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
