulating media consist
of notes of the National Bank of Nicaragua and, on the east coast, a
certain amount of United States currency.
The establishment of the National Bank of Nicaragua (Banco
Naeional de Nicaragua) was provided for in the treasury bills agree
ment of September 1, 1911, and in the monetary law of March 20,
1912. The bank is the fiscal agent of the Government; it enjoys
the exclusive right to issue notes which are legal tender. Not even
the Government is permitted to issue paper currency or any form of
obligation capable of being used as money. Nicaragua is now on the
gold-exchange standard; the note issue is secured by the conversion
fund maintained by the bank in New York. The monthly average
circulation in 1928 was 4,087,000 cordobas.
BIMETALLIC STANDARD
The early monetary experience of Nicaragua wras similar to that
of the other Central American countries. Under the Spanish régime
the monetary system was based on that of Spain although the actual
currency in circulation was a heterogeneous mixture of coins, also
commodities, differing from one district to another. In some sections
coconuts and cacao beans passed as money. The coins were not of
uniform character and many were crudely minted. Much of the
currency consisted of the old “macacas” or “macuquinas, ” which
were irregular pieces of silver cut to the proper weight and bearing
the official stamp. In view of the numerous foreign coins circulating
in the country the Government frequently posted a table giving the
values at which the different moneys should circulate and at which
the Government offices would receive them.
Nicaragua endeavored to maintain the bimetallic standard of the
Spanish system whereby 16 silver pesos w'ere equivalent to 1 gold
“onza, ” but owing to the bad condition of the silver money the more
valuable gold money disappeared from circulation. The silver peso
weighed about 25 grams 0.900 fine, similar to that of the neighboring
Central American countries.
FIRST ISSUES OF GOVERNMENT NOTES
About 1875 moderate amounts of Government paper money,
“billetes del Tesoro,” as the notes wrere called, w-ere issued. The
notes were redeemable in gold or silver but were not legal tender until
a decree to that effect wras promulgated in 1885. In March, 1882,
a banking law arranged for the issue of notes by banks. The Gov-
124
FOREIGN CURRENCY AND EXCHANGE
eminent discontinued issuing notes and in 1887 granted a concession
to the Bank of Nicaragua by which it enjoyed the exclusive right of
note issue; the notes, however, were not legal tender.
After the revolution of 1893 the new Government issued so-called
“ billetes del Tesoro Nacional” and by the end of 1898 the bank notes
in circulation had fallen to 82,000 pesos and later on practically dis
appeared.
DEPRECIATION OF PAPER MONEY
From the very beginning the Government notes began to depre
ciate, but during the early years to no very great extent. By 1902,
however, this depreciation had so affected revenues that the Govern
ment declared a surcharge on import duties equal to the spread
between the internal value of the notes and the exchange rates for
gold. This amounted to placing the Government’s revenues upon
a gold basis, although the country was actually upon the silver basis;
in fact, Nicaragua might be said to have been, in effect, upon a paper
basis, since the circulation of silver money was greatly reduced and
the coins were at a premium in terms of paper.
The issues of Government paper continued to grow, accelerating
depreciation. For 16 years thereafter there was a gradual increase
in the amount of paper money in circulation and a corresponding fall
in its exchange value. In 1905 and 1909 a change of Government was
effected through various revolutionary disturbances, during the
course of which large additional amounts of paper currency were
issued, with the result that the Nicaraguan peso fell to about 6 cents
gold.
FISCAL REORGANIZATION
In 1911 the first steps toward the reorganization of Nicaraguan
affairs were taken, among which was the establishment of a new
currency system. The value of the outstanding paper money was
placed at 12.50 pesos to the new cordoba, and the old notes were to
be redeemed at that ratio. Some of these notes were retired and the
balance made convertible into notes of the National Bank of Nica
ragua.
The National Bank of Nicaragua was established in 1912 under an
agreement between the Nicaraguan Government and United States
bankers. From that time until August, 1924, the Government of
Nicaragua owned a minority of the stock, the controlling shares
being held by United States interests. At the latter date the Nic
araguan Government purchased the United States holdings and has
since been in full ownership of the bank.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Table 76 is:
1900-1912, selling rate of the peso for United States gold; 1913-1929,
selling rate of the cordoba by the Banco Nacional for sight drafts on
New York.
FOREIGN CURRENCY AND EXCHANGE
T able
76.— Y e a r l y A v e r a g e E x c h a n g e R a t e s
and
Average
rate
Year
1900 ........
1901 ...
1902 ................
1903................................
1904 ...
1905__
1906..........................
1907...............................
1908 ...
1909.......................
$0.4808
. mS9
. 1894
. 1389
. 1462
. 1624
. 1852
. 1587
. 1255
. 1095
C ordoba 1
Year
Average
rate
of the
N ic a r a g u a n P e so
Year
1910.............................. $0.0870 1920................................
1911................................ . 0556 1921................................
1912................................ . 0645 1922................................
1913.............................. .9901 1923................................
.9901 1924................................
1914 ...
1915...........
.9174 ' 1925................................
1918................................ . 9901 1926...............................
1917................................ . 9901 ! 1927................................
.9828 1928................................
1918..................
1919................................ .9852 1929................................
' Peso, 1900-1912; cordoba, 1913-1929.
125
Average
rate
$0.9828
.9804
.9804
. 9852
.9901
.9901
.9901
.9901
.9901
.9901
NORWAY
Norway’s monetary unit is the krone (plural, kroner), representing
448.03 milligrams of gold 0.900 fine (403.23 milligrams of fine gold),
the par value of which is $0.26798 United States currency. The krone
is divided into 100 0rer. Gold pieces of 10 and 20 kroner are legal
tender, but there is practically no gold in actual circulation. The
subsidiary coins are of silver, copper-nickel, and bronze in krone and
0re denominations.
The principal circulating medium consists of the notes of the Bank
of Norway (Norges Bank), the central bank of issue, established June
14, 1816, to replace the branch of the Danish National Bank after
the separation of Norway from Denmark. The legal minimum
reserve requirement is 100 per cent gold against notes in excess of a
fiduciary issue of 250,000,000 kroner; the fiduciary issue may be
increased, subject to tax, by authority of the King and Storting.
NORWAY A M EM BER OF SCANDINAVIAN UNION
Prior to the World War Norw ay was a member of the Scandinavian
Monetary Union, with Denmark and Sweden. Norway signed the
convention in 1875 (Denmark and Sweden in 1873), and from that
time the gold and silver coins of Denmark and Sweden were law ful
money also in Norway. The bank notes of the Scandinavian central
banks were generally accepted at par in all three countries. After
the outbreak of the war, the monetary units of Norway, Sweden, and
Denmark remained “ pegged” together until the autumn of 1915.
The notes of the Bank of Norway, which were legal tender, were
redeemable in gold on demand until August 4, 1914, when, because
of the war, the bank was relieved of the obligation to redeem in gold
until March, 1916, and again from November, 1920, up to May 1, 1928.
Of the total circulation prior to the World War there was a fiduciary
issue of 45,000,000 kroner. Beyond this amount, the notes had to
be covered in full by gold and foreign balances payable in gold (pro
vided the balances abroad did not exceed one-third of the total reserve)
and were subject to a high tax so that they would not continue out
standing.
W AR'S REFLEX IN NORWAY
Norway experienced considerable prosperity as the war progressed.
Norwegian products were in great demand both at home and abroad;
profits were large and business confidence high. With the krone at
126
FOREIGN CURRENCY AND EXCHANGE
a premium in foreign countries, the tendency was for gold to flow to
Norway.
The purchase of gold by the Bank of Norway tended toward infla
tion, because bank notes and deposit credits—which serve as reserves
for private banks—were given in return for the gold purchased.
The increased gold reserves of the bank also provided the basis for
expansion of its own currency and credit. The inflation which took
place in Norway was in part a result of the issue of Government
securities, which went into the banks and served as the basis for
borrowing.
Note circulation increased; notes outstanding at the end of 1913
amounted to 108,000,000 kroner; at the end of 1918, to 436,000,000
kroner; and at the end of 1920, to 483,000,000 kroner. Meanwhile,
the gold reserve advanced from 44,000,000 to 147,000,000 kroner.
POSTW AR DEPRECIATION OF THE KRONE
The general trade depression of 1920-1921 affected seriously each
of the four basic industries of the country (fishing, lumbering, woodmanufacture, and shipping); there were many business failures,
f ulp
n 1922 and 1923 some of the most powerful banks were in difficult
straits. However, the tension relaxed somewhat during 1924, with
a gradual improvement of business and the banking situation. Note
circulation was gradually reduced to 391,000,000 kroner at the end
of that year, and each succeeding year saw a still further reduction.
Meanwhile the gold reserve remained constant at 147,000,000 kroner.
In December, 1929, the note circulation stood at 318,000,000 kroner,
the gold reserve at 147,000,000 kroner, and foreign balances and bills
of exchange at 59,000,000 kroner.
The exchange value of the krone in terms of the United States dol
lar was above par during 1917 and 1918, largely because the dollar
was tied up with the “ pegged” currencies of the European Allies.
After March, 1919, when this artificial prop was withdrawn, the ex
change value of the krone began to fall, being quoted at less than 20
cents in December. Depreciation continued during 1920, owing
partly to the fact that there was a money stringency in New York and
London, and bankers endeavored to liquidate their holdings of kroner.
The relatively greater shrinkage of the buying power of the krone in
Norway than of the dollar in the United States has been the real cause
of the continued low value of the krone in New York since shortly
after the close of the war.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 77 and
78 is: 1914, selling rate in Christiania on London (pence converted,
see United Kingdom, p. 175); 1915-1918, bankers’ checks, New York
on Christiania; January, 1919, to June, 1921, sight drafts, New York
on Oslo; July, 1921, to December, 1929, noon buying rates for cable
transfers, New York on Oslo. The rate for 1914 is as quoted in the
Statistisk Aarbok for Kongeriket Norge. Average rates from 1915
to 1918 are computed from mid-points between the monthly high and
low rates; from 1919 to 1929, averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are com
puted from monthly averages.
FOREIGN CURRENCY AND EXCHANGE
12 7
For conversion purposes, the par value ($0,268) may be used from
1900 to 1913, since the variations from par did not exceed 1 per cent
at any time during that period.
T able 77.— Y early A verage E xchange R ates
Average
rate
Year
$0. 2660
.2688
. 285ft
.3046
.3033
.24.58
1914
1918
Average
rate
Year
1920____ ___________
1921.-............................
1922................................
1923........................ ......
1924.-...........................
192.5................................
T able 78.— Q uarterly
and
Period
191.5
of the
$0.1653
. 1491
. 1750
. 1667
. 1394
. 1788
N orwegian K rone
Average
rate
Year
$0. 2233
. 260ft
. 2689
.2068
192R.
11)27.
1928.
1929.
M onthly A verage E xchange R ates
N orwegian K rone
1916
1917
1918
1919
1920
1921
of t h e
1922
$0. 2485 $0. 2806 $0. 2820 $0.3123 $0. 2770 $0. 1822 $0. 1720 $0. 1665
. 2591 .2891 .2917 .3141 . 2556 . 1867 . 1.545 . 1S05
.2588 . 2851 . 3043 . 3092 . 2359 . 1516 . 1310 . 1090
. 2687 . 2787 . 3402 .2777 . 2197 . 1397 . 1400 . 1839
. 2495 . 2773 .2800 .3188 . 2793 . 1919 . 1763 . 1566
. 24.57 . 2793 . 2795 .3113 . 2740 . 1730 . 1778 . 1666
. 2504 . 2853 . 2865 . 3069 . 2676 . 181S . 1619 . 1762
. 2558 . 2963 . 2900 .3169 . 2590 . 1983 . 1597 . 1801
. 2545 . 1863 . 1577 . 1847
. 2590 . 3035 . 2925 .3118
. 2624 . 294.5 . 2925 .3135 . 2532 .1754 . 1461 . 1706
. 2605 .28«) .3(100 .3130 .2410 . 1652 . 1338 . 1«W
. 2.580 . 2855 . 3050 .3118 . 2342 . 1499 . 1307 . 1718
. 2580 .2838 . 3080 . 3028 . 2324 . 1.398 . 1286 . 1683
.2610 . 2800 . 3332 . 2840 . 2305 . 1379 . 1264 . 1786
. 2718 . 2770 . 3525 .2710 . 2220 . 1338 . 1412 . 1837
.............. . .27:« . 2792 . 8880 .2780 . 2060 . 1474 . 1523 . 1894
Second Quarter.- ..... ...............
Third Quarter. .........................
Fourth quarter-------- ---------January........... .........................
M arch......................................
April...........................................
May.............................. ..........
June.................
July ................ .......................
August ............. -........
September................. ........ .
December........
Period
First quarter. ....... ...................
April................................... ...
July....................................... .
December...................................
1923
$0. 1846
. 1701
. 1619
. 1502
. 1867
. 1855
.IKltU
. 1784
. 1654
. 1664
. 1620
. 1630
. 1608
. 1.550
. 146.5
. 1491
1924
1925
1926
1927
1928
192»
$0. 1365 $0. 1532 $0.2088 $0. 2580 $0. 2662 $0. 2666
. 1372 . 1665 .2179 . 2586 .2677 . 266.6
. 1371 . 1927 . 2192 . 2005 . 2670 . 2064
. 1468 .2027 . 2473 . 2648 . 2666 .2678
. 1408 . 1527 .2035 . 2557 . 2660 . 2666
. 1332 . 1525 .2083 . 2578 .2601 . 2600
. 1543 .2147 . 2605 . 2666 . 2666
. 1379 . 1613 . 2162 . 2.586 . 2674 . 2666
. 1387 . 1682 . 2166 . 2584 . 2678 . 2666
. 1351 . 1701 . 2210 .2589 . 2678 . 2664
.1342 . 1807 . 2193 .2584 .2673 . 2665
. 1.387 . 1880 .2191 .2594 . 2669 . 2663
. 1383 . 2093 . 2191 . 2636 . 2667 . 2663
. 1425 . 2020 .2361 .2634 . 2665 .2674
. 1472 . 2031 . 2530 . 2649 . 2605 . 2679
.1500 .2031 .2529 . 2662 .2667 .2682
PALESTINE
Palestine has for its monetary unit the Palestine pound of 1,000
mils. It. is on a gold-exchange standard and is equal in value to the
British pound sterling, par $4.8665, or to 97.50 Egyptian piastres.
The Palestine pound was introduced on November 1, 1927, under the
British order in council 28 of February 7, 1927, to replace the Egyptian
•'* Palestine is administered by Great Britain under a mandate which was passed by the Council of the
League of Nations on July 24, 1922, and came officially into force on September 29, 1923.
128
FOREIGN CURRENCY AND EXCHANGE
pound. The Egyptian pound, par $4.9431 (see Egypt, p. 64), had
been the unit of currency in Palestine since 1918, while prior to that
period the Turkish pound had been the unit.
The new coins in circulation consist of silver, nickel-copper, and
bronze pieces ranging in denomination from 1 to 100 mils, in addition
to notes. These new notes and coins were issued on behalf of the
Palestine Government by the Palestine Currency Board, appointed
by the British Secretary of State for the Colonies, having its offices in
London. The treasurer of Palestine'is the currency officer, and he
represents the board in Palestine.
Egyptian currency ceased to be legal tender after March 31, 1928,
by which date all Egyptian currency was expected to have been with
drawn and replaced by the new Palestine currency. The Egyptian
currency thus exchanged was to be sent back to Egypt and there sold
for its value in British money. Thereafter the board, through the
currency officer, was to buy or sell Palestine currency freely at Jeru
salem in exchange for British money in London, thus maintaining
parity with the pound sterling.
PANAMA
For its monetary unit Panama employs the balboa (plural, bal
boas), representing 1.672 grams of gold 0.900 fine (1.5048 milligrams
of fine gold) and being therefore practically the equivalent of $1
United States currency.*7 This unit was adopted bv the law of June
28, 1904.
Under the treaty of November 18, 1903, between the United States
and Panama, the balboa was named the unit of currency and United
States gold was made legal tender. Branches of United States banks
were established. To provide a medium of exchange within the coun
try, the currency of Panama was placed upon a gold-exchange basis,
secured by a fund deposited in New York City. No Government
paper money or bank notes have been issued. The coinage was
based upon a limited circulation of silver, the unit of which was the
half-balboa, commonly called the peso, containing 25 grams of silver
0.900 fine, and equivalent to $0.50; the peso is divided into 100 cen
tesimos, and the other subsidiary metallic currency of silver and
nickel-copper is in centesimo denominations.
When the price of silver advanced, from 1916 through 1920, the
silver coins of Panama gradually disappeared and after the fall in
the price of silver few of these coins returned to circulation. At
present, business in Panama is conducted on practically a dollar basis,
with United States currency almost the only medium in general use.
PARAGUAY
The monetary unit of Paraguay is the paper peso (plural, pesos)
of 100 centavos, which formerly had a theoretical par value equal to
that of the Argentine peso, or $0.9648 United States currency. (See
Argentina, p. 3.) By measures taken in March and September,
1923, the Paraguayan currency was definitely stabilized with relation
r While the balboa is nominally equivalent to the United States dollar, the legal gold content thereof is
exactly equal to that of the Nicaraguan cordoba, or slightly in excess of the United States dollar’s gold
coutent.
FOREIGN CURRENCY AND EXCHANGE
129
to Argentine currency. The ratio established was 18.75 Paraguayan
paper pesos to 1 Argentine paper peso or 42.61 Paraguayan paper
pesos to 1 Argentine gold peso.
The present circulation consists of Paraguayan paper currency and
subsidiary nickel coins. However, the Argentine gold peso has
served for many years as the money of account in connection with
the foreign trade and larger financial transactions of Paraguay.
ARGENTINE AND PARAGUAYAN CURRENCIES INTERLOCKED
The Paraguayan paper peso (symbol c/l=curso legal),28 the unit
employed in domestic transactions, experienced a gradual depreciation
with respect to the gold peso from 1893 until about 1902, when its
fluctuations increased and its value began to decline more rapidly.
In 1904 the paper peso was worth roughly one-tenth of the gold peso,
or about $0.10 United States currency. During the years following,
owing to larger issues of unsecured Government paper money, the
value of the paper peso showed a still further decline, being worth
only about $0.02 United States currency at the beginning of 1923,
when definite steps were taken toward the stabilization of the paper
peso. By the law of March, 1923, it was provided that the Para
guayan paper peso was to be convertible into the Argentine paper
peso at the ratio of 18.75 to 1, and that the Argentine paper peso was
to be convertible into the Argentine gold peso at the ratio of 0.44.
By the law of October, 1923, the Exchange Office (Oficina de
Cambios)—created originally in 1916—was officially made responsible
for the maintenance of the established ratio. It was to receive
Paraguayan paper for Argentine paper at 18.75 to 1, and to perform
the reverse operation at the ratio of 18.73 to 1. It might issue an
unlimited amount of Paraguayan paper currency in return for the
deposit of Argentine money, and such Paraguayan currency as was
turned in for Argentine money was to be retired from circulation.
The Paraguayan paper currency which now circulates, and which
supplies the entire needs of the country (since practically no coin is
in use), consists of the old fiduciary Government issues still outstand
ing and issues of the Exchange Office against deposits of Argentine
currency.
The statement of the Exchange Office for March 31, 1926, showed
that the Argentine funds held as part guaranty of the Paraguayan
circulation amounted to 3,632,000 Argentine paper pesos and 819,000
gold pesos. The guaranty was 45.3 per cent. The Paraguayan
paper circulation was 205,363,000 pesos, of which 31,852,000 pesos
had been issued by the Exchange Office. On October 15, 1928, the
total paper circulation was 211,905,000 pesos, of which 45,553,000
pesos had been issued against Argentine money; the reserve of the
Exchange Office was 51.27 per cent.
BASIS OF STATISTICS
The average exchange rates given in Table 79 are for the Para
guayan paper peso; for exchange rates of the gold peso see Argentina,
page 5.
* In its official foreign-trade statistics Paraguay uses the abbreviation o/s (oro scllado {coined gold]) with
the dollar mark in stating the gold value of commodities; illustration, $1,000 o/s.
130
FOREIGN CURRENCY AND EXCHANGE
T able 79.— Y early A verage E xchange R ates
P eso
Year
Average
rate
Y ear
of the
P araguayan P aper
Average
rate
Year
1900............................... .. $0.1178 1910............................. $0.0675 1920_______________
1901.................................. . 1127 1911................................ .0734 1921....................... ........
1902.................................. . 1036 1912................................ .0603 1922................................
1903...
.0972 1913...........................
.0605 1923 .
1904...1..... ........ ............ .0867 1914..............................
.0482 1924__
1905
.0910 1915 .
. 0249 1925
1906................................. .0895 1916..............................
.0299 1926 ...
.0269 1927..............................
1907................................. . 0832 1917..............................
1908.................................. .0637 1918................................ . 0361 1928.............................
. 0523 1929................................
1909.................... ......... .0601 1919.............. ...........
Average
rate
$0.0359
.0275
.0230
.0184
.0183
.0214
. 0216
.0226
. 0226
.0223
PERSIA
Persia’s monetary system is based on the silver kran, which weighs
about 4.603 grams and is 0.900 fine. There are 20 shahis in a kran,
and 10 krans in a toman. The value of the kran in foreign exchange
moves with the price of silver.
Gold coins are the new 1, 2, and 5 pahlavi pieces and the old %, 1,
and 2 toman pieces. These coins, however, are not in circulation as
current money, owing to their constantly changing value in terms of
the silver kran. The 1-pahlavi piece represents 2.0833 grams of gold
0.900 fine and is equal to 10 krans. While a silver toman is equivalent
to 10 krans, the same ratio does not apply to a gold toman; ordinarily
gold coins are worth about twice as much as silver coins of corre
sponding face value. Silver coins are of 1, 2, and 5 kran denomina
tions; there are also 10-shahi (% kran), 5-shahi (K kran), and 3-shahi
silver pieces and nickel coins of 1 and 2 shahis.
In addition to the metallic currency, the notes of the sole bank of
issue, the Imperial Bank of Persia (incorporated by royal charter
September 2, 1889), go to make up the circulation. Denominations
are 1, 2, 5, 10, 20, 50, and 100 tomans. Notes outstanding on March
21, 1929, amounted to 155,000,000 krans. The bank gave up the
right of note issue May 13, 1930.
The average exchange rates as given in Table 80 are computed from
the valuations in French francs found in Le Tableau Général de
Commerce de la Perse. The rates are for fiscal years.
T able 80.— Y early A verage E xchange R ates
of the
P ersian K ran
g e Y e a r e n d in g M a rc h 21— A v e ra g e Y e a r e n d in g M a rc h 21 — A v e ra g e
Y e a r e n d in g M a rc h 21— A vrae ra
te
ra te j
ra te
1907............................................
1908......................
1909................... .. ................
1910.............
1911_____ . .
1912.............................................
1913____ .
1914................................. ...........
$0.0893
.0970
."."97
. 0881
.0888
.0879
.0873
.0870
1915..........................................
1916.............. .........................
1917..........................................
1 9 1 8 .....................................
1919. . .................................
1920..........................................
1921.......... ............................
1922.........................................
PERU
$0.0779 1923..........................................
.0768 1924.........................................
. 1309 1925..........................................
.1549 1 1926 ..
. 1633 1927.........................................
. 1395 1928.......................................
.1048 1 9 2 9 ...
.0750
$0. 0755
.0918
. 1048
. 1101
.0976
.0980
. 1007
Until March 27, 1930, Peru’s monetary unit was the Peruvian libra
(plural, libras) of 10 soles; the sol being divided into 100 centavos.
The Peruvian libra—commonly called “ pound”—represents 7.9881
grams of gold 0.916% line (7.3224 grams of fine gold) and is therefore the
FOREIGN CURRENCY AND EXCHANGE
131
exact equivalent of the pound sterling; its par value is $4.8665 United
States currency. The Peruvian pound is abbreviated Lp. (also
written £p.). Since de facto stabilization, which became effective in
April, 1928, exchange has been fairly steady at about $4. On March
21, 1930, the sol (par value, $0.40 United States currency) replaced
the libra as Peru’s official unit of currency. Effective February 10,
1930, the export of gold is free.
The circulating medium consists of the notes of the Banco de
Keserva del Peru, cheques circulares, and subsidiary silver (moneda
feble) and nickel coins of sol and centavo denominations. There is
a fairly large stock of Peruvian gold coins in the country, but this
gold is held by the Banco de Reserva and other banks and does not
circulate. The legal minimum reserve requirement of the Reserve
Bank of Peru is 50 per cent gold and foreign exchange against out
standing notes and other demand liabilities.
"CHEQUES CIRCULARES” A WAR-TIME EXPEDIENT
On January 10, 1898, a decree was issued, under authority of the
President of the Republic, making effective,the law of December 29,
1897, which established a gold currency. By the act of December 14,
1901, gold became the sole standard, and remained the sole standard
until the first issue of the “ cheques circulares” under laws passed in
August and October, 1914.
Prior to the outbreak of the World War the only money in circu
lation was gold and silver coin. The result of the crisis and panic of
1914 was the practical disappearance from circulation of the gold then
in the hands of the public. The necessity of issuing paper in some
form resulted in the emission of bank notes secured by the reserves of
gold still held by the banks, supplemented by securities and commer
cial paper. A commission of bankers and business men, called the
Junta de Vigilancia, was appointed to administer the new system.
The Junta de Vigilancia operated with entire success for eight years,
until it was superseded by the Banco de Reserva del Peru.
The original issue of “ cheques circulares,” as these new notes were
called, was Lp. 2,500,000 (of which amount Lp. 500,000 represented
a loan by the banks to the Government), which sufficed until 1917,
when there was a shortage of silver coins owing to the increased needs
of business and to the rising value of silver, which made its exportation
profitable. At that time it was necessary to issue a certain amount of
cheques circulares of the denominations of 50 and 5 centavos, secured
in full by gold.
ADDITIONAL "CHEQUE” EMISSION STEADIES EXCHANGE
When the United States entered the war and placed an embargo on
gold exports, monetary equilibrium in Peru was again disturbed.
Foreign bills of exchange (representing the heavy exports of the time)
had to be sold at increasing discounts in Peruvian money. The
exchange value of the Peruvian pound for sight drafts on New York
advanced to as high a point as $5.65 in June, 1918.
This situation was met by the passage of a law in August, 1918,
which permitted the issue in Peru (to a maximum of Lp. 3,000,000)
of “cheques circulares” based on 100 per cent gold deposits in the
Federal Reserve Bank of New York or other approved banks in New
York or London. This measure brought the exchange value of the
Peruvian pound back to the rate (about $5.04) assigned by the law
132
FOREIGN CURRENCY AND EXCHANGE
to cover banking commissions and the estimated expense of importing
gold. The arrangement had such a beneficial effect that it was ampli
fied at the end of 1918 by a law which permitted the Junta de Vigi
lancia to issue, in return for gold, an unlimited amount of cheques
circulares. During 1919 and 1920 additional cheques circulares to a
total of Lp. 2,000,000 were issued.
Under the influence of lower export prices, reduced volume of
exports, heavy imports, and a general derangement of the balance of
financial transactions caused by extraordinary world conditions, a
period of exchange depression set in about September, 1920, and since
that time the exchange value of the Peruvian pound has remained
below par in spite of the fact that the gold reserve held by the Reserve
Bank of Peru has been above the legal limit.
RESERVE BANK REPLACES JUNTA DE VIGILANCIA
An important change was made in Peru’s currency system in 1922,
when the Junta de Vigilancia was abolished and its functions were
taken over by the new Reserve Bank of Peru (Banco de Reserva del
Peru). The Reserve Bank is a semiofficial institution; it has the
sole right of note issue,' based on stringent restrictions regarding
reserves of gold, commercial paper, and securities held against its
notes. It is to substitute gradually its notes for outstanding cheques
circulares (amounting to Lp. 7,222,000 when the junta was dissolved),
the latter to be destroyed as soon as full redemption in gold is insti
tuted by the bank. The reserves of the Junta de Vigilancia are now
held by the bank.
The bank is gradually retiring the former cheques circulares and
increasing its own note circulation. In December, 1929, the note
circulation of the bank amounted to Lp. 6,523,000 and the gold reserve
(against outstanding notes) to Lp. 3,836,000.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 81 and
82 is: 1900-1901, Lima on London (pence converted at $0.02028);
1902-1925, 3 days’ sight drafts, Lima on New York; 1926-1929,
cable transfers, Now York on Lima. The rates for 1900 and 1901 are
computed from mid-points between monthly high and low rates;
from 1902 to 1912, the rates are mid-points between yearly high
and low rates (quoted in the Statistical Abstract of Peru, 1924);
from 1913 to 1925, the rates are computed from monthly average
rates; from 1926 to 1929, the averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are com
puted from monthly averages.
T able 81.— Y early A verage E xchange R ates
(P ound )
Year
1900 ..............................
1901................................
1902 ..
1903................................
1904................................
1905................................
1900................................
1907................................
1908................................
1909................................
Average
rate
$4.9750
4. 9430
4. 8200
4. 8550
4.8450
4. 8450
4.9050
4. 8450
4.8000
4.7800
Year
Í 1910...............................
¡ 1911................................
1912 ...
; 1913................................
1914................................
! 1915................................
I 1916................................
! 1917................................
1 1918................................
j 1919................................
Average
rate
$4.8500
4.8550
4.8100
4. 7700
4. 7200
4.2300
4. 8200
4.9900
5. 2750
4. 9200
of the
P eruvian L ibra
Average
rate
1920 ..................
$4.5900
1921.....................
3.6000
1922 ...
3.8600
1923................................ 4. 1100
1924 ...
4.0500
1925.........................
4. 0210
1923............................
3. 7410
1927 ...
3. 7377
1928..............
3.9705
1929......................
3.9998
Year
133
FOREIGN CURRENCY AND EXCHANGE
T a b l e 8 2 .— Q u a r t e r l y
and M onthly A verage E xchange
P e r u v ia n L ib r a ( P o u n d )
Period
1914
First quarter...................................... .
Second quarter........................ . ............
Third quarter........................................
Fourth quarter............................. ........
January..................................................
February.......................... ..................
March....................................................
April.......................................................
M ay............... .......................................
June............................ -.........................
July......................................... ..............
August.............................. ....................
September............................................
October________________________
November...........................................
December..............................................
Period
1915
1916
1917
1918
R ates
1919
of the
1920
$4. 77 $4. 33 $4. 62 $4. 92 $5. 36 $5.04 $4. 71
4. 77 4 2ti 4.82 4.93 5 53 5.04 4. 75
4. 77 4. 18 4. 91 4. 97 5. 17 4.85 4. 74
4.57 4. 17 4. 91 5. 13 5. 04 4. 74 4. 21
4. 77 4. 36 4.50 4. 92 5.28 5.04 4. 74
4. 77 4. 33 4. 68 4. 92 5. 43 5.04 4. 70
4. 77 4. 30 4.68 4.92 5. 38 5.04 4 69
4 77 4. 30 4.71 4.92 5. 39 5.01 4. 74
4. 77 4.28 4 80 4. 92 5.54 5. 01 4. 75
4. 77 4.20 4.94 4. 94 5. 65 5.04 4.77
4. 77 4. 21 4 91 4.94 5.37 4. 92 4.81
i 4. 77 4. 18 4.91 4. 94 5. 10 4.83 4. 82
i 4. 77 4. 14 4. 92 5. 02 5.05 4. 80 4. 58
»4. 75 4. 16 4.90 5. 10 5.04 4.80 4.39
4. 56 4. 15 4.91 5. 12 5.04 4. 78 4. 11
4. 40 4. 19 4. 92 5.17 5.04 4.63 4. 12
1922
1923
1924
1925
1926
1927
1928
1921
$3.94
3. 65
3. 33
3 50
4. 05
3.91
3. 86
3.54
3.80
3 60
3. 42
3. 21
3. 36
3. 43
3.51
3 55
1929
First quarter.......................................... $3. 52 $4. 13 $3. 97 $4. 130 $3. 81139 $3. 6469 $3. 9053 $3 9992
Second quarter...................................... 3. 77 4. 22 4. 0:5 4. 102 3. 7184 3. 6746 3. 9884 4. (XXK)
Third quarter........................................ 4.03 4.09 4.00 3. 965 3. 8296 3. 7937 3. 9887 4. (XXX)
Fourth quarter..................................
4. 07 4. 02 4. 11 3. 887 3. (.031 3. 8339 3. 9991 4.0000
January.................................................. 3. 55 4.06 3. 97 4.0C0 3. 8912 3.6112 3. 9034 4. (XXX)
February............................................... 3. 57 4. 08 3. 99 4. 170 3. 8459 3. (*(‘36 3. 9016 3. 99V7
March.................................................... 3. 44 4. 26 3. 90 4. 1(0 3. 8547 3. 6659 3. 9109 4. (XXX)
April................ .............. ............
3.57 4. 23 4.01 4. 100 3. 7820 3. ( 331 3. 9776 4.(XXX)
May........................................ .............
3. 73 4.22 4. 11 4. 100 3. 6890 3. »464 3 9927 4. (XXX)
June....................................................... 4. 02 4. 21 4. 07 4. 105 3. 68-12 3. 7442 3. 9950 4.0000
Ju ly ........................................................ 4.05 4. 12 4. 05 4. 040 3. 7659 3. 7460 4. 0048 4. (XXX)
August......................................... ......... A 05 4. 06 4. 09 3. 915 3. 8316 3. 7496 3. 9800 4. (XXX)
September............................ .............. : 8 4. 08 4.05 3. 940 3. 8912 3. 8856 3 9812 4. (XXX)
October....... .......................................... 3. 94 4.04 4. 08 3. 865 3. ('422 3. 8416 3. 9901 4. (XXX)
November.................................... ........ 4. 12 4. 00 4. 12 3. 940 3. 5939 3 7» 15 4. 0030 4. (XXX)
December.............................................. 4. 10 4.01 4. 13 3. 855 3. 5733 3. 8985 4. 0040 4. (XXX)
1 Nominal rates.
PHILIPPINE ISLANDS
In the Philippine Islands the monetary unit is the new peso (plural,
pesos) of 100 centavos, containing 20 grams of silver 0.800 fine and
equivalent to $0.50 United States currency. The Philippines are
on the gold-exchange standard under the gold standard fund act of
June 13, 1922.
The circulating media consist of silver pesos and subsidiary
coins of silver, nickel, and copper in centavo denominations; and
notes of the Bank of the Philippine Islands, of the Philippine National
Bank, and Treasury certificates. United States money also circu
lates freely and is legal tender.
When the United States took possession of the islands under the
treaty of peace between the United States and Spain of April 11, 1899,
the Mexican dollar was the chief current coin; however, its exchange
value fluctuated considerably. In 1900 an order was issued estab
lishing the ratio of 2 Mexican dollars to 1 United States dollar; this
arrangement not proving satisfactory, Congress passed a law, effective
in June, 1904, establishing as the monetary unit a Philippine coin,
the peso (symbol, i*), of the value of $0.50 United States currency,
to be guaranteed by gold.
134
FOREIGN CURRENCY AND EXCHANGE
PHILIPPINE NATIONAL-BANK NOTES
Before American occupation, the only authorized note circulation
consisted of the issues of the Banco Español Filipino, now the Bank
of the Philippine Islands. This hank still retains the right of note
issue, protected by a reserve of 25 per cent. The present circulation
is about 9,000,000 pesos.
The Philippine National Bank was established, under special charter
granted by the Philippine Legislature, on May 2,1916, with an author
ized capital of $10,000,000, of which the Government subscribed about
one-half. The bank was authorized to issue notes to an amount not
exceeding 60 per cent of its capital and surplus, plus an amount not
exceeding 75 per cent of the amount of specified bills held by it. A
reserve of not less than 33% per cent of the outstanding notes must
be held in lawful money of the Philippine Islands. Notes may like
wise be issued against gold coin of the United States to the full value
thereof, provided such gold is not otherwise pledged.
Upon the reorganization of the bank in 1924, the Government
purchased the remaining shares, reduced the capital stock to $5,000,000, and guaranteed the final redemption and payment of the bank’s
circulating notes, the reserve for which had been dissipated; and it
advanced, from the proceeds of bonds, approximately $8,000,000 for
the purpose of rehabilitating that reserve.
TREASURY-CERTIFICATE FUND
Treasury certificates, issued by the Insular Government, are sup
ported by the treasury-certificate fund, which must be maintained
at 100 per cent of the treasury-certificate issue. Gold coin of the
United States may be substituted for silver pesos in this fund if neces
sary to release silver coins for circulation, but only pending the pur
chase of silver bullion. Under certain conditions, currency of the
United States deposited in Manila or with designated Federal reserve
banks may be substituted.
On September 21, 1929, bank notes in circulation totaled 20,509,000
pesos; treasury certificates, 97,533,000 pesos; and Philippine coins,
21,738,000 pesos. (Insular Auditor’s Report.)
BOND ISSUE TO RESTORE GOLD-STANDARD FUND
Exchange has been fairly stable since 1903 except for the critical
years 1920 and 1921. In 1918 the currency system was modified by
merging the gold-standard fund with the treasury-certificate reserve.
A large part of the gold-standard fund was removed from the author
ized depositories in the United States and deposited with the Philip
pine National Bank. The fund was diverted to commercial uses,
and by 1920 it had largely disappeared.
The exchange value of the peso fell off steadily throughout 1920,
and in April, 1921, it was at 16 per cent discount. Only the general
confidence in ultimate redemption bv the United States prevented a
further decline. To restore the gold-standard fund following this
debacle, the United States Secretary of War was authorized to issue
for the Philippine Government additional bonds to the amount of
$23,500,000.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Table 83 is:
1900-1917, banks’ selling rate on New York in Manila; 1918-1924,
cable transfers, New York on Manila; 1925-1929, demand rates,
FOREIGN CURRENCY AND EXCHANGE
135
New York on Manila. The rates from 1900 to 1917 were secured
from the Bureau of Insular Affairs; from 1918 to 1929, the rates are
as quoted in the Annalist.
It is suggested that, for ordinary conversions, the par value be used
except for the years 1920 and 1921.
T a b l e 8 3 .— Y e a r l y A v e r a g e E x c h a n g e R
Year
1900 .......................
1901
1902 _
1903 ............
1904 ...
1905
1900
1907 ...
1908.........................
1909
Average
rate
$0. 4944
. 4944
. 4944
.4944
.4944
.4944
.4944
. 4944
. 4944
ates of th e
P h il ip p in e P eso
Year
Average
rate
Year
1910.............................
1911................................
1912................................
1913.......................: ___
1914...............................
1915
1916................................
1917................................
1918................................
1919................................
$0.4944
.4944
.4944
.4944
.4944
.4944
.4944
.4944
.5000
.4957
1920..........................
1921...............................
1922................................
1923................................
1924.............................
1925
1920...............................
1927...............................
1928................................
1929................................
Average
rate
$0. 4775
.4775
.5050
. 5000
.4987
.4981
. 4903
.4975
. 4956
.5010
N ote.—Rates from 1900 to 1917 are more or less nominal.
POLAND
The new Republic of Poland has adopted as its monetary unit the
zloty (plural, zlote) of 100 grosze, stabilized under the presidential
decree of October 13, 1927, effective on October 19, 1927. In accord
ance with the stabilization plan, the monetary system of Poland is
based on gold. Coins are to be minted in the proportion of 5,924.44
zlote to 1 kilogram of fine gold, which corresponds to 8.9141 zlote to
the United States dollar. The new stabilized zloty therefore repre
sents 187.546 milligrams of gold 0.900 fine (108.792 milligrams of
fine gold) and is equivalent to about $0.1122 United States currency.
Coins provided for under the stabilization plan are gold pieces of
25, 50, and 100 zlote, silver pieces of 2 and 5 zlote, and subsidiary
coins of nickel and bronze in zloty and groszy denominations.
Apart from the metallic currency, the principal circulating medium
consists of the notes of the Bank of Poland (Bank Polski), the sole
bank of issue, which are unlimited legal tender. At the end of Decem
ber, 1929, outstanding notes of the Bank Polski totaled 1,340,263,000
zlote; gold at home, 520,905,000 zlote; and gold abroad, 179,553,000
zlote.
MIXED CURRENCY OF WAR PERlOu
The Republic of Poland, which came into existence at the time of
the armistice on November 11, 1918, is composed of former parts of
Germany, Austria-Hungary, and Russia, territory which in the main
had constituted the Poland partitioned about 150 years ago by Russia,
Austria, and Prussia.
Upon the outbreak of the war of 1914 Germany invaded Russian
or Congress Poland, and in 1916 introduced a new currency into this
section, the German-Polish mark of 100 pfennige. This was accom
plished through the establishment of a Government bank of issue,
the Polska Ivrajowa Kasa Pozyczkowa, or Polish State Loan Bank.
Prior to this time the currency in Congress Poland had been the
Russian ruble, which was legal tender. The Polish population
received the marks but preferred the Russian rubles with which they
were familiar, and disposed of the marks as soon as possible. The
136
FOREIGN CURRENCY AND EXCHANGE
ruble circulation available was limited, and, since the demand for
rubles was strong, marks were locally at a discount. The German
governor general of Warsaw in April, 1917, issued a decree demonetiz
ing the ruble and forbidding the quoting of prices, the transacting of
business, or the keeping of accounts in terms of rubles. Polish marks
and German marks were decreed the only legal money.
POST-WAR MONETARY CONFUSION
After the armistice, when Poland became independent, the cur
rency was much confused. Posen, or German Poland, had the
German mark; Galicia, or Austrian Poland, had the krone of the
Austro-Hungarian Bank; Congress (or Russian) Poland had the
German-Polish mark and in the east, beyond the German-occupied
area, the Russian ruble.
The new Polish Government took over the bank established by
the Germans and accepted the bank’s note circulation as the tempo
rary currency of the country pending the issue of a national currency.
According to the treaty of St. Germain, Poland was to convert the
kronen of the Austro-Hungarian Bank circulating in Poland into
national currency; this was undertaken at the rate of 70 marks to
100 kronen. The German marks in Poland were deprived of their
legal-tender quality in the latter part of 1919, but few were in circu
lation at that time, so that the new Polish mark and the former
German-Polish mark were the sole monetary units.
PERIOD OF INFLATION AND DEPRECIATION
The history of Polish currency from the armistice until the spring
of 1924 is chiefly an account of continued paper-money inflation and
accompanying depreciation in the value of the mark, both internally
and externally. The note circulation of the Polish State Loan Bank
at the end of 1918 was 1,023,800,000 marks; on March 31, 1924,
596,244,000,000,000 marks. This inflation took place largely as a
result of advances to the Government by the bank, mainly for bud
getary deficits, and was accompanied by a steady decline in exchange.
The Polish Government endeavored by various means to stem the
depreciation of the mark, but as long as inflation continued these
efforts were unsuccessful. An office was established by the Govern
ment to control exchange rates. This expedient failed of success,
since the rates established were too low to balance demand and
supply and requests for foreign bills frequently had to be refused.
As a result, the so-called “ Black Exchange” came into existence;
this was an illegal market where foreign currencies were dealt in.
The exchange rates prevailing on the “ Black Exchange” were always
in excess of those of the Government office.
ZLOTY ADOPTED AS UNIT
In 1919 Poland adopted the zloty as the unit (“ zloto” meaning
gold in Polish), its value to be equal to that of the gold franc ($0,193).
However, at this time Poland did not attempt any real currency re
form involving the introduction of the new unit into circulation. The
zloty was to be, for the time being, only a theoretical unit; the inten
tion was later to create a State bank which should issue currency in
zlote. Until 1924 the zloty was a theoretical unit used for purposes
of computation to avoid the difficulties resulting from the fluctua
FOREIGN CURRENCY AND EXCHANGE
137
tions of the mark. In 1923 the Government issued bonds, half of
each bond being in terms of zlote and the other half in terms of Polish
marks. Marks were received in payment for the bonds at the rate of
1 zlote for 1,400 marks. In June, 1923, the Government began con
verting its statistics into zlote retroactively, using a rate for each
month based upon the price of rye and upon exchange rates for Swiss
francs.
In the spring of 1924, after the organization of the Bank of Poland
(Bank Polski), which took over the former Polish State Loan Bank,
zloty currency was put into circulation. According to the monetary
decree, the zloty was equivalent to the gold franc (SO.193); it was
divided into 100 grosze. The conversion of marks into zlote began
in the spring of 1924 at the ratio of 1,800,000 to 1.
The Bank of Poland was to enjoy a monopoly of note issue for 30
years; its notes were full legal tender. Although the notes were to be
convertible into gold, the date on which such convertibility was to
begin was to be determined later. The minimum reserve against its
outstanding notes was to be 30 per cent.
EXCHANGE UNSTEADY IN 1925 AND 1926
During the latter part of 1925, which was a year of poor crops and
financial disturbance, the exchange value of the zloty declined rapidly
and the foreign exchange reserve of the Bank Polski fell from 259,000,000 zlote in March, 1925, to 49,000,000 zlote by March, 1926.
During this period the bank withdrew from circulation a considerable
amount of the notes presented for redemption, reducing the note cir
culation from 563,000,000 zlote to 389,000,000 zlote. During the
same period, however, the Government increased its fiduciary issues
from 192,000,000 to 460,000,000 zlote. The decline in the exchange
value of the zloty continued until May, 1926, when it reached its low
point of $0.0903 United States currency.
In the summer of 1926 the foreign-exchange reserve began once
more to climb, and at the end of September, 1927, amounted to 243,000,000 zlote; on the same date the gold reserve of the bank was
182,000,000 zlote. At the same time the exchange value of the zloty
began to appreciate, reaching about $0.11 in August of that year—a
level which it has since maintained with slight fluctuations.
ZLOTY STABILIZED IN 1927
On October 19, 1927, with the aid of foreign capital the stabiliza
tion of the zloty at a level which had already been attained through
national efforts and maintained for a whole year preceding the reform
was assured. Legal stabilization of the zlote was made possible by
the 7 per cent 20-year loan floated by the Treasury for $62,000,000
and £2,000,000, face value, at an issue price of 92. At the same time,
under the initiative of the New York Federal Reserve Bank and of
the Bank of France, the Bank of Poland obtained a rediscount credit
of $20,000,000 from 14 banks of issue, which thus participated in the
work of monetary reform in Poland and indicated their confidence in
the regular execution of the stabilization plan. This credit was sub
sequently extended for another year, ending October 13, 1929.
The entire yield of the stabilization loan was turned over in foreign
exchange to the Bank of Poland and placed to a special account,
1942°—30----10
138
FOREIGN CURRENCY AND EXCHANGE
while the equivalent thereof, amounting to 540,000,000 zlote, was
allocated as follows: 75,000,000 zlote to increase the capital of the
Bank of Poland; 140,000,000 zlote for redemption by the bank of
one-half the State note issue; 90.000,000 zlote for conversion into
silver money of the other half oi the State note issue; 25,000,000
zlote for redemption of Treasury bonds; 75,000,000 zlote to be Treas
ury reserves; and 135,000,000 zlote to aid Government enterprises
and agriculture.
STATUTES OF BANK OF BOLAND REVISED
The more important changes in the statutes of the Bank of Poland
voted by the extraordinary meeting of shareholders on November 5,
1927, are:
(1) Under article 47 the bank will redeem its notes at its discretion
in gold coin or in bills of foreign exchange. Redemption will take
place only at the head office in Warsaw and for amounts in excess of
20,000 zlote.
(2) Article 51 provides that bank notes in circulation and demand
obligations, including deposits, of the bank mu be covered in the
minimum proportion of 40 per cent. The gold reserve in coin and
bullion must represent at least three-fourths of the minimum cover.
Only such foreign-exchange bills as have been accepted or indorsed
by foreign banks of highest rank may serve as cover.
In carrying out the stabilization plan adopted by the Polish Gov
ernment and the provision for the election of a foreign member to the
council of the Bank of Poland, a new article (article 26A) was intro
duced into the statutes of the bank. Under this article Charles S.
Dewey, former Assistant Secretary of the Treasury at Washington,
was appointed on November 5, 1927, to the board of directors of the
bank and on November 22 he assumed his functions as a member of
the board and as Financial Adviser to the Government within the
limits provided by the stabilization plan.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 84 and
85 is: July, 1919, sight drafts. New York on Warsaw; August, 1919,
to December, 1929, noon buying rates for cable transfers, New York
on Warsaw. Average rates from July, 1919, to June 1921, are mid
points between monthly high and low rates; from July, 1921, to
December, 1929, averages are as computed from daily rates by the
Federal Reserve Board. Quarterly averages are computed from
monthly averages.
T a b l e 8 4 .— Y e a r l y A v e r a g e E x c h a n g e R a t e s
Z loty 1
Year
Average
rate
1919 *............................ $0.03773
1920............................... . 0030«
1921..............................
.000792
1923.............................. .000188
Year
of the
Average
rate
1923 ......................... $.0000138 1927
1924............................ *. 1923
1928 ...
. 1774
1925
1929
192«............................ . 1118
P o l is h M
Year
ark and
Average
rate
*$0 . 1129
. 1121
.1119
1 Mark, 1919-1923; zloty, 1924-1929, except as stated in Note 3 below.
*July-Deeevnber.
* June-December, for the zloty. The average rate for the Polish mark, January- May, was $0.000000113
(that is, 11.3 cents per million marks).
* Zloty revalued in Octolier. (See text.)
139
FOREIGN CURRENCY AND EXCHANGE
T a b l e 8 5 .— Q u a r t e r l y
Period
and M on th ly A v era g e
P o l is h M a r k a n d Z l o t y
1919
1920
1921
E xchange R
1
ates of th e
1923
1922
1924 »
First quarter................................ o
$0.0068 $0. 00136 $0. 000283 $0.000031
$0. 000000113
Second quarter.............................
.0057 .00112 . 000249 .000019
«*23
.0051 .000420 .000149 .0000043
Third quarter................. ............. $0.(!)0546
. 19*
Fourth quarter............................. .0208
.0026 .000272 . 000072 . 000000616
. 1921
January.......................................... (0
.0070 .00145
.000327 . 000043
.000000116
.000286 . 000025
. 0068 . 00130
February........................................
. 000000109
. 000236 . 000024
March....................... .................... «
. (XXXXX1113
. 0067 .00132
.0060 .00130
. 000262 . 000023
. 000000114
April.............................................. (!)
. 0051 .00124
. 000249 . 000021
May................................................ <3
.000000113
.0059 .00082
.000237 .000013
June..................................... ......... (3
. 1929
.0061 . 000516 .000185 .000007
July................................................. .0688
.1925
.0563
. 00-17 .000489 . 000135 . 000004
August....................................... .
. 1923
.0045 . 000256 .000127 . 0000035
September..................................... .0388
. 1922
October.......................................... .0308
. 0037 .000212 . 000095 . 000001113
. 1922
November.....................................
.0188
.0026 .000290 . 000065 . 000000502
. 1921
December....................................... .0129
.0016 .000313 .000057 . 009000234
.1920
Period
First quarter..
Second quarter.
Third quarter.
Fourth quarter
January..
February.
March__
April___
May........
June........
July...........
August___
September.
October. .
November.
December
1925
1926
1927
1926
$0. 1918 $0. 1290 $0. 1134 $0. 1123
. 1007
. 1919
. 1137
. 1121
. 1821
. 1120
. 1063 .1123
. 1120 . 1121 .1120
. 1441
. 1918
1124
. 1287
. 1131
1123
. 1315
. 1134
. 1918
1123
. 1269
. 1137
. 1918
.1133
.1142
. 1918
1120
1121
. 0958
. 1919
. 1138
1121
. 1919
. 0930
. 1131
. 1908
1120
... 100T
ias«. .1125
. 1795
. 1122
1120
1120
. 175«
1097
.
1122
. 1121
. 166«
. 1109
1120
. 1121
1120
. 1574
.1123
. 1122
1119
. 1084
.1127
1929
$0. 1119
.1119
1120
. 1120
.
. 1119
. 1119
.1119
. 1119
.1119
. 1119
. 1119
.. 1120
1120
.1120
.1120
. 1120
* Mark, 1919-1923; zloty, 1924-1929, except as stated in Note 3.
* No quotation.
* Mark, January-May; zloty, June-Peeember.
4 Indeterm inable.
PORTUGAL
Theoretically Portugal’s monetary unit is the gold escudo (plural,
escudos) of 100 centavos, adopted by decree of the Provisional
Government of May 22, 1911. The escudo represents 1.80634 grams
of gold 0.900 fine (1.6257 grams of fine gold) and its par value is
$1.0805 United States currency. The same decree provided for gold
coins of 1, 2, 5, and 10 escudos, a 1-escudo silver piece (0.835 fine),
and subsidiary coins of silver, copper, nickel, and bronze in centavo
denominations.
The principal circulating medium, owing to the disappearance of
practically all gold and silver, consists of the notes of the Bank of
Portugal (Banco de Portugal), established in 1846. The pound ster
ling is legal tender for 4.50 gold escudos.
PA PER T H E ACTUAL CIRCULATING M ED IU M
Portugal adopted a single gold standard in 1855. The law provided
for gold coins of 1, 2, and 5 milreis. The present escudo is the equiva
lent of 1 milreis. (Reis is the plural of real; 1 milreis [written 1$000] =
1,000 reis; 1 con to = 1,000 milreis. Fractions of the milreis are written
0$500 or $500; fractions of the escudo, 0S50 or simply $50.)
140
FOREIGN CURRENCY AND EXCHANGE
Owing to the withdrawal from circulation of practically all gold and
silver, Portugal at the present time is actually on a paper basis. The
exchange value of the escudo, only slightly below par in 1906, has since
shown considerable fluctuation, with a downward trend after 1912;
it reached its low point in the summer of 1924, but from the beginning
of 1928 it has remained fairly steady at about $0,045. The note
circulation has increased from 87,000,000 escudos at the end of 1913 to
2,001,000,000 escudos in December, 1929; the gold reserve, during
the same period, has remained practically stationary at about 9,000,000
escudos.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 86 and
87 is: 1900-1921, Lisbon on London (sterling converted; see United
Kingdom, p. 174); 1922-1929, noon buying rates for cable transfers,
New York on Lisbon. Annual rates from 1900 to 1921 are computed
from monthly average rates; from 1922 to 1929 the averages are as
computed from daily rates by the Federal Reserve Board. Quarterly
averages are computed from monthly averages.
T a b l e 8 6 .— Y e a r l y A v e r a g e E x c h a n g e R a t e s
of th e
P o r t u g u e s e E scu d o
Year
Average j
rate
Year
Average
rate
Year
1900 ............................
1901 ............................
1902 ............................
$0.7595
.7(09
.8500 i
. 8f 91
' .8991
1. 0154
1.0 21
1.0483
. 9394
.9380
1910................................
1911................................
1912..................... .........
1913................................
1914................................
1915................................
1910..............................
1917................................
1918..............................
1919...............................
$0. 9943
. 9953
.9777
.9274
. 8665
. 7059
.6788
.6183
.6012
.5420
1920.......................
1921.......................
1922.......................
1923.........
1924................
1925................
1921....................
1927
..................
1928
.........
1929 ...
190 i
190-' .
T
able
8 7 .— Q u a r t e r l y
and
Period
1914
Average
rate
M onthly A verage E xchange R ates
P o r t u g u e s e E scu d o
1915
1916
1917
1918
1919
1920
$0. 1921
. 0975
. 0.67
. 04‘>5
.0338
.0504
.0512
.0503
.0447
.0417
of the
1921
First quarter.............................. $0. 9184 $0. 7175 $0.6909 $0. R193 $0. MfflO $0. 6843 $0.2541
Second quarter.......................... . 9280 .7369 .6860 . 6194 .(>050 . (>096 . 2132 $0.0972
. 1025
Third quarter............................ .8526 . 7027 . 6970 .6307 . 5943 . 4954 . 1800 . 1018
Fourth quarter.......................... .7649 .6707 .6426 .5984 .6260 .4018 . 1222 .08.8
January...................................... .9168 .7240 .6761 .6197 .5891 .6951 .2708 . 1052
February................................... . 9222 . 7028 .7118 . 6203 .5866 . 6898 . 2431 . 1009
March____ _________ _____ .9161 .7256 .(>848 . 6178 . 5643 . 6681 . 2485 .0856
April........................................... . 9219 .7268 .6823 .6156 .5770 .6436 . 2457 .0900
M ay............................................ . 9299 .7441 .6841 .6191 .6191 .5981 . 2004 .0994
June....................... ...... ............. .9323 .7397 .6916 . 6234 .6188 .5871 . 1934 .1182
July............................................. .9253 .7208 .7002 .6351 . 6039 . 5443 . 1852 . 1210
August........................................ .8687 .6983 .7015 .6342 .5996 . 4806 . 1867 .0914
September................................. .7637 .6889 . 6894 . 6228 .5794 .4614 . 1682 . 0931
. 6702 .5965 .5893 . 4619 . 1466
October...................................... .8214 .6757
November.................................. .7757 .6601 .6367 . 5996 . 6243 . 4099 . 1181 .09(58
. 0827
December................................... .6975 .6762 .6209 .5990 .6643 .3335 . 1019 .0808
141
FOREIGN CURRENCY AND EXCHANGE
T a b l e 8 7 .— Q u a r t e r l y a n d M o n t h l y A v e r a g e E x c h a n g e R a t e s
P o r t u g u e s e E s c u d o — Continued
Period
First quarter...
Second quarter.
Third quarter..
Fourth quarter.
January..
February
March...
April----May____
June.......
July.........
August__
September
October...
November.
December.
1928
of the
1929
$0.0786 $0.0443 $0.0316 $0.0491 $0. 0512 $0.0512 $0. 0465 $0.0443
.0777 . 0458 .0301 .0501 . 0514 .0509 .0429 .0447
.0619 .0420 .0298 .0514 .0513 .0496 .0450 .0448
.0480 .0378 .0441 .0511 .0511 .0495 .0446 .0450
.0766 .0460 .0318 .0488 .0512 .0512 .0493 .0443
.0749 .0436 .0316 .0491 .0512 .0512 .0476 .0441
.0843 .0434 .0313 .0493 .0513 .0512 .0426 . 0445
.0798 .0460 .0314 .0496 .0514 .0511 .0421 .0446
.0783 .0447 .0304 .0500 .0513 .0512 .0422 .0447
.0751 .0466 .0286 .0507 .0514 .0504 .0443 .0449
.0716 .0421 .0280 .0514 .0513 .0500 .0446 .0448
.0658 .0421 .0297 . 0513 .0513 .049o . 0453 .0447
.0483 .0417 . 0318 . 0514 .0513 .0493 .0450 .0448
.0488 .0400 .0393 .0509 .0511 .0495 .0450 . 0449
.0499 . 0379 .0451 .0511 .0511 .0494 .0447 .0451
.0452 .0356 . 04ô0 .0512 . 0512 .0490 .0441 .0451
PORTUGUESE AFRICA
ANGOLA AND PORTUGUESE GUINEA
The monetary unit of Angola and Portuguese Guinea (Portuguese
West Africa) is the escudo (plural, escudos) of 100 centavos, repre
senting 1.80634 grams of gold 0.900 fine (1.6257 milligrams of fine
gold), the par value of which is $1.0805 United States currency.
(See Portugal, just preceding, for exchange rates, etc.)
In Angola the bank of issue is the Banco de Angola, which super
seded the Banco Nacional Ultramarino on November 1, 1926.
There has recently been a movement to introduce a new currency
unit in Angola, to be called the angolar (plural, angolares), bearing
the relation of 80 angolares to 100 escudos. This movement, however,
has met with strong opposition on the part of the merchants, indus
trialists, and agriculturalists.
MOZAMBIQUE
In the Portuguese Province of Mozambique (Portuguese East
Africa) the monetary unit is the escudo of 100 centavos, the par value
of which is $1.0805 United States currency. (See Portugal, p. 140,
for exchange rates, etc.) The escudo currency has been in general
use since September 1, 1922, but at Lourengo Marques and Beira
libra esterlina notes issued by the local banks are still in use; these
notes, however, are to be withdrawn by 1936.
The Banco Nacional Ultramarino has the sole right of note issue;
these notes are the principal medium of circulation. Exchange has
recently been fairly steady at 100 escudos to the pound sterling.
RUMANIA
The leu (plural, lei) of 100 bani, the gold content of which was fixed
at 10 milligrams of gold 0.900 fine (9 milligrams of fine gold) by the
stabilization law of February 7, 1929, and the par value of which is
$0.00598 United States currency, is the monetary unit of Rumania.
The former unit was the leu of 322.58 milligrams of gold 0.900 fine
(290.322 milligrams of fine gold), the par value of which was $0.192948.
142
FOREIGN CURRENCY AND EXCHANGE
Stabilization of the leu was effected by means of an aggregate credit
of $25,000,000 granted by the Federal Reserve Bank of New York in
cooperation with the banks of issue of 13 other countries. The
agreement was to run for one year from February 7, 1929; it has now
been extended for another 12 months. In addition the Rumania
Government has negotiated a 30-year loan of $101,000,000 with an
international group of private banker’s. The proceeds, which are to
be deposited with the National Bank, are to be utilized for economic
development as well as for strengthening the position of the bank and
the Government in connection with the stabilization program.
The principal circulating medium consists of the notes of the
National Bank of Rumania (Banca Nationala), founded by private
capitalists in 1880. The Banca Nationala is the central bank of the
country; it serves as fiscal agent for the Government and has the
exclusive right of note issue. It is required to redeem its notes in
gold or gold exchange in minimum amounts of 100,000 lei. The bank
is also required to maintain against its notes and other demand liabili
ties a reserve of 35 per cent in gold or gold exchange, five-sevenths of
which must be gold. The gold may be either held in the vaults of
the bank or deposited abroad.
GOLD STANDARD MAINTAINED UNTIL WORLD WAR
In 1868 Rumania adopted the French monetary system. The leu
was a silver coin (5 grams 0.900 fine) and of the same value as the old
French franc ($0.1825) prior to 1868. Old Rumania did not mint
any great quantity of gold. As a result the gold reserves of the
National Bank and the gold circulating in the country consisted
mostly of French napoleons (20-franc pieces), Turkish pounds (par
value $4.40), and German 20-mark pieces. There were also some
British sovereigns.
Though not a member of the Latin Monetary Union,29Old Rumania
adopted all its regulations, and in harmony therewith minted silver
coins of K, 1, 2, and 5 lei. Silver was legal tender up to 50 lei, but
customs duties were payable only in gold.
In 1878, at the Congress of Berlin, Rumania adopted the gold
standard; the country, however, did not actually achieve the gold
standard until the early nineties. Gold, silver, nickel, and copper
coins were minted and put in circulation, but most of these, with the
exception of subsidiary coins, have now practically disappeared. The
larger fraction of the currency actually circulating in Old Rumania
before the war consisted of notes of the National Bank, which, in
general, were maintained at substantial parity with gold.
RETIREMENT OF FOREIGN CURRENCIES
Prior to the World War Rumania depended upon its cereal crop to
maintain a favorable trade balance, and, having such a balance from
1900 to 1914, the leu was-fairly steady at $0,193 United States cur
rency. There was no paper-money inflation up to that time.
As a matter of fact, inflation of currency was not resorted to in
Rumania so soon as in most of the other countries engaged in the
World War. During their occupation of Rumania the Germans—
through the Banca Generala (the Bucharest branch of the Deutsche
» Formation of the Latin Monetary Union is discussed under Belgium, p. 15.
FOREIGN CURRENCY AND EXCHANGE
143
Diskonto Gesellschaft at Berlin)—issued about 2,500,000,000 lei
which they proposed to secure by an adequate reserve at the Imperial
Bank in Berlin. The obligation of Germany to redeem this entire
issue, which, after the withdrawal of the Germans, was stamped by
the Rumanian Government and accepted at its face value throughout
the country, was imposed by the treaty of Versailles.
In addition, the Government of New Rumania had to deal with
an estimated total of 8,500,000,000 Austro-Hungarian kronen (ex
changed by the Rumanian Government at about 4,250,000,000 lei,
approximately the relative rates of the paper lei to paper kronen
at that time) and an estimated total of nearly 2,000,000,000 Russian
rubles (valued by the Russian Government at some 1,250,000,000
lei)—these being the currencies in circulation in the new territory
acquired by Rumania. Both Austria and Russia had greatly inflated
their currency during the war, and these notes circulating in Rumania
had lost much of their buying power. It was necessary to retire
these notes so that a uniform national currency might be attained;
this necessitated the issue of new notes.
NOTE CIRCULATION OF NATIONAL HANK
Before the end of 1018 the National Bank of Rumania had begun
to issue lei to provide for the absorption of these German-made lei,
kronen, and rubles. About 7,075,000,000 lei of the total National
Bank issue early in 1922 was originally put into circulation to retire
these foreign paper currencies. (The total note circulation at the
end of 1921 was about 13,750,000,000 lei.)
Actual gold, or its equivalent, held in reserve against this circula
tion was practically nil. On February 1, 1914, the official figures of
the National Bank show a note circulation of 400,000,000 lei, with a
reserve of 200,000,000 lei, of which 150,000,000 lei was gold coin or
bullion. On December 31, 1921, with a paper circulation of 13,750,000,000 lei the National Bank carried on its books a reserve of less
than 500,000,000 lei in gold. This so-called “gold reserve,” however,
diminishes greatly when it is seen that 80,000,000 lei of it was due
from the Imperial Bank of Berlin, while 315,000,000 lei was repre
sented by a deposit receipt for the Rumanian gold treasure sent to
Moscow, Russia, for safekeeping during the war and now officially
acknowledged in Rumania as “non-existent.”
The note circulation of the National Bank outstanding at the end
of December, 1929, was 21,150,000,000 lei; the gold reserve (in terms
of the stabilized currency) consisted of 5,266,000,000 lei within the
country and 3,919,000,000 lei abroad; foreign assets amounted to
6,745,000,000 lei.
FALL IN EXCHANGE BEFORE STABILIZATION
For nearly two years after the armistice the exchange value of the
leu held up more steadily than did the currencies of almost all of the
other middle and eastern European countries. By March, 1919, it
was about $0.11 United States currency, but fell to about $0.05 at the
end of the year. On November 5, 1921, it touched its lowest point
up to that time—being quoted at 206 to the United States dollar, or
about $0.00485. (In Slay, 1926, it dropped to 300, or $0.00325.)
Prior to actual stabilization in 1929, Rumanian Ministers of Finance
had made earnest but unsuccessful efforts to “ peg” the leu.
144
FOREIGN CURRENCY AND EXCHANGE
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 88 and
89 is: 1919-1929, noon buying rates for cable transfers, New York
on Bucharest. The averages are as computed from daily’- rates by the
Federal Reserve Board. Quarterly averages are computed from
monthly averages.
For conversion purposes, the par value ($0,193) may be used from
1900 to 1914, since during that period there were no great variations
from par. No average rates are available from 1915 to the latter
part of 1919.
T a b l e 88.— Y e a r l y A v e r a g e E x c h a n g e R a t e s o f t h e R u m a n ia n L e u
Year
1 car
! Average
rale !
1919 ....... .......................i$0. 05030
1920 ................ ......................01914
1921.................................. . 01252 !
1922................................. . 0C697 ;
Year
Average
rate
Average
rate
Year
j
1923................................ $0.00494 1927................................ $0.00604
1924................................ .00498 1928...........................
. 00613
1925................................ .00483 1929................................ . 00596
1926................................ .00462
1August-December.
T able
89.-— Q u a r t e r l y
and
Ì 1921
Period
M onthly A v era g e E x c h a n g e R a tes o f the
R u m a n ia n L e u
1922 j 1923
1924
1925
1926
1927
1928
1929
First quarter.........................-! ci $0.00774 $0. 00493 $0.00513 $0.00504 $0.00434 $0.00573 $0.00617 $0. 00599
. 00696 .00502 . 00480 .00465 . 00401 .00610 . 00620 . 00595
Second quarter.................... .. O
Third quarter...................... $0.01198 . 00690 .00483 . 00470 . 00496 . 0C479 . 0C614 .00612 . 00594
Fourth quarter................... - . 00745 .00626 .00496 .00531 .00467 .00535 .00618 .00604 .00597
. 00778! .00519 .00499 .00519 .00448 .00531 . 00618 .00601
January......... -....................
m
. 00795Ì .00477 . 0C518 . 00507 .00432 .00574 .00614 .00600
February............ .................
0)
. 00748) .00484 . 00522 .00487 .00423 .00613 .00618 . 0059fi
March................................. .-! (')
. ÜG733 . 00479 .00519 . 0045* .00403 .CC616 . 00627 . 005%
April.....................................
(')
.0C697 .00510 .00490 .00472 . 00371 . 0C618 . 00619 . 00595
May...................................... .. (')
. 00658j .00517 .00431 .00466 .00428 .00596 .00615 . 00594
June................-........ -.......... .. (>)
July................... ................. .. .01400 .00604 . 00518 .00432 .00488 .00400 . 00609 . 00614 . 00594
August................................. .. .01238 . 00811 .00468 .00460 .00512 .00467 .00616 .00611 . 00594
September...................... .. .. . 0C.957 . 006561 . 0046-4 .00518 .00489 .0051(1 .00618 . 00(510 . 00594
October .............................. .. . 00778 . 00626 .00469 . 00646 .00477 .005361 .00619 . 00(i07 . 00596
November............................ .. . 00657 . 0C642; . 005P3 . 0C539 . 00465 .00.549 . 0C616 . 00604 . 00598
December............................. .. . 00801 .00611 .00515 .0C508 .00461 .00521 .00619 .00600 .00597
~ j
I Not available
ST. PIERRE AND MIQUELON
In the French islands of St. Pierre and Miquelon, off the coast of
Newfoundland, the legal money is the French franc, recently stabilized
at $0.039179 United States currency. (See France, p. 73, for exchange
rates, etc.) United States and Canadian currency also circulates ]
freely. The principal bank is La Banque de St. Pierre et Miquelon
at St. Pierre.
EL SALVADOR
Theoretically the colon (plural, colones) of 100 centavos, adopted j
by the National Assembly on September 11, 1919, is the monetary !
unit of El Salvador. The colon represents 836 milligrams of gold
0.900 fine (752.4 milligrams of fine gold) and its par value is almost
exactly $0.50 United States currency.
FOREIGN CURRENCY AND EXCHANGE
145
Provision was made for the minting of gold pieces of 5,10, 20, and 40
colones, also subsidiary coins of silver and nickel in colon and centavo
denominations.
Apart from the metallic currency, the principal circulating medium
consists of the notes of the three banks of issue—Banco Salvadoreño,
Banco Occidental, and Banco Agricola Comercial.
During the period when El Salvador recognized the authority of
Spain, the chief coin was the Spanish silver peso, divided into 8 reales.
Along with the Spanish money, coins of various other countries, espe
cially of Latin America, were in circulation. In addition to silver
money, certain gold coins, such as the “ onza,” 30 equivalent to
about 16 silver pesos, circulated.
S IL V E R T H E S T A N D A R D U N T IL 1914
So far as can be ascertained, from the establishment of its independ
ence, in 1821, until 1883 El Salvador had no general monetary law.
In February of the latter year the silver peso (25 grams of silver
0.900 fine) was adopted as the monetary unit. At the same time
El Salvador discarded the system of 8 reales to the peso and adopted
the decimal system, whereby the peso was divided into 100 centavos
or 10 reales. The law also provided for gold coins, the gold peso to
weigh 1.6129 grams 0.900 fine. As regards foreign money, the law
declared that the foreign money circulating in the country, which
was the chief currency in use, should continue to be legal money. A
table of equivalents was adopted which listed the various foreign
coins and the values at which they were to be received as legal money.
Coins not mentioned in the table were to enjoy conventional circu
lation.
When the price of silver experienced its continued fall, El Salvador
followed the lead of other countries and attempted the introduction
of the gold standard. A law to this effect was passed in September,
1892, declaring the monetary unit to be the peso representing 1.612903
grams of gold 0.900 fine. The silver money was to remain unchanged,
the silver peso weighing 25 grams 0.900 fine. The banks were
authorized to issue notes redeemable in gold, either national gold or
foreign gold. In October of that year the name of the silver peso
was changed to “colon,” in honor of Christopher Columbus.
This effort to establish the gold standard was unsuccessful, and in
1894 all the laws dealing with the gold standard were repealed, and
the silver peso was left the unit as before. The silver standard con
tinued until 1914, when inconvertible paper money came into exist
ence and prevailed until the present gold standard was inaugurated
in 1919.
B A N K S O F IS S U E G R A N T E D M O R A T O R IU M
The first bank to issue notes was the Banco Internacional, founded
in 1880. A second bank was founded in 1885, the Banco Particular;
its name was changed to Banco Salvadoreño in 1892. In 1898 the
Banco Internacional was merged with the Banco Salvadoreño, which
still enjoys the right of note issue. Two other banks of issue exist
in Salvador at the present time—the Banco Occidental, founded in
1890, and the Banco Agricola Comercial, founded in 1895. A fourth
80 See fo o tn o te 17 o n p . 85.
14«
FOREIGN CURRENCY AND EXCHANGE
bank of issue, the Banco Nacional, founded more recently, became
involved in difficulties and failed in November, 1913.
When the World War began El Salvador, like most other countries
of the world, experienced a financial crisis. Merchants in the Republic
were asked by their European creditors to remit funds immediately,
and the demand for foreign drafts was so great that their price rose
sharply. With foreign-exchange rates high the exportation of silver
money began, and the banks were called upon to pay out large
quantities of silver coin. To relieve the situation, the Government
on August 11, 1914, issued a decree extending to the three banks of
issue a moratorium on the redemption of their notes and the payment
of all their other obligations in specie. The moratorium was to last
until one year after peace was signed in Europe. The banks were
ordered to retain in their vaults all the silver money which they then
had, with the exception of fractional currency. The decree also
established what was known as the Junta de Vigilancia, a joint
commission representative of the Government and the banks, to see
that these dispositions were enforced. This Junta de Vigilancia, by
decree of July, 1920, became a permanent body to exercise general
supervision over the banks of the country.
In 1914 the banks held in their vaults the legal reserve of 40 per
cent as a guaranty for their note circulation. However, it was
•sealed under Government seal and was not available for use. The
result was that silver money immediately began to disappear from
circulation and was at a premium in terms of bank notes. Note
circulation showed a steady growth from the middle of 1914 to the
first part of 1920—from about 3,500,000 to 14,500,000 pesos.
C U R R E N C Y R E F O R M A C C O M P L IS H E D IN 1919
Special interest in currency reform became evident early in 1919,
and in June of that year the National Assembly passed a law author
izing the President of El Salvador to appoint a monetary commission
to study the situation and make recommendations for reform. This
commission made a report in August, 1919, with the result that the
gold standard was adopted. The law demonetized all the old silver
money, national and foreign, with the exception of small coins (20
centavos and under); it also extended the moratorium. Banks were
ordered to substitute, within three months, United States gold for
the silver reserve which they held. Since the price of silver was about
at its peak at tins time, a considerable profit was made by the sale of
silver; this profit was shared equally by the Government and the
banks.
A second law, passed on the same date (September 11, 1919),
made United States gold legal tender in El Salvador at the rate of 2
colones to the United States dollar. The plan was not to coin any
national gold immediately but to use United States gold as the basis
of the new system. United States bank notes, although not legal
tender, were given free circulation and the banks of El Salvador were
required to receive them. A decree in December, 1920, made them
receivable for all Government dues also. When the moratorium
should be lifted the banks were to redeem then- paper notes in United
States gold if national gold coins had not yet been minted. Another
monetary law (that of July, 1920) declared that no foreign money was
legal tender in El Salvador except United States gold and silver coin,
FOREIGN CURRENCY AND EXCHANGE
147
which should enjoy full legal-tender quality until national money was
minted in sufficient quantity.
The world-wide commercial depression that began in 1920 furnished
a severe test for the new system. The new standard, however,
weathered the strain of the difficult times through 1921 and the first
part of 1922, although there was sufficient premium upon foreign
remittances to cause the exportation of a considerable amount of
United States gold despite Government prohibition thereof. Pressure
brought to bear upon the authorities to declare the bank notes
inconvertible was resisted, and with better conditions later in 1922
and 1923 there was a re turn to normalcy.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Table 90 is:
1906-1929, sight drafts, San Salvador on New York. The rates are
as quoted in the Anuario Estadistico.
It is suggested that the straight rate of 2 colones to the United States
dollar be used for ordinary conversions from 1920 onward.
Average
rate
Year
Average
rate
S alvadorean P eso
Year
1906 ..............
$0. 4338 1914 ............................ $0. 3968 1922. ............................
1907............
.4115 1915................................ . 3704 1923................................
1908...............
. 3929 1916 .............................. .3437 1924................................
1909 .
. 3795 1925__
.3711 1917 ...
1910................................. . 3552 1918................................ .4141 1926................................
1911-................................ .3984 1919............................. .4938 1927................................
1912...............
.4132 1920 .
.4914 1928................................
1913...................
.4115 1921 .............................. .4762 1929................................
■ Peso, 190<}-lt*19; co lo n ,
Average
rate
iiiiliii !
Year
of the
«
T able 90.— Y eauly A verage E xchange R ates
and C olon 1
1920-JU29.
SIAM
By a law promulgated by the Government in April, 1928, Siam
adopted the baht (anglicized plural, bahts) of 100 satangs as its
monetary unit. The baht is the exact equivalent of the silver coin
formerly called the tical, containing 15 grams of silver 0.900 fine.
The baht is linked with gold at a ratio corresponding to 11 bahts to
the pound sterling, thus representing 739.633 milligrams of gold
0.900 fine (665.67 milligrams of fine gold), par value $0.4424 United
States currency.
The gold standard act of November 11, 1908, provided for the
minting of the following coins: The gold “ dos” (6.20 grams of gold
0.900 fine), which, however, has never been minted; the silver tical
(15 grams of silver 0.900 fine); the silver 1-salung (25-satang) piece
(3.75 grams of silver 0.800 fine); the silver 2-salung piece (7.5 grams
of silver 0.800 fine); nickel 5 and 10 satang pieces; and the bronze
1-satang piece. These coins are now in circulation.
Apart from the metallic currency, the principal circulating medium
consists of currency notes issued by the Government. The original
paper currency act of 1902-3 provided for the issuance of notes of 5,
10, 20, 100, and 1,000 tical denominations. Later on 1 and 50 tical
notes were issued.
148
FOREIGN CURRENCY AND EXCHANGE
MAIN FEATURES OF NEW MONETARY LAW
The main operating sections of the monetary law of April, 1928,
referred to above, are:
(1) The Minister of Finance shall receive or deliver gold at Bangkok at the
rate of 1 baht of legal tender money for every 665.67 milligrams of fine gold;
(2) The Minister of Finance may, at his option, in lien of receiving or delivering
gold as aforesaid, receive or deliver abroad gold, or gold exchange, in exchange
for legal-tender money, for immediate delivery, at such places and at such rates
as he may notify from time to time. Such rates shall be 1 baht for every 665.67
milligrams of fine gold, with an addition or deduction, as the case may be, repre
senting the approximate cost of conveying gold to or from Bangkok and the place
abroad at which such receipt or delivery takes place.
The most important feature in this legislation is the acceptance by
the Government of the liability to keep exchange, not only from rising
by more than a fraction above the pivot point of one-eleventh of the
weight of gold in a sovereign, but also from falling below that point
by more than the same fraction.
To enable the Government to discharge this liability a currency
reserve was constituted by the new law, consisting of the assets of the
former paper-currency reserve and of the gold-standard reserve, the
integrity of the new reserve being safeguarded by various provisions.
GOLD-EXCHANGE STANDARD
By royal decree of November 25, 1902, the mint was closed to the
free coinage of silver when the local bank rate of exchange was over
21 ticals to the pound sterling, and it was announced that thereafter
ticals could be obtained from the Treasury only by sales to the
Siamese Government of sterling in London at rates to be ascertained
from the Ministry of Finance. This decree established the goldexchange standard.
The rate for these sales was first fixed at 17 ticals to £1 for tele
graphic transfers; but this proved too high, and the rate was lowered
to 20 ticals to £l on the understanding that it would be maintained
for at least three months unless the price of bar silver rose to a point
where the Singapore rate for the Straits dollar was above Is. 7d.
An almost immediate rise in the Straits dollar caused the tical to
advance on December 17, 1902, to 19.75 and on December 30, 1902,
to 19.50. As the price of silver continued to advance, the rate of the
tical also moved upward until it reached 16 to 1 on November 17,
1905. On August 14, 1906, the rate was fixed at 15 to 1; on Novem
ber 2, 1906, at 13.33 to 1; and on December 2, 1907, the Government
fixed the rate for the issue of legal currency against sterling sold at
13 to 1, on which date the banks were notified by the Ministry of
Finance that the corresponding rate for the sale of sterling by the
Treasury was 13.33 ticals per £l.
RICE CONTROL INFLUENCES EXCHANGE RATES
A notification issued simultaneously with the gold standard act on
November 11, 1908, confirmed the rate of 13 to 1 for the issue of legal
currency in Bangkok against gold paid to the Government abroad by
telegraphic transfer, while the corresponding rate for the sale of ster
ling, 13.33 to 1, remained unchanged. These rates continued in force
until September 4, 1919, when an amendment to the gold standard
act established a new mint par of exchange of 12 ticals to £1, or Is. 8d.
per tical, with the rate of 11.88 ticals to £1 for the issue of currency in
FOREIGN CURRENCY AND EXCHANGE
149
Bangkok against gold sold to the Government abroad. As silver
prices continued to rise it was necessary to raise the rate still further.
Accordingly, a notification dated November 26, 1919, advanced the
rate for the issue of legal currency to 9.14 ticals to £1.
In the last instance the banks were notified that the rate for the
sale of sterling by the treasury would be 9.54 ticals to £ l ; and as the
prohibition against the export of rice was then in force, owing to the
rice-crop failure of that year, this was the effective rate on which the
banks based their quotations, inasmuch as they required, not local
currency, but sterling to cover their excess sales of exchange to im
porters. The rice control was abolished at the end of January, 1921,
after being in operation over a year and a half; but the economic sit
uation only gradually righted itself, and until the end of December,
1922, the banks continued to base their rates on the Government
sterling selling rate of 9.54 ticals to £1. It was not until January 3,
1923, when the Government buying rate was lowered to 10.80 to 1
(with a corresponding selling rate of 11.20 to 1), that the banks re
sponded by lowering their quotations to the new Government level.
FUND TO SUPPORT EXCHANGE
Toward the close of the first period of rising exchange ending in
1907-8 it was realized that it would be necessary for the Government
to provide sterling funds for the support of the rates officially fixed,
as there had been times when the market rates quoted by the banks
had, for lack of such support, been below the official rates. Accord
ingly, when the second Siamese loan of 1906-7 was negotiated, an
additional sum of £1,000,000 was borrowed for the purpose of pro
viding funds in Europe which could be drawn upon for the support of
exchange. Of this amount, £900,000 was made available for this
purpose. Between January, 1907, and November, 1908, when the
gold standard act was promulgated, about £772,500 was sold, repre
senting about 10,4S0,000 ticals.
The act provided for the establishment of a special reserve fund of
not less than 12,000,000 ticals for maintaining the stability of the
exchange rate. The act provided that the fund may be held either
in Siam or abroad, but that its composition shall be determined by
the demands of the banks, which are influenced by. the trade situa
tion. On March 31, 1926, the fund was held entirely in sterling in
London and, with accrued interest, amounted to £1,502,000.
INVESTMENT OF PAPER-CURRENCY RESERVES
' The paper-currency issues are governed by the provisions of the
paper-currency act of 1902-3 and subsequent amendments. The
original act provided that the fiduciary issue be limited to 25 per cent
of the value of the notes in circulation, but an amending act of Octo
ber 9, 1906, raised this limit to 50 per cent. By an amendment to
the paper-currency act promulgated on February 3, 1917, the Minis
ter of Finance was authorized to hold half of the specie reserve against
the note issues (that is, 25 per cent of the value in circulation) in gold
coin or bullion abroad, or in silver bullion either abroad or in transit
to Siam or in course of being minted into ticals. However, this meas
ure was never put into operation as it was impossible to obtain gold
or silver bullion because of the World War, but a further amendment
150
FOREIGN CURRENCY AND EXCHANGE
(of August 25, 1917) authorized the investment of half of the specie
reserve. The reserves against the note issues thus authorized were,
therefore, investments 75 per cent and specie 25 per cent. On March
16, 1918, the specie reserve was reduced to 15 per cent and investment
increased to 85 per cent. On December 27, 1918, a further amend
ment authorized the Minister of Finance to invest the entire reserve
held against the currency notes.
On January 27, 1919, the currency notes were made temporarily
inconvertible; since that date the period of inconvertibility has been
extended from time to time, the last extension (for two years) being
effective as from January 27, 1925. An amendment of December 6,
1924, declared that the paper-currency act, temporary-amendment
act (No. 1), also should remain in force for a further period of two
years as from January 27, 1925; in other words, the authorized re
serves held against notes in circulation were: Investments, 75 per
cent; specie, 25 per cent. (These reserves have since been consoli
dated with the gold-standard reserves in the fund supporting the new
baht.)
At the end of March, 1929, the total note circulation was 140,068,000 bahts; the reserves consisted of coin and bullion in Siam, 52,000,000 bahts, and gold exchange, 109,083,000 bahts.
BASIS OF STATISTICS
The average exchange rates given in Tables 91 to 93 following have
been taken from the Statistical Yearbook of the Kingdom of Siam and
Foreign Trade and Navigation of the Port of Bangkok. It will be
noted that the averate rates differ slightly for some years. In the
Statistical Yearbook both the monthly high and low as well as the
mean for the month are given in shillings and pence to the tical (for
demand drafts, Bangkok on London); in Foreign Trade and Navi
gation, only the yearly average rates are given in ticals to the pound
sterling.
Monthly average rates have been converted at the corresponding
monthly average exchange rate of the penny (see United Kingdom,
p. 175); quarterly averages have been computed from monthly averages.
T able 91.— Y early A verage E xchange R ates
of the
S iamese T ical
(R a se d o n q u o ta tio n s fro m th e S ta tistic a l Y e a rb o o k of th e K in g d o m of S iam )
F is c a l y e a r
1900-1001......................
1901-2......................... _
1902-3. .............. .........
1903-4......................
1904-5.........
1905-6............... ........ .
1906-7............................
1908-9. .......................
1909-10............ .............
A v e ra g e
ra te
$0.2914
.2734
. 2485
. 2795
. 2776
.3004
.3511
. 3612
. 3663
. 3688
F is c a l y e a r
1910-11..........................
1911 12_____________
1912-13...........................
1913-14..........................
1914-15 ...
1915-16 ...
1916-17....... ...................
19IS-19..........................
*919-20..........................
A v e ra g e
r a te
$0. 3720
. 3695
.3726
.3712
. 3755
. 3638
. 3654
. 3652
.3630
F is c a l y e a r
1920-21..................
1921-22
1922-23................... .
1923-24
1925-26
1926-27.....................
A v e ra g e
ra te
$0.3886
. 4147
. 4544
. 4095
.4467
.4493
151
FOREIGN CVKIIEXCY AND EXCHANGE
T able 92.— Q uarterly
and
M onthly A verage E xchange E ater
S iamese T ical
of the
(F ig u re s ta k e n fro m th e S ta tistic a l Y e a rb o o k of th e K in g d o m o f S iam )
1913
Period
1914
1915
1916
1917
1918
1919
1920
First quarter ........................-. $0.3714 $0. 3709 $0. 3693 $0.3658 $0.3653 $0.3651 $0. 3648 $0.3753
3722 .3671 . 3657 . 3653 . 3650 . 3573 .4081
Second quarter.............. .......... .3716 ..3767
.3616 . 3655 . 3649 . 3653 . 3333 . 3828
Third quarter-------------------- .3713
Fourth quarter.............. .......... .3707 .3719 .3602 .3654 . 3651 .3654 .3860 . 3622
January.................................. . . 3694 .3710 .3702 . 3656 . 36.56 .3651 . 3662 . 3837
February................................... .3712 . 3706 . 3696 . 3658 . 3653 . 3651 . 3660 .3.531
March................ ....................... . 3737 .3710 . 3681 .3660 . 3649 . 3651 .3623 . 3892
April........................................... . 3717 .3716 . 3678 . 3660 . 3654 . 36.53 . 35S3 . 4100
May....................... ................... . 3714 . 3725 .3674 .3656 .36.53 . 3653 . 3586 .4017
June............................ ....... .3717 . 3726 . 3661 .3656 .3653 .3644 . 3.549 .4125
.3717 .3739 .3654 .3656 .3646 . 3651 .3367 . 4035
July............................. .............
August................. ........... ........ .3714 .3757 .3605 .36.56 . 3654 . 36.54 . 3232 .3782
.3594 .3654 . 3646 . 3653 . 3400 . 3667
September................................ . 3706 . m b
. 3629
October---------------------------- . 3708 . 3760 . 3592 .3654 . 3651 . 3653 .. 3704
3896 . 3589
. 3706 . 3707 . 3586 . 36.54 . 3651 . 36.54
November......................
.3651
.
3656
.3647
.3708
.3627
.
3653
.
3980
. 3690
December ___ ________
1921
Period
1922
1923
1924
1925
1926
1927
1928
$0.4493 $11. ««3 $0.4493
First, quarter............ ................. $0. 4013 $0.4512 $0.4190 $0. 3929 $0.4410
3988 . 4465 . 4446 . 4493 0)
Second quarter ..................... .4066 . 4634 . 4247 .. 4080
.4481
.4447 . 4493 o
.4644
.4182
.
3833
Third quarter ........................
Fourth quarter ....................... .4177 .4710 .40.50 .4159 .4474 .4468 . 4493 o)
. 3905 .4413 .4493 . 4493 .4493
January...................................... .3907 .4411 .4135
. 4493 . 4493 . 4493
February.____ ___________ . 4048 . 4656 .4166 . 3949 .4407
. 3834 . 4469 . 4493 . 4493 . 4493
March......................................... . 4085 . 4569 .. 4269
4268 . 3994 .4427 . 4493 . 4493 0)
April.......................................... .4103 .4609
May........................................... .41.50 . 4644 . 4242 . 4003 . 4482 .4481 . 4493 <■ )
June................ ...... ..... ....... .3950 .4649 .4231 . 3966 .4487 . 4405 . 4493 «
. 4493
July............................................. . 3792 . 4644 .4202 .4012 .4487 .4443
. 4443 . 4493 (0
August____________ ___ .-3817 . 4662 .4180 .4131 .4484
4473 . 4455 .4493 (')
September________ ____... . 3890 . 4626 .4165 . 4096 ..4471
. 4493 (■ )
October...................................... . 4045 . 4636 .4147 .4120 .4473 .. 4468
4468 . 4493 01)
November................................. .4145 .4679 .4017 .4100
December........................ .......... .4341 .4814 . 3997 .4256 .4478 .4468 . 4493 (•)
1 Figures not vet available.
T able 93.— Y early A verage E xchange R ates
of the
S iamese T ical
(Based on quotations from Foreign Trade and Navigation of the Port of Bangkok)
Fiscal year
1906-7
1907-8
1908-9
1909-10
1910-11
1911-12.
1912-13...
1913-14..................
1914-15...
1915-16___
1916-17................
1917-18..................
Exchange United
value of States
Ticals to the
pound dollar
the sterling
in equiva
pound
lent of
sterling United
States the
tical
dollars
15.06
13. 52
13.29
13. 24
13.08
13. 24
13.28
13. Of
13. 06
13.03
13. 02
13.02
$4.8665
4. 8665
4.8665
4. 8665
4. 8665
4. 8665
4. 8665
4. 8640
4. 89.50
4. 7360
4. 7570
4. 7540
$0. 3232
.3600
.3662
. 3676
.3720
. 3676
.3666
.3731
. 3748
. 3635
. 3654
.3651
Fiscal year
1918-19..............
1919-20..............
1920-21..............
1921-22..............
1922-23..............
1923-24..........
1924-25..............
1925-26 ............
1926-27..........
1927-28..............
1928-29..........
1629-30...............
Exchange United
value of States
I Ticals to the
pound dollar
the sterling
1 ]>ound Unitedin equiva
| sterling States
lent of
dollars the tical
13.02
11.28
9.58
9.58
9.92
10.89
10.89
10.83
11.00
11.00
11.00
11.00
$4. 7540
4. 1425
3. 7216
3.9720
4.5187
4. 4755
4. .5404
4.8496
4. 8.561
4.8671
4. 8598
4.8602
$0. 3651
. 3672
.3884
.4146
. 455.5
.4110
.4169
. 4478
.4415
. 4425
.4418
.4418
152
FOREIGN CURRENCY AND EXCHANGE
SOVIET RUSSIA (U. S. S. R.)
The Union of Socialist Soviet Republics has adopted as its monetary
unit the chervonets (plural, chervontsi), equivalent to 10 chervonets
rubles. The chervonets ruble is theoretically the exact equivalent of
the pre-war Russian ruble (860.26 milligrams of gold &900 fine, or
774.234 milligrams of fine gold), and its par value is $0.51455 United
States currency. The chervonets ruble, like the former Russian
ruble, is divided into 100 kopecks. The chervonets was definitely
established in accordance with a series of laws enacted during February-May, 1924.
Provision was madi for the minting of the chervonets gold piece,
silver pieces of 10, 15, 25, and 50 kopecks and 1 ruble, and subsid
iary coins of copper in kopeck denominations.
Apart from the metallic currency, the principal circulating medium
consists of the notes of the State Bank (Gosbank), which began its
activities on November 16, 1921, and Treasury notes.
EARLY CURRENCIES
About the time of the Russo-Turldsh War of 1877-78 the currency
of Russia, while nominally on a silver basis, was in fact composed
largely of irredeemable paper, so-called credit notes, issued by the‘
State Bank. Excessive issues, especially during that war, caused the
foreign exchange value of these notes to decline below their normal
par, the average exchange value of the paper ruble for the years 1888
to 1895 being about two-thirds of a ruble in gold.
In 1897 the gold ruble (860.26 milligrams of gold 0.900 fine), par
$0.51455 United States currency, was adopted as the unit of currency.
GOLD STANDARD ADOPTED IN 18«9
Thereupon the State Bank began the gradual accumulation of a
gold reserve against its outstanding notes. In 1896 the value of the
existing half-imperials (5 rubles) was fixed at 7}i paper rubles, and the
bank announced that it would redeem all of its notes in gold at the
same ratio upon presentation. This secured the stability of the
paper ruble in terms of gold.
In 1897 a law was passed providing for the continued coinage of
the “ imperials” and half-imperials at their former weight and fineness,
but with the new legends of 15 and 7% rubles instead of the former
legends of 10 and 5 rubles. This change of the ratio meant a onethird devaluation of the paper currency.
In November, 1897, the coinage of new gold pieces of 5 rubles was
ordered, while in December, 1898, a new gold piece of 10 rubles was
authorized, which soon superseded the older pieces and became the
standard coin of the country. In 1899 the law declared that the
monetary system of Russia was henceforth to be based on gold. In
addition to gold there also circulated silver and copper coins, which,
however, were legal tender only in limited amounts.
STATE BANK GIVEN NOTE-ISSUE POWER
The Russian State Bank, owned by the State, after its reorganiza
tion in 1894 assumed the functions of a modern central bank of issue.
In 1897 the authorized maximum “fiduciary” issue was fixed at
FOREIGN CURRENCY AND EXCHANGE
153
600,000,000 rubles, and of this amount 50 per cent had to be secured
by gold; issues in excess of 600,000,000 rubles could be made only
when fully covered by gold, Silver could not serve as note cover.
Foreign bills and deposits, however, were to be regarded as gold. It
was further stipulated in the act that note issues were to be kept
within limits strictly determined by the actual needs of the money
market. Experience proved, however, that while these provisions
insured adequate cover for the notes, they made these note issues
inelastic and insufficiently responsive to normal trade requirements.
The State Bank notes were unlimited legal tender on a par with gold
coin.
In accordance with the view, officially held, that the new gold stand
ard could be made secure only if sufficient gold were in actual circu
lation, the bank met the demand for currency by paying out gold.
Between January 1, 1897, and January 1, 1914, the outstanding circu
lation (exclusive of subsidiary silver and copper in smaller denomina
tions) increased from 1,134,000,000 to 1,486,000,000 rubles. (State
ment of the Annual Reports of the State Bank.) But while the
amount of bank notes in actual circulation during this period showed
a decrease from 1,068,000,000 to 578,000,000 rubles, the gold coin in
circulation showed an increase from 36,000,000 to 775,000,000 rubles.
Immediately after the outbreak of the World War the State Bank
was relieved of its obligation to redeem its notes in gold. (Law of
July 27, 1914.)
WAR-TIME ISSUES OE PAPER CURRENCY
From the beginning of the war up to the time of the final liquidation
of the old ruble in 1924 there were three periods in the issues of paper
money corresponding with the periods of the different political
régimes: The first, from July, 1914, to the February revolution of
1917, when paper money was issued exclusively for financing Russia’s
participation in the World War; the second, the period of the Pro
visional Government, from the February revolution to the October
revolution, when both the World War and the revolution were be
ing financed by paper money; and the period after October, 1917,
when paper money began to servo to cover the deficits of the Soviet
Government.
At the time of the February revolution the State Bank had the
right to issue credit notes not backed by gold up to 6,500,000,000
rubles. (Law of July 27, 1914; ministerial decree of Mar. 17, 1915;
law of Aug. 22, 1915; ukase of Aug. 29, 1916; and ministerial decree
of Dec. 27, 1916.) In addition, credit notes were issued against “ gold
abroad” or so-called credits opened for Russia by the British Govern
ment to the amount of about 1,892,000,000 rubles, so that the issuing
power of the State Bank under the old régime may be estimated at
approximately 8,400,000,000 rubles.
The Provisional Government extended the issuing power of the
State Bank by five decrees (the first on March 4, 1917, the last on
October 6, 1917), making the total issue 16,500,000,000 rubles.
The Soviet Government issued credit notes for a long time without
bringing forward any special law providing such rights for the State
Bank. In October, 1918, however, that formality was effected and a
link established between the new issues and the issues of former
1942°—30-----11
154
FOREIGN CURRENCY AND EXCHANGE
Governments. Taken as a whole, by the end of October, 1918, the
unbacked issuing power of the State Bank had been increased to about
50.000. 000.000 rubles. After this time, issues of paper money con
tinued without extension of the issuing rights. In 1920 the State
Bank was liquidated and the issuance of paper money was carried
out through the “ Department of Monetary and Account Tokens.”
In 1920 the paper-money issue totaled 943,600,000,000 rubles; in
1921.16.375.300.000. 000 rubles; in 1922,1,976,900,000,000,000 rubles;
and in 1923, 176,505,500,000,000,000 rubles.
DIMINUTION OK GOLD RESERVE
Simultaneous with this growth of issue was the decline of the gold
reserve. On July 16, 1914, the old State Bank had “gold in Russia ”
to the value of 1,604,000,000 rubles. (The item “gold abroad” had
a fictitious character and so can not be taken into account.) At that
time the credit notes were backed by gold up to 98.2 per cent. On
March 1, 1917, there was 1,476,000,000 rubles in gold, and the credit
notes were backed up to 14.8 per cent; and on October 23, 1917, there
was only 1,292,000,000 rubles in gold, and the notes were backed up
to 6.8 per cent.
This lowering of the percentage of backing was occasioned not only
by the increased issue of paper money, but also by the actual decrease
in the gold reserve. Under the financial agreements between the
Czarist and later on the Provisional Government and England, part
of the Russian gold was sent to England. So far as is known from
figures published at the time, there were four such shipments—October
1914, 75,000,000 rubles in gold; May, 1916, 94,500,000 rubles;
November, 1916,94,500,000 rubles; and July, 1917, 200,000,000 rubles.
As a result, the gold reserve at the time of the revolution of Octo
ber, 1917, had been reduced by 341,000,000 rubles notwithstanding
the continued influx of gold from the mines and of gold coin from
circulation.
A further drain of 120,400,000 rubles in gold was caused by the
payment to the German Government of part of the war indemnity
under the Berlin agreement supplementary to the Brest-Litovsk
Treaty. According to W. Novitsky, former Assistant Minister of
Finance, the Soviet authorities abandoned in Kazan 633,600,000
rubles in gold which was subsequently appropriated by the Kolchak
Government. During 1919 237,200,000 rubles in gold was shipped to
Vladivostok in payment for munitions and as collateral for credits
opened to the Kolchak Government by Japanese, British, and United
States banking interests.
In addition to the gold of the Russian State Bank the Soviet
authorities held about 118,200,000 rubles in gold which Rumania had
shipped to Russia for safekeeping during the German invasion in
1916. The Soviet holdings were also augmented to a small extent by
requisitions and confiscations of church and private treasure, and
the output of the Ural and Siberian gold mines. Novitsky estimated
that at the close of the civil war in 1920 the Soviet Government held
between 900,000,000 and 1,000,000,000 rubles in gold. During 1920,
1921, and 1922 Russia shipped to Sweden (according to Swedish
official statistics) gold to the amount of 1,237,833,000 kronor (roughly
about 650,000,000 rubles).
FOREIGN CURRENCY AND EXCHANGE
155
CONTROL OF PRIVATE EXCHANGE TRANSACTIONS
After the revolution of October, 1927, the foreign-exchange market
entered upon a new phase of development. The home foreignexchange market vanished underground. Absence of banks and
bourses made the usual operations with foreign currencies and gold
impossible. People began to hoard money. Capitalists continued to
employ every means to get their capital out of the country. Later,
at the end of 1918, the Soviet Government began to discourage
private operations in gold and foreign exchange, demanding delivery
of the drafts to the State, and this became more intense during 1919-20.
Nevertheless the illegal valuta market existed during the entire time
in the chief centers of the country.
The principal objects of speculation was gold specie and bullion,
“Czmst money,” “ Kerenskies,” and “Duma money” (the paper
money of the Provisional Government). After the appearance in
the middle of 1918 of Soviet monetary tokens (at first they were called
“Penza money” because they were printed at Penza), money of the
old régimes began to disappear from circulation.
CURRENCY SYSTEM REESTABLISHED IN 1921
In April, 1921, there occurred a change in the economic policy of
the Soviet Government; this was followed at the end of 1921 by a
reestablishment of the currency system. This reestablishment passed
through two stages. The first was the issue of banknotes, “ chervontsi,”
by the State Bank of the R. S. F. S. R. (later of the U. S. S. R.), which
began near the close of 1922; and the second, the final liquidation of
the Soviet ruble and the issue of a stable Treasury note in FebruaryMay, 1924.
The State Bank began its activities on November 16, 1921, with an
original capital of 2,000,000,000,000 paper rubles, given to it by the
Treasury. At the end of 1922, by a decree of the Soviet of People’s
Commissars dated October 11 the State Bank was given the power to
issue bank notes, “ chervontsi.” The issue of chervontsi began on
November 27, 1922. Some of the regulations were:
(1) Bank notes are to be issued by the State Bank in denominations of 1, 2, 3,
5, 10, 25, and 50 chervontsi, and are denominated in gold, since the chervonets is
equal to 10 rubles in the former Russian gold coinage.
(2) Bank notes are to be secured up to not less than 25 per cent of the cir
culation by precious metals and stable foreign currency. The remainder is to be
secured by easily realizable goods, short-term bills, and other short-term secu
rities; provided that not less than two-thirds of this part of the cover shall
consist of bills resulting from transactions in goods.
(3) Bank notes must in due course be exchangeable for gold. However, they
are not redeemable at the present time; the time of redeemability is to be fixed
by a special act of the Government.
(4) The State Bank may issue notes for granting short-term loans to the
People’s Commissariat of Finance.
TREASURY NOTES REPLACE RUBLE NOTES
Side by side with the new chervontsi the old Soviet ruble notes
were still in circulation and continued to be issued by the treasury.
There was no fixed ratio between the two. However, the chervonets
remained fairly stable, while the Soviet ruble continued to depreciate.
In February, 1924, the Soviet Government set itself to liquidate
this parallelism and to unify the monetary system. The depreciating
Soviet ruble was replaced by treasury notes expressed in gold rubles
and by silver coin, and a fixed ratio was established between cher-
156
FOREIGN CURRENCY AND EXCHANGE
vonets and the treasury notes. The chervonets then became the
unit of currency.
The note circulation of the State Bank outstanding on October
16, 1929, amounted to 155,296,000 chervontsi. The reserve, of the
same date, was made up of:
Chervontsi
Gold coin and bars________________________________
Platinum and silver_______________________________
Foreign currency_________________,________________
Drafts in foreign currency_________________________
Total............................................................................
27, 603, 000
3, 788, 000
8, 073, 000
286, 000
39, 750, 000
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 94 and
95 is: 1914-1917 and 1922, bankers’ sight bills, Moscow* on New
York; January, 1923, to February, 1924, Moscow* quotations on
New York; thereafter rates are nominal at $0.51455. The rates
from 1914 to 1917 and for 1922 have been computed from mid-points
between the monthly high and low* rates; for 1923, from average
monthly rates. Quarterly averages have been computed from
monthly averages.
For conversion purposes, from 1900 to 1913 the par value of the
former Russian ruble ($0.51455) may be used inasmuch as during
that period the ruble w*as fairly stable at par; from January, 1914,
to February, 1924, the rates as given. Thereafter rates are nominal
(at $0.51455).
T able 94.—Y early Average E xchange R ates of the F ormer R ussian
R uble and C hervonets R uble 1
Average
Average
Average
Year
Year
rate
rate
rate
1926............................ 2 $0. 51455
$0. 4972 1920 ..........................
(»)
1927............................
2. 51455
.3802 1921............................
(8)
2.51455
.3090 1922............................ $0.00000046 1928..........................
1929............................
2. 51455
.2188 1923............................ .4500
1.1375 1924............................ 2. 51455
1925............................ L 51455
1919
(»)
i Russian ruble, 1914-1922; chervonets ruble, 1923-1929. * Nominal rate. 1 No quotations.
Year
T able 95.—Q uarterly and M onthly Average E xchange R ates
F ormer R ussian R uble and C hervonets R uble
of the
1922
1923
1914 1915 1916 1917 1918 * 1919 1
Period
$0. 3075 $0. 2855 $0. 1300 $0. 1400 $0. 000001324 $0. 4627
First quarter............................... $0. 5161 $0.4388
4079 .3079 .2674 . 1400 (»)
. 000000273 .3980
Second quarter............................ .5147 .. 3462
. 000000199 . 4730
.3171 . 1873 . 1400 <>)
Third quarter.............................. <■ )
.000000046 . 4M.3
Fourth quarter........................... .4512 . 3279 .3036 . 13.50 . 1400 (>>
4360
. 5162 .4294 . 2969 . 2900 . 1300 .1400 . 000002381 ..4620
.4419 .3081 .2857 . 1300 . 1400 . 000001012
. 5162 . 4450 .3175 . 2807 . 1300 . 1100 . 000000549 .4900
. 0000? 0308 . 4240
April............................................. . 5153 .4312 .3100 .2852 .. 1400
«
. 000000247 . 3560
May................ .......................... . 5140 .4037 .3081 .2735 1400 (>)
.000000264 . 4140
June.......................................... . .5147 .3887 .3055 .2435 . 1400 (>>
.4740
.000000243
.3500
.30.56
.2235
.
1400
(»>
July............................................... .5128
. 000000225 .4700
1935 . 1400 (>>
August...................... .................. .5106 .3400 .3207 .. 1450
.4750
.
1400
.
000000128
.
3487
.32.50
<♦ ) .3425 . 3120 . 1450 . 1400 (>>
. 000000062 .4920
.4800
p>
. 00000(k)47 .4540
.4537 .3287 .3012 . 1300 . 1400 <>)
.000000028 .4530
.4200 .3125 .2977 . 1300 . 1400 c)
1 Rates given are nominal.
*Indeterminable.
* Foreign exchange business with Russia suspended after March, 1919, and no rates are available until
January, 1922.
*Not available.
FOREIGN CURRENCY AND EXCHANGE
SPAIN
157
Theoretically the gold peseta (plural, pesetas) of 100 centimos,
representing 322.58 milligrams of gold 0.900 fine (290.32 milligrams
of fine gold), with a par value the same as that of the former French
franc, $6.192948 United States currency, is the monetary unit of Spain.
Spain, how'ever, is not on the gold standard; nor can the country be
said to be on the silver standard, since there is no free coinage of
silver and the exchange value of silver coins is not influenced to any
great extent by the market value of their metallic content. The coins
have a “scarcity” value which is greater than that of the bullion in
them. Spain is thus upon a fiduciary silver standard, and exchange
rates fluctuate with practically no relation to the price of silver and
about no fixed par with any other country.
Apart from the metallic currency (which, besides the gold and silver
coins mentioned, consists of nickel-copper and bronze pieces in centimo
denominations), the principal circulating medium, consists of the
notes of the Bank of Spain (Banco de España). Note circulation is
limited to 6,000,000,000 pesetas, and may exceed 5,000,000,000 pesetas
only with the consent of the Government. Consent of the Govern
ment is required for any reduction of gold holdings and can not be
given unless these holdings are in excess of the requirement necessary
for a circulation of 6,000,000,000 pesetas. The first 4,000,000,000
pesetas require a 45 per cent reserve; at least 37 per cent must be gold,
5 per cent may be silver, and 3 per cent foreign exchange. Circulation
above 4,000,000,000 pesetas requires a 60 per cent reserve; at least 47
per cent must be gold, 10 per cent may be silver, and 3 per cent foreign
exchange.
B O T H G O L D A N D S IL V E R C O IN S M IN T E D
Spain adopted the monetary system of the Latin Monetary Union
in October, 1868, although it did not become a party to the agreement
and was not a member of the Union.31 The Spanish law of 1868
provided for unlimited coinage of both gold and silver. Gold coins,
however, were not struck under this law until 1877. By that time the
gold price of silver had begun to fall and the market ratio between
gold and silver was not that of the monetary ratio of Spain (15K to 1)
nor of the countries of the Latin Monetary Union. As silver fell in
price and as the monetary circulation increased, the gold coins be
came more valuable as bullion than as money and were driven from
circulation.
Free coinage of silver by private individuals was abolished in Spain
in 1878. However, the Government continued to coin silver money
for its own account and increased the circulation in this way. This
continual expansion of the circulation was largely responsible for the
fall in exchange rates during the last quarter of the nineteenth century.
After 1899 coinage of silver was very much curtailed.
Although the Government struck large quantities of silver coins,
especially 5-pesta pieces (or “duros”),the restriction upon free coinage
prevented the quantity of the coins from becoming so great as to
depreciate their value as rapidly as the price of silver was falling. The
M F o rm a tio n o f th e L a tin M o n e ta ry U n io n is d isc u sse d u n d e r B e lg iu m , p . 15.
158
FOREIGN CURRENCY AND EXCHANGE
coins at all times have been sufficiently limited in number to prevent
their value falling to that of their bullion content; at the same time,
they have been sufficiently plentiful to prevent their value being
maintained at the gold parity.
B A N K O F S P A IN T H E G O V E R N M E N T ’S F IS C A L A G E N T
The Bank of Spain (Banco de España) dates back originally to 1783,
but under its present name only to 1856; its predecessor, the Banco
de San Fernando, was the outgrowth of the Banco de San Carlos,
founded in 1783. The Bank of Spain, like other central banks, is a
bankers’ bank and serves as fiscal agent for the Government. It holds
the bulk of the country’s specie reserve and rediscounts for private
banks and bankers, who look upon deposits at the Bank of Spain as
cash. It has enjoyed a monopoly of note issue since March, 1874, the
notes being redeemable in either gold or silver at the option of the
bank.
The maximum amount of notes which the bank was permitted to
have outstanding prior to the World War was 2,000,000,000 pesetas.
On August 5, 1914, the limit to the note issue was raised to 2,500,000,000 pesetas, and subsequently was increased several times. However,
the bank’s policy in regard to note issues has been conservative, and
the increased circulation has been almost equalled by new’ gold
acquired.
B A N K ’S P R E -W A R R E S E R V E R E Q U I R E M E N T S
The legal-reserve requirements against notes of the Bank of Spain
prior to the war w’ere somewhat complicated. For notes up to the
amount of 1,200,000,000 pesetas, a specie reserve of one-third w’as
required, at least half of wffiich must be gold; from 1,200,000,000 to
1.500.000. 000 pesetas, a specie reserve of 60 per cent, of which at least
two-thirds must be gold; from 1,500,000,000 to 2,000,000,000 pesetas,
a specie reserve of 70 per cent, of which at least five-sevenths must be
gold. The decrees expanding the note issue after the beginning of
the war provided that the increases should be backed by an equivalent
amount of specie; the first decree did not specify whether silver or gold,
but the other decrees provided that the increases authorized should
be covered entirely by gold.
At the end of December, 1929, the outstanding note circulation of
the Bank of Spain was 4,433,000,000 pesetas; the gold reserve totaled
2.566.000. 000 pesetas, the silver reserve 705,000,000 pesetas, and
foreign assets 103,000,000 pesetas.
P R E S E N T G O L D R E S E R V E O F B A N K O F S P A IN
As the belligerent countries made purchases in Spain gold began to
How into the country in payment. The imported gold went almost
entirely to the Bank of Spain,-there being practically no other market
for it; and inasmuch as the bank is not required to purchase foreign
gold at a fixed price, it purchased the gold imported at a discount
reaching as much as 6 per cent at one time. This operation was very
profitable to the bank. During 1916 and 1917 most of the gold
that wTas acquired was United States coin.
At present the gold in the Bank of Spain, amounting to some
2.600.000. 000 pesetas (about $501,800,000), is practically the only
FOREIGN CURRENCY AND EXCHANGE
159
gold within the country. The bank has used its option to redeem its
notes in silver coin, as it was feared redemption in gold would lead to
depletion of its stock of this metal. Spain is thus upon a fiduciary
silver standard.
ALLIED CURRENCIES BELOW FAR
Fluctuations in exchange rates prior to the World War were,
generally speaking, only those resulting from the demand for and
supply of bills. Upon the outbreak of that war, banks and individuals
in Spain holding funds abroad desired to bring them back into Spain.
Heavy offerings of francs, pounds sterling, and other currencies
followed and rates of exchange on foreign centers declined. Francs
and pounds both went below par in August, 1914; they recovered
later in the year, but, exports from Spain having increased, the re
covery lasted for only a few months. From the first part of 1915 to
the middle of 1918 these currencies continued to fall, with slight
reactions.
United States dollars were at a discount in Spain from the first part
of 1916 to the latter part of 1919, which may be accounted for by the
fact that the United States dollar was tied up artificially with the
currencies of the European Allies. Exchange rates in New' York on
London and Paris were “ pegged.” When the “ unpegging” took
place after March, 1919, pesetas started downward in New York.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 96 and
97 is: 1900-1914, sight drafts, Madrid on Paris (French francs
converted; see France, p. 73); 1915-1918, bankers’ checks, Madrid
on New York; January, 1919, to June, 1921, sight drafts, New York
on Madrid; July, 1921, to December, 1929, noon buying rates for
cable transfers, New York on Madrid. The rates from 1900 to 1914
are mid points between the yearly high and low rates; from 1915 to
1918, the averages are computed from mid-points between the monthly
high and low rates; from 1919 to 1929, the averages are as computed
from daily rates by the Federal Reserve Board. Quarterly averages
are computed from monthly averages.
Y ear
1900
1901 .
1902.
1903 .
1 9 0 4 ...
1905
1906
1 9 0 7 ...
1908
1 9 0 9 ...
A verage E xchange R ates
A v e ra g e
ra te
Y ear
A v e ra g e
ra te
$0.1494
. 1412
. 1432
. 1437
.1409
.1483
. 1674
. 1733
. 1706
.1767
1910.........................................
1911.........................................
1912..........................................
1913.........................................
1914.........................................
1915.........................................
1916..........................................
1917..........................................
1918..........................................
1919..........................................
$0.1799
.1784
.1810
. 1805
.2000
. 1918
.1989
.2219
.2448
.1982
of the
S p a n is h P e s e t a
Y ear
1920..........................................
1921..........................................
1922.........................................
1923.........................................
1924..........................................
1925........................................
1926.........................................
1927...................................
1928.........................................
1929..........................................
A v e ra g e
ra te
s
96.— Y e a r l y
« io a O * ik g i» w £
T able
160
T
able
FOREIGN CURRENCY AND EXCHANGE
9 7 .— Q u a r t e r l y
P e rio d
and
1915
M onthly A verage E xchange R
S p a n is h P e s e t a
1916
1917
1918
1919
1920
ates op the
1921
1922
F irst q u a r t e r . . . ................................ $0. 1943 $0. 1903 $0. 2126 $0. 2444 $0.2042 $0. 1799 $0. 1383 $0 1544
.2019
. 2226
. 2799
. 1695
. 1354
. 1986
. 1.563
S econd q u a r te r ......................... ......... . 1941
. 1291
. 1893
.2015
. 2278
. 2497
. 1922
. 1527
T h ird q u a r t e r ................................ ..
. 1547
.2051
. 2369
.2050
.1950
.1348
. 1387
F o u rth q u a r t e r .................................. . 1895
.1539
.1891
. 1351
. 2425
.2017
. 1923
.1900
. 1498
J a n u a r y ..................................................
.2125
. 1745
. 2115
.2-113
. 2039
. H 02
. 1900
. 1569
F e b r u a r y ............................................... . 1940
. 1910
.2071
. 1760
. 1965
. 2139
. 2493
. 1397
. 1565
M a r c h .....................................................
. 1748
.2032
. 1395
. 1948
.2160
.2810
. 1551
A p ril......................................................... . 1999
. 1978
. 2215
.2024
. 1680
. 1359
. 1941
. 2800
. 1568
M a y .........................................................
.2001
.1656
. 1308
.1883
.2033
.2303
.2788
. 1568
J u n e .........................................................
.1940
. 1596
. 1282
.2016
.2270
.2708
. 1556
J u ly .......................................................... . 1892
.2014
.2488
. 1920
.1510
. 1289
. 2250
. 1555
A u g u s t.................................................... . 1900
. 2295
. 2014
.1906 . . 1476
.1302
.1530
S e p te m b e r............................................ . 1886
. 2303
. 1325
O c to b e r_________________________
. 1900
.2020
. 2343
.2135
. 1921
. 1433
. 1525
.2010
.1978
. 1303
N o v e m b e r............................................
. 1899
. 2039
.2355
.1372
. 1528
.2006
.1307
. 1564
D e c e m b e r.............................................. .1885
.2095
.2408
.1951
.1465
P e rio d
F ir s t q u a r t e r ......................................
S eco n d q u a r t e r .................................
T h ird q u a r t e r . ...................................
F o u rth q u a r t e r ...................................
J a n u a r y ...................................................
F e b r u a r y ................................................
M a rc h .......................................................
A p r il.........................................................
M a y ...........................................................
J u n e .......................................... .............
J u l y ..........................................................
A u g u s t..................................................
S e p te m b e r..........................................
O c to b e r .........................................
N o v e m b e r...........................................
D e c e m b e r..............................................
1923
$0. 1559
.1516
. 1385
. 1320
. 1566
. 1566
. 1546
. 1532
. 1523
. 1492
.1430
. 1366
. 1358
. 1347
. 1308
. 1304
1924
1925
1926
1927
1928
1929
« 0 .1274 $0.1421 $0.1411 $0. 1674 $0. 1697 $0. 1564
. 1446
.1669
. 1437
. 1363
.1486
. 1748
. 1444
. 1705
. 1654
. 1465
. 1332
. 1541
. 1426
.1618
. 1409
. 1365
.1516
.1695
.1630
.1275
. 1418
.1415
.1603
.1710
. 1274
. 1422
.1678
. 1698
.1556
.1410
. 1422
. 1409
. 1741
. 1682
. 1507
. 1273
. 1475
. 1364
. 1429
. 1429
.1764
. 1676
. 1422
. 1380
. 1453
.1453
. 1759
.1673
.1413
.1346
.1457
.1576
.1720
.1657
.1648
. 1451
. 1330
. 1451
.1572
. 1709
. 1661
. 1467
. 1341
. 1441
. 1529
. 1690
. 1476
. 1324
. 1439
.1522
. 1715
. 1653
. 1435
.1725
. 1618
. 1450
. 1340
. 1510
. 1399
. 1360
. 1425
. 1515
.1694
.1612
.1378
.1396
.1418
.1524
.1666
. 1C23
SWEDEN
Sweden’s monetary unit is the krona (plural, kronor), representing
448.03 milligrams of gold 0.900 fine (403.23 milligrams of fine gold),
with a par value of $0.26798 United States currency. The krona is
divided into 100 ore. Gold coins are of 5, 10, and 20 kronor, but
practically no gold is in actual circulation. Subsidiary coinage
consists of silver, copper-nickel, and bronze pieces in krona and ore
denominations.
The principal circulating medium consists of the notes of the
Bank of Sweden (Riksbank), which is a reorganization of the old
State Bank founded in 1668. The bank is owned and controlled by
the Riksdag, or Parliament. It is thus one of the few central banks
that is entirely a government bank. Since 1904 the bank has had
the exclusive right of note issue; the notes are legal tender. The
bank has been required to redeem its notes unconditionally in gold
except during the World War and a short succeeding period of incon
vertibility. Over and above a fiduciary issue of 250,000,000 kronor
the bank must maintain a gold reserve against note circulation of
not less than 50 per cent. The gold reserve may not fall below
75,000,000 kronor. In emergency the King and Riksdag, acting
together, may extend the fiduciary circulation.
FOREIGN CURRENCY AND EXCHANGE
161
S W E D E N A M E M B E R O F S C A N D IN A V IA N O N IO N
The present Swedish krona is the descendant of the old “ debt cer
tificate” daler, which was made the legal unit in 1855; its par value
was about SO.268 United States currency. At that time the currency
was redeemable in silver, but in 1873 Sweden adopted the gold stand
ard, which remained in force until August, 1914.
In 1873 Sweden signed the Scandinavian monetary convention,
and from that time the gold and silver coins of Denmark and Norway
were lawful money also in Sweden. The bank notes of the Scandi
navian central banks likewise were generally accepted at par in all
three countries. After the outbreak of the war, the monetary units
of Norway, Sweden, and Denmark remained “ pegged” together
until the autumn of 1915.
G O L D S T A N D A R D A B A N D O N E D I N 1914
The economic life of Sweden suffered considerable derangement at
the outbreak of the World War, although Sweden was not a belliger
ent. The country abandoned the gold standard on August 3, 1914,
when redemption of the notes of the Riksbank was suspended. Specie
payments were resumed in January, 1916; however, in 1920, incon
vertibility was again introduced and continued in force until April 1,
1924.
The note circulation of the Riksbank expanded continually during
the war, advancing from 234,000,000 kronor at the close of 1913, to
813,534,000 kronor in December, 1918; meanwhile the gold reserve
rose from 102,000,000 to 285,566,000 kronor. Early in 1919 note cir
culation began to decline, and by December, 1929, had fallen to
569,000,000 kronor; at the same time the gold reserve totaled 245,000,000 kronor, and net balances abroad aggregated 266,000,000
kronor.
W A R ’S E F F E C T O N S W E D IS H E X C H A N G E
As with Norway, Sweden experienced considerable prosperity as
the war progressed. Business felt the stimulus of orders from the
belligerent nations. The demand for money became heavier and the
Riksbank increased its loans, and as gold began to flow into the coun
try toward the close of 1915 the reserve of the Riksbank mounted and
the expansion of credit continued.
Swedish exchange, unlike British and French, did not go to a pre
mium in New York during 1914. This was partly due to the fact that
both dollars and kronor were at a discount in London and Paris. Tn
Sweden', pounds sterling, francs, dollars, and florins continued to rise
from the beginning of the war until about March, 1915. By the end
of 1915, however, all except florins were below par. In November,
1917, the krona was selling for over 47 cents. After August, 1918,
the krona began to fall in New York; it reached par in March, 1919,
and continued to decline rapidly, since it was at this time that the
artificial support in New York was withdrawn from the allied curren
cies. The rapid fall of the krona in 1919 was owing largely to the
fact that prices were relatively higher in Sweden than in the United
States.
On March 29, 1924, the Swedish Parliament voted to resume specie
payments effective April 1 of the same year. Accordingly, the Riks
bank was required to redeem in gold, and the embargo on the export
162
FOREIGN CURRENCY AND EXCHANGE
of gold, except Scandinavian gold coins, was removed. The Riksbank’s obligation to purchase at a fixed price all gold tendered has
not been restored, however, nor have the mints been reopened to the
free coinage of gold.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 98 and
99 is: 1914, selling rate, Stockholm on London (pence converted, see
United Kingdom, p. 175); 1915-1917, bankers’ checks, New York on
Stockholm; January, 1918, to June, 1921, sight drafts, New York on
Stockholm; July, 1921, to December, 1929, noon buying rates for
cable transfers, New York on Stockholm. The average rate for 1914
is computed from monthly average rates; from January, 1915, to
October, 1918, the averages are computed from mid-points between
monthly high and low rates; from November, 1918, to December,
1929, the averages are as computed from daily rates by the Federal
Reserve Board. Quarterly averages are computed from monthly
averages.
For conversion purposes, the par value ($0,268) may be used for all
transactions (commercial and financial) from 1900 to 1913, inasmuch
as the variation from par did not exceed 1 per cent at any time during
that period.
T
able
9 8 .— Y e a r l y A v e r a g e E x c h a n g e R a t e s
Y ear
1914.........................................
1915..........................................
1 9 1 ft.......................................
1917..........................................
1918.........................................
1919..........................................
T
able
A v e ra g e
ra te
$0. 2655
.2589
.2876
.3263
.3280
.2554
9 9 .— Q u a r t e r l y
P e rio d
A v e ra g e
r a te
Y ear
1920..........................................
1921..........................................
1922..........................................
1923..........................................
1924..........................................
1925..........................................
and
1915
of the
$0.2049
. 2264
.2617
.2655
. 2652
.2685
S w e d is h K
A v e ra g e
r a te
Y ear
1926..........................................
1927.......................................
1928 . . .
1929............
M onthly Average E xchange R ates
S w e d is h K r o n a
1916
1917
1918
F irs t q u a rte r . - ..................... .......... $0.2490 $0.2807 $0.2945 $0.3305
. 2591
S eco n d q u a rte r.................................
.2987
. 2986
. 3439
T h ird q u a r te r __________ _______
. 2588
.2855
.3274
. 3466
.2687
F o u r th q u a rte r . ..............................
.2856
.2911
.3846
.2948
J a n u a r y ..................................................
.2500
.2773
.3338
. 2462
F e b r u a ry ..............................................
.2793
.2950
. 3288
.2509
M a r c h .....................................................
. 2855
. 2938
.3288
. 2560
.3413
A p ril.......... . . ........................................
.2968
. 2963
.3043
M a y .......................................................... . 2590
.2975
. 3423
.
2624
.3020
.3480
J u n e ......................... ............................
.2950
J u l y . . ....................... ......... ..................
.2605
.2863
.3145
.3540
A u g u s t ..................................................
. 3313
.2580
. 2860
.3550
S e p te m b e r .......................................... . 2580
.2*43
. 3365
. 3308
O c to b e r. .........................................
.2610
.2840
.3838
. 3003
N o v e m b e r .......................................... .2718
. 2835
.4175
.2820
D e c e m b e r.—........................................ .2733
.2892
.3525
.2911
1919
1920
rona
1921
$0. 2676
.2681
.2680
.2678
of the
1922
$0. 2829 $0.1989 $0. 2216 $0. 2575
. 2624
. 2164
. 2321
.2588
. Q0S8
. 2478
. 2131
.2624
. 2303
. 1946
.2357
.2681
.2889
.2070
.2140
. 2495
.2822
. 1860
. 2226
. 2615
.2777
. 2037
. 2283
. 2616
. 2690
. 2187
. 2357
. 2605
. 2594
. 2122
.2349
. 2577
. 2588
. 2183
.2256
.2581
. 2.500
. 2185
.2104
. 2591
. 2059
. 2467
.2111
.2634
. 2456
.2021
.2178
.2646
. 2439
. 1970
.2294
.2665
.2309
.1910
.2323
.2684
.2160
.1959
.2453
.2695
163
FOREIGN CURRENCY AND EXCHANGE
T
able
9 9 .— Q u a r t e r l y
and M onthly A verage E xch an ge R
S w e d i s h K r o n a — Continued
Period
1923
First quarter..............................................
Second quarter.........................................
Third quarter................... .............. ........
Fourth quarter..........................................
January................................................... .
February............... ...................................
M arch........................................... .........
April..........................................................
May............................................................
June.............................
.......... ..
July....... .................... .................. ...........
August........................................................
September............................. ............
October.....................................................
November...................................................
December................................ ..................
1924
1925
1926
1927
a t e s ok t h e
1928
1929
$0.2669 $0. 2622 $0. 2695 $0. 2679 $0. 2671 $0. 2685 $0. 2873
. 2662 . 2647 . 2682 . 2678 .2877 .2684 . 2673
. 2657 .2660 .2685 .2677 .2683 . 2677 . 2679
. 2634 .2679 .2678 .2671 .2695 .2674 .2689
. 26S6 .2618 .2695 .2678 .2671 .2688 . 2674
. 26C0 .2618 . 2694 . 2678 . 2669 .2684 . 2673
. 2660 . 2629 . 2695 . 2681 . 2674 . 26.84 . 2671
. 2664 . 2638 . 2694 . 2679 . 2678 . 2685 .2671
. 2665 . 2650 .2675 . 2676 . 2G75 . 2683 . 2672
.2656
. 2654 .2676 .2680 .2678 .2683 . 2676
.2678
.2678
.2680
.2686
.2680
. 2653 ..2660
2661
. 2676
. 2682 . 2676 . 2679
. 2663
.2687
. 2655 .2660 .2682 . 2675 .2688 . 2676 .2678
. 266,1 .2679 .2673 .2692 . 2674 . 2684
. ‘¿640
. 2675 . 2669 . 2692 . 2673 . 2687
.2629
.2681
.2633
.2695
.2679
. 2G72 .2700 . 2676 . 2696
0
SWITZERLAND
Switzerland has for its monetary unit the Swiss franc of 100 cen
times, representing 322.58 milligrams of gold 0.000 fine (290.32 milli
grams of fine gold), the par value of which is SO. 192918 United States
currency.
Gold coins in circulation are 10 and 20 franc pieces; silver coins,
%, 1, 2, and 5 franc pieces. There are also subsidiary coins of nickel
and bronze in centime denominations.
Apart from the metallic currency, the principal circulating medium
consists of the notes of the Swiss National Bank (Banquo Nationale
Suisse), the sole bank of issue. The legal minimum reserve require
ment is 40 per cent gold against outstanding notes.
c o u n t r y o n g o l d s t a n d a r d in p r a c t i c e
On March 5, 1866, Switzerland became a member of the Latin
Monetary Union,32 which gave the countries belonging to it the
bimetallic standard at a mint ratio of silver to gold of 15% to 1, and
originally provided for the free coinage of both silver and gold. This
latter provision, however, lasted only nine years.
When the price of silver fell sharply about 1873 large quantities of
silver were brought to the mints of the other countries of the Union
to be coined, and Switzerland began to be flooded with this ilver
money. In Switzerland, however, free coinage of silver had never
been allowed and the coinings there were very' moderate compared
with those of France, Belgium, and Italy. A monetary conference
in 1878 suspended completely the coinage of silver 5-franc pieces in
all the member countries. However, the convention of 1885 later
restored the right of coining silver 5-franc pieces to the different
States, but each State was required to redeem its own silver coins in
gold on demand of any other contracting State.
Although Switzerland had stopped the free coinage of silver, the
silver 5-franc pieces continued to be legal tender, but their value no
longer tended to conform to the value of their bullion content. They
«Formation of the Latin Monetary Union is discussed under Belgium, p. 15.
164
FOREIGN CURRENCY AND EXCHANGE
were not redeemable in gold, but remained on a parity with gold
because of their limited supply. Thus, until the war Switzerland for
all practical purposes had been upon the gold standard since some
time in the seventies.
M E T A L L IC R E S E R V E S U P P O R T S N O T E IS S U E S
Before 1907 banking was decentralized in Switzerland. Most of
the cantons had their own banks of issue, and the cantonal notes did
not have a wide circulation. The Federal Chambers passed a law
on October 6, 1905, creating the Swiss National Bank (Banque
Nationale Suisse). This act became effective by resolution of the
Federal Council on January 16, 1906, and the bank opened its doors
for business on June 20, 1907. This bank was given the exclusive
right of note issue (as from June 20, 1910) and other powers commonly
given to central banks. No limit was set on the note issue, and no tax
was levied upon any of the notes. The bank was simply required to
keep a reserve of not less than 40 per cent against its notes. The
reserve might be either gold or silver but in practice consisted largely
of gold. The bank was required to redeem its notes on demand in
either gold or silver. Before August, 1914, the notes were not legal
tender but Government offices were required to accept them.
The board of directors of the bank is selected by the Federal
Council, and the bank is thus under the general supervision of the
Federal Government, which, together with the cantons, participates
in the profits of the bank. The bank has a paid-in capital of 25,000,000 francs and a surplus of 6,941,000 francs.
U S U A L N O T E IN F L A T IO N F O L L O W S W A R
Immediately after the outbreak of the World War there was a
shortage of currency in Switzerland as in other European countries.
In one month note circulation increased from 282,800,000 francs to
437,900,000 francs. The notes of the Swiss National Bank were
made legal tender and suspension of specie payments was authorized
on July 30, 1914.
As the note circulation expanded there was also an increase in the
gold reserve. Gold imports during the war period, mainly coin, came
principally from Germany and Austria for the purpose of effecting
payments and supporting exchange. These imports were particularly
heavy in 1916. Gold exports, which were permitted only under
license, were insignificant. The very large imports and exports of
gold in 1921 represent chiefly a movement of Russian gold, brought
from Sweden and, to some extent, from Russia direct. This gold,
when in the form of coin, was melted, stamped, and then reexported
to the United States. In 1922 and 1923 the gold imports included
considerable amounts from Germany deposited as collateral by the
German Reichsbank.
The gold reserve of the Swiss National Bank amounted to about
170,000,000 francs at the end of 1913; to 238,000,000 francs at the
close of 1914; to 345,000,000 francs in 1916; to 415,000,000 francs in
1918; and to 550,000,000 francs at the close of 1921. The peak was
reached in January, 1922, at slightly over 550,000,000 francs. This
increase in gold reserve was a stimulus to credit inflation. The
annual average note circulation rose from 272,359,000 francs in
1913 to 933,832,000 francs in 1920.
FOREIGN CURRENCY AND EXCHANGE
165
In December, 1929, the note circulation of the bank stood at 999,000,000 francs, the gold reserve at 595,000,000 francs, the silver reserve
at 24,000,000 francs, and sight balances abroad and foreign bills at
353,000,000 francs.
U N IO N S IL V E R F L O O D S S W IT Z E R L A N D
There was an especially strong tendency for silver 5-franc pieces
(6cus) to gravitate to Switzerland after the outbreak of the war.
These coins were “official money” in all the countries of the Latin
Monetary Union regardless of which member of the Union had
struck them; Swiss exchange was at a premium in most of the other
countries of the Union, and profits could be made by shipping the
silver currency to Switzerland. Moreover, there was no tendency
for the 5-franc pieces to go outside the Latin Union, because their
monetary value (down to 1919 and again later) was much greater
than the value of their bullion content.
This large influx of silver 5-franc pieces embarrassed tbe Swiss
Government, and further imports were prohibited on October 4,
1920. At a monetary conference held in 1921 Switzerland was
given authority to put the Swiss stamp on about 65,700,000 francs
which formerly had borne the stamp of other countries. The remain
ing 5-franc pieces, amounting to 166,000,000 francs, were to be held
for redemption (beginning in 1927) by the countries of their origin.
By a decree of February 18, 1921, the Swiss National Bank was
prohibited from counting the silver 5-franc pieces at more than their
bullion value, the Government giving the bank a note for the differ
ence between then' nominal and their bullion value.
L A T IN M O N E T A R Y U N IO N D IS S O L V E D
By a resolution of the Federal Council on December 13, 1926, the
Latin Monetary Union was dissolved,.resulting in the retirement
from circulation in Switzerland of gold coins of other countries belong
ing to the Union. This retirement was decreed by the Federal
Council on February 8, 1927, but the time for the withdrawal of these
coins was extended to the end of March to permit the public to convert
coins of the Union minted in other countries into legal tender without
loss. Some 111,300,000 francs in foreign gold of the Latin Monetary
Union were thus converted.
By the withdrawal of gold coins of other countries from circulation,
following upon the withdrawal of foreign silver coins, the Swiss mone
tary system has been completely nationalized.
S W IS S E X C H A N G E A T P R E M I U M
Exchange rates in New York on Switzerland, like those on France
and Great Britain, were at a high premium at the outbreak of the
war, reaching $0.21505 in July, 1914. The cause of the high rates
was largely the panic in London and Paris. Bankers in these markets
refused to discount bills for New York at a time of the year when
usually large amounts were discounted. The supply of sterling and
francs in New York being thus seriously curtailed, rates for these
currencies advanced sharply. In London and Paris, Swiss exchange
was at only a slight discount and consequently bills on Switzerland
also went to a high premium in New York since they were an accept
able means of payment in London and Paris. The Swiss franc was
1GG
FOREIGN CURRENCY AND EXCHANGE
down to par again in New York by December, 1914. The high
rates for Swiss francs current at the close of 1916 resulted mostly
from the support given sterling and French francs by United States
financial interests and from the difficulty of shipping United States
gold to Switzerland.
New York rates for Swiss francs again began to advance sharply
in the early summer of 1917 (after the United States entered t he war)
and continued at a premium until the middle of 1919. This was
owing partly to the embargo on gold shipments from the United
States and more particularly to the fact that the United States
dollar was artificially “ pegged” with the pound sterling and French
franc until March, 1919. After that time the Swiss franc began to
fall and continued this decline until 1925, when it again advanced
practically to par.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 100
and 101 is: January, 1914, to June, 1921, sight drafts, New York on
Zurich; July, 1921, to December, 1929, noon buying rates for cable
transfers, New York on Zurich. The average rates from January,
1914, to October, 1918, are computed from mid-points between the
monthly high and low rates; from November, 1918, to December,
1918, from monthly averages of daily rates; from January, 1919, to
December, 1929, the averages are as computed from daily rates by
the Federal Reserve Board. Quarterly averages are computed from
monthly averages.
For conversion purposes, the par value ($0,193) may be used from
1900 to 1913.
T
able
100.—
1914..................................... .
1915........................................
1910.........................................
1917..........................................
1918.....................................
1919..........................................
able
101.—
P e rio d
early
A
verage
A v e ra g e
ra te
Y ear
T
Y
Q
E
xchange
and
j 1914
M
ates of th e
A v e ra g e
ra te
«Y ear
$0.1950 19*20........................................
. 1871 1921 .....................................
. UU3 192*2..........................................
. 2102 ! 1923..........................................
.2289 i 1924..........................................
.1S98 j 1925..........................................
uarterly
R
onthly A verage
is s F r a n c
1915
1916
1917
is s
F
ranc
A v e ra g e
ra te
Y ear
1920 . . .
1927 . . .
i « » ..
1929.................
$0.1090
. 1735
. 1907
. 1803
. 1822
.1933
Sw
Sw
E
xchange
1918
1919
$0. 1931
. 1920
. 1926
. 1928
R
ates
1920
of
the
1921
F ir s t q u a r t e r _____________ ......... $0.1927 $0. 1864 $0.1920 $0.1990 $0.3255 $0.2053 $0. 1710 $0.1637
S eco n d q u a r t e r ..................... ................... 1937
. 1874
.1917
.1915
. 1971
.2442
.1796
.1774
T h ird q u a r t e r ....................... .........
.1888
.2177
. 1862
.2408
.1686
. 1790
.1684
<>>
F o u r th q u a r t e r ................... ................... 1937
.1882
.1932
.2258
.2049
.1814
. 1561
.1881
J a n u a r y ..................................... .......... . 1922
.1902
. 1925
.2261
.1568
.1984
.2066
.1789
F e b r u a r y ...................... .......
.1929
. 1851
. 1920
. 1996
.2229
. 2049
.1647
. 1636
M a r c h ....................................... .......... . 1930
. 1840
.1914
. 1989
.2275
.1708
.2045
. 1695
. 1868
.2028
. 1935
.1926
A p ril...........................................
. 1965
. 1793
.1736
. 2336
M a y ..............................................
. 1938
.1882
. 1996
.1920
. 1960
.2482
.1773
.1786
J u n e ............................................ ................... 1939
.1872
. 1898
.2025
.2507
.1890
.1821
.1701
J u ly _________ _____________
. 2043
.1854
.1891
.2098
.1808
.2521
.1762
.1655
A u g u s t...................................... ..........; (>)
. 1861
. 1889
.2283
.2454
.1773
. 1665
.1682
S e p te m b e r............ .................. ...................1998
. 1870
. 1883
.1789
. 2151
.2250
. 1626
. 1720
O c to b e r..................................... ................... I960
. 1893
. 1877
. 2198
.2073
.1786
.1823
. 1590
N o v e m b e r............................... ................... 1933
. 1878
. 1922
.2263
.2012
.1815
. 1553
.1880
D e c e m b e r................................ .......... . 1919
.1891
.1980
.2314
.2062
.1842
.1539
.1939
1 Indeterminable.
J N o t a v a ila b le .
167
FOREIGN CURRENCY AND EXCHANGE
T a b l e 101.— Q u a r t e r l y a n d M o n t h l y A v e r a g e E x c h a n g e R a t e s o f t h e
S w iss F r a n c — Continued
Period
1922
1923
1924
1925
1926
1927
1928
1929
First quarter....... ................... $0.19-16 $0. 1872 $0.1733 $0.1929 $0.1927 $0.1925 $0.1926 $0,192!
Second quarter......................... .1923 . 1807 .1766 . 1936 . 1934 .1923 . 1927 . 1925
1898 .1782 .1863 . 1937 .io:« . 1927 .1925 . 1924
Third quarter............................ ..1859
.1762 .1928 .1928 .1930 . 1930 .1925 . 1939
Fourth quarter..........................
January...................................... .1942 .1878 .1732 . 1934 .1931 .1927 .1927 .1924
February l.................................. . 1952 . 1880 .1737 . 1926 .1926 .1923 . 1924 . 1923
March........................................ . 1945 . 1859 .1729 .1926 . 1925 . 1924 .1926 .1923
April............ ................... ........ . 1945 . 1824 .1760 . 1933 .1930 .1923 .1927 . 1925
May............................................ . 1921 . 1803 .1772 .1935 . 1935 .1923 .1927 . 1926
June........................................... .1904 .1794 .1766 .1940 .1936 .1924 .1928 . 1924
July................-.................. ...... . 1910 .1755 .1819 .1941 .1936 . 1925 .1926 . 1923
August....................................... . 1904 . 1805 .1882 . 1940 .1932 .1928 . 1925 . 1924
September................................. . 1879 . 1786 .1888 .1931 .1932 .1928 . 1925 . 192»)
October....... ............................. . 1842 . 1787 .1918 . 1927 . 1931 . 1929 . 1924 . 1934
November........... ................... . 1844 . 1755 . 192S .1927 .1928 .1928 . 1925 . 1939
December................................... .1891 .1745 .1938 .1930 .1932 .1932 .1927 . 1924
SYRIA
__
", g
The Syrian pound note of 100 piastre»-,'Exchangeable in Paris at the
fixed rate of 20 French francs
has been the official currency
of Syria since May 1, 1920. It is issued by the Bank of Syria, under
French Treasury control. Prior to the British occupation in 1918, the
Turkish gold pound, par $4.3965, was the unit, but it was superseded
by the Egyptian pound after occupation.
For accounting purposes the Syrian-Lebahese gold piastre was used
from the latter part of 1926 until September, 1928, due to the wide
fluctuations during that period of the French franc, upon which the
Syrian currency is based. By decree No. 2094 of August 29, 1928,
following the stabilization of the French franc, the French high
commissioner abolished, as of September 1, 1928, for certain purposes,
and as of January 1, 1929, for all other purposes, the Syrian-Lcbanese
gold piastre.
TAIWAN (FORMOSA)
The monetary system of Taiwan (formerly called Formosa) is the
same as that of Japan, the yen of 100 sen, representing 833.33 milli
grams of gold 0.900 fine (750 milligrams of fine gold), with a par value
of $0.4985 United States currency, being the unit. (See Japan,
pp. 107-108, for exchange rates, etc.)
The central bank of the island is the Bank of Taiwan. By law
No. 38 of April, 1897, the bank was authorized to issue notes conver
tible into silver, but, because of the fluctuations of the silver yen, as
an emergency currency measure the bank was authorized in June,
1904, to issue notes convertible into gold. In April, 1911, the cur
rency system of Taiwan became uniform with that of Japan.
The Bank of Taiwan at the present time is privileged to issue notes,
in denominations of 1 yen and upward, which are at any time con
vertible into gold yen. It is required to hold gold and silver coin
and bullion as a reserve against all but 20,000,000 yen of its notes;
these 20,000,000 yen may be issued on security of government
paper money and securities, notes of the Bank of Japan, and other
bonds and commercial bills. Notes issued in excess of this limit are
subject to an annual tax of not less than 5 per cent.
168
FOREIGN CURRENCY AND EXCHANGE
TURKEY
The actual circulating medium in both European and Asiatic
Turkey is the Turkish paper pound (symbol £T or Ltq.) of 100
piastres, although theoretically the monetary unit is the Turkish
gold lira of 100 piastres established by the currency-reform law of
April 17, 1916. That law authorized also minor currency of silver;
and there are subsidiary coins of copper and nickel in piastre and
para denominations. (1 piastre = 40 paras.)
The Turkish gold lira, more commonly called the pound, represents
7.2166 grams of gold 0.916% fine (6.6152 grams of fine gold) and has a
par value of $4.3965. Because of the lack of a gold reserve the
present paper notes are much depreciated in value.
N O P R E -W A R P A P E R C U R R E N C Y
Turkey issued no paper currency prior to the World War. After
Turkey entered the war in 1915, in order to conserve the gold supply
and to meet the increased needs of the Government the following
issues of paper money (and the dates of the laws authorizing them)
were made:
Turkish pounds
Under the law of Mar. 30, 1015___________________ 5, 148, 000
Under the law of Aug. 18, 1915___________________ 5, 008, 000
Under the law of Oct. 18, 1915___________________ 8, 131, 000
Under the law of Dec. 22, 1915___________________ 73, 956, 000
Under the law of Feb. 4, 1916____________________ 31, 956, 000
Under the law of Aug. 6, 1916____________________ 31, 995, 000
Under the law of Mar. 28, 1917______________ _____ 2, 496, 000
Total............................................................................. 158,750, 000
In addition, the Imperial Ottoman Bank issued paper money of a
face value of 900,000 Turkish pounds; this, however, has since entirely
. disappeared from circulation.
The first of the issues of paper money was made repayable in gold
within six months after the conclusion of peace, but this condition
was canceled by article 58 of the treaty of Lausanne. The remaining
issues were guaranteed by German Treasury notes, which in turn were
guaranteed by gold deposits in the Reichsbank at Berlin. These
gold deposits, however, passed into the hands of the allied powers
after the war. Hence, the entire note issue is backed solely by the
credit of the Turkish Government.
N O T E C IR C U L A T IO N —C O U R S E O F E X C H A N G E
The present paper circulation is 153,000,000 Turkish pounds; new
notes to this amount were printed in London and have replaced the
old paper money issued during the war. The new notes are in denom
inations of 1, 5, 10, 50, 100, 500, and 1,000 pounds.
Turkish exchange, which was practically stable at par before the
war, held fairly well until the end of 1916, when gold was at a premium
of 2 to 1 over paper. Turkish paper money, however, showed no
precipitous decline until after the armistice; the main causes of this
decline were the adverse trade conditions and absence of a gold reserve.
B A S IS O F S T A T IS T IC S
The basis for the average exchange rates as given in Tables 102
and 103 is: 1910-1918, Sofia on Constantinople (National Bank of
Bulgaria) (leva converted; see Bulgaria, p. 39); January, 1919, to
169
FOREIGN CURRENCY AND EXCHANGE
December, 1929, sight drafts, Constantinople on New York. The
averages from 1910 to 1918 are the averages as quoted in Le Bulletin
Mensuel de Statistique de la Bulgarie; from January, 1919, to Decem
ber, 1929, the averages are computed from daily rates quoted by the
American Express Co. in Constantinople.
T able 102.— Y early A verage E xchange R ates
(P ound )
Average
rate
Year
Average
rate
Year
op the
T urkish L ira
Average
rate
Year
1910.................................. $4.4375 1917.............................. . $3.1831 1924................................
1911..............................
4.4467 1918................................ 3.3048 1925................................
1912.................................. 4. 4371 1919................................ 1.2520 1926................................
1913.................................. 4. 2672 1920................................ . 8436 1927................................
1914.................................. 4.3148 1921................................ . 6379 1928................................
1915....................
3. 8404 1922................................ .6154 1929................ ..............
1916.................
4. 5027 1923................................ .6067
T able 103.— Q uarterly
and M onthly A verage
T urkish L ira (P ound )
1919
Period
$1.5170
F irst q u a rte r................................................... —
Second q u a rte r....................................................... 1. 2100
T h ird q u a rte r......................................................... 1. 1400
F o u rth qu arter....................................................... 1. 1400
Ja n u a ry ....................................................................
1.6500
F eb ru ary ................................................................... 1.5000
M arch..................... 1................................................. 1.4000
1.20(H)
A pril...................... ...................................................
M ay ............................................................................ 1.2500
1.1800
Ju n e ...........................................................................
Ju ly .............................................................................. 1.1800
A u g u st....................................................................... 1. 14(H)
S eptem ber............................................................ . 1. 1100
O ctober................................. .................................... 1. 1900
N ovem ber................................................................ 1.2000
D ecem ber................................................................. 1.0200
Period
F irst q u a rte r........................................................
Second q u a rte r............................... ........................
T hird q u a rte r..........................................................
F o u rth q u a rte r........................................................
Ja n u a ry .......................................................................
F ebruary....................................................................
M arch.........................................................................
A pril________________ _____________________
M a y .............................................................................
Ju n e .............................................................................
Ju ly ..............................................................................
A ugust.......................................................................
Septem ber................................ ................................
O ctober......................................................................
N ovem ber...................: ............................................
D ecem ber..................................................................
1942°— 30-
12
1920
E xchange R ates
1921
1922
1923
$0.8633 $0. 6566 $0. 6468 $0.6417
.8738
. 7196
. 6569
.6412
. 6445
. 8775
. 6005
. 5879
.7598
.5308
.5575
.5558
.6390
.8700
.6106
. 5991
. 8400
. 6607
.6716
. 6457
.88(H)
. 6700
. f 582
. 6804
.8260
. 68.36
. 6578
.6801
. 8675
. 7672
. 6640
.61(H)
.9279
.7079
.6267
. 6558
. 668-4
.9376
. 6050
. 6270
. 8680
. 6495
. 6002
. 6577
. 8269
.6157
. 5963
. 5789
. 578.3
. 5847
.8019
.5191
. 5252
. 5492
.7200
. 5273
.5480
. 5335
.7574
. 6669
1925
1926
1927
1928
$0. 5257 $0. 5215 $0. 5055 $o. m i
.5211
. 6171
.5116
. 5349
. 5422
. 5066
. 5669
. 5133
.5241
.5049
.5007
.5520
. 5396
. 5265
.5045
.5150
.5229
. 5048
. 5194
. 5089
. 5182
. 5152
.5031
. 5050
. 5224
. 5033
.5090
.5120
. 5282
. 5434
.5222
.5120
.5200
.5390
. 5319
. 5109
.5530
. 5518
.5105
.5084
. 4998
. 5146
.5838
. 5505
.5639
. 5243
. 5096
.5169
. 5296
. .5654
. 5109
. 5084
.5580
. 5020
. 5249
.5009
.5019
.5178
.5325
. 4929
$0. 5298
. 5449
.5225
.5133
.5085
.4810
of the
1924
$0. 5252
. 5268
. 5265
.5405
.5261
. 5243
. 5251
. 5358
. 5330
.5117
.5040
. 5342
. 5413
. 5338
..5473
.5404
1929
$o. 4 m
.4H47
. 4789
.4705
. 4873
.4922
. 49(H)
.4907
. 48.53
.4780
.4797
. 4767
. 4803
.4748
. 4689
.4678
170
FOREIGN CURRENCY AND EXCHANGE
UNITED KINGDOM
The monetary unit of the United Kingdom is the pound sterling
(plural, pounds sterling)33 of 20 shillings or 240 pence, representing
7.9881 grams of gold 0.916% fine (7.3224 grams of fine gold), the par
value of which is $4.866563523 United States currency but customarily
regarded as $4.8665. The symbol of the pound sterling is
of
the shilling, “s.” ; of the penny, “d.” The £1 gold coin is called a
sovereign.
Apart from the metallic currency,34 the circulating medium consists
of the notes of the Bank of England, a private institution. The legal
minimum reserve requirement is 100 per cent gold against notes in
excess of a fiduciary issue of £260,000,000, with the proviso that, at
the request of the bank, the Treasury may, as occasion demands,
raise the limit of fiduciary issue above the established maximum for
a period of six months and that such authorization may be renewed
for a period not to exceed two years.
With the exception of the period extending from August, 1914, to
December, 1925, Great Britain has been upon the gold standard con
tinuously since 1821, when specie payments were resumed after a
period of about 24 years of inconvertible paper money because of the
Napoleonic wars.
B A N K O F E N G L A N D N O T E IS S U E
The Bank of England dates from 1694, although its present form
dates from the Peel Act of 1844. The bank is privately owned, al
though it acts as fiscal agent for the Government and serves as a cen
tral bank for the other banks. The bank, as arranged by the act of
1844, is divided into two departments, the issue department and the
banking department. Against its outstanding notes the bank must
hold coin or bullion to the extent of 100 per cent, with the exception
of a fixed fiduciary issue against which Government securities are
held; 25 per cent of this reserve may, under the law, be silver, but in
practice the bank ceased holding silver as security for its notes in
1853. The fiduciary issue was limited to £14,000,000, which was the
debt of the Government to the bank at the time of the Peel Act,
£11,000,000 of the £14,000,000 being the perpetual debt of the Gov
ernment to the bank.
The note circulation of the Bank of England thus could not increase
except as the new currency was issued in exchange for gold brought to
the bank. An exception, however, must be noted. Whenever any of
the joint-stock banks gave up their right to issue notes the Bank of
England could increase its fiduciary issue to the extent of two-thirds
of the lapsed issue. In this way, the fiduciary issue had grown to
£18,450,000 by June 30, 1914.
»»“ Sterling is a term used to denote m oney of stand ard w eight or q u ality, especially applied to th e English
sovereign. T he word has been generally derived from the nam e o f 4E asterlings’ given to the N orth
an m erchants w ho cam e to E ngland in the reign of E dw ard I and formed a ‘h a n sa ' or guild in Lon
f oldlerm
don. modeled on the earlier one of the m erchants of Cologne. T heir coins were of uniform w eight and
fineness • • • and thu s it is supi>osed gave th e nam e of the m onevers to a coinage of recognized fine
ness.” —Encyclopedia B ritannica.
* T he present m etallic currency of G reat B ritain and N orthern Ireland is com posed of the following:
G old co in s: Five pound (£5), issued only on special occasions: tw o pound (£2), issued only on special
occasions; guinea (21s.), no such coin is now in circulation; sovereign (£1); and half-sovereign (10s.).
S ilv e r co in s: C row n (5s.). discontinued; double florin (4s.), discontinued; half-crown (2s. 6d.); flofin
(2s.); shilling (is.); sixpence (6d.); groat (4d.), issued only on special occasions; threepence (3d.):
tw opence (2d.), issued only on special occasions; penny (id .), issued only on special occasions.
B r o n ze co in s: P enny (Id.): halfpenny (Pid.); and farthing (>4d.).
As indicated, not all of these coins are now current. Com m ercial quotations usually are m ade in pounds,
shillings, and i>ence.
FOREIGN CURRENCY AND EXCHANGE
171
C U R R E N C Y N O T E S O F T H E B R IT IS H T R E A S U R Y
The gold standard ceased to exist in Great Britain in August, 1914,
although it continued nominally until May 10, 1917, when the ex
portation of gold was prohibited by proclamation. On August 6,
1914, the currency and bank notes act was passed, authorizing the
Treasury to suspend the bank act and also to issue currency notes (in
denominations of £1 and 10s.), which were legal tender. The cur
rency notes were obligations of the Government and were to be re
deemable in gold at the Bank of England; they were issued to banks
to a maximum of 20 per cent of their deposit and current-account
liabilities. Later the banks obtained the notes by transferring to
the currency-notes account portions of their balances with the Bank
of England. The Government then borrowed these balances and
substituted Government securities. The banks could thus convert
their balances at the Bank of England into notes at will. The banks
paid interest to the Government for the notes at the prevailing bank
rate.
The same law of August 6, 1914, permitted the Bank of England
to expand its fiduciary circulation beyond the fixed amount. How
ever, such increase occurred only once and continued for only a few
days; it does not appear in any of the bank’s statements since the
situation was remedied before a statement was issued.
War-time inflation in Great Britain was not so much in the notes of
the Bank of England as in the new Treasury currency notes and in
bank credit. The currency notes increased during the courso of the
war and the years following and reached a maximum in 1920 of about
£370,000,000. Bank of England notes also increased, but these were
backed 100 per cent by gold, and the notes took the place largely of
gold formerlv in circulation; their circulation expanded from about
£40,000,000 in 1914 to about £115,000,000 at the end of 1920. In Oc
tober, 1928, Bank of England notes amounted to £78,300,000 and
Treasury notes to £291,000,000. The total notes in circulation at
the end of December, 1929, amounted to £379,600,000; on the same
date gold coin and bullion totaled £145,800,000.
R E C O M M E N D A T IO N S O F T H E C U N L IF F E C O M M IT T E E
The increase in circulation during and after the war attributable to
currency notes represents inflation, but only a part of the inflation
which took place in Great Britain. There was also credit inflation.
In January, 1918, a committee was appointed to consider the vari
ous problems of currency and foreign exchanges during the period of
reconstruction. This committee, known as the Cunliffe Committee,
in August recommended that steps should be taken as soon as pos
sible to reduce the uncovered or fiduciary issue of currency notes.
The method proposed was that the “ actual maximum fiduciary cir
culation in any year should become the legal maximum for the fol
lowing year.” This suggestion was adopted later by the Treasury,
which fixed the legal maximum fiduciary issue of currency notes for
1920 at the actual maximum for 1919. In each succeeding year the
legal maximum has been lower than in the preceding year.
The committee was of the opinion that the country required a min
imum gold reserve of about £150,000,000 and that a corresponding
amount of paper currency should be covered by 100 per cent of gold,
172
FOREIGN CURRENCY AND EXCHANGE
while the remainder of the paper currency could be fiduciary in char
acter. (It was estimated that the pre-war gold reserves consisted of
about £38,500,000 in the Bank of England and £123,000,000 in the
other banks and in circulation.)
R E S T O R A T IO N O F G O L D S T A N D A R D
In 1924 a second committee was appointed to consider amalgamat
ing the Treasury note issue with the Bank of England note issue.
This committee devoted itself chiefly to developing a program for the
restoration of the gold standard in England, which it considered nec
essary as a preliminary to this amalgamation.
On April 28, 1925, the Bank of England, already under legal obli
gation to redeem its notes in gold, was given a general license to ex
port gold, with the understanding that this meant in effect the free
export of gold. The gold standard act became a law on May 13 of
the same year and the gold and silver (export control) act of 1920
lapsed entirely on December 31, 1925.
A M A L G A M A T IO N O F N O T E IS S U E S
The currency and bank notes bill became a law on July 2, 1928.
This act provided for the amalgamation of the Treasury currencynote issue with the Bank of England issue.
By its terms the Bank of England was to take over the liability
on outstanding currency notes, and also to take over the Bank of
England notes, the silver, and the securities that serve as cover for
the notes. The excess of cover, amounting to about £13,000,000,
was to be turned over to the sinking fund of the Treasury. The
Bank of England was permitted to issue bank notes with legal-tender
powers in denominations of £1 and 10s., and a fiduciary issue of
£260,000,000 was provided for, corresponding closely to the combined
fiduciary issues of the bank and Treasury previous to the act. Sus
pension of the fiduciary limit may be made legal with the consent of
the Treasury.
W AR U N SETTLES EXCHANGE
Exchange rates in New York on London rose sharply upon the
outbreak of the World War in 1914 and in August of that year reached
a maximum of about $5.56 United States currency. This rise during
the early weeks of the war was occasioned primarily by the urgent
demand for funds in London. British banks, financial houses, and
merchants in need of funds to meet maturing liabilities called in
available funds from foreign countries as far as possible.
Financial conditions became more settled as the year advanced;
by December the rates for sterling in New York were back practically
to par and before the year closed were even below par. Rates in
New York continued downward, reaching a low point of $4.50 in
September, 1915, the main reason being the unfavorable trade balance
between Great Britain and the United States. To counteract the
depreciation of sterling and to provide funds in New York for the
purchase of United States goods the British Government borrowed
various amounts in the United States.
173
FOREIGN CURRENCY AND EXCHANGE
A R T IF IC IA L S T A B IL IZ A T IO N O F E X C H A N G E T H R O U G H " P E G G IN G ”
In order to procure collateral for additional borrowing in the
United States a plan was devised whereby dollar securities held in
Great Britain were loaned or sold to the British Government. This
plan was undertaken in the latter part of 1915, and Great Britain
collected, either through outright purchase or as a loan, a large amount
of United States securities, giving the original holders of the loaned
securities a bonus in addition to the interest or dividends which the
owners received. Funds obtained in this way provided means for
stabilizing exchange rates.
From early in 1916 to March, 1919, exchange rates were “ pegged”
at $4.76 and fluctuations were very slight. This artificial stabiliza
tion of exchange rates was accomplished through loan operations
undertaken in the United States. When “ unpegging” took place,
sterling rates in New York on London fell very rapidly. Large
importations of goods from the United States had caused the balance
of trade to be heavily against Great Britain. Furthermore, prices
had risen higher in Great Britain than in the United States, and on
the basis of the ratio between the price levels in the two countries
the pound sterling should have been considerably depreciated as
compared with the United States dollar.
The low point was reached in February, 1920, when the exchange
rate of the pound sterling in New York was about $3.20. This
extreme depreciation, however, was due to temporary market factors
and was lower than the underlying conditions warranted.
The deflation and general trade depression which began in the last
half of 1920 had its effect upon exchange rates. Prices in Great
Britain trended downward from April, 1920, to early in 1922. As
prices fell and came more into harmony with those in the United
States, and imports declined, there was an improvement in exchange
rates.
B A S IS O F S T A T IS T IC S
The basis for the average exchange rates as given in Tables 104 to
107 is: January, 1914, to June, 1921, sight drafts, New York on
London; July, 1921, to December, 1929, noon buying rates for cable
transfers, New York on London. The averages from 1914 to 1918
are computed from monthly average rates; from 1919 to 1929, the
averages are as computed from daily rates by the Federal Reserve
Board. Quarterly averages are computed from monthly averages.
For conversion purposes, the par value ($4.8665) may be used from
1900 to 1913.
T able
104.— Y e a r l y
Year
1914
1915
1916
1917
1918 .
1919.........
A verage E x change R ates o f th e
S t e r l in g
Average
rate
Y ear
$4. 9054
4. 7514
4. 7588
4. 7542
4. 7547
4.4258
1920.....................................
1921.....................................
1922.....................................
1923 ...................................
1924.....................................
1925......................................
Average
rate
B r it is h
Y ear
$3. 6643 I 1926.....................................
3. 8491 ; 1927.....................................
4. 4292 1928.....................................
4. 5748 1929.....................................
4.4171
4. 8289
P ound
Average
rate
$4. 8582
4. 8610
4. 8002
4.8569
174
FOREIGN CURRENCY AND EXCHANGE
T able 105.— Q uarterly
Period
and M onthly A verage E xchange
B ritish P ound S terling
1914
1915
1916
1917
1918
R ates
1919
of the
1920
1921
First quarter............................ $4,861 $4. 821 $4. 761 $4,754 $4. 753 $4. 7485 $3. 5949
Second quarter........................ 4. 879 4. 786 4. 760 4. 755 4. 754 4. 6501 3.909.5 $3.3. 8430
89.54
Third quarter.. _____ _____ 4. 981 4.712 4. 758 4. 755 4. 755 4. 2932 3. (»656 3. 6699
Fourth quarter____________ 4.901 4.687 4. 756 4. 752 4.757 4. 0315 3.4682 3. 9997
January...................................... 4.863 4. 842 4. 759 4. 758 4.753 4. 7658 3.6779 3. 7420
February.................. ............
4. 858 4. 820 4. 761 4. 755 4. 753 4. 7649
3. 875S
March.................................... . 4. 862 4.800 4. 763 4. 7.50 4. 753 4. 7147 3.3810
3. 7258
9111
April.......................................... 4. 870 4. 794 4. 765 4. 757 4. 755 4. 6617 3. 9310 3.3.9292
M ay............................................ 4. 882 4. 790 4. 758 4.755 4.755 4. 6676 3. 8477 3. 97.54
4.884 4.774 4. 758 4.754 4. 753 4. 6211 3.9498 3. 7815
June.......................................
4.901 4. 765 4.758 4. 755 4. 753 .4. 4287
July.........................................
3. 6321
August....................................... 5. 055 4. 693 4. 758 4.756 4. 756 4. 2720 3.8647
6219 3. 6536
September.................................. 4.986 4. 677 4. 757 4.755 4. 755 4. 1790 3.3.5102
3. 7240
October....................................... 4.945 4. 674 4.757 4. 752 4.755 4. 1840
3. 8729
November................ ................. 4. 890 4. 668 4. 757 4. 752 4V757 4. 0982 3.4751
3.
4372
December..... ........................... 4. 869 4.720 4.755 4. 752 4. 758 3. 8123 3.4924 3.4. 9702
1561
Period
1922
1923
1924
1925
1926
1927
1928
1929
First quarter . ..................—
Second quarter........................
Third quarter ___ ________
Fourth quarter..........................
January......................................
February...................................
M arch............... .......................
April..........................................
May............................................
June............................................
July.......... ................................
August.................................... .
September___ ____________
October......................................
November.................................
December..................................
$4. 3208
4. 4371
4. 4473
4. 5094
4. 2248
4. 3620
4. 3757
4. 4134
4. 4461
4.4519
4. 4464
4. 4647
4. 4307
4. 4385
4. 4799
4.6098
4. 6320
4. 5620
4.4220
4. 6546
4. 6908
4. 6957
4.6555
4. 6257
4. 6147
4. 5834
4. 5603
4. 5422
4. 5237
4. 3822
4.3601
$4.2858
4. 3440
4. 4435
4.5975
4. 2591
4. 3077
4. 2906
4. 3513
4. 3608
4.3199
4. 3704
4. 4995
4. 4605
4. 4870
4. 6097
4. 6958
$4.7768
4. 8368
4. 8543
4. 8462
4. 7817
4. 7724
4. 7762
4. 79.53
4. 8547
4.8604
4. 8596
4. 8.569
4. 846.5
4.8428
4. 84.59
4. 8498
$4. 8607
4. 8633
4. 8.587
4. 8501
4. 8579
4. 8634
4. 8608
4. 8622
4. 8615
4.8661
4.8634
4.8586
4. 8542
4.8503
4. 8488
4.8512
$4. 8523
4. 8565
4. 8596
4. 8754
4. 8526
4. 8503
4. 8.540
4. 8565
4. 8570
4. 8561
4. 8551
4. 8602
4. 8635
4. 8697
4. 8740
4. 8825
$4. 8767
4. 8813
4. 8559
4.8504
4. 8753
4. 8748
4. 8799
4. 8820
4. 8816
4.8803
4.8636
4.8535
4. 8.505
4. 8495
4. 8492
4.8524
$4. 851.5
4. 8507
4. 8492
4. 8763
4. 8499
4. 8521
4. 8526
4. 8532
4. 8508
4. 8482
4. 8510
4. 8485
4. 8482
4. 8699
4. 8775
4. 8816
T able 106.— Y early A verage E xchange V alue 1 of the B ritish P enny
T erms of the U nited S tates D ollar
Average
value
Average
value
in
Year
Average
value
1914................................ $0.02044 1920................................ $0. 01527 1921
1915................................ .01980 1921................................ .01 04 1927 ..
1916................................ . 01983 1922................................ . 01845 1928..............
1917................................ . 01981 1923................................ .01906 1929__
1918................................ .01981 1924................................ . 01840
1919................................ . 01844 1925....................
.02012
$0.02024
.02025
.02028
.02024
Year
Year
1 Based on the average exchange rates of the British pound sterling. The par value Is $0.02028.
175
FOREIGN CURRENCY AND EXCHANGE
T able
107.— M o n t h l y A v e r a g e E x c h a n g e V a l u e
of th e
T e r m s o f t h e U n it e d S t a t e s D o l la r
Month
1914
1915
1916
B r it is h P e n n y in
1917
1918
1919
January........................................................... $a 0202« $0.02018 $0. 01983 $0. 01983 $0. 01980 $0. 019S6
. 01985
February......................................................... .02024 .02008 .01984 . 01981 .01980
March........... ................................................ . 02020 . 02<XX) .01985 . 01979 . 01980
.01965
.01943
April................................... .......................... . 02029 . 01998 . 01985 . 019S2 . 01981
May...................................... ...................... . . 02034 . 01996 . 01983 .01981 .01981
. 01945
June.........................-...................................... .02035 . 01989 .01083 . 01981 . 01980 .01925
July................................................................. . 02042 .01985 .01983 .01981 .01980
. 01845
. 01780
August.......................: ........... .................... ... . 02106 . 01955 . 01983 . 01982 . 01982
Sept ember........................... ........................ . 02078 .01949 .01982 .01981 .01981
.01741
. 01743
October. ....................................................... . 02060 .01948 .01982 . 01980 .01981
November...................................................... . 02038 .01945 . 01982 . 01980 701982
. 01708
December............................ ........ ................. . 02029 .01967 . 01981 . 01980 .01983
.01588
M o n th
11)20
1921
1922
January...................... ................................... $0.01533 $0. 01559 $0. 01760
February........................................................ .01409 .01615 .01818
March............................................................. . 01553 .01630 .01823
Aprjl
. 01638 . 01637 .01839
M ay................................................. .............. . 01603 . 01656 .01863
June................................ ................ ......... . 01646 . 01576 .01855
.01610 .01513 .01853
July ................................ ..........................
August ............................................ ............. .01509 .01523 .01860
September................................................. . .01463 .01552 .01846
October....... .................................................. .01448 .01614 .01850
Nove uher.._____ ____________ _______ .01432 .01654 .01807
Decern her........................................................ . 01455 .01732 .01921
1923
$0. 01940
.01955
. 01957
. 01940
.01928
.01923
. 01910
.01900
.01893
. 01885
.01826
.01817
1924
1925
$0. 01775 $0.01992
.01795
.01989
.01788
. 01990
.01998
.01813
.01817
. 02023
.01800
. 01025
.02025
.01821
. 01875
. 02024
. 02019
. 01859
.02018
. 01870
. 02019
.01921
. 02021
. 01957
N ote.—T he above (able has been inserted owing to the fact that the exchange value of so many currencies
prior to the World War was expressed in pence as London was the financial center; and to the fact that the
exchange value of a number of currencies in this survey has been computed in accordance with the rates
given. Since 1925 the par value ($0.02028) may be used.
URUGUAY
Uruguay lias for its monetary unit the peso (plural, pesos) of 100
centesimos, representing 1.697 grams of gold 0.9167 fine (1.5273 grams
of fine gold), the par value of which is 81.0342 United States currency.
(The dollar mark [$] is used as the symbol for the Uruguayan peso.)
The circulating medium, apart from subsidiary silver and nickel
coins in peso and centesimo denominations, consists of the notes of
the Banco de la República Oriental del Uruguay (Bank of the Repub
lic), established in 1896. The Bank of the Republic is the official
bank of Uruguay; it has the sole right of note issue and acts as fiscal
agent for the Government.
“ MAJOR” AND "M IN O R ” BANK-NOTE ISSUES
Under normal conditions the bank is authorized to issue notes con
vertible into gold in denominations of 10 pesos and upward (emision
mayor, or major issue) to three times its paid-in capital. The circu
lation of smaller notes convertible into gold or silver at the bank’s
option (emision menor, or minor issue) is limited to one-half the paidin capital. During the World War the limits thus fixed were found
too small for the needs of business, and provision was made for the
issuance of additional notes, up to a total of 5,000,000 pesos, against
the deposit of gold in custody of the bank and commercial paper redis
counted for other banks. Again in 1918 the bank was permitted to
increase its circulation by 15,000,000 pesos to cover the loan made to
176
FOREIGN CURRENCY AND EXCHANGE
the French Government. Under various authorizations the permis
sible circulation December 31, 1925, was 100,083,000 pesos.
The bank is required to keep a gold reserve of at least 40 per cent
against its major issue of notes plus its sight obligations or deposits
nominally payable in gold (these deposits are known as gold accounts, to
distinguish them from others payable in silver or small bills of the minor
issue). Note issue in denominations of 10 pesos or above is limited
in relation to the capital of the bank, gold deposited by commercial
banks, and a war loan made to the French Government. The gold
reserve consists of bullion and foreign coins (United States, British,
etc.).
BANK’S ISSUING PRIVILEGE ENLARGED
In October of 1928 the Uruguayan National Assembly, with the
evident intention of granting to the Banco de la República more elas
tic privileges, decreed (Diario Oficial of Oct. 26):
A rticle 1. T h e B an co d e la R e p ú b lic a is a u th o riz e d to m a n a g e fre ely th e
coin ed gold in its d e p o sits o v e r a n d a b o v e th e su m of 55 ,000,000 pesos, re scin d in g ,
in so fa r a s w o u ld affec t th e h a n d lin g of t h a t excess, th e p ro h ib itio n c o n ta in e d in
p re v io u s law s.
A rt . 2. G o ld d e p o sits a b ro a d , th e p ro p e rty of th e B a n c o d e la R e p ú b lic a , w ill
b e co n sid ered as a n in te g ra l p a r t of th e go ld d e p o sits of th is b a n k .
A r t . 3. T h e b a n k is a u th o riz e d to m a k e a sp e cial issu e of n o te s of 10 peso s as
w ell as h ig h e r d e n o m in a tio n s of th is ty p e , e q u iv a le n t to th e d e p o sits of go ld h eld
b y th e b a n k a b ro a d , u p to a lim it of 15,000,000 pesos.
A rt . 4. T h e b a n k is also a u th o riz e d to p u rc h a s e fo reig n n a tio n a l-d e b t b o n d s,
a lre a d y issu ed , u p to a to ta l of 10,000,000 pesos.
At the end of April, 1929, the note issue outstanding totaled
70,000,000 pesos; the gold reserve, 66,000,000 pesos.
WORLD TRADE DEPRESSION AFFECTS EXCHANGE
For many years preceding the World War Uruguayan exchange
was stable. At the beginning of the war there was a depression in the
exchange value of the peso owing to the decreed inconvertibility of
bank notes and the consequent inability to ship gold at a time when
foreign remittances were in urgent demand; but this unsettled period
soon passed, and the well-sustained export trade brought a return to
normal exchange rates.
The world trade collapse of 1920 had a serious effect on Uruguayan
exchange. The important factors in the exchange situation were,
(1) the necessity of meeting payments on a rather large quantity of
imports ordered before the slump; (2) the impracticability of shipping
gold (since the suspension of gold payments had not been lifted), and
the consequent necessity of buying foreign drafts in a strong seller’s
market; (3) the general curtailment of credit; and (4) the depressing
influence of the Government’s borrowings to meet a series of fiscal
deficits. A distinct improvement, however, took place in 1924, which
continued through 1928; after the first quarter of 1929, however,
exchange again began to fall, continuing throughout the remainder of
the year.
177
FOREIGN CURRENCY AND EXCHANGE
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 108 and
109 is: 1900-1914, 90 days’ sight, Montevideo on London (sterling
converted; see United Kingdom, p. 174); 1915-1921, sight drafts,
Montevideo on New York; 1922-1929, cable transfers, New York on
Montevideo. The averages from 1900 to 1914 are computed from the
monthly averages quoted in the Anuario Estadistico (in shillings and
pence); from 1915 to 1921, the averages are mid-points between the
yearly high and low rates; from 1922 to 1929, the averages are as com
puted from daily rates by the Federal Keserve Board. Quarterly
averages are computed from monthly averages.
T able 108.— Y early Average E xchange R ates
of the
U ruguayan P eso
Y ear
A v e ra g e
ra te
Y ear
A v e ra g e
r a te
Y ear
1000 ..............................................
1001 .............
1902 ..............................................
1903................................................
1904 .
1905 __
1906
1907
1008 .
1909. .
$1.0470
1.0480
1. 0464
1. 0489
1.0487
1. 0481
1. 0499
1. 0522
1.0486
1.0468
1910.............................................
1911.............................................
1912.............................................
1913.............................................
1914. ..
1815.............................................
1916 .
1917. ..
1918 ..............
1919___
$1. 0463
1. 0456
1.0501
1.0482
« 1.0428
. 0970
1.0406
i. m i
1.2019
1.0989
1 9 7 0 ...........................................
1921.............................................
1922.............................................
1921.............................................
1921.............................................
1925.............................................
192».............................................
1927.............................................
1928.............................................
1929.............................................
$0. 8627
.6861
. 7940
.7 9 0 6
. 8227
. 9840
1.0147
1.0134
1.0266
.9 8 6 3
M onthly A verage E xchange R ates
U ruguayan P eso
of the
A v e ra g e
r a te
1January-July.
T able 109.— Q uarterly
Period
and
1921
First quarter........................... o
Second quarter.......................
Third quarter......................... $0. o6316
Fourth quarter....................... .6725
January.................................... o
February.................................. o
March.................. .................. o
April................... .................... o
May..........................................
June................. ....................... o0)
Ju ly ......................................... .6069
August ................................... . 6391
September............................... . 6489
October................................... . 6644
November................................ .6641
December............................... .6891
1Not available.
1922
1923
1924
1925
1926
1927
$0. 7754
. 7960
.8009
.8025
.7265
. 7924
.8073
.7811
.7976
.8094
.8140
. 8085
.7801
.7708
. 7946
.8421
$0.8410
.8181
. 7587
.7434
.8460
.8316
. 8455
. 8373
.8086
.8085
.7919
. 739 f
. 7446
. 7364
.7213
.7724
$0. 7821
.7771
. 7953
.9393
.7968
. 7826
. 7669
.7751
. 7803
.7759
.7664
. 7852
. 8344
. 8859
. 9546
.9774
$0.9660
. 9579
. 9946
1.0175
.9903
. 9546
.9531
. 9438
.9602
.9697
.9853
. 9989
.9995
1.0113
1.0248
1.0164
$1.0272
1. 0247
1.0028
1. 0046
1.0288
1.0310
1.0218
1.0271
1.0300
1.0171
1.0025
1.0019
1.0041
1.0021
.9990
1.0126
$1.0142
1. 0102
. 9990
1.0304
1.0152
1.0146
1.0128
1.0198
1.0071
1.0037
.9917
1.0014
1.0040
1.0188
1.0337
1.0387
VENEZUELA
1928
1929
$1.0313 $1.0226
1.0292 . 9783
1.0230 . 9799
1.0225 .9613
1. 0277 1. 0275
1. 0294 1. 0260
1. 0368 1.0162
1.0353 .9911
1. 0299 . 9770
1. 0225 . 9609
1.0228 . 9757
1. 0251 . 9857
1.0211 .9782
1.0184 . 9769
1.0230 . 9679
1.0261 . 9182
Venezuela’s monetary unit is the bolivar (plural, bolivares) of 100
centimos, representing 322.58 milligrams of gold 0.900 fine (290.32
milligrams of fine gold), the par value of which is $0.192948 United
States currency. In 1891 Venezuela adopted the unit of the Latin
Monetary Union and, at the same time, the gold standard. The
FOREIGN CURRENCY AND EXCHANGE
17 8
metallic currency consists of gold pieces of 10, 20, and 100 bolivares,
with subsidiary coins of silver and nickel in bolivar and centimo
denominations.
The currency employed in the commercial centers consists of bank
notes issued by the Banco de Venezuela (founded in 1890), Banco de
Caracas, Banco de Maracaibo, and Banco Comercial de Maracaibo.
PROVISIONS OF NEW BANKING LAW
The new Venezuelan banking law of July 18, 1927, authorizes the
free establishment of banks in Venezuela, which, provided they are
incorporated as native companies, shall have power to issue notes to
bearer convertible on demand. They must keep 10 per cent of their
reserves in gold and 60 per cent in Venezuelan securities. Circulation
of foreign bank notes is prohibited.
The banks of Venezuela have never issued notes up to the legal
maximum, nor has there been any recorded instance of inconvertibility.
The bank notes are not specifically declared legal tender—a function
reserved exclusively to gold—and as a rule they circulate only in the
State in which they are issued. In isolated parts of the country and on
the plains of the Orinoco the people will accept only silver and gold
coin.
Fluctuations of exchange from 1914 to 1924 were moderated by the
fact that gold was available for export. Under the stress of the world
commercial crisis of 1920-21 there were instances of the payment of
a small premium for gold over silver and notes, but the various forms
of currency soon returned to an equality.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 110 and
111 is: 1908-1912, mean rate for sight drafts, Banco de Venezuela on
New York; 1913-1925, mean rate for sight drafts, Caracas on New
York; 1926-1929, cable transfers, New York on Caracas. The rates
from 1908 to 1912 have been computed from monthly average rates
as quoted in the Anuario Estadistico (bolivares to the United States
dollar); from 1913 to 1925, from the monthly average rates quoted by
the Camera de Comercio, Caracas (bolivares to the United States
dollar); from 1926 to 1929, the averages are as computed from daily
rates by the Federal Reserve Board. Quarterly averages are com
puted from monthly averages.
T able 110.'—Y early Average E xchange R ates of the V enezuelan B olivar
Year
190S .................
1110!».......... ......................
K U O ............
1911 .......................................
1912.........................................
1913 . . .
1914
1915........................................
A verage
rate
$0. 1849
. 1S79
. 190)
. 1878
.1872
. 1898
. 1870
. 1883
Year
1 1913..........................................
i 1917........................
i 191S.........................................
j 1919 .....................................
1920 .......................................
| 1921
_____
1 1922 .
1923 .......................................
i
Average
rate
Year
$0.1934 1924..........................................
. 1949 1925..........................................
. 2179 | 1923..........................................
.2037 ! 1927..........................................
. 1839 . 1928..........................................
. 1056 i 1929 ........................................
. 1838
. 1894
Average
rate
$a
1923
. 1929
. 1926
. 1898
. 1925
. 1930
FOREIGN CURRENCY AND EXCHANGE
T a b le
111.— Q u a r t e r l y
1914
Period
Second quarter......................
Third quarter..........................
Fourth quarter. ...................
January...................................
February....................................
March....................... ................
April.......... . ....... ___
May............................................
June............................................
July............................................
August..:...............................
September.................................
October.. ..................... .........
November.................................
December............... .................
Period
and M o n th ly
Venezuelan
1915
.
179
A v era g e E x ch a n g e R ates of th e
B o l iv a r
1916
1917
1018
1919
1920'
1921
$0. 1942 $0. 1702
$0. 1912 $0.1866 $0. 1931 $0. 1946 $0. 2076 $0.2272
. 1908 . 1882 .1931 . 1949 . 2236 .2087 . 1877 . 1606
. 1847 . 1875 . 1934 . 1953 . 2226 . 2026 . 1803 . 1622
. 1836 . 1906 .1945 . 1947 .2211 . 1941 .1750 .1701
. 1919 .1842 .1931 .1946 .1773 .2387 . 1949 .1706
. 1908 . 1862 . 1931 . 1946 .2183 .2208 . 1946 . 1733
. 1908 . 1894 . 1931 . 1946 . 2273 . 2222 . 1931 . 1667
. 1908 . 1894 . 1931 . 1946 . 2315 . 2137 . 1873 . 1623
. 1908 . 1883 . 1931 . 1949 .2278 .2083 . 1876 . 1570
. 1908 . 1869 . 1931 .1953 .2114 .2041 . 1883 . 1626
.1887 . I87fi . 1934 . 1957 .2208 .2188 .1869 . 1656
. 1815 . 1883 . 1931 . 1963 . 2212 . 1946 . 1795 . 1608
. 1838 . 1866 . 1938 . 1949 . 2257 . 1944 .1764 . 1603
. 1869 . 1880 . 1912 . 1946 . 2217 . 1940 . 1736 . 1639
. 1815 . 1908 . 1946 . 1942 .2137 . 1938 . 1745 . 1689
. 1825 . 1931 .1940 .1953 .2278 . 1946 . 1770 . 1776
1922
1923
1924
1925
1926
1927
1928
1929
First quarter. ................... >:0. 1809 $0.1906 $0. 1919 $0. 1936 $0. 1938 $0. 1886 $0.1»20 $0. 1928
1840 . 1912 . 1919 . 1929 . 1940 . 1875 . 1925 . 1932
Second quarter_______ ___ .. 1833
. 18G8 . 1918 . 1923 . 1922 . 1915 . 1925 . 1932
Third quarter..........................
Fourth quarter . .............. . 1866 . 1885 .1932 . 1917 . 1902 . 1917 . 1930 . 1926
. 1783 . 1916 . 1905 . 1935 . 1935 . 1906 . 1917 . 1934
January.. . ............
February........................... ....... . 1808 . 1898 . 1919 . 1936 . 1939 . 1876 . 1919 . 1926
March.................... ....... ....... . 1836 . 1905 . 1934 . 1936 . 1940 . 1875 . 1925 . 1925
April ....................................... .. . 1855 . 1908 . 1927 . 1941 . 1910 . 1875 . 1925 . 1926
May............................... ............ . 1835 . 1912 . 1921 . 1932 . 1940 . 1875 . 1925 . 1933
June....................................... .. . 1848 . 1916 . 1908 . 1913 . 1940 . 1876 . 1925 . 1938
Julv......................... ............... . . 1806 . 1890 . 1910 . 1932 . 1932 . 1913 . 1925 . 1938
August...................... ...............- . 1821 . 1866 . 1912 . 1924 . 1936 . 1916 . 1925 . 1931
September .............................. . 1812 . 1847 . 1931 . 1914 . 1900 , 1917 . 1925 . 1926
October
............................ . 1825 . 1892 . 1931 . 1891 . 1900 . 1917 . 1925 . 1925
November................................. . 1862 . 1876 . 1934 . 1929 . 1900 . 1917 . 1928 . 1925
December................................... . 1912 . 1887 . 1931 . 1931 . 1905 • 11)17 . 1938 . 1929
YUGOSLAVIA
Yugoslavia employs as its monetary unit the dinar, (anglicized
plural, dinars) of 100 paras, representing 322.58 milligrams of gold
0.900 fine (290.32 milligrams of fine gold), the par value of which is
SO. 192948 United States currency. The metallic currency consists
of pre-war issues of 10 and 20 dinar gold pieces and subsidiary coins
in para and dinar denominations. The gold and silver coins have
practically disappeared from circulation.
r e s e r v e s o f n a t io n a l b a n k a g a in s t n o t e s
The principal circulating medium consists of the notes of the
National Bank of the Kingdom of the Serbs, Croats, and Slovenes,
established in February. 1920. This bank superseded the Privileged
National Bank of the Kingdom of Serbia, founded in 1883.
The National Bank is the sole bank of issue; its notes must not
exceed three times the amount of its metallic reserve. There is no
existing law as to what proportion of the reserves must be gold or
silver, so the proportion varies. The bank acts as fiscal agent for the
Government. The bank holdings at the end of December, 1929,
consisted of national gold coins to the amount of 1,046,251,000 dinars;
180
FOREIGN CURRENCY AND EXCHANGE
silver coins, 72,900,000 dinars; and sight drafts abroad, 267,931,000
dinars. Notes in circulation on the same date totaled 5,817,966,000
dinars.
ABSORPTION OF KRONEN DEPRESSES EXCHANGE
The decline in dinar exchange since the opening of the Belgrade
Bourse in February, 1919, has been due primarily to the increase in
fiduciary circulation. This increase was brought about by the absorp
tion of the Austro-Hungarian kronen (to the value of 1,200,000,000
dinars, at the rate of 1 dinar for 4 kronen, the actual ratio at that
time) which were found in the territory of the Kingdom at the time
of unification; and by advances made to the Government by the
National Bank to the amount of about 1,709,784,000 dinars in 1920
and 1,125,000,000 dinars in 1921. Thus the note circulation increased
from 350,000,000 dinars at the end of December, 1918, to about
4,688,000,000 dinars at the end of December, 1921. However, since
February, 1923, dinar exchange has shown some improvement.
BASIS OF STATISTICS
The basis for the average exchange rates as given in Tables 112
and 113 is: July, 1919, to December, 1929, noon buying rates for
cable transfers, New York on Belgrade. The averages are as com
puted from daily rates by the Federal Reserve Board. Quarterly
averages are computed from monthly averages.
T a b l e 112.— Y e a r l y A v e r a g e E x c h a n g e R a t e s o f t h e Y u g o sla v D in a r
Year
Average
rate
Year
Average
rate
A verage
rate
Year
1919................................. i $0.0773 1923............................... $0.0107 1927................................
1920.................................. .0368 1921............................. .0128 1928................................
1921
.0237 1925................................ .0170 1929 . .
1922 ..............................
.0135 1926................................ .0176
$0. 0176
.0176
.0176
1July-Deeember.
T a b l e 113.— Q u a r t e r l y a n d M o n t h l y A v e r a g e E x c h a n g e R a t e s o f t h e
Y u g o sl a v D in a r
Period
1921
1922
1923
1924
1925
1926
1927
1928 j 1929
First quarter................ ........! 0) $0. 01323 *0. 00989 $0. 01198 $0. 01619 $0. 01764 $0.01761 ?0. 01761 Í0. 01757
. 01387 . 01072 .01220 .01651 .01763 .01758 . 017(i0 . 01757
Second quarter............. ....... ■ (■ )
Third quarter.............. .......$0. 02218 . 01234 . 01073 .01257 . 01779 .01766 . 01759 .01760 . 01756
Fourth quarter............. ............. 01455 . 01471 .01153 .01456 .01771 .01766 .017611 .01758 . 01767
Januarv........................ ........ 0)
.01381 .00956 .01134 . 01635 .01770 .01764 .01762 .01758
February.......................
. 00968 .01223 .01622 . 01761 .01760 .01760 .01757
<■ ) .01298
March............................ .......
.01290 .01042 .01237 .01601 .01761 .01759 .01760 . 01756
.......
o
April.............................. ....... 1 <•)
. 01330 . 01017 .01239 .01615 .01761 .01758 .01760 . 01756
May............................... ........ 0)
.014.50 . 01050 . 01235 .01627 .01762 .01758 .01760 . 01757
.01380 .01148 .01185 .01711 .01765 .01758 . 01760 .01757
June.............................. ........: «
July................................ ........1 .02563 .01222 .01067 .01182 . 01761 . 01767 .01758 .01760 . 01756
August. ...................... ....... . 02330 .01186 . 01057 . 01236 .01795 .01765 .01760 . 01760 .01756
September..................... ............. 01912 . 01293 .01094 . 01352 .01780 .01766 .01760 . 01760 .01756
October ........................ ....... .01523 . 01622 .01175 . 01424 .01773 . 01767 .01761 . 01758 .01762
November.................... ....... .01306 . 01569 .01149 . 01449 .01770 .01766 . 01761 .01758 .01767
December....................... .............01537 .01223 .01136 .01496 . 01770 .01765 . 01762 . 01759 . 01772
1Not available.
APPENDIX
I. MONETARY SYSTEMS OF PRINCIPAL COUNTRIES SUMMARIZED
The following tables summarizing the monetary systems of the
principal countries of the world as at the end of 1928 are quoted from
“Monetary Units and Coinage Systems ” issued by the Office of the
Director of the Mint, United States Treasury Department.
GOLD-STANDARD COUNTRIES
Countries where gold may legally be exported and where convertibility of notes
into gold, gold bullion, or gold exchange is in force or contemplated by laws already
enacted, coupled with the stabilization of exchange at a fixed ratio with gold.1
Gold content of
monetary unit
Country
Monetary unit
Grams
Grains
United
States
equiva
lent
value, of
mone
tary
unit
Value of
United
States
dollar in
foreign
mone
tary
unit
named
N O R T H A M E R IC A
23.22
$1.00
1. 50403
Alaska, Porto Rico, and Hawaiian
Islands.
113.0016 4. 8000 0. 20548
British colonies of Bermuda and West Pound....................... 7. 3224
Indies Islands.
1.00
1. (X)
the unit.
1. ,rt04U3
23 22
1.00
1. 00
.25
4.00
for 1 U. S. dollar.
1. 50403
23. 22
1. 00
1.00
J . S. irold
1.00
11.00
is the basis.
.9097
French colonies of Miquelon, St. Pierre, Franc......................... . 05895
.0392 25. 5238
Martinique, and Guadeloupe.
.40323
0.2227
. 2080 3. 7315
1. 504005 23 22
1.00 * 1. (X)
.20
5.00
"for 1 U. S. dollar.
.75
11. 5743
. 4985 2. 003
1.00
1.00
Dollar ......................
23. 2220 1. 00
1.00
1. 5048
23.2220 1.00
1. 5048
1.00
.50
.7524
11.6113
2.00
4. 4804
. 193
5.18
Virgin Islands (U. S.)..............................
.2903
S O U T H A M E R IC A
22. 4018
2.825
22.0002
4. 0441
113. 0010
.9048 » 1. 0365
. 1217 8. 2195
.9733 1.0274
. 2000 5.00
4. 8000 .20.548
9. 3335
. 0048
. 05895
.9097
the unit.
4.4804
Venezuela..................................... ............. Bolivar_____ _____ .2903
15 pesos= 1 dollar.
*00 pesos=l quetzal.
*Actual circulation convertible at 44 per cent of this face value.
♦ See text of this present handbook, p. 87.
.4020 2.4878
.0392 25. 5238
.9048 »1.0365
.1930 5.18
Chile.............................................. r . ........
Guiana:
(<)...............................
1. 4510
. 18300
1. 40447
.30093
7. 3224
181
182
FOREIGN CURRENCY AND EXCHANGE
Country
Bulgaria.
Czechoslovakia
Danzig (free city)
Denmark
Estonia.
Finland
France (including Corsica)
Germany
Great Britain
British possessions:
Gibraltar.
Guernsey
Jersey
Malta
Greece (including Crete)
Hungary
Iceland..............
Italy (including Sicily and bar .inia)
Irish Free State
Latvia
Liechtenstein.
Netherlands
Norway
Poland
Rumania
Sweden
Switzerland
Union of Soviet Socialist Republics
^B h u tan ...............—
✓ Borneo, Sarawak, and Labunn.
V British India
✓ Ceylon
Cyprus.
V Federated Malay States
Iraq (Mesopotamia)
✓ Nepal
v* Netherland East Indies
Palestine
v Philippine Islands.
✓ Siam.................. ✓ Straits Settlements
JK
V Syria
Belgian Congo.
Egypt..............
Italian Somaliland.
Tripoli
Union of South Africa
Southwest Africa
Value of
United
States
dollar in
foreign
mone
tary
unit
named
1S3
FOREIGN CURRENCY AND EXCHANGE
Gold content of
monetary unit
Monetary unit
Country
United
States
equiva
lent
value of
mone
tary
unit
Value of
United
States
dollar in
foreign
mone
tary
unit
named
0.9097
50. 0392
25. 5238
Unit is of same
value as British
shilling.
. 2433
Grains
Grains
-
-
A f r ic a - - c o n tin u e d
Algeria....*..... .....................
Algerian Sahara.................: —
Comoro island. _......................
Dahomey................................
French Equatorial Africa —
French Guinea___
—
French Somaliland.. -------French West Africa ______
Ivory Coast--------- ------------Kamanin.............................
Madagascar..................
..
Morocco. . ..................... .......
Reunion Island.......................
Senegal.......................................
Togo...........................................
Tunis.......... ....... ....... ..........
British East Africa:
Kenya------....
Uganda.... ......................
Tanganyika.....................
Franc (French).
Basutoland..........................................
Bechuanaland..
........................
British West Africa:
Gambia.........................................
Gold Coast...................................
Nigeria.........................................
Sierra Leone_____ __ ___
Nyasaland.............
Rhodesia (Northern and Souti.ern)
St. Helena Island........................
Swaziland______ _______ _______
British Somaliland...........................
Mauritius Island................................
Pemba Island....................................
Zanzibar Island.................................
¡^Shilling.
Under mandate of
British Fast Af
rica.
Pound (British).
O C E A N IA
t
f
n
°
f
7.3224
113.001«
Rupee (B ritish 13M» rupees to £ 1 ...
India).
«-^Australia, includes Papua (New Guinea) Pound.
and adjoining islands.
y f New Zealand, TAjhhhiul. Fiji, Solomon, ___ do..
New Hebrides, Tonga (Friendly), and
other islands.
<r Frencii^oloBwsc Society, New Cale- Franc (French)__
fima, Marquesas, and other islands.
C
0.05895
2. 73Iff l
3224 113.0016- /
3224 - 113.0010
I.
. 2054I-S
4 . HI
. 20548V)
25. 523H -, .
O c e 4:
SILVER-STANDARD COUNTRIES
Countries wherein the value measure and principal circulating medium is silver,
other circulating media being convertible into silver only.
Country
/
.^ikIo-C hm a\F rend]/
Hong Kong <
Persia.
Monetary unit
DeHarVvuan
Piastre..__ !
Thaler (Italian)
' Based on United States $0.€0 per fine ounce, the approximate average price ofj
‘ See also text of this present handbook, p. 75.
/
E ritrea.
during 1926 and 1927.
L ft."*
184
FOREIGN CURRENCY AND EXCHANGE
N O N F I X E D O R N O N M A I N T A I N E D B A S IS C O U N T R I E S
C o u n trie s w ho se u n its a re n o t m a in ta in e d a t a d e fin ite re la tio n to e ith e r gold
or silv er, u n it v a lu e s b e in g d e p e n d e n t u p o n th e m a rk e t v a lu e of th e m e ta l in th e
coin s t h a t c irc u la te o r u p o n th e r a te a t w h ich th e c irc u la tin g m e d iu m is ex ch an g e
a b le fo r gold o r its e q u iv a le n t.
Country
N O R T H A M E R IC A
Honduras......................
S O U T H A M E R IC A
United
States
equiva
Monetary unit lent of
unit as
defined
by law
United
States
equiva
lent of
unit's ap
proximate
circulat
ing
value
Value of
United
States
dollar in
foreign Depreciation (approxi
monetary mate) of monetary
units
named, units from par
on basis
of data in
preceding
! column
Lempira............. $0.50
Bolivia.
B r a z il...
Boliviano...........
M Ureis................
.3650
.5462
$0.3322
Peru.........
Uruguay..
Libra..................
Peso....................
4.8666
1.0342
3.90
1.02
Portugal............... ................
Spain (including Balearic Peseta.................
Islands).
Yugoslavia............................ Dinar..................
1. 0805
.193
.193
. 0449 22.2717 96 per cent.
.163
6.1350 16 per cent.
.0176 56.8182 Stabilized at about oneeleventh of face value.
EU R O PE
^Afghanistan.
.1196
3.01
8.3612
9 per cent.
Stabilized for payment
of public dues at 4,567
paper to 1 gold.
Stabilized at about 80
per cent of face value.
1 per cent.
-Afttirrr-:
A F R IC A
SO'
Abyssinia..
Liberia
Morocco.
Portuguese colonies: Angola
(West AfricaLi-Sfast Africa
(including. Mozambique),
Guinea, Azores, Madeira,
Cape Verde, and other is
lands.
Spanish colonies: Bio do Same as Spain
Oro, Guinea, Fernando (above).
Po, Morocco (zone in),
Canary Islands.
O C E A N IA
’ Carolina and other islands
under mandate of Japan.
—
s
. 4oy -
2. IT***1. * pel OTfrt. '
Ja
*Unit not defined by law.
*Law's definition not supplied.
*This valuation is very approximate.
4 Refer to text; see index.
* Principal circulating medium is British silver. Liberian and United States silver $4.S0=£l British
silver.
n. GOLD HOLDINGS OF CENTRAL BANKS AND GOVERNMENTS
The figures in the table which follows, taken from the Federal
Reserve Bulletin of April, 1930, trace the gold holdings of central
(that is, Government owned or controlled) banks and governments
from 1913 to 1929. They bring out the world maldistribution of gold
185
FOREIGN CURRENCY AND EXCHANGE
stocks, to which maldistribution some economists attribute the serious
fall in wholesale prices that has been apparent in many quarters
recently.
G old H o l d in g s o f C e n t r a l B a n k s a n d G o v e r n m e n t s , 1 9 1 3 -1 9 2 9
[In thousands of dollars, converted at par of exchange]
/
End of year—
Total
1913.................................
1914__
1915...
1916..............................
1917............. ...................
1918....
1919........ .......................
1920 . .
1921....
1922 ........................ .
1923__________ _____
1924. ..........
1925............. . ...........
1926............. ..................
1927_________ ______
1928.................................
1929.................. .............
4,932.445
5,419,867
6, 226,898
6. 618, 404
7, 126, 340
6, 783,361
6,768, 245
7, 205,805
7.994. 314
8,380,754
8,612, 199
8, 933, 486
8. 935,922
9, 191,219
9, 546,363
10,010.178
10, 290,638
End of year—
End of year—
1913..................................
1914
1915...
1916.......
1917..................................
1918..
1919..................................
1920..
1921..................................
1922..................................
1923..
1924..................................
1925..................................
1926................................
1927.................................
1928..................................
1929..................................
i Austrian account only.
Aus
tralia
1,290,420
1,206. 487
1,706,922
2,202,157
2. 523,084
2, 657,885
2, 517,722
2,451,182
3' 221, 215
3, 505, 551
3. S33, 735
4,090,067
3,985, 399
4.083,380
3,977, 181
3, 740, 111
3,900, 160
256,126
241,539
238,906
265, 540
288,020
304,466
336, 707
473,913
472,415
472, 529
466,495
443,896
450,592
450, 557
529,134
607, 290
433,932
21,899
38,932
73,484
78,351
85, 050
104,143
116, 796
115,409
113, 487
116,499
121,088
121, 200
127,838
106,975
105,121
108, 430
88, 882
Chile
Colom Czecho
bia slovakia
19
303
251
241
340
Brazil Bulgaria Canada
1913
89,610
1914................................ 44, 805
1915................................ 24, 588
1916................................. 24, 588
1917.................................. 24, 588
1918................... . ... 26, 227
1919.......................... .
26,227
32, 784
1920.............. .............
1921................................. 42, 619
1922........................ ......... 46,152
1923................................. 48.669
1924................................. 53.803
1925.............................. . 54, 305
1926......................... .
56,329
1927................................ 100,746
1928............................... 148,555
1929.................................. 150,395
Aus AustriaHun
tria
gary
United Al Argen
States bania tina
10,615
10,615
11,773
13,124
12,159
12,352
7,137
7,155
7, 335
7.415
7, 629
7, 792
7,981
8,464
9, 198
9, 529
9,997
116, 572
99, 126
126,545
131,5.58
139,823
129, 761
129,712
112,(505
95,073
146,588
127, 109
151,467
156, 768
158,105
151,978
113,948
77, 626
251,421
213, 757
138, 758
58,759
53, 717
53,072
45, 111
11
» 16
»9
»
1.313
1, 560
2,087
7. 388
11,883
23, 743
23, 727
Bel
gium
48,062
50,963
50.720
50.720
50, 720
50.720
51,417
51,438
51,451
51,901
52, 204
52,543
52,856
86, 214
99,878
125, 576
163, 351
Den- Ecuanmrk: ! dor
19,666
24. 506
29,833
42, 847
46. 611
52, 159
60. 807
60.992
61, 192
61. 173
56,171
56,145
56,085
56,007
48, 780
46, 298
46, 204
1,330
1,330
1,330
9,039
23,413
24.384
32, S93
34,025
34,025
34,025
34,025
34,025
10,303
7,439
7,363
7,695
1,875
6, 774
14, 599
17,901
19,962
24,271
21,774
27
4,053
12,545
20,458
27.020
27.020
27, 213
27,032
29, 737
34. 237
37, 249
Egypt England Estonia P'inland
France
Germany Greece Guate
mala
6,673
19,367
35, 264
29,318
19,075
16,357
16,475
16, 475
16, 510
16, 619
16, 658
16,510
16, 708
17,439
18,388
19,006
18,789
1942°—30----- 13
170,245
428, 223
389, 203
402,971
422. 592
523, 089
583, 211
762,911
763;719
751, 597
754, 400
75?; 033
703,482
735, 421
741,698
749, 767
710,645
94
1,476
1,427
1,318
1,353
1,377
1,710
1,717
6,948
678,858
8, 236
802,583
8,230
967,950
8, 232
652,886
8,227
639, 682
8, 234
664,009
694,847
8,227
8,227
685, 517
8,227
690, 141
8,371
708, 403
709, 480
8, 242
8,354
710,394
8,357
710,968
8,250
711, 106
7,979
954,000
7,672 1, 253, 500
7,608 1,633,402
278,687
498, 508
582, 443
600, 377
573, 249
538, 861
259,519
260,028
237, 102
239, 3.54
111,247
180,939
287,763
436, 235
444, 158
650,127
543,838
4,825
7,086
10.939
11,378
11,907
10, 246
10,744
10,765
10,770
5,944
7, 182
7,533
7,833
8,729
9,903
7,196
8,326
2,046
1, 124
1, 111
2,535
1,955
1,977
2, 341
186
G
old
FOREIGN CURRENCY AND EXCHANGE
H
o l d in g s
of
C
entral
B
Hnngary
End of year1913..
1911..
1915..
1916..
1917..
1918..
1919.
1920.
1921.
1922.
1923.
1924.
1925.
1926.
1927.
1928.
1929.
anks
India
123,921
80.008
67,881
78, 127
90,118
64,231
128,819
116, 249
118, 341
118,341
108, 609
C, 872 108, 009
10,365 108. 609
29,526 108, 609
34, 432 119,097
35,169 123,988
28,405 128,076
End of year—
1913..
1914..
1915.
1916..
1917..
1918..
1919..
1920..
1921..
1922.
1923..
1924..
1925.
1926.
1927.
1928.
1929.
and
G
overnm ents,
Italy
Japan
Java
265,476
269, .584
203, 278
223, 400
206, 721
202, 403
200,098
204,372
210, 739
217, 284
215, 699
218, 382
218,825
220,732
239, 177
265, 732
273,001
64,963
64, 062
68, 187
113,411
229, 980
225, 622
349,971
556, 475
610, 822
605, 532
602, 343
585, 738
575,768
561,810
541,870
540,873
542,475
10,398
15,118
12,053
29,452
31,517
43, 423
69,134
88. 214
58, 728
61,306
62,809
53, 726
73,394
79, 369
71, 640
68. 264
56, 101
Now
Mexico Netherh in d s
Zealand Norway
16,683
4,689
6,900
6,238
6, 722
60,899
83, W
172, 531
230, 216
280.690
277,155
250, 204
255, 729
243, 600
233,879
233,876
202,854
178,080
106,231
100,796
174,692
179,881
25,325
30,250
33,827
37,414
39, 161
39,506
38,260
37, 263
37, 394
38, 367
38, 290
37, 579
37, 667
38,007
38,280
34. 873
31,978
1913-1929—Con.
11,892
10,290
13,837
33,027
31,193
32, 691
39, 590
39,472
39, 474
39, 474
39, 472
39, 457
39,456
39,457
39,458
39, 362
39,302
End of year—
Russia
South
Africa
Spain
1913................................................
1914................................................
1915»................................................
1916................................................
1917....................................... ........
1918................................ ...............
1919................................................
1920................................................
1921................................................
1922..............................................1923...............................................
1921..............................................
1925................................................
1926................................................
1927................................................
192S...............................................
1929................................................
872,367
891,542
830, 572
7.58,962
666, 523
«
(>)
w
(*)
2,609
45,043
73,047
93.858
84,605
97,043
91,887
147,021
34,377
30,693
32,056
27.048
30,036
33,340
35,540
50,441
49, 361
51,692
52,500
63,098
43.594
36, 703
40.032
39, 273
36, 474
92,627
110,611
167,375
241,423
379, 614
430,070
472,064
174, 228
484, 984
487, 278
487,841
489,294
489, 630
493, 489
502, 484
493,093
495, 227
Peru
19.933
20,872
19,753
19. 164
20.084
19. 437
19, 938
18,668
Latvia
2, 123
2,512
3, 188
4, 555
4, 548
4. 559
4, 570
4, 584
4,618
Lithu
ania
1,519
1.645
3,078
3,229
3, 136
3,320
3,427
3,508
Ru
Poland Portugal mania
1,644
2,954
5,931
9, 769
13,099
19, 949
25, 793
26,677
.58,041
69, 685
78, 598
8,140
8.662
9, 195
9, 247
9,261
9, 263
9,265
9,267
9, 267
9,267
9, 267
9, 267
9, 267
9,267
9, 267
9, 267
9, 267
29. 240
29. 733
42, 647
95, 201
34' 531
34, 466
34, 467
34, 794
34. 794
42,050
46, 364
47, 822
48, 537
49. .588
50. 80.5
49. 324
55, 112
Yugo
Sweden Switzer
land Uruguay slavia
27,372
29,088
33, 385
49, 183
65, 514
76,532
75, 351
75, 516
73, 631
73, 428
72, 8.53
63,508
61,647
60,
162
61,68,5
63. 223
65,569
32,801
45,922
48. 275
66, 585
69.02.5
80,041
99. 779
104, 780
106,058
103.283
103. 669
97,642
90, 140
91,050
99, 785
102,874
114,832
10,826
13,483
22,530
33, 251
42,003
46,718
56, 756
57, 307
56, 813
56,812
56,812
56,809
56,815
56,823
59,319
68.365
68, 205
11,194
11,034
12,381
12,321
12,310
12.306
12,233
12,386
14,318
12,355
13,286
13,965
14, 657
16,620
17,133
17,566
18,426
* Figures not available.
N o t e . —Figures are for central banks only, except in the following countries:
United States—Treasury and Federal reserve banks; Argentina—Government
conversion fund and Bank of the Nation; Australia—Prior to 1920, Treasury
note reserve; subsequently, Commonwealth Bank note reserve; Brazil—Prior
to 1923, guaranty of currency fund; subsequently, Bank of Brazil and Govern-
FOREIGN CURRENCY AND EXCHANGE
187
ment stabilization fund; Canada—Government reserve against Dominion notes
and savings-bank deposits, and gold deposits of chartered banks in the central
reserve; Chile-—Prior to 1926, Government conversion fund; subsequently,
Central Bank of Chile; Czechoslovakia—Prior to 1926, banking office of Minister
of Finance; subsequently, Czechoslovak National Bank; England—Bank of
England and, prior to 1925, Government reserve against currency notes; India—Currency and gold standard reserves of Government; Italy—Prior to July, 1926,
three banks of issue; subsequently, Bank of Italy; Japan—Domestic holdings
of Bank of Japan and Government; New Zealand—Six banks of issue; South
Africa—Prior to 1921, gold at home of note-issuing joint stock banks; subse
quently, South African Reserve Bank.
III. LEGAL-RESERVE REQUIREMENTS OF SOME FOREIGN CENTRAL
BANKS
The stability of any currency is dependent a priori upon the strict
observance by the issuing authority of all legal stipulations regarding
reserves. The table following—which was furnished by the Federal
Reserve Board, and which appeared in the August (1930) issue of the
Federal Reserve Bulletin—gives the legal-reserve requirements for
certain of the countries against whose fiduciary circulation reserves
must be maintained.
L
egal-
Country
R
eserve
R
e q u ir e m e n t s
L ia b ilitie s against
which reserves must
be held
Notes plus other de
mand liabilities,
minus amount rep
resented by Federal
loan debt.
Belgium............ Notes and other demand liabilities.
F
o r e ig n
C
entral
B
anks
Reserve require
ments
Gold
Gold and
foreign
exchange
P er cent
P e r cent
25
30
mand liabilities.
Chile............... .
Colombia......... Notes and deposits—
Czechoslovakia Notes and other demand liabilities.
of
*36
»12M
Qualifying provisions, etc.
exchange may not exceed two133H Foreign
thirds.
l »24 Reserve ratio to be increased at 6-year
intervals ending January 2, 1938, the
successive ratios being 24 per cent, 28 per
cent, and 33H per cent.
40
>*50 Silver in reserve may not exceed one-fifth.
Foreign exchange may consist only o{
deposits payable in gold on demand or
on 3 days’ notice in New York or
London.
**33H Foreign exchange net. Silver ineligible
after March 10, 1931. Government con
sent necessary for suspension of reserve
requirement
*50 Foreign exchange may consist only of
demand deposits payable in New York
or London.
*60 Foreign exchange may consist only of
demand deposits.
*25 Reserve ratio of gold and foreign exchange
to b e increased to 30 per cent by the end
of 1930 and 35 percent by the end of 1935.
Gold to constitute at least one-half the
reserve.
per cent reserve must be held against
33W 100circulation
in excess of 100 gulden per
capita. Excess also subject to tax.
Foreign exchange may consist only of
demand claims on the Bank of England.
1 May legally include silver.
* The bank may, subject to the payment of a tax, permit the reserve ratio to fall below the legal minimum.
188
FOREIGN CURRENCY AND EXCHANGE
L e g a l -R e s e r v e R e q u ir e m e n t s o f F o r e ig n C e n t r a l B a n k s — Continued
Country
L ia b ilitie s against
which reserves must
be held
Denmark
Notes.
Ecuador...
Notes and deposits.
.Egypt........
Notes
England...
Notes in excess of fidu
ciary issue of £260,000, 000.
Notes and other de
mand liabilities.
Notes and other de
mand liabilities in
excess of 1,200,000,000 maikka.
Notes and other de
mand liabilities.
Notes............ ...............
Notes and other de
mand liabilities.
Notes............................
Deposits due in 30
days or less
Special deposits..........
Notes plus other de
mand liabilities, mi
nus amount repre
sented by State
debt.
Notes and other de
mand liabilities.
Notes in excess of fidu
cial y issue of 120,000,000 yen.
Notes and other de
mand liabilities.
Notes............................
Notes............................
Notes and other de
mand liabilities.
Notes in excess of fidu
ciary issue of 250,000,000 kroner.
Notes and other de
mand liabilities.
Notes and other de
mand liabilities.
Notes and other de
mand liabilities.
Notes............................
Estonia__
Finland__
France.......
Germany..
Greece.......
Guatemala.
Hungary...
Italy..
«Japan
Java..
Latvia
Lithuania.........
Netherlands__
Norway______
Reserve require
ments
Gold and
foreign
exchange
Gold
*30
P er cent
P er cent
* 50 Foreign exchange may consist only of the
bank’s non-inteiest-bearing demand
balances with Bank of Norway and
Swedish Riksbank, less indebtedness
to these 2 banks, and non-interest-bear
ing demand balance on giro account
with German Reichsbank. Government
consent necessary for suspension of reseive requirement.
*50 Foreign exchange may consist only of
deposits payable in gold on demand or
on 3 days’ notice in New York or
London.
50 The original requirement was a gold re
serve ratio of 50 per cent, but on Oct. 30,
1916, the bank was authorized to sub
stitute British Treasury bills for gold.
Fiduciary issue may be increased by
authorization of Treasury.
Foreign exchange net. Government con
sent necessary for suspension of reserve
requirement.
100 Foreign exchange may consist only of
undisputed balances with foreign
correspondents.
(*)
35
*30
*40 Maturity of foreign exchange in reserve
must not exceed 14 days.
*40 Foreign exchange net. Government con
sent necessary for suspension of reserve
requirement.
140 Silver in reserve may not exceed one-thir
»25 tieth of total reserve requirement.
12
m
30
1 100
»40
33H
»40
Qualifying provisions, etc.
»
100
1*24 Reserve ratio to be incieased at 5-year
intervals ending June 24, 1939, the suc
cessive ratios being 24 per cent, 28 per
cent, and 33H per cent.
*40
Silver in reserve may not exceed onefourth. Fiduciary issue may be in
creased, subject to tax, by authorization
of Minister of Finance.
50 Additional requirements for notes in
excess of 100,000,000 lats.
Fiduciary issue may be increased, subject
to tax, by authority of King and Storting.
Peru.................
50 Foreign exchange may consist only of
New York and London funds.
Poland..............
*30
»*40 Silver in reserve may not exceed onetwentieth of gold held.
Rumania____ _
25
35
Russia...............
»25 Reserve may include platinum. Foreign
exchange limited to foreign currency in
vault.
South Africa... Notes, deposits, and
»*40
Silver in reserve may not exceed 8 per cent
bills payable.
of deposits and bills payable. Govern
ment consent necessary for suspension
of resei ve i equirement.
* May legally include silver.
*
*•300,000,000
The bank may,
subject
to
the
payment
of
a
tax,
permit
the
reserve
ratio to fall below the legal minimum.
markka.
100
FOREIGN CURRENCY AND EXCHANGE
L e g a l - R e s e r v e R e q u ir e m e n t s
Country
Spain............
Switzerland___
L ia b ilitie s against
which reserves must
be held
Notes up to and ineluding 4,000,000,000
pesetas.
N otes above 4,000,000, 000pesetas.
ciary issue of 250,000,
000
kronor.
Notes............................
'M ay legally include silver.
of
189
F o r e ig n C e n t r a l B a n k s — Continued
Reserve require
ments
Gold
Gold and
foreign
exchange
P e r cent
P er cent
38.8
Qualifying provisions, etc.
J 45 Note circulation limited to 6,000,000,000
pesetas and. may exceed 5,000,000,000
with consent of the Government.
>00 only
Consent of Government required for
any reduction of gold holdings and can
not be given unless these holdings are in
excess of requirement necessary for a
circulation of 6,000,000,000 pesetas.
Silver in reserve may not exceed 5 per
cent of notes up to and including 4,000,000,000 pesetas and 10 per cent of notes
in excess.
Gold reserve may not fall below 150,000,000
ki onor. King and Riksdag may extend
the fiduciary issue by 125,000,000 kronor.
48.5
50
40
o
@FedFRASER