The Washington herald., 1920-04-26
By JAMES II. COLLINS.


Lima. Peru. April 21.-''what is ex-
change today" This is the con-
stant inquiry of all Latin America.
The merchant hopes for a favorable
rate when he has to take up his
draft. the traveller watches for an
opportunity to buy dollars with his
letter of credit. and in the absence
of a stock market the speculator
plays the peso. the pound and the
dollar against each other for a
profit.
In Lima the newspapers seldom
publish exchange figures. and when
they do, by an odd perverslon. they
are always wrong. For the banks
have an agreement among them
selves to keep the real rates in con-
fidence. for their own advantage,
and the newspaper rates are doc
tored,' and the real rate can be
got only by shopping from bank to
bank.
Perhaps you wonder why you
should worry about this obscure,
far-off subject of exchange-you
with your factory a thousand miles
from tidewater.
But listen!
Suppose the exchange rate in
Lima and other capitals suddenly
Cancelled all your South American
sales. That happened lately with
shipment to Peru of wire rope. Our
price was lowest when 1t was
bought, but a shift in the exchange
made IT cheaper in another country.
and the order went there, while the
American wire rope was rejected.
1t begins with the British pound
sterling. The peg which sustained
it's value during the war was pulled
out. Sterling sagged down toward
81, then below 1t. The franc and
mark likewise declined, while the
dollar rose in value. In it's financial
naivete New York was delighted.
"The dollar is worth more than any
other money" it said jubilantly.
I'VE have the best money in the
world" But suddenly 1t became
clear that. in buying our products.
people in other countries had to buy
our dear dollars with their depreci-
ated money-which made it hard to
sell. Hurriedly the Edge bill was
passed by Congress. making it pos
sible for private business interests
to extend satisfactory credits to
customers abroad.
Many Connections Broken.
Your goods have been going to
Peru since 1916. You have a dis
tributor there. The yearly aggre-
gate is quite tidy. and gives you no
trouble or selling expense. World
trade? BY all means! An excellent
thing for the country.
But today when your distributor
in Lima takes 1000 libras of his
good Peruvian money to the bank
in paying for goods he can buy only
S4.75 with each libra. while British
pounds cost him about 1915. Thus,
while the actual price of British
goods may be higher, his 1000
libras will buy more British money
to pay for them. That is why your
Lima distributor is turning to Brit
ish and European goods, and many
a war connection between American
manufacturers and British houses in
Latin America is being broken And
SO foreign exchange becomes some
thing more than an academic prop
osition in the corn belt.
Peru is the first country in South
America visited by the writer in
which tariff duty is charged on
typewriters taken in for personal
use. The rate 10 twenty-six soles,
sl3 United States currency, for each
machine, and the money is not re
turned on leaving the country. rhe
visitor, however, has the option OF
leaving his machine in the customs
house, getting II back when he de-
parts. Most Americans are disposed
to argue the justice of this tariff
with the customs inspectors. One
Yankee debated 1t twenty minutes,
but, of course, the inspector had not
made the law and could not change
IL, and, in the end, he Indignantly
handed over his money because he
needed his typewriter. Another
Yankee then addressed the inspec-
tor with the courteous "Senor,"
opened up his typewriter, showed
that the space bar was worn, and
stated that 1t was second hand.
value was $60-120 Peruvian soles.
The inspector exclaimed. "Ah!" and
took him to another official who
made q quick calculation and cut
the duty down to fifteen soles-$7.50
United States currency. Thus the
duty amounted to no more than
Ee would have had to pay for a
rented machine, even could one have
been secured. Latin American tariff
schedules are highly diversified. Mo-
body knows where they will hit his
pocketbook next. Very often they
seem unjust, but 1t does not pay to
argue them, On the whole, thoy are
as reasonable as our own and, SO
far aa they touch the frauAiar "A.