The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-03-22
U. 5. LIFTS BAN ON
DEALINGS IN LIRE
Rate, Pegged at 6.85, Drops to
7.20 to the Dollar, an 85
Point Decline.
MARKET GROWS CONFUSED
Change Of italian Rates
Takes OFF Last War Time
Exchange Restriction.

The third ana Anal step in the dfrec-
ton Of freedom Of foreign exchange
transactions and quoted rates took place
yesterday when all restrictions in lire
transactions were removed. The an
nouncement was made by the Federal
Reserye Board and Fred /. Kent, the
boards director Of the division of for
eisn exchange. As result the rate,
which had been pegged Mt 6.S5 lire to
the dollar. went sharply against Rome,
the hnal quotation being T.2O. q decline
Of IS points. :.
Owing to the fact that d. Gidoni. d.
rector Of the Italian Institute Of FIX
change, had gone back to Rome. there
was n great deal OF confusion In the lire
market following the Reserve Boards
announcement II was said by some one
ut the institutes Offices that the regula-
tion OF lire exchange by the institute was
in force; that the minimum had been re-
duced from 6.35 to 6.45 lire TO the dollar,
and that italian banks would not be per-
mitted to make transfers for American
dealers which represented sales below
the minimum fixed by the institute.
It was learned later that all OF the
institutes power had been eliminated by
the lifting Of restrictions on lire trans
actions by the American Government
and the rate began to sag. The first real
lire TO the dollar for cables and just be-
fore the close cable business was trans
acted Mt 7.2o. There was no business in
lire checks. The effect of the sudden
removal Of restrictions on lire was dis
astrous not only to those who were long
of lire exchange at Gas on the theory
that the rate would be marked upward.
perhaps to $50. IN the near future but
10 spectators in italian Government
bonds. which declined from $12 to SIS
a thousand lire.
With Yesterdays action in regard TO
italian rates the last of the war time re-
strictions Of the exchange market was
removed. Support was withdrawn from
the French rate early in tho week. up to
which time II had been maintained at
about 5.45 francs to the dollar. The ex-
IRENE decline was to b.16. and the rate
appeared TO have steadied yesterday
around $40 and 5.11. After the removal
on Thursday OF the peg from the sterling
market the cable rate dropped from
f4.76 7-1s TO Sass. but that rate ap-
peared TO have steadied around S4.6s and
$40 for a pound sterling. The sterling
peg had been maintained since January.
1915. )
Not only was the peg in lire the last
70 be removed. but IL was the last made
effective. In fact. nothing was done 10
stabilize the market Cor lire until the
rate had fallen below lire to the dollar.
Then the Federal Reserve Board took a
hand In the matter. forming the Foreign
Exchange Division, with Fred l. Kent IN
charge. Following negotiations with the
italian Government the italian Institute
Of Exchange was formed TO cooperate
with the Federal Reserve Board. and I'M
der that artificial control the rate was
marked upward so points at a time, then
more gradually until several months ago,
when 6.s5 lire TO the dollar was agreed
upon as n fair rate.
In connection with the removal OF gov
srnmental restrictions on lire. Il was an
Interesting coincidence that the Treasury
Department yesterday allotted to the
Italian Government a credit for SIS 1000
900. II was said that that credit would
take care of that Governments require
ments for purchases In this country for
some time. 1t nevertheless leaves out in
tho cold those who had speculated in
italian Government securities and those
who happened to' be long OF Italian ex-
change