Canadian funds in New York were therefore at a premium during the first few months of the war, but. in sympathy with sterling, fell to par in November and to a discount in December, and remained at a dis count until August, 1915, when the proceeds of the United States loan to Canada of $45,000,000 became available. In conjunction with a number of loans made by New York to Canadian municipalities and others, this loan was sufficient to maintain the rate at about par for the remainder of the year. Since then. however, Canadian funds have been more or less at a discount in New York; or conversely, New York funds have been at a premium in Canada, tho toward the end of 1916 they fluctuated for several months around par. The course of exchange between the United States and Canada and the financial relations obtaining between the two countries have been so fully dealt with in the press that it is unnecessary to enlarge further upon the situation.
12. exchange from the com mencement of the war has been a very complex sub ject, and is apparently a study in economics rather than in exchange, especially so far as New York is concerned.
Practically no mark quotations were available for the first six weeks of the war or until about the middle of September, and from that time on a steady fall in the value of the mark set in. A few temporary im provements occurred, but these were immediately fol lowed by still further depreciation.
As Germany and her Allies have been practically cut off from any direct trade with the United States it is plain that the excessive depreciation of the mark is not due to the reasons responsible for the fall in the value of the pound sterling and the franc, namely, ab normal imports of munitions and produce.
As a matter of fact the German mark is now uni versally at a discount, but this is not the case with the franc or pound sterling. In January, 1916, the mark was quoted in Amsterdam as low as 42 florins per 100 marks against a normal quotation of 59 florins; a dis count against Berlin of nearly 29 per cent.
The cause of this universal depreciation in value of the mark cannot be found in exchange conditions. By some it is ascribed to the decline in Germany's credit due to the lack of confidence, even among neu tral and friendly nations, as to her future financial stability. At the beginning of December, 1916, the mark was quoted in Amsterdam at 32% per cent dis count, in Switzerland at per cent, in Denmark at 30% per cent, and in New York at 29% per cent discount.
13. The Scandinavian Scandinavian Union is a monetary and commercial union of the three kingdoms of Denmark, Norway and Sweden. A glance at the map of Europe will show the unique position of these countries as regards Great Britain and Germany. They form as it were a little nest of neutral nations within easy distance by water of both. Notwithstanding their favorable position in regard to trade with the belligerent nations, the Union was seriously affected by the declaration of war and had to face abnormal conditions from the outside. These were due principally to the difficulty of obtaining ster ling exchange to meet obligations for imports and other indebtedness maturing in England, and even the great increase in their exports failed to correct the exchange. Sweden declared a moratorium on Aug
ust 7, 1914, Denmark on 21, and Norway on August 25. Notification was also given by the latter that the Bank of Norway would not redeem notes in gold. The monetary system in the three countries has as its unit the krone at a par value of 26.797 cents or ls. VA. Both London and Copenhagen quote on a basis of kroner per pound sterling (par K 18.16 per pound) . Any increase in the rate would be in favor of England as she would receive more kroner per pound. This would, therefore, operate against the Union. In Copenhagen, just before the war, the quo tation stood at K. 18.30, rising on August 1 to K. 18.50 and subsequently reaching as high as K. 19.70. In Norway and Sweden the rates run practically con currently with Denmark. In view of the difficulty of remitting to London under these circumstances, even for indebtedness incurred since the war com menced, various expedients were adopted by some of the banks. The most general method was to credit the proceeds of the collection to a kroner account in the name of the foreign bank, leaving to the latter the problem of realizing the amount in home funds.
British trade with these countries fell off to a great extent, due to the exchange situation as well as to the more attractive 1 prices which Germany was forced to offer. There is no doubt that the risk of transpor tation owing to mines and submarines also acted as a deterrent.
As regards the trade relations of these countries with Germany direct information is naturally not available. It is well known, however, that Germany has imported not only vast quantities of the products of the Union, but also immense quantities of cotton. wheat, etc., originating in other countries, particularly the United States. The latter conclusion can be formed by reference to the export reports of the United States. Norway, for instance, for the year ending June, 1915, imported from the United States, goods to the value of $39,075,000, as against only $9, 700,000 the previous year. Sweden, for the same period, shows $78,274,000 as against only $14,644,000 in 1914. These amounts are out of all proportion to the amount given for home consumption.
German exchange, as elsewhere, was at a heavy discount and Germany endeavored to correct it with gold shipments from time to time, but the effect was only temporary and she was finally forced to pay for her Scandinavian purchases in gold. An inter esting side-light on these gold payments was the re appearance in London of a large number of the sover eigns known to have formed part of the German war chest at Spandau and which were allocated for that purpose out of the French war indemnity of 1872. These sovereigns were not only identified by their date and design (Victoria. effigy "shield reversed") but some of the coins were received in London from Scandinavia in the identical labeled bags in which they had been dispatched from the Bank of England to Germany for French account forty-three years ago.