THE MONETARY CRISIS 53 
credit of 200 million pesos was opened in 1918 by the 
Argentine, and one of 350 million pesetas by Spain. 
With this assistance, the exchanges of the Allies, after 
having fluctuated in the first two years as we have shown, 
soon became stable in relation to each other and to the 
United States dollar. 
“The London Exchange in New York was pegged in 
the autumn of 1915 and the peg was kept in until March 
1919. The mechanism by which this was brought about 
was the appointment by the British Government of fiscal 
agents in New York—]. P. Morgan and Co.—with 
authority to buy all exchange offered on London at 47635. 
Morgan and Co. had large credits, some of which the 
British Government established by the negotiation of 
loans and the sale of American securities before the 
United States went into the war, and others which the 
United States Treasury subsequently placed at the dis- 
posal of the British Government.” 
The French Government followed a similar course. It 
made use of credits opened by the Treasuries of the 
United States and Great Britain to supply the Bank of 
France with drafts placed by the latter at the disposal of 
certain privileged classes of importers, the remainder 
being used to influence the open market. Thus from 1917 
there came to be two rates of exchange, the official rate 
fixed by the Bank and the market rate.2 But owing to the 
Bank’s action the two rates were not widely different, and 
the French exchange may be said to have been more or 
less stabilised in the last phase of the war by a sufficiency 
of foreign credit and an adequate machinery for conver- 
sion. With resources adequate to its needs, the Bank of 
France pursued a steady but not too rigid policy of 
1 Currencies after the War, published by the Secretariat of the League 
of Nations, London 1920, p. 188. From the first half of April 1917 
onwards Congress authorised advances to the Allies up to a total of 3 
milliard dollars. This assistance was all the more timely as private credits 
were on the point of exhaustion. 
2 This twofold action is explained by the necessity of supporting the 
exchange as a whole without giving the free market the benefit of unlimited 
sums at a fixed rate of exchange for payments which in war-time might 
have lacked justification.