New-York tribune., 1921-12-01
Inflated Cllrrencies Near
Vanishing Point, Says Bank
Little Hope Held Out for Rehabilitation of Finances
of European Nations Seen by
National City

L,.tle hope for carly rehabilitation
OF the finances of many Of the cnor-
mously inflated countries of Europe is
neld out by the National City Bank in
lts December review of economic rondi-
tions, unless there is cutting loose
entirely from the old currcncies, which
rave become so vast in volume and so
appreciated in valuo that they would
SINK any new monetary system that
h''empted TO become responsible for
them.
The views expressed by the largest
national bank in The United States in
TINS connection are of unusual interest
| az TINS time, because Of the plans on
foot tor calling an international con-
terence to be participated in by the
countries represented at the Washing
ton conference on armament. for the
purpose of taking up the problem OF
stabllizing the international exchanges.
'lhe fundamental requirements for
currency reform in the European situ-
alton" the National City Bank says,
ARE that the currency shall be di-
vorced from the fiscal needs Of the
governments and chat paper money
| shall be redeemablc in something that
| All the world esteems of real value.
once the governments are on their feet
financially some plan for disposing Of
the old issues by funding operations
or otherwise may be possible, but the
new system should start free from
every such incubus.
Near Vanishing Point
"Thc currencics of Europe are near
ing stage at which it will be i'm
possible 70 use them as media of ex-
change. There is no we'll defined line
at the crossing of which currency
becomes worthless, but evidently it
cannot continue to depreciate without
reaching in time the point where the
public viii refuse to give anything for
will makcshift with money that is on
the verge of becoming worthless.
simply from the forces of custom and
because they have no substitute In
Russia the old unit, the rubie, for
merly worth about 81 cents, now has
a value so small that the old de-
nominations have long since passed
out Of use. Even a thousand ru5le
note of the new issues will not buy
anything. As tbs depression has pro
gressed the denominations have risen
10000, $4,000 and 100000 ruble notes
becoming the common Change in use
"Consider the situation in Germany
whore six months ago tho mark was
worth | Z cents, and even three months $
ago was worth more than cent,
against present value Of about 35-1 100
of a cent II is true that the mark has
not declined as rapidly in purchasing
power within Germany as in tho for
eign exchanges. The relationship be
tween internal prices and foreign cx-
change is indirect. but it is close
enough to cause a steady decline in the
value Of the currency for internal use,
resulting in strikes and ware advances
constantly.
"The most effective influence for
/ bringing the internal value of the mark
/ into line with its value in the ex-
! changes is the cost of food. Germany
/ is obliged to import grain, meats, cot
ton, wool and other necessaries enter
ing into common consumption, and
these imports must be paid for at the
current rates OF exchange.
The increase N the volume Of mark
currency and its depreciation have re-
acted unon each other in vicious
cycle. The amount of this currency now
outstanding is about 95.000,OOO, 900
marks, which compares with about