The United States, Great Britain, France and Italy should use the firm
strong hand of organized government to prevent such harmful imposition
of usurious rates on the resources of the Allies now engaged in deadly
war. Exchanges are commodities, and governments able to fix prices
on commodities and fair interest rates on bonds can fix reasonable
exchange and interest rates on international bills, and prevent the
sale of pesetas above 19.30 or gold par and prevent the sale of lire
at 11 cents and then buying the offerings at 19.30 and refusing to
allow the sale at any other rate. American, English and French banks
refusing to buy pesetas except at gold par would end the false values
put arbitrarily on pesetas as far as exchange is concerned on the loan
of pesetas.
In order to sell pesetas there must be both a seller and a buyer.
If the Governments of Great Britain, France, Italy and the United
States can control the banks of those countries and prevent their
buying pesetas at an exorbitant rate the market for pesetas would be
measurably controlled. The selling of pesetas at a grossly usurious
rate is against public policy. It is against the interests of the
Allies. It is a gross injustice because it has the effect of taxing the
Allies fifty per cent. for the use of Spanish credit which ought to be
extended, if extended at all, on a reasonably decent basis. Therefore,
the Governments of the United States, Great Britain, France and Italy
would be justified, as a war measure, in forbidding the banks of the
great belligerents from buying pesetas except on terms of reasonable
interest charges, considering war conditions.
Moreover, there should be concerted action by the four belligerents in
making representations to the Spanish authorities as to the injustice
to the Allies of the Spanish exchange situation, and that the highly
appreciated Spanish currency, or Spanish credits, is doing positive
harm to Spanish commerce, as I have otherwise pointed out.
If Spain sells the Allies goods and charges fifty per cent. for the use
of Spanish pesetas, it has the effect of discriminating against Allied
purchases as compared with Spanish purchases to the extent of fifty per
cent., which is contrary to commercial justice, and by controlling the
exchange rate, through the control of the banks in New York, London,
Paris and Rome, an equitable condition might be restored. At the same
time it is obvious that credits properly secured and at proper rates of
interest ought to be placed in Spain through agencies otherwise pointed
out in this brochure.