The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-08-02
SPANISH CREDIT TO
STABILIZE DOLLAR
Bankers Grant Over 800, 000,-
600 to United States to Lower
Rate Of Exchange.
KAHN ARRANGEs DEAL
Details to Be Worked Out and
Announced Soon-Credit
Institute Planned.

A credit amounting 10 between $780,
900 900 and sl25.o0o,o 900. or between
900 900, 600 and 100000 900 pesetas. has
been tentatively granted to the United
States by Spanish bankers. It was
learned yesterday from authoritative
sources. for tho purpose Of establishing
the rate Of exchange between the two
nations The credit Is tho direct re-
suit Of negotiations conducted by Otto
u Kahn of Kuhn. Loeb & Co. who
returned to this country recently from
a trLp abroad, which included many
conferences with representatives OF the
Spanish Government.
Although the exact amount has not
vet been definitely decided upon, that
and other details being left to represen-
tatiyes Of the Government who still
remain in Spain, It Is understood on
high authority, that 6he negotiations
have advanced far enough to expect
official announcement within the next
few weeks. The nature OF the loan 10
SIN undecided. but enough Is known
OF the details to state 1t Will be IN the
form OF commercial credit
While Mr.. Kahn said that he could
make no announcement pending the
conclusion OF all the details. which are
numerous he characterized as ridic-
ulousy low the reports in foreign ex-
change circles that he had arranged
credit OF 10000, 900 pesetas. But the
meagre information possessed by deal
ers in foreign exchange was sufficient
TO cause a decline yesterday in pesetas
TO 26l. cents as compared with the re-
cent high rate OF 80 cents peseta and
the normal rate Of about Is cents.
Discount Impeded Commerce.
Exchange on Spain has been at a dis
count Of IS 20 per cent, and at the
best price yesterday the discount was
about 45 per cent. This has resulted
not so much from an unfavorable trade
balance between the United States and
Spain as from arbitrage operations.
whereby England. which Is heavily in
debted to Spain, took advantage OF the
fixed rate for sterling exchange In New
YORK and caused the dollar to go in
Spain to as great discount as that of
sterling exchange on Madrid. None the
less the discount on the dollar seriously
impeded commerce between the United
States and the creditor nation, and the
purpose Of the credit Is to aid both Eng
land and the United States. While for
elEu tNCndIgt experts eNpTcsS tHc oe-
LIEF that restoration Of peseta exchange
70 the parity enjoyed before the war is
an impossibillty the conclusion OF this
huge credit, they say. will result In an
Immediate reduction in the number Of
cents commanded by the peseta and will
Do away with tho project. already dis
cnssed. OF shipping gold to Spain.
At the same time that representative
OF the United States Treasury Depart
nent is in Spain to conclude the nego-
ta'l0ns over the credit promised to Mr..
Kahn by Spanish bankers. the foreign
exchange department of the Federal Re-
eerve Board, Il was learned yesterday.
ie conducting negotiations with Cru-
quay, Brazl, Bolivia, the Argentine and
ether South American countries looking
toward the etahilzing Of dollar exchange
~ that hemisphere Important develop
nlents in that connection are reported on
good authority to he near at hand.
The present plans. II they can be car
r'ed crt. call for the formation OF an
American institute OF credit similar to
tho Italian Credit Institute. which has
heon SO successful in stahilzing lire ex-
change. The Ira with relation TO the
United States was In the same position
rs the dollar with reference to South
American countries International bank
e'N U"'4aTe mat tne arrangements MADE
70 stabilize the price OF exchange or
1'a.y are working out admirably, italian
lra having advanced from 9.13 lire "a
N" dollar to under the supervision o!
Fed I. Kent, head of the foreign ex-
lha"ge division OF the Federal Reserve
bark, and the representatives of the
Italian Credit Institute.
italian Lire at Mig Discount.
Italian lire are still quoted ut n big
le'ore tho war. but already a great I'm
provement has been achieved. according
TO International bankers. Contrary &c
general impression the American Gov.
eminent has not had to advance funds
70 Italy to support the market In New
York for lire. As soon as the fixed rate
for lire began to move upward a grea,
demand for lire remittance sprang UT
from Italians in this country. who In
normal times RENTED about $50. 0O0, 900
or 1j0,0o0000 lire, to italy each year
The number OF remitters has fallen off
but the amount per person has in.
Vea7ed. and the annual demand for lire
remittance to Italy at the present rate
81 lire 10 the dollar Is not far from q
billion lire
Tho number OF Americans in South
America who could remit in dollars IL
relatively small, but the South Ameri.
can countries must pay for purchases In
tho United States. and those who are
conducting negotiations believe that with
small advances from the South American
countries the dollar can be stabilized In
much the same way the Ira has beer
stabilized in this market.