New-York tribune., 1918-07-07
Sterilization of
Italian Exchange
Proving Effective
Kingdom Expected to Emerge
From Present Economic
Troubles After War

Steps taken to stabilize Italian ex-
change In New York and London mar
kets are beginning already to show re-
suits. Rates for italian lire are sub
stantially above the recent low record
levels and international bankers say
they would not be surprised to see
further improvement. The rate on
Italy is now around 1856 lire to the
dollar, compared with a low month
ago Of GIT. Details of the plan by
which the Italian exchange position is
being bettered have been withheld. It
is understood, however, that the ad.
vancing Of new credits to, Italy Is an
important factor in the scheme.
Not long ago, before the present or
rangement for stabilizing Italian ex-
change was put into operation,
"L'Economista," Of Italy, discussed at
considerable length the political sig
nificance Of 1taly's exchange problem
"Italy must buy from abroad half of
the grain it consumes" said the au-
thority, "the coal and great quantity
of metals, besides many articles of
prime necessity such as meat, cotton,
hides, fertilizers, machinery, etc. How
does Italy finance such purchases? She
exports little. Her metal reserve is a
mockery In relation to the sum of her
purchases, and she does not possess
foreign securities to sell to create
credits for herself. Therefore italy
had fo onn1u fo bor
cially to Great Britain to finance her
/ importations.
British Gave Most Aid
"Until the present time the largest
/ loans were made to Italy by tho Brit
ish government, but these loans, which
represent about one-sixth of the Italian
war debt, do not compensate for the
deficit in her commercial balance for
1917. Italy, therefore, must obtain by
private credit the remainder on harder
terms than those imposed by the Brit
lsh government, since business men do
not take account of political consider
ations, but only their own interests.
Thus, che conditions became absolutely
disastrous as the demand for foreign
currency increased, producing a rapid
depreciation Of the exchange"
A report prepared by the Genoa,
Italy, branch of the National City Bank
of New York, published in "The Amer
icas," covering the Italian exchange
situation, points out that the existing
inflated circulation in Italy is an i'm
portant factor in the depreciation Of
the value of the lire. The total cir
culation at the end of 1917 reached a
total of 173,800,000 lire "a Ira is
worth, normally, 1873 cents), which is
more than IL per cent of the total
wealth Of Tfol11 UT1,o ~
"The circulation undoubtedly has de-
creased considerably since the first
part of this year, as the government
launched new war loan, which was
notably successful. The subscription
reached the high figure of Lit. $780,
100000. The previous war loan netted
only three billion lire. But measures
should be taken to still further reduce
the paper circulation of this country.
Payments are generally made in cash;
the use of the check is not yet prac-
ticed, except on very few occasions,
and, further, the government has put
tax of 20 centesimi on checks. which
naturally prevents their free use by
great many people. 1t is needless to
say that II checks were used more fre-
quently the number of banknotes in
circulation would decrease rapidly, and
this would considerably help the eco
"Thc opening of the Institute of the
Exchange will have the effect of stop
ping the speculation in exchange which
was taking place to such an extent in
this country, and it will regulate i'm
portations in order to allow only the
entry of goods which are essential to
win the war.
Peace Will Bring Recovery
"Italy, with her incessantly increas-
ing population, will undoubtedly be
able to recover from the present eco
nomic conditions soon after peace is
established. She has for doing so that
powerful asset of men, which will be
the main factor to obtain this result.
She can look forward into the future
with confidence, because she knows that
she will be able to develop her exports;
her splendid fields of raw materials are
gradually being opened; iron. lead,
zinc, manganese, mercury, sulphur, lig-
mite, and last, but not least, petroleum,
will bring into the economic balance a
preponderant weight in her favor"
} Check to Prohteering