ibrary 55\^ Bancroft Librarv ARGENTINE REPUBLIC. The basis of Argentine's Monetary System is the gold standard. The unit is a gold PESO, divided into 100 Centavos, weighing 1.6129 grammes of gold .900 fine, or say 1.4516 grammes fine gold. Its par value expressed in terms of U. S. currency is $0.96475. The parity of $1.00 U. S. currency in terms of. Argentine gold pesos is $1.0365. The actual currency of the Argentine is Govern- ment notes, to which a fixed value of 44% of the gold peso has been assigned by the Government. This parity of 44% is maintained through the me- dium of a conversion fund which exchanges gold for paper, and vice versa, on the basis of $44.00 gold for $100.00 paper, or $227.27 paper for $100.00 gold. Since, then, the value of the paper peso is fixed by Governmental decree and is maintained through the conversion fund, the paper peso represents 0.6387 grammes of fine gold, and its parity expressed in terms of U. S. currency is $0.4245. The parity of $1.00 U. S. currency in terms of Argentine paper pesos is $c/l 2.35576.* Bills of exchange on Foreign countries are quoted in both paper and gold, but usually they are quoted in gold. When Buenos Aires quotes New York exchange on the basis of paper currency, the quota- tion represents the equivalent in U. S. currency of $1.00 paper peso; thus, 42.50 means that $0.4250 U. S. currency is the equivalent of $1.00 peso, paper. When Buenos Aires quotes on the basis of the gold peso, the quotation is expressed in gold pesos; thus, "New York sight $1.0375" means that $1.0375 Ar- gentine gold pesos is equal to $1.00 U. S. currency. While conditions were disturbed in the Argentine during the early weeks of the war, the exchanges held remarkably firm and quickly returned to more or less *Note: The Sign $c/l stands for Paper Currency and is an abbrevia- tion of Curso Legal. the normal rates. This was due principally to the character of the Argentine's exports, and the urgent demand existing for those products, consisting of foodstuffs, hides, wool, etc. EXCHANGE RATES. The foreign exchanges are quoted in the Argentine as hereunder noted: London 90 d/s 47-7/8d=$ 1.00 Peso gold Pa-is 90 d/s Francs 5.0325= 1.00 " Germany 90 d/s Marks 4.07= 1.00 " " New York Sight U, S. Cv. $1.00= 1.0350 " BRAZIL. The Monetary System of Brazil is nominally based on the gold standard. The MILREIS is the gold unit. It is divided into 1,000 Reis. It weighs 0.89645 grammes of gold .917 fine, or say, .82207 grammes of fine gold, and its par value in terms of U. S. cur- rency is $0.5463. $1.00 U. S. currency is, therefore, the equivalent of f 1$831 gold milreis. The circulating medium, and the only legal money in Brazil, consists of Government notes guaranteed redeemable at the rate of 16d per milreis; this rate being maintained through a conversion fund known as the Caixa de Conversao. The theoretical unit of the paper circulation represents 0.48816 grammes of fine gold, and its equivalent in terms of U. S. cur- rency is $0.32444. The par value of $1.00 U. S. currency is, therefore, 3$08226 expressed in terms of Brazilian paper currency. On receipt in Brazil of the news of the declaration of war, exchange fell to 14d. A bank holiday of 15 days was declared, specie payment was suspended by the Caixa de Conversao, and the rate of exchange remained more or less nominal at 14d until the banks reopened on August 18th. After that date, the rate steadily declined until early in October, when a low point of lOd was reached. The principal factors in bringing about this heavy decline were the suspension of specie payments by the Caixa de Conversao, the closing of London credits in favor of Brazil, and the fact that, under date of August 24th, the Government authorized an issue of treasury notes amounting to 250,000 contos (one conto=l,000 milreis—1,000 milreis=$308.226 U. S. currency) . Since October, exchange rates have reacted, and in the swing touched as high as 14%d, but they have again declined to the present rate of 12%d. fThe Sign $ for Milreis is placed after the units and before the decimals. EXCHANGE RATES. The method of quoting exchange rates in Brazil under normal conditions is hereunder noted: 90 D/S. London 16-3/32d=l$000 Berlin 1 Mark= .730 Paris 1 Franc= .593 SIGHT. London 15-7/8d =1$000 Berlin 1 Mark= .740 Paris „ 1 Franc= .600 New York $1.00 U. S. Cy.=3$113 BOLIVIA. The Monetary System of Bolivia is based on the gold standard. The BOLIVIANO is the theo- retical unit. It is divided into 100 centavos represent- ing 0.63904 grammes of gold .91666 fine or say .58579 grammes of fine gold (B 12.50 to the £ Sterling). Its par value in terms of U. S. currency is $0.3893, and the value therefore of $1.00 U. S. currency, ex- pressed in terms of Bolivian currency, is Bs 2.5685. The chief article of export of Bolivia is tin. Just how important a factor this item is in relation to the total export trade is demonstrated by the fact that of a total export movement in the year 1912 of $25,- 057,841 the sum of $23,432,668 corresponded to tin. The greater part of Bolivia's tin goes to Great Britain, and with the outbreak of the war this trade was practically suspended. Bolivia therefore has been severely affected as a result of the war. The normal rate of exchange in Bolivia for 90-day draft on London fluctuates around 18l/2cl per bolivi- ano. This rate has declined since August 1st to as low as 14%d per boliviano, with remittances scarce and difficult to procure even on this basis. The quota- tions in Bolivia for exchange on "New York are more or less nominal, even under normal conditions, and vary from Bs 2.60 to Bs 2.80 per $1.00 U. S. currencv. EXCHANGE RATES. The rates for foreign exchange as quoted normally in Bolivia are hereunder noted: 90 D/S. London 18-l/4d=B 1.00 Paris _ Frs. 1.91-3/4= 1.00 Berlin „ Mks. 1.55 = 1.00 SIGHT DRAFT. London 1 18 d =B 1.00 Paris Frs. 1.89 = 1.00 Berlin Mks. 1.53-1/2= 1.00 New York U. S. Cy. 1.00= 2.75 NOTE: The rate for New York sight draft was quoted in May, 1915, at Bs 3.30=$1.00 U. S. currency. 7 CHILE. Chile is nominally on a gold basis, but the currency is inconvertible paper, and there is no limit to the fluctuations which may occur in the exchange quo- tations, as there is no fixed unit or value as a basis for rates. A theoretical unit exists in the Chilean gold PESO, which represents 0.599103 grammes of gold .91666 fine, or say, 0.54918 grammes pure gold. Its par value in terms of U. S. currency is $.0365, and its equivalent in British currency is 18d. The law fixing this unit, however, is not in active opera- tion, and the circulation is limited to Government notes, which are normally quoted at rates fluctuating between 9d and lid per Chilean paper peso. At the present time the rates fluctuate in the neighborhood of 71/od, thus showing a depreciation in the Chilean paper currency of 25% more or less. The basis of exchange in Chile is the 90-day Lon- don bill, which is quoted in terms of pence per one paper peso; thus, when the rate for 90-day bills on London is quoted at lOd, it means that Chile receives lOd British currency for each paper peso. Chile has been severely affected by the European war. Her chief article of export is nitrate, which finds its principal market in Great Britain and Ger- many. This market being cut off for the time being, the nitrate business, which is the heart of Chilean industrial and commercial life, has been paralyzed. RATES OF EXCHANGE. The rates of exchange prevailing in Chile before the war and the present rates are hereunder noted: VALPARAISO, FEB. 7th, 1913. London 90 d/s 10 l/32d=$ 1.00 Peso paper London sight 9.7/8d= 1.00 " " Berlin 90 d/s Marks 85.50= 100.00 Berlin sight " 84.00= 100.00 Paris 90 d/s Francs 105.25= 100.00 Paris sight " 103.25= 100.00 New York... 90 d/s U. S. Cy. 1.00= 4.99 New York... sight " 1.00= 5.06 8 VALPARAISO, London 90 d/s London sight Berlin 90 d/s Marks Berlin sight " Paris _ 90 d/s Francs Paris sight " New York... sight MAY 23d, 1915. 7-3/4d=$ LOO 7-5/8d= 1.00 67.75= 100.00 66.75= 100.00 81.25= 100.00 79.75= 100.00 $1.00= 6.64 Peso paper COLOMBIA. The currency of Colombia is inconvertible paper notes. The theoretical unit is the PESO, divided into 100 centavos. A law was passed some time ago, fix- ing as the unit a peso of 1.5976 grammes of gold .91666-fine (one-fifth of a pound Sterling), but this law is not in operation. The value of the paper currency for official pay- ments and judicial liquidations has been fixed by law in Colombia in relation to the pound Sterling, and in the proportion of $500 paper currency as the equivalent of <£l, or say, 10,000%. Since then the actual par of exchange is 10,000%, when quotations vary from this par they are considered as at either a discount or a premium, as the case may be. For instance, if the commercial quotation for demand draft on London is expressed as 10,500%, this would represent a premium over par of 5%, since £l would cost $525.00 pesos instead of $500.00 pesos the par at 10,000%. English and American gold coin circulate freely in Colombia, and foreign exchange rates are frequently quoted in terms of English and American gold, as well as in terms of paper currency. The principal export products of Colombia are coffee, hides, gold, etc., and shipments usually are financed through the medium of credits. Shortly after the war began, most of these credits were can- celled and business was brought to a standstill. Ex- change rates advanced to as high as ll 1 /2% above nor- mal, which means that £l cost $557.50 pesos instead of $500.00 pesos (par), or that $100.00 U. S. cur- rency cost $11,150.00 Colombian paper pesos. 10 EXCHANGE RATES. The method of quoting exchange rates in Colombia is hereunder noted : Madrid „ 500 Pesetas, Berlin 400 Marks Italy 500 Lire Paris 500 Francs London £20 New York......$100 NOTE: At the present time (April, 1915) rates in Colombia are quoted at a premium of about 7% over par or normal rates. 9550%=$ 9550. Pesos paper 9850%= 9850. \t u 9950%= 9950. " " 9950%= 9950. u u 10000%= 10000. " 10250%= 10250. « « 11 COSTA RICA. The Monetary System of Costa Rica is based on the gold standard. The unit is the COLON, divided into 100 centimos, and is used only in Costa Rica. The weight of the unit is 0.7780 grammes of .900-fine gold, or say 0.7002 grammes of pure gold, which gives it a par value in terms of U. S. currency of $0.46536. The par value of $1.00 U. S. currency expressed in terms of Costa Rican Colones is 02.14887. Under normal conditions, the commercial rate of exchange in Costa Rica for sight draft on New York fluctuates between 02.13 and 02.18 per $1.00 U. S. currency. The circulation consists of banknotes backed by gold and other assets of the issuing banks. Foreign gold coins are legal tender in Costa Rica at the following rates: American (U. S. Dollar) =£2. 15 French (Franc) =00.4125 German (Mark) =00.51 English (Sovereign) =010.45 Foreign exchanges are quoted in Costa Rica plus a premium. The nominal premium on the U. S. Dollar is 115%, which means that $1.00 U. S. cur- rency is the equivalent of 02.15 in terms of Costa Rican currency. When the war broke out, its immediate effect on the economic life of Costa Rica was to cause an extra- ordinary scarcity of drafts on foreign countries and, in consequence of this, and the enactment of a law prohibiting the export of gold, the premium for for- eign remittances advanced from 115% to 180%. While no legal moratorium has been decreed with respect to the payment of bills of exchange, etc., in view of the existing premium exacted for foreign remittances, a practical moratorium is in effect in so far as the settlement of foreign bills is concerned. The situation in Costa Rica has been complicated 12 by the recent failure of the Banco Comercial de Costa Rica. Some of our merchants here in the States who passed their bills for collection direct to the bank referred to have been caught in this failure in varying sums. The failed bank liquidated with the drawees of many of the bills which it held for collec- tion on the basis of a nominal exchange rate and credited the senders of the drafts in special account with the proceeds, in Costa Rican currency, of the drafts so collected. Credits accruing from the sums thus collected and credited in special account will now have to enter into the general liquidation. Financial conditions in Costa Rica are unsatisfac- tory, due to the restricted market for the export products of the country, and a consequent reduction in its revenues through the falling off of exports and imports. With the object in view of relieving the situation, the Government has authorized the estab- lishment of a new bank of issue, the Banco Interna- cional de Costa Rica which has been empowered to issue notes to the extent of 04,000,000. This issue is guaranteed by 6% bonds of the National Treasury in the sum of £332,800. In order to facilitate the circulation of the notes issued by the new bank, the Government has decreed that all obligations which are to be liquidated in col ones, or in other agreed-upon moneys, will enjoy the privilege of a moratorium until one year after the signing of European peace, unless the creditors are willing to accept payment in bills of the Banco Internacional de Costa Rica. EXCHANGE RATES. Foreign exchanges are quoted in Costa Rica in the following manner: London _ sight 112% " - cable 114% New York sight 118% cable v 120% Paris _ _ sight 111% " cable 113% Berlin - _ sight I08y 2 % 13 ECUADOR. The Monetary System of Ecuador is based on the gold standard. The SUCRE is the unit of value and is divided into 100 centavos. Its weight is 0.8136 grammes of gold .900 fine, or say 0.73224 grammes of pure gold (one-tenth of a £ Sterling). Its value in terms of U. S. currency is $0.48665, and the value therefore of $1.00 U. S. currency in terms of Ecua- dorean currency is S/ 2.05484. The actual currency of the country is gold, silver and banknotes, but gold is the only legal tender. Early in August, the rate of exchange on New York advanced from S/ 2.07^/2 to S/ 2.11, and subsequently it advanced to S/ 2.15. According to advices, the Government of Ecuador was rather heavily in debt to one of the local banks, and, after the war started, there was a run on that bank, which was stopped only by executive decree suspending specie payments. The Banco del Ecuador had plenty of gold in its vaults for the purpose of redeeming its own notes, and refused to avail itself of the decree. It publicly announced that it would exchange gold for its own notes, and for a short time quite a few notes were presented for redemption. Public confidence in the bank was soon restored, however, and the gold ex- changed for notes began to reappear for deposit. The fact of two classes of notes circulating, one redeemable in gold and the other non-redeemable, gave rise to a rather anomalous situation. Naturally the notes of the Banco del Ecuador disappeared from circulation, and the only bills in evidence were those of the other banks. As a logical result of this condi- tion, those bills which could not be exchanged for gold depreciated in value until they were at a dis- count of 8%, more or less, in relation to gold or notes of the Banco del Ecuador. The Banco del Ecuador has continued selling drafts at all times since the beginning of the war in ex- 14 change for its own notes or gold at current rates of exchange. Since, for the reason above indicated, gold and their own notes have disappeared temporarily from circulation, it now is necessary for the prospec- tive purchaser of foreign remittance (unless he hap- pens to be the fortunate holder of gold or Banco del Ecuador notes) to pay, in addition to the quoted rate for his exchange, the premium of 8%, approximately, existing between the depreciated notes in circulation and gold or notes redeemable in gold. EXCHANGE RATES. The exchanges as quoted in Guayaquil before and after the declaration of war are hereunder noted : BEFORE AFTER England ____. £1 =S/10.10 £1 =S/10.50 New York $1.00 = 2.07 J^ $1.00 = 2.15 France Frs. 5. = 2.00^4 Frs. 5. = 2.08 Switzerland " 5. = 2.00^ " 5. = 2.08 Belgium " 5. = 2.00^ " 5. = 2.08 Austria Kr. 5. = 2.10 Kr. 5. == 2.18 Germany Mks. 4. = 1.97 Mks. 4. = 1.96 Russia Rbl. 1. = 1.07 Rbl. 1. = 1.11 Spain Pts. 5. = 1.94 Pts. 5. = 2.04 Italy Lit. 5. = 2.00 Lit. 5. = 2.00 Peru £p. 1. =S/10. £p. 1. =S/ 9.00 Chile $ch. 1. = 0.42 $ch. 1. = 0.40 Panama B. 1. = 2.07^ B. 1. = 2.15 15 GUATEMALA. Guatemala is nominally on a silver standard, but the present currency is inconvertible paper, which circulates freely in the country. It has no fixed value with relation to gold or foreign exchange. In 1870, the silver PESO, divided into 100 cen- tavos and weighing 25. grammes of silver .900 fine, or say 22.500 grammes fine silver, was adopted as the monetary unit, and this, in reality, is the unit of account. At present, practically no gold or silver coins circulate. In 1899, some $350,000 Pesos, in silver, were put into circulation, but these quickly disappeared in consequence of the great depreciation in the paper currency, which is subject to unrestricted fluctuations, since this currency is not guaranteed in any form and no provision has been made for its redemption, either in gold or in silver. For the purpose of calculation in Guatemala, an imaginary or fictitious unit — viz. a gold dollar — is used. It is the practice to figure under this system that £l Sterling, 25 Francs, or 20 Marks are the equivalent of $5.00 gold, and exchanges are based on these figures, plus the existing market premium, which runs very high. Under normal conditions, the exchange rates in Guatemala fluctuate at from, say, 1600% to 2000%. With the outbreak of the European war, conditions in Guatemala became acute and the premium on exchange advanced to from 4000% to 4500%. Even at these high rates it was almost impossible to buy foreign remittances in the market, owing to the closing of credits existing in favor of Guatemalan merchants for the financing of coffee operations, to decreased exports, etc., and a consequent scarcity of bills. Recently the situation has improved slightly, and the premium now exacted for foreign remittance is from 3500% to 3600%. 16 EXCHANGE RATES. The rates of exchange prevailing in Guatemala be- fore the war and at the present time (May, 1915) are hereunder quoted: Ante War Present Dollars 2100% 3500% Pounds 2060% 3450% Francs 2040% 3400% Pesetas 1950% 3400% Lires 2040% 3425% Marks 1995% 3250% 17 HONDURAS. The Monetary System of Honduras is based on the silver standard. The unit is the PESO, divided into 100 centavos, and weighs 25. grammes of silver .900 fine, or say 22.500 grammes fine silver. With silver at 55 cents an ounce as a basis, the value in terms of U. S. currency of the Peso of Honduras is $0.39786, and the value of $1.00 U. S. currency in terms of Hondurean currency is $2.5134. Under normal conditions, sight exchange on New York is quoted in Honduras at a premium of 140% to 150% ; which means that the $1.00 U. S. currency is equivalent to $2.40 to $2.50 in terms of Hondurean silver. According to last advices from Tegucigalpa, the Capital of Honduras, the present premium on New York exchange is 215% to 230%; in other words, the equivalent of $1.00 U. S. currency in terms of Hondurean currency is $3.15 to $3.30 Pesos and even with this increase in the premium on New York ex- change, it is difficult to secure New York drafts in Honduras. Collections on Honduras are effected with diffi- culty at the present time owing to the enhancement in the value of dollars in the form of New York and San Francisco drafts. 18 MEXICO. The finances of Mexico at present are on an incon- vertible paper basis. Until 1905, the unit of value in Mexico was the silver PESO. Early in that year, a new monetary law was put into effect, and the gold standard was. adopted. The unit fixed under this system was a PESO divided into 100 centavos and weighing .8333 grammes of gold .900 fine, or say .75 grammes of fine gold, and its par value in terms of U. S. cur- rency was $0.4985, the par of $1.00 U. S. currency in terms of Mexican currency being $2.0062 Pesos. Fixed rates of exchange were maintained through the intervention of an Exchange Commission, and the system worked splendidly from the time it was put into effect until the year 1913. During this period, exchange rates revolved within a radius of about 1 % of par, discount or premium, and the fluc- tuations were never violent or great. The exchanges continued on a fairly stable basis until the latter part of 1913, and held remarkably firm, taking into consideration the fact that Mexico had been in a turmoil of revolution for three years, or say from November, 1910. Since 1913, however, conditions have grown rapidly worse, and as a result, Mexican currency has depreciated from its par value of $0.4985 U. S. currency to from $0.08 to $0.10 U. S. currency per paper peso. Even on this depreciated basis, foreign remittances are difficult to secure in Mexico, and the tendency of the peso is steadily downward. The rapid decline in the value of the peso is due chiefly to the ^fact that during the past eighteen months a large volume of notes has been issued by the various contending factions. The amount of this paper (absolutely unsecured) which has been forced upon the country is unknown, but it is estimated that 19 $1,000,000,000 pesos more or less have been issued up to the present time. In view of this flooding of the country with incon- vertible currency, it is not surprising therefore that foreign exchange or gold has enhanced rapidly in value. The value given to the paper currency by present rates as compared with foreign exchange is exaggerated, and a steady and rapid decline or de- preciation in the value of the Peso may be expected. The continual state of revolution which has had Mexico in its grasp since December, 1910, has com- pletely paralyzed the industrial and economic life of of the republic, and today the only fitting word to describe the conditions existing in that country is chaos. Under normal conditions, sight draft on New York in Mexico was quoted at $0.4950 to $0.4990=$1.00 Mexican Peso. As indicated above, the present rate is from $0.08 to $0.10 U. S. currency=$1.00 Mexi- can currency. EXCHANGE RATES. The method of quoting exchange rates under nor- mal conditions is noted hereunder: London - sight 24.52 d =$1.00 Peso Paris " Fes. 2.57 = 1.00 " Berlin " Mks. 2.09 = 1.00 " New York " $ 0.4987 U. S. Cy. = 1.00 " 20 NICARAGUA The present Monetary System of Nicaragua is the gold standard. The unit is the CORDOBA, divided into 100 centavos. The weight of the theoretical gold unit is 1.6718 grammes of gold .900 fine, or say 1.50464 grammes of fine gold, and its value in terms of U. S. currency is $1.00. The circulation consists of silver coin and banknotes guaranteed to be pay- able in gold. Until three years ago, the monetary unit of Nica- ragua was the silver Peso with a nominal value of $0,435 in terms of U. S. currency. The actual cur- rency, however, was inconvertible paper, and the ex- change rates ranged from 1000% to 1700% premium for sight bills on New York. Some three years ago, certain New York interests, through the medium of the Banco Nacional de Nica- ragua, Inc., undertook to rehabilitate the finances of Nicaragua and as a result the present monetary sys- tem was established. Under this system the old paper peso circulation is being retired at a fixed rate of $12.50 Pesos per one Cordoba. Since the outbreak of the war, financial conditions in Nicaragua have become acute. During the first month of the war, foreign remittances were impos- sible to secure, save through the medium of the Banco Nacional de Nicaragua, which, under the terms of the present monetary law, was obliged to exchange New York funds or gold for Cordobas at the par rate for U. S. gold. All the other banks in Nicaragua suspended the sale of drafts, and in consequence of this the Banco Nacional was called upon to carry the heavy burden of supplying the entire demand. After a short time, it likewise was obliged to suspend the sale of drafts on New York thus taking advantage of a moratorium decreed by the Government. According to last advices, certain of the local banks 21 and export houses in Nicaragua have resumed in a small way the sale of New York exchange, but on the basis of a premium of from 20% to 23%, with a rising tendency. In view of the existing moratorium, and of the high premium for exchange on New York, the collec- tion of bills on Nicaragua is very difficult, and delays and evasions are to be expected. RATES OF EXCHANGE. The rates of exchange prevailing in Nicaragua before the war and the present rates are hereunder noted : ANTE-WAR RATES. ' New York $100. U. S. Currency 100.00% = Cordobas 100. London ...... £1 Sterling = " 4.88 PRESENT RATES. New York $100. U. S. Currency 123.00% = Cordobas 123. London £1 Sterling = 6. 22 PANAMA. The Monetary System of Panama is based on the gold standard. The unit is the BALBOA divided into 100 centesimos. The theoretical unit represents 1.672 grammes of gold .900-fine, or say 1.5046 grammes of pure gold. Its value expressed in terms of U. S. currency is $1.00. United States currency circulates freely in Panama on a par basis. The Panamanian currency circulating consists of silver half balboas (locally called pesos) and frac- tional silver and nickel coins. The rate of exchange in Panama for New York draft is: Buying y A % discount Selling 14% premium 23 PARAGUAY. The Monetary System of Paraguay is based on a theoretical gold PESO, (the Argentine gold peso is the nominal unit) weighing 1.6129 grammes of gold .900 fine, or say 1.4516, but the currency in circula- tion consists of inconvertible notes. Practically no gold or silver coins circulate in Paraguay, the currency being limited to the above- mentioned depreciated paper, which is quoted at widely varying rates, from day to day, with refer- ence to its former gold value and with a steadily declining tendency. No provision is made for the redemption of the outstanding notes, with the exception of a small volume of notes known as Moneda Nacional (Na- tional Money). These notes are guaranteed by a gold reserve of one-tenth of the issue, and therefore have a stable value on that basis. Some years ago, fractions of the paper peso in the form of nickel coin were placed in circulation by the Government ,of Paraguay, but the paper currency depreciated in value so rapidly that the intrinsic value of the nickel coins soon exceeded their mone- tary value, and they disappeared from circulation. The few Paraguayan coins seen are in the hands of money changers, who sell them as curiosities. Exchange payable in gold and always command- ing a high premium is used in commercial transac- tions, particularly in relation to foreign remittance, but practically no gold coin is used in internal operations. Gold or foreign remittance, today, commands a premium of 3500%, more or less, in terms of Para- guayan paper currency. A moratorium exists in Paraguay, and the collec- tion of bills on that country is difficult under pres- ent conditions. 24 PERU. The Monetary System of Peru is the gold stand- ard. The unit is the Peruvian pound ( LIBRA), divided into ten soles of 100 centavos. It contains 7.32238 grammes of fine gold, the same as the Eng- lish pound, and its par value in terms of U. S. cur- rency is $4.8665. British gold is legal tender and circulates freely with the Peruvian pound. Under normal conditions no premium exists on gold, since that is the standard currency of Peru. A premium is now exacted for gold, however, due to a recent issue of banknotes under Government authori- zation and also the prevailing exchange conditions. The news of the declaration of war caused a panic in Lima, the Capital and center of commercial and industrial life in Peru. A three-day bank holiday was declared and business was brought to a complete standstill. This was followed by a moratorium, which is still in effect. The Peruvian Government, with the idea of remedying the local situation, authorized the banks in Lima to issue circulating checks or notes to the extent of £p2,500,000, the issue to be especially guaranteed in the form hereunder noted: Gold 20% Mortgage Securities 30% . Fiscal Securities 14% Drafts and Promissory Notes 36% This issue has now been completed. The past experience of Peru with notes or paper currency had been disastrous, and at the first intima- tion of a note issue the gold in circulation went into hiding. The export of gold was prohibited, and this, together with a marked decrease in the export of raw products (copper, cotton, sugar, etc.) caused a notable scarcity of drafts on Europe and the United 25 States. As a result of this scarcity of bills, a premium of from 7% to 10% now is demanded for foreign drafts, and even at this premium drafts for foreign remittance are difficult to secure. EXCHANGE RATES. Hereunder I note the method of quoting foreign exchange rates in Peru under normal conditions: 90 d/s on London 1/2% discount M « « Paris Fes. 25.00 = £p 1. « « a Italy Lire 25.00 SB " 1. U ii " Spain Ptas. 26.35 = " 1. (( u " Hamburg Mks. 20.80 = " 1. 80 « «< New York $ 4.79 a -1 8 « « <«