THE MONETARY CRISIS 49 
the national monetary unit to depreciate to an unlimited 
extent in relation to gold. A loss on exchange did not, 
however, occur everywhere at once. In France, for in- 
stance, the exchange remained normal during the first 
months of the war, and the franc for a short time even 
went slightly to a premium. This is explained by the fact 
that France was repatriating capital during this initial 
stage and had no debit balance to meet abroad. 
Nevertheless, the inconvertibility of notes and the pro- 
hibition to export gold formed the starting point of the 
exchange crisis, since unlimited dealings in foreign cur- 
rencies could thenceforward take place at a rate below 
par; thus the slightest deficit requiring settlement was 
bound to provoke it. And so after November 1914 the 
mark lost 109, on New York market, and had fallen by 
20 or 259, in the first quarter of 1916. During the same 
period the value of the mark had depreciated by 24 to 
35% at Amsterdam, and the Austrian crown by more 
than 409, at Geneva. Again, the Russian exchange had 
fallen in 1915 by 18 to 339, even on the Paris market. 
The Italian lira had lost about 89, in Paris, 189, in 
Switzerland and 309%, in the United States. The French 
franc, which, as has just been observed, had withstood the 
effects of forced currency for some months, came to be 
quoted in 1916 at 12 or even 149%, discount in London, 
16%, in New York and Geneva, and 259%, in Amsterdam. 
As we shall see later, arrangements were made between 
the Allies in order to establish with the help of certain 
neutrals a united front on the exchange market, and thus 
prevent excessive depreciation of the currencies of 
countries most directly implicated in the war by shifting 
part of the burden on to the others; hence, the United 
States having also temporarily suspended the free export 
of gold,! the dollar was quoted at a loss in certain neutral 
markets.2 
1 Gold was exported in spite of the prohibition, in the form of contra- 
band, but at a very heavy price. See Tetrode, “La Banque néerlandaise 
pendant la guerre,” Rev. d’ec. polit., November 1920, p. 675. 
2 It should be observed that the depreciation of the dollar in relation to 
EF