New-York tribune., 1922-03-05
Exchange Fluct4otion

During our Civil War, when our cur
rency was off the gold basis the dealer
who bought wheat of the Western
farmer to sell in any foreign market
had to run not only the ordinary risks
Of the business but the risk Of violent
exchange fluctuations, and he had to
have q margin wide enough to cover
that risk. The same risk attaches to
all interna tional transactions now.
Moreover, it must not be thought
that nuctuations in exchange rates af-
feet only the persons engaged in for
cign trade. They affect the prices Of
all commodities exported or imported,
and by affecting these they have more
or less influence UPON all prices. Dur
ing our Civil War the fluctuations OF
exchange or price Of gold) we're con-
stantly affecting the prices of all staple
commodities and the same has been
true Of late in Germany. Strikes have
been a common occurrence in Germany,
as the results of efforts by the wage
earners to bring their wages into line
with the cost Of living as affected by
the fall in the value Of the money as
reflected in the exchange rates.
Compare this state of chaos III the
exchanges with the stability which ex-
listed when the countries were main
tanning their currencies on gold basis
before the war. international trade
then was free from these vezat,ons.
These numerous contingencies. affect
inc the interests Of millions Of people,
beyond the ken of most Of them, defy
ing any certain calculation, and in
vifing the operations Of speculators,
have resulted because the common gold
standard is no longer in use. The DIS
organization of industry, the unbal-
anced state of trade and the enormous
issues of paper money. occas'oned by
the war, have made it, for the present,
;muossjble for the countries to redeem
their currcnctr3 in gold, as they were
formerly accns omed to do.
We have taid emphasis upon the
services Of a. international standard
Of yalue-a standard to which the cur
rencies of All nations shall conform
in order to make clear the necessity
for convertibilty. 1t is asked why
portantss
|ConuertibiLity
The answer is that tNe simplest
yav. and, indeed. the only practicable
way, Of maintaining a paper currency
at the standard is by convertioii!ty:
The most effective way Of maintaining
a fixed price for anything is by buying !s
ali that is offered at the price. There
must be unobstructed flow or privilege
Of conversion for the money OF one
country into the money Of other coun-
tries to keep them of the same value
there is any difficulty about con
verting the internal currency into the
standard money when the state OF
trade or other conditions make IT de- @
sirable, the internal currency wili oe
offered at a discount; in other words
it will become deprecated as compared,
with the standard, and as compared
with ali commodities of international
trade. and eventually for all purposes
Before the war every country when
stood ready to redeem its internal cur
rency in gold thereby maintained Its
financial structure and its level OF
commodity prices in close relation to
those Of every other country doing
likewise They were doing business
on the same basis. They had common
language Of values.
If prices rose in one country above
the price level in other countries. as
| measured by the common gold stand
ard, the high-priced country became a
good one to sell goods in and poor
one to sell goods from, with the resul.