8o MODERN MONETARY SYSTEMS
the law foreign bills and foreign currencies were to be handed
over to the Banking Office, which was thus likely to succeed
in getting together a large portfolio of foreign bills.
Thus, when M. Rasin after some months of hard work
was about to leave the Finance Ministry, the currency
reform which had been contemplated might have been
said to be under way without having yet attained its
object. The currency, although it had been only slightly
reduced, was at all events regulated ; but no stable con-
version rate had been contemplated, and there was neither
a gold stock nor credit sufficient to cover any conceivable
demand for foreign exchange. But some valuta had already
been collected, and a small reserve of gold and foreign
currencies had been constituted.
The first effects of this policy showed themselves clearly
in the exchange curve. As from October 28th, 1918, the
Czech crown had been quoted at Zurich separately from
the Austrian crown, considerably to its advantage (30
francs for 100 crowns as against 26 francs). Thereafter
the confidence inspired by Rasin’s vigorous policy helped
to increase the disparity between the two currencies, the
Czech crown appreciating to 33°5 francs on May 17th,
1919, while the Austrian crown dropped to 21 francs on
the same day. In April the Foreign Exchange Control
Office had stepped in to break speculation,’ and it did so
again in May to check a rise which was too sharp and to
arrest it when a rate of 34 francs was reached.
But from the moment of Rasin’s fall (July 191 9) to the
middle of 1921, the Czech crown, while remaining at a
higher level than the Austrian crown, described a curve
nearly parallel to that of the mark, declining almost with-
out interruption until February 1920; when it fell to
5-65 francs, recovering till May in the same year with the
mark, which it then again followed in a decline. |
This prolonged dependence of the Czech crown on the
1 Tt had suddenly caused the Czech crown, which had fallen to 21
centimes, to rise to 28 centimes, tO the confusion of those who were
speculating on a fall. Rasin also prohibited the import of Austrian securities
which would have weighed down the balance of payments. (See Piot,
0p. cit., p. 156.)
