56 MODERN MONETARY SYSTEMS
experienced in obtaining foreign credits. She was obliged
to support Austria, Bulgaria and Turkey, but was far
from having at her disposal, like France and England,
enormous quantities of foreign securities.! ‘The United
States failed her just at the moment when the American
Treasury opened unlimited credits to her new Allies,
whose financial resources were beginning to fail.
It is true that with her powerful industry and the raw
materials which she obtained in Central Europe, Germany
was in a position to provide amply for the wants of herself
and her Allies in war supplies, without becoming too
dependent on neutral markets. Nevertheless she experi-
enced great difficulty in paying for her imports, and the
credits opened in her favour by her smaller neighbours
were not adequate to her needs. She therefore made every
effort to support her currency, not only by reducing im-
ports to a minimum and prohibiting the transfer of capital
abroad, but also by putting to the best use such stocks of
foreign currencies as she possessed. By an ordinance of
January 28th, 1916, supplemented by another of February
oth, 1917, a Central Foreign Exchange Office (Devisen-
zentrale) was set up to which foreign bills were to be
handed over, and to which all those who wished to obtain
direct or indirect media of exchange were to apply. All
orders for the purchase or sale of foreign exchange were
to be sent through one or other of the twenty-six banks
which were admitted to form part of the Office.
The Foreign Exchange Office thus enjoyed a com-
pulsory monopoly of exchange and was therefore in a
position to peg the rate more or less arbitrarily ; for it
could buy up all the available exchange, and thereupon
distribute it without being obliged to adapt the rate,
which it fixed itself, to the ratio between supply and de-
mand. The rates of the mark to the florin or of the mark
1 An estimate commonly accepted places Germany’s pre-war holding of
foreign securities at about 25 milliard marks; but as a large proportion
could not be used, being in enemy hands, Germany had barely one-third
of this sum at her disposal and, even so, only took belated measures to
mobilise her securities.
