The extreme sympathy of the French and English exchanges is due to the fact that Great Britain has in a great measure borne the financial responsibility of the American exports to France, the adjusting pay ments being made between Paris and London.
The discount on foreign money or premium on the dollar means that exchange on New York is difficult to get, as there is not enough to supply the needs of the foreign centers, and consequently the cost of American goods to the foreign purchaser is cor respondingly increased. Normally the situation en courages exportation from the country in question to the United States and discourages importation from the United States. This is the natural corrective for adverse balances. Take, for instance, Great Brit ain; under war conditions her ability to export is greatly reduced, but her need to import is vastly in creased. Continued settlements by gold shipments from Great Britain are impracticable, and from the United States' point of view, undesirable. Under these conditions the United States therefore had either to extend credit or stop exporting. The Anglo French loan was the first large loan and similar loans in addition to gold shipments will be found necessary from time to time in order to maintain the rate.
Much prominence has been given in the financial press to the appreciation of the American dollar as compared with other exchanges, particularly with those of belligerent nations, but little or no comment has been made regarding the depreciation of the dollar itself in Holland, Spain, Sweden, Denmark and other neutral nations. As a matter of fact the dollar reached a lower discount in Holland than that yet at tained at any time by the pound sterling; namely, nine per cent. In the quotations given on page 271 the dol lar in both Sweden and Spain exceeds even this rate.
Holland, like Scandinavia and Switzerland, borders on the belligerent countries and carries on business with both. It is not only a great maritime power, but also a free trade country. What few duties she has, are of a fiscal rather than of a protectionist nature. Like Great Britain. these two features make her torts vast clearing houses for cargoes from all over the world, especially for goods from the East Indies, such as sugar, spices, coffee and tobacco. In addition
many of Germany's direct imports are routed thru the wonderful Dutch canal system. During the first part of the war Holland unquestionably exported a vast quantity of both home and foreign goods into Germany, especially from the United States. Her imports from that country for -the year ending June, 1915, showed an increase in value of over $13,000,000 over the corresponding period of last year. The Brit ish blockade in this connection, however, was so thoro that Holland found her own requirements jeopard ized, and the Netherlands Overseas Trust was incor porated. The guarantee of this company as to the destination of any cargo was accepted by the British Government. Holland, however, continued to export large quantities of her own products into Germany and apparently received payment in American securi ties, judging from the large number of these securities disposed of by Dutch interests in New York, thus creating a large balance in favor of Holland. These were supplemented of course by gold shipments from Germany, the latter being reflected by the large in crease in gold holdings of the Netherlands banks. Notwithstanding these correctives the German mark in Holland continued for some time at a discount of about thirty two per cent.
11. Canada.—As New York is the exchange center of this continent, foreign exchange conditions in Can ada since the beginning of the war have been a reflec tion of those experienced in the United States. The quotations for sterling, francs, etc., differ from those in New York only by the discount or premium ob taining on New York funds in Canada. Only a brief reference to the latter, therefore, is necessary.
Under normal conditions, gold can be transferred between New York and Montreal for about 70 cents per $1,000 or %4 of 1 per cent on either side of par. but since the war, gold shipments have practically been discontinued and the quotations, without this steadying influence, have ranged from per cent discount to 1 per cent premium.