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Home , Australian pound, Cent (currency), Israeli pound, September 1949

NOTES ON FOREIGN ADJUSTMENTS

Events leading to the devaluation of the selves to combination of devaluation with subsidiza- sterling on and to the subsequent tion of food and essential raw material imports and adjustment of many other currency values were prevention of excess profits in certain lines of export reviewed in the last issue of the BULLETIN. The business. Countries with multiple rates which de- present article reports, country by country, on valued thus increased the spread between the high- the principal technical changes and economic issues est and lowest rates. Most countries with unitary resulting from the currency adjustments. exchange rate systems, however, resisted the tempta- Within the few weeks since sterling devaluation tion to adopt the multiple currency device. the variety of national experience has been striking. Broadly stated, the policies adopted by most Possibly the best illustration of the wide range of countries during and immediately after the ex- results following the monetary decisions of differ- change rate adjustments appear to have been moti- ent countries is the contrast between the removal vated primarily by two considerations: first, the of obstacles to the achievement of the Benelux Eco- prevention of inflationary developments; second, nomic Union and the increase in economic friction the preservation of the competitive position of ex- between and Pakistan. ports. The first consideration, for a long time the Departure of some countries from expected pat- main obstacle to devaluation, was finally subordi- terns of reaction also deserves mention. Devalua- nated in the countries that devalued. In many of tion should, in general, make it possible to relax these countries, however, concern with monetary economic controls and to eliminate or reduce dis- stability has since dominated domestic economic crimination against the . Yet a number of policy and it has induced several other countries not countries are contemplating a series of new controls to devalue or to devalue less than sterling. In addi- and subsidies in order to minimize the effect of tion, several countries have sought benefits from an devaluation upon the cost of living, and at least one intermediate devaluation that would improve their country appears to have increased discrimination competitive positions in dollar markets and at the against dollar goods. same time permit cheaper imports from the sterling The impact of devaluation on the foreign ex- area. Some countries have hesitated to follow ster- change rate systems of different countries has varied ling devaluation because of concern lest a drastic widely. In some instances devaluation of the pound devaluation raise excessively the local currency cost has led to a more unified system of exchange rates. of dollar imports and thereby retard economic A few countries, notably and Greece, have development. taken the occasion of devaluation of sterling to WESTERN EUROPE make their exchange rate systems reflect the new 1 official parity of the with the dollar. United Kingdom. The recent world-wide currency Previously, the pound was officially quoted within adjustments were initiated by the announcement of these countries at a discount in relation to the the British Chancellor of the Exchequer on Sep- tember 18 that the exchange rate for the pound had dollar for certain foreign transactions. Also, devalu- been reduced by 30.5 per from U. S. $4.03 to a ation has permitted several gold-producing coun- new fixed rate of U. S. $2.80. The substantial per- tries to move toward the abolition of gold-mining centage of the devaluation was determined by three subsidies. In other countries, however, considerable main considerations: the need to provide an effec- impetus has been given to multiple pricing of for- tive incentive for exports to North America (taking eign . Multiple exchange rate systems that into account the effect on export prices of increased were already in existence conveniently lent them- sterling prices for imports), the desire to terminate "cheap" sterling transactions in which the pound NOTE.—This article was prepared by the staff of the Inter- national Sections of the Board's Division of Research and 1 Statistics. It is a factual statement, based on published in- See also "Readjustment of Foreign Currency Values," formation, and necessarily incomplete at this time. Federal Reserve BULLETIN, , pp. 1169-81.

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CHANGES IN CURRENCY VALUES

[As of November 14, 1949]

Currency value: Date of U. S. cents per unit of currency Reduction Country Monetary unit devalua- in value tion (per cent) Old New

WESTERN EUROPE: United Kingdom1.. Pound Sept. 18 403.00 280.00 30.5 2 *.3676 France —Commercial Sept. 20 22.3 Free *.3030 *.2857 5.7 Belgium-Luxembourg3. Franc Sept. 21 2.28 2.00 12.3 Netherlands4 Guilder Sept. 20 37.70 26.32 30.2 Western Germany Sept. 19 30.00 23.81 20.6

NORTHERN EUROPE: Krona Sept. 20 27.78 19.31 30.5 Krone Sept. 18 20.15 14.00 30.5 Denmark Krone Sept. 18 20.84 14.48 30.5 Markka Sept. 19 .625 .4348 30.4 Iceland Krona Sept. 20 15.41 10.71 30.5

SOUTHERN EUROPE: Sept. 19 *.1739 *.1602 7.9 Greece Drachma Sept. 22 *.01 .0067 33.3 Escudo Sept. 21 4.00 3.48 13.1 Peseta Oct. 7

MIDDLE EAST: 300.00 Pound—Imports Sept. 18 6.7 Exports 403.00 280.00 30.5 Iraq. . . Dinar Sept. 20 403.00 280.00 30.5 Egypt. Pound Sept. 19 413.30 287.16 30.5

SOUTH AFRICA. Pound Sept. 18 403.00 280.00 30.5

SOUTHERN ASIA AND FAR EAST: India Sept. 18 30.23 21.00 30.5 Ceylon Rupee Sept. 20 30.23 21.00 30.5 Burma Rupee Sept. 18 30.23 21.00 30.5 Thailand Baht Sept. 27 10.08 8.00 20.6

AUSTRALIA AND : Pound Sept. 18 322.40 224.00 30.5 New Zealand Pound Sept. 19 403.00 280.00 30.5

CANADA. Dollar Sept. 19 100.00 90.91 9.1

LATIN AMERICA: 8 Argentina .. . . Peso—Imports Oct. 1 26.80 18.62 30.5 Exports 25.12 17.46 30.5 Uruguay.. Peso Oct. 6 (5) Paraguay. Peso Nov. 7 <*) Peru Sol Nov. 14 (*)

* These rates are based wholly or in part on current quotations for the dollar in officially regulated free markets. 1 All local currencies of British dependencies, except British Honduras, have been devalued by 30.5 per cent. 2 All local currencies of French dependencies are pegged to the , except: (1) the rupee of the French possessions in India, which is kept at par with the ; and (2) the Djibouti franc, which retains its old dollar parity of .47 cent. 3 The belgian Congo franc remains at par with the Belgian franc. 4 The guilder remains at par with the Netherlands guilder, but the Surinam guilder retains the old dollar parity of 53 cents. 6 See text for description of adjustment of multiple exchange rate system. 6 These rate changes apply to specified commodity transactions. See text for variety of effective rate changes applicable to trade transactions. The free market rate, for nontrade transactions, declined by approximately 46 per cent.

was quoted below U. S. $3.00, and the need to make of commodities such as British automobile^ and clear that the new rate was a definitive one. cotton and woolen textiles was much more consid- One of the major benefits hoped for from devalu- erable. In general, price changes seem to aim at ation was an expansion of Britain's dollar earnings. cutting dollar prices only where this would result In some cases, British exporters appear to have in larger dollar earnings. adjusted their pound prices in accordance with To encourage the development of trade in new American market conditions. The sterling price products, the Government is preparing a program of whiskey, for example, was raised to the full guaranteeing exporters, under the Exports Credit amount of the devaluation. Prices of other prod- Guarantee program, a proportion of their prelimi- ucts have varied. While china prices were reduced nary losses in getting new products established in about 10 per cent in , the cut in dollar prices the American market. The exporter would be in-

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sured against loss resulting from the costs of market prices of United States goods compared to competi- surveys and trade promotion. tive British and European products as a result of The British Government has recognized the the currency adjustments; the cuts in dollar imports grave danger that a price-wage spiral would wipe following the recommendation of the Common- out the benefits to be derived from devaluation. wealth Finance Ministers who met in London last After considerable effort at "disinflation" in 1948, June; and prospects for expanded American and renewed inflationary pressures began to appear in Canadian purchases of raw materials. the course of 1949 as a result of the rising level of The third part of the deficit consisted of dollar Government expenditure and the continuing high payments on behalf of the entire sterling area to level of investment. With devaluation, the infla- nondollar countries, particularly Belgium, Switzer- tionary danger became more serious because of the land, Western Germany, and Iran. Since the cur- increased pressure on prices and wages through rencies of all these countries have been devalued less higher pound prices for imported raw materials and than sterling, their trade with the sterling area foodstuffs. should move toward balance. Further, the United In attempting to counter this danger, the Prime Kingdom's payments position with Belgium has Minister announced on October 24 a program to already been eased by the increased drawing rights reduce both capital investment and Government and credits made available by Belgium under the expenditure. The capital investment, housing, and Intra-European Payments Scheme. education programs, currently running at an annual France. Devaluation came at a critical moment rate of almost ^2,100 million, are to be cut back in France. For the first time since the success of by about £140 million; these reductions, however, the stabilization policies adopted toward the end of will not become fully effective until the second 1948, retail prices had started to rise in August and half of 1950. Government and defense expendi- September after having fallen more than 11 per cent tures are to be reduced by over ^120 million and from to . This renewed some additional revenue is to be obtained from an price rise, amounting to 6 per cent between July increase in the tax on distributed profits from 25 and September, was largely attributable to the to 30 per cent. The reduced expenditures are scat- summer drought. In addition, sentiment for wage tered among a number of budget items. increases had been growing among the labor unions, The combined effect of these retrenchments will which had expected more drastic price reductions be in the direction of the fiscal objective announced than had actually taken place. In this situation, by the Government to restore the extent of disinfla- devaluation led to an immediate sharpening of pre- tion which had been achieved with the 1948-49 existing conflicts because of the expectation of budget surplus. In addition, commercial banks further price increases that was aroused in a coun- have been requested to tighten advances to com- try with a 30-year experience of and de- mercial enterprises. To supplement these restric- valuation. tions, the Government has announced that there Devaluation of the French franc by 22.3 per cent would be no relaxation of the policy of preventing as compared with the 30.5 per cent sterling devalu- any increases in personal income arising out of ation had the effect of appreciating the franc in profits, wages, or salaries. terms of sterling. It was the hope of the French Although in itself devaluation cannot be expected authorities that the lower franc prices of purchases to solve Britain's balance-of-payment difficulties, in the sterling area would largely offset the higher there is reason to hope that Britain's external posi- prices of dollar purchases, thus preventing any im- tion will be improved in several respects. Britain's portant rise in the average level of French import import surplus with the dollar area, the first and prices as a result of the devaluation. Since, how- main component of its dollar deficit, should be ever, devaluation has been followed by price in- reduced by the announced 25 per cent cut in im- creases of many sterling area exports, such as wool ports and by the expected revival in export earn- and rubber, this hope may not be fully realized. ings. The second part of the deficit, the sterling While the franc prices of French imports thus may area's import surplus with the dollar area, may be rise by more than was expected, the extent to which reduced by various factors: the relatively higher a further round of inflation may occur in France

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will depend primarily on internal developments. ance of payments with Belgium-Luxembourg. Technically, France took the occasion of the The existence of this deficit has hindered progress exchange adjustment to unify its system of exchange toward freer trade and payments between the two rates. Previous to the devaluation noncommercial areas. transactions in certain "hard" currencies (U. S. Now that the Netherlands has devalued by 20 dollar, Belgian and Swiss , and Portuguese per cent in relation to Belgium-Luxembourg, it is escudo) were effected at the free market exchange hoped that as controls on current transactions are rate (330 francs per dollar just before devaluation) lifted the deficit will be maintained at a size that and commercial transactions in all currencies were can be financed by credits and drawing rights at the equivalent of the average of the free market granted by Belgium and possibly by Dutch sur- rate (272 francs per dollar) and the official rate pluses of other currencies. Thus, shortly after the (214 francs per dollar). Now all transactions in all devaluations it was announced that, beginning currencies will occur at the equivalent of the free October 1, 1949, a state of "preliminary union" market rate for the dollar, which at present is 350 would be in force, during which import restrictions francs per dollar. Thus, as concerns commercial would be progressively removed. transactions with the hard currency countries and Although devaluation has permitted this further all transactions with other countries, the franc step toward economic union, the basic difficulties has depreciated from 272 to 350 francs per dollar have not been entirely eliminated. In the Nether- or by 22.3 per cent. For purposes of noncommer- lands, although inflationary pressure has decreased, cial transactions with the hard currency countries, the continued high rate of investment tends to the depreciation of the franc amounted to only 5.7 maintain effective demand for domestic and foreign per cent. The fluctuations of the French exchange goods at a high level. In Belgium, on the other rate remain subject to the control of the monetary hand, an apparent contraction of internal demand authorities, who can alter the volume of exchange has resulted in under-utilization of capacity in some permits granted in relation to the supply of dollars sectors of the economy. The steady rise of exports, on the free market, or can directly intervene in however, has tended to mitigate the deflationary it through purchases and sales of foreign exchange. effect of this development. Now that the curren- Benelux countries. Following the devaluation of cies of Belgium's chief competitors, the United sterling, the Belgian and Luxembourg francs were Kingdom, France, and Germany, have been de- reduced in value by 12.3 per cent and the Dutch 2 valued to a greater extent than the Belgian franc, guilder was devalued by 30.2 per cent. The re- exports from Belgium-Luxembourg may fall off, sulting 20 per cent depreciation of the guilder with the result that the tendencies toward recession against the currencies of Belgium and Luxembourg may be accentuated. There are some indications, is expected to remove some obstacles wThich so far however, that the Belgian Government is orienting have retarded achievement of the Benelux Eco- its policy toward stimulating domestic production nomic Union. by encouraging reconstruction and investment ex- Progress has already been made in preparation penditures, many of which were postponed during for the Union. A customs union was established the early postwar period. beginning January 1, 1948, and steps have been taken to unify the systems of indirect taxation. Switzerland. Switzerland is the only country in In general, an attempt has been made to adapt Western Europe that has not devalued its currency. economic planning and policy in the three countries However, the Swiss National Bank decided shortly to the expectation that economic union would begin after sterling devaluation to buy all dollars at the in 1950. officially quoted buying rate, thus putting an end to Nevertheless, important differences in postwar the "finance dollar" market in which the dollar economic conditions and policies have caused a was quoted at a discount of approximately 8 per large and persistent deficit in the Netherlands' bal- cent below the rate of 4.315 francs to the dollar, which has long been in use. Previously, holders of 2 The reason for choosing 30.2 rather than 30.5 per cent dollar assets wishing to convert them into francs as the devaluation ratio is to be found in the desire of the Dutch authorities to establish the dollar rate at the round had to resort to this market since the National figure of 3.80 guilders. Bank was not willing to convert them for fear of

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inflationary developments within Switzerland. The of the large-scale imports from the dollar area. new move, therefore, means a return to a unitary In connection with the approval of devaluation, rate system and is equivalent to an 8 per cent de- the Allied High Commission decided that all exist- valuation of the for capital transactions ing discriminatory practices in international trade with the dollar area. must be discontinued. This decision, which affects It should be noted that legally the Swiss franc is primarily the present premium of about 20 per cent flexible within the rather wide limits prescribed by of the export over the domestic price of Ruhr coal, the monetary decree of 1936. These limits corre- is to become effective by the end of the year. In spond to dollar equivalents of 4.13 and 4.68 francs. the meantime, any adjustment of the coal price to Following sterling devaluation, advantage was taken the new exchange rate is not permitted to increase of this legal flexibility of the exchange rate to allow the existing differential. minor variations in the value of the Swiss franc. The eventual equalization of the export and the In the immediate future it is probable that the domestic prices of coal poses a difficult domestic Swiss authorities will no longer need to be con- problem. Adjustment of the domestic price to cerned with an excessive inflow of funds from the predevaluation dollar export price would have abroad. Within limits, an outflow of funds may be meant an increase by about 50 per cent. This welcome to the monetary authorities, who recently would have deeply affected the domestic price level adopted a policy of sterilizing gold through special as well as the competitive position of Western Ger- issues of Government securities in order to counter- many's heavy industry and thereby its exports of act the excessive liquidity of the market. finished goods. For the time being, it has been The Swiss franc is in a very strong technical decided to make virtually no change in the mar\ position since Switzerland's gold and dollar hold- price of coal for either export or domestic use. The ings stood at an all-time high of over 2 billion result is a reduction of the dollar price of coal ex- dollars just before the devaluation of the pound. ports by about 20 per cent. German coal will now Moreover, the positions of Switzerland's vital ex- be less expensive than British and Polish coal, and port and tourist trades will not necessarily suffer this development may bring about a general decline as a result of its decision not to devalue. Since in the dollar price of coal in Europe. At the same many countries have artificially restricted the pur- time, smaller proceeds from coal exports will in- chase of goods and services from Switzerland in crease Western Germany's balance-of-payments order not to lose reserves, Swiss exports may indeed deficit unless offset by a reduction in drawing rights benefit from the larger volume of Swiss imports granted by Western Germany under the Intra- which is likely to result from the devaluations of European Payments Scheme. Switzerland's principal trading partners. . Austria has not yet (November 14) al- Western Germany. The German mark has been tered the official exchange rate of its currency—10 Austrian schillings per dollar. Most commercial devalued by approximately 20.6 per cent from 30 transactions, however, have been conducted at pre- cents to 23.8095 cents. The new exchange rate is mium rates, which vary according to both the com- identical with the rate that prevailed before 1914 modities and the currencies involved. and again between 1923 and 1933. The Austrian economy is heavily dependent upon Several reasons have been advanced for devalu- foreign trade, and especially upon the importation ing the mark by a smaller ratio than sterling. A of foodstuffs and raw materials, a large part of large part of German exports go to countries like which is supplied by the dollar area with the aid France, Italy, and Belgium which have devalued by of ECA allocations. In public discussions of the similar or smaller percentages; and the German subject, the advantages of a unitary rate system price system probably is flexible enough to permit on the basis of a lowered official rate are being any change needed to counterbalance the 10 per cent weighed against the danger of a substantial rise in differential in favor of British competitors. Even at the cost of living, which might disturb the delicate the actual rate of devaluation, the Government equilibrium of the price-wage structure as well as found it necessary to apply subsidies on a signifi- the country's precarious financial stability. The cant scale to prevent the cost of living from rising difficulties of finding an appropriate solution to in response to the increased local currency cost these problems are probably to a large degree

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responsible for delaying the decision of the Gov- suppliers. Under these conditions, Swedish ex- ernment to readjust the official exchange rate and porters may not care to initiate price reductions, to simplify and unify the premium system. On but may prefer to await possible price moves by November 9, when Parliament convened, the Gov- American and Canadian producers. ernment indicated that such action would soon be Norway. In Norway as in Sweden, there is major taken. concern about the possible repercussions on the cost NORTHERN EUROPE of living of a 30.5 per cent devaluation of the cur- rency. Present wage agreements provide that con- Sweden. Discussion following devaluation of the tracts may be newly negotiated if the cost of liv- Swedish krona by 30.5 per cent has centered on the ing index reaches 165.6 on February 15, 1950. At adoption of appropriate domestic policies to safe- present there is a leeway of 5.9 index points, or 3.5 guard the cost of living from an increase due to the per cent, before the limit is reached. Without spe- rise in import costs. The Government and the cial measures of control, devaluation may result in Trade Unions Federation have tentatively agreed an increase larger than the margin between the to continue the present wage stabilization policy. present index and the limit permitted before wage For its part, the Government has promised meas- renegotiations can be undertaken. The Govern- ures to hold down living costs by cutting consump- ment has not yet announced a policy to deal with tion taxes and import duties and by increasing sub- these problems. It would be in line with economic sidies. An increase in the costs of some imports is considered inevitable, but the Swedish Government policy pursued hitherto if the Government were to is optimistic regarding its ability to hold down ag- grant additional subsidies to counteract the effect of gregate living costs. devaluation on the cost of living. Denmark. Denmark followed sterling devalua- The situation is somewhat precarious, inasmuch tion and reduced the value of the krone by 30.5 per as at present a 2 per cent increase in the cost of cent. As is the case in the other Scandinavian living index would entitle some 200,000 State em- countries, concern about domestic repercussions ployees to an additional 8 per cent of base pay. dominates policy discussions. Like its neighbors, Such an increase might in turn cause 1.5 million Denmark has an automatic cost of living provision wage earners to reject a wage freeze and thus en- in collective bargaining contracts. Notwithstand- danger the stabilization program. While attention ing the protection afforded by the sliding wage has been concentrated on the impact of devaluation on the cost of living, it is recognized that subsidies scale, labor interests are pressing for a reintroduc- alone will not remove all dangers of monetary in- tion of wartime price control, but the Government stability that may result from devaluation. has thus far been reluctant to make such a move. Another problem of considerable interest con- To date the only positive action taken has been a cerns the effect of devaluation upon prospects for decree prohibiting price increases on any goods a revival of pulp and paper exports to the United bought before devaluation. This measure was States. Export interests had been pressing for a probably prompted by the large current volume of readjustment of the currency, which had been ap- inventories. preciated by nearly 17 per cent in 1946. However, As a result of devaluation, Denmark may encoun- pulp exporters in general have not moved to re- ter special difficulties in maintaining export prices of duce their dollar prices. The resulting increased agricultural products for the United Kingdom mar- returns in local currency will serve to re-establish ket. The production of these commodities involves cost-profit ratios, earlier adversely affected through imports from the dollar area in the form of coarse successive price reductions enforced by American grains and feeding stuffs, whose cost has now risen and Canadian competition. The price policy of in terms of Danish kroner. This increased outlay the Swedish pulp trade may also have been deter- for imported feedstuffs means a tendency for the mined by the consideration that the market for prices of butter, bacon, and eggs to increase. The pulp has lately been rising. Swedish exporters may export of these commodities to the United King- feel that the present level of sales to the United dom, however, is currently conducted in accordance States cannot be raised through price reductions, with long-term agreements negotiated earlier this which would be met by United States and Canadian year, the terms of which provide for both the quan-

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tities to be taken and the prices. The latter may Italy, since the achievement of monetary stability, be renegotiated periodically, but provision is made has been accumulating dollar reserves and has be- that the price adjustment may not exceed 7.5 per come a creditor country in its payments relations cent either way. Devaluation may, therefore, make with almost all European countries. Particularly in it difficult for Denmark to maintain these export its relations with the sterling area, Italy has ac- commitments without special controls or subsidies. cumulated a substantial volume of sterling bal- Finland. The markka had been devalued by 15 ances since the Italian Government agreed a year per cent on July 5, 1949, in order to reduce con- ago to raise the price of sterling by restoring it to siderably the competitive disadvantage of Finnish its official cross rate to the dollar. Prior to that exports in world markets caused by high domestic agreement sterling had been quoted at a substantial costs and declining prices abroad. On September discount with respect to the dollar in a free market. 19, Finland devalued by an additional 30.4 per cent, Nevertheless, the decision to depreciate the lira raising the rate for the U. S. dollar from 160 to 230 by only a small percentage is likely to pose a num- markkas. Since midyear the markka has been de- ber of problems. Difficulties may be experienced valued by 41 per cent with respect to the U. S. by exporters of fruits and vegetables who rely dollar. heavily on the British market and by various lines The second devaluation came as no surprise. of Italian industries (such as textiles) that com- The bulk of Finnish foreign trade is with countries pete with British industries in sterling area and of Western Europe, especially with the United othier markets. In addition, a decline in the ac- Kingdom, and its chief competitors are Scandina- cumulation of foreign exchange might expose the vian countries, especially Sweden—i.e., countries Italian economy to deflationary strains unless do- which also aligned their currencies with the new mestic investment is activated. value of the pound sterling. Technically, the Italian exchange rate system has An exception to the September devaluation is not been changed except that the official dollar rate that all dollar clearing arrangements by Finland will be determined from now on by the daily clos- with Eastern European countries (including the ing free market quotation rather than, as here- Soviet Union, but excluding Czechoslovakia) and tofore, by the average quotation of the preceding with Argentina continue to be conducted at the rate month. According to the existing monetary law, of 160 markkas to the dollar. These arrangements fluctuations in the free market are permissible refer to bilateral trade agreements of a barter nature, within the range from 350 to 650 lire per dollar. in which prices are usually expressed in terms of In the absence of new legislation, there is there- U. S. dollars for purposes of reciprocal clearing fore a narrow limit to any further downward move- between the Bank of Finland and its counterpart ment of the lira in relation to the dollar. in the other country. Finland imports essential Greece. Following devaluation of the pound foodstuffs and raw materials under these agree- sterling, Greece announced new parities for the ments. The special treatment of these trade rela- drachma of 15,000 to the dollar and 42,000 to the tionships may be attributed to the desire to mini- pound sterling. The new rates, effective September mize the upward pressure on the internal Finnish 22, correspond closely to the rates which had pre- price level and to forestall windfall profits on ex- vailed for some time in the free market. They con- ports to these countries. stitute a depreciation of the so-called effective (i.e., SOUTHERN EUROPE official plus certificate) rate by 33^ per cent against Italy. After the devaluation of sterling the Ital- the dollar and by 23.8 per cent against the pound ian monetary authorities let the lira depreciate in sterling. The disparity which hitherto prevailed the officially regulated free market for dollars by in the dollar-pound cross rate has thus been elimi- approximately 8 per cent—from 575 to around 624 nated. The system under which Greek exporters to the dollar. The resulting appreciation of the lira have been selling foreign-exchange certificates to in relation to sterling amounts to about 32 per cent. importers since remains in effect. The smallness of the Italian currency adjustment The Government has expressed the belief that probably reflects the considerable expansion of Ital- devaluation will improve the prospects of exports, ian exports over the past two years and the fact that particularly in dollar markets. However, it is not

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expected that all export prices will fully reflect the moved constantly in the direction of a comprehen- currency change, and the possibility of taking steps sive multiple rate system. Since the devaluation of to capture windfall profits is being debated. As re- sterling in September, the various import rates gards the effect on local prices, the Government have been devalued uniformly by 30.5 per cent has announced that it will subsidize the importa- while adjustments varying from 7 to 42 per cent tion of essential foodstuffs, fuel, and certain raw have been applied to export rates. The average materials so as to maintain domestic prices un- devaluation of export rates is estimated at 20-25 changed, and that it will also endeavor to avert per cent. A number of essential and raw material a price rise in domestically produced essential com- imports, however, continue to be bought at the modities in the hope of avoiding wage and salary basic rate and their domestic prices have therefore increases. remained unchanged. Since the presence or absence of inflationary pres- sure in the country has been largely a matter of EASTERN EUROPE public confidence, it is of some consequence that The U. S. S. R. and the other communist-domi- a favorable reception has been accorded the de- nated countries of Eastern Europe have not altered valuation by financial circles. Sales of gold by the official rates of exchange for their currencies the Bank of Greece, which were at first substan- with relation to the U. S. dollar. Some of the tial, have ceased and gold and dollars have re- currencies have been overvalued at these rates portedly been resold to the Bank of Greece. By for some time, and this situation has been ac- the end of October, the open market rate for dollars centuated as a result of the widespread devalu- had settled at 15,700 drachmas, only 4.7 per cent ations. But, because of specific conditions, this above the newly established rate. A restrictive credit fact is of little significance with respect to the policy is having some effect on speculative opera- volume and distribution of trade of the Eastern tions in general. European countries. Virtually all of the foreign Portugal. Portugal has devalued its currency by trade of these countries is conducted by State-owned 13.1 per cent in relation to the dollar, thus appre- agencies, which buy and sell abroad at prices pre- ciating the escudo by 25 per cent relative to the vailing in the various foreign markets, in accord- pound. One reason for the relatively moderate ance with requirements and availabilities under degree of devaluation may have been the accumu- domestic economic plans. Only secondary atten- lation of sterling resulting from a favorable balance tion is paid to profitability of operation in terms of payments with the sterling area. Notwithstand- of domestic currencies, losses being readily covered ing a heavy trade deficit with the United Kingdom, from the State's resources. Under these circum- Portugal has been a net earner of sterling, largely stances, readjustment to more realistic rates of as a result of noncommercial transactions between exchange was not essential, although it might have facilitated rational planning of foreign trade. the Portuguese colonies and South Africa: large sterling proceeds have accrued from remittances by It is too soon to discern the effect of the devalua- colonial labor employed in South African gold tion in Western Europe on its trade with Eastern mines and from port and railway services rendered Europe. However, major direct changes are hardly in the colonies to the United Kingdom and South to be anticipated on this score. Africa. On the other hand, Portugal has experi- MIDDLE EAST enced a considerable decline in its gold and dollar holdings as a result of its large deficits with the Turkey. Turkey, which had devalued its cur- Western Hemisphere. rency by 36 per cent in 1946, this time decided not Portugal will obtain ECA aid for the first time in to change the par value of the lira, despite the 1949-50, and plans to use part of the funds to fact that its trade is largely oriented toward coun- finance a development program. The desire not to tries which have devalued their currencies. A large impede this program by unduly raising the local portion of Turkey's exports are sold against pay- currency cost of imports may have influenced the ment in sterling and the United Kingdom is the decision to devalue by a relatively small percentage. biggest customer for nuts, raisins, dried figs, Spain. Although formally retaining a basic ex- mohair, oil seeds, and other important export change rate of 10.95 pesetas to the dollar, Spain has goods. Now that the value of the pound sterling

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has been lowered these exports may encounter diffi- Oil royalties, although payable in sterling, are culties, but a substantial portion of this year's crops computed at the price of gold in London. Oil has already been marketed. On the other hand, exports, which normally account for 50 per cent a large portion of Turkey's imports come from of total exports, will therefore yield far higher sterling sources and the sterling devaluation may returns in sterling than formerly. On the other bring about some reduction in the price of these hand, the general price level is expected to rise as goods and therefore of the price and cost level in the result of the increase in import prices. In the general. sensitive Baghdad market, local prices of processed Syria and Lebanon. These countries, which have goods rose by 10 to 15 per cent within a few days identical monetary units and a common bank of after devaluation. issue, have decided to maintain the official par Iran. Iran has changed neither the official par values of their currencies, the Syrian and the Leba- value nor the effective dollar rate of the rial. As nese pounds, in terms of the dollar. The economic a result the sterling exchange sold to the Bank significance of that decision, however, is modified Melli by the Anglo-Iranian Oil Company to cover by the fact that most foreign transactions of these expenditures in Iran will be increased by about countries take place at free market rates of exchange. 44 per cent. In addition, sterling balances deriv- To encourage exports in the new situation both ing from oil production and export are guaranteed countries have rescinded a regulation requiring ex- against sterling depreciation, and oil royalties porters to surrender 10 per cent of their foreign —the main source of Iran's foreign exchange re- exchange proceeds to the Exchange Office at official ceipts—are payable in sterling but computed at the London gold price. On balance, these gains will rates. All export proceeds may now be sold on the far exceed the rise in the country's sterling expendi- free exchange market. tures for imports. There was therefore little reason The note issue of the two countries is backed to follow sterling devaluation. However, the posi- largely by balances of French francs, guaranteed tion of minor exports may be endangered by the both ways against a change in the franc-sterling maintenance of the exchange at the present figure. ratio rather than in the franc-dollar ratio. Since sterling was devalued more than the French franc, Some observers feel that the restoration of Brit- the guarantee should mean a payment to France ain's competitive position through sterling devalua- by Syria and Lebanon with consequent reduction tion may result in that country's taking part in of the note coverage of the two countries. Iran's seven-year development plan, which involves In the Beirut and Damascus free markets the dol- various projects now being planned with American technical aid. lar quotation rose by about 9 per cent between Egypt. Egypt has devalued its pound by 30.5 the middle of September and late October. per cent—to $2.87 from $4.13. This action can be Israel. Israel, with an important part of its ex- ascribed to the preponderance of sterling in the ports directed to the sterling area and its foreign nation's foreign exchange assets, and the dependence exchange assets consisting chiefly of sterling, has of the economy on cotton exports to the United devalued its currency to the new rate adopted for Kingdom. sterling. The change afTects mainly exports because While little information is available on trade, the imports and financial remittances with hard cur- Government has expressed optimism concerning im- rency countries had been made at the rate of $3.00 provement in European demand for cotton, flax, to the since the new State was estab- rice, onions, and phosphates. Quotations for various lished. The devaluation thus reduced the latter cotton grades have risen since devaluation about rate by only 6.7 per cent. 25 per cent on the average. Iraq. Traditional currency and trade ties to ster- Ethiopia. Ethiopia did not change the par value ling made Iraq follow the United Kingdom's action. of the Ethiopian dollar, despite its sizable sterling Recent economic difficulties may have contributed holdings and the importance of the sterling area to the decision. The suspension of petroleum ex- in the country's trade. Following announcement ports to Haifa has shut off a large part of the of sterling devaluation, exchange control was in- normal revenue from oil, and export markets for stituted providing for the surrender by exporters agricultural produce have been weakening. to the monetary authorities of 100 per cent of all

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soft currency proceeds and of 25 per cent of United have created new and difficult problems for India States, Canadian, Belgian, and Swiss currency pro- and Pakistan. ceeds. After December 23 the latter ratio will also In recent years sterling currencies have been sub- be raised to 100 per cent. ject to wide discounts against the dollar in free markets in Hong Kong, Bangkok, and other Far SOUTH AFRICA Eastern centers. With the official cross rate at The rise in the local price of gold resulting from $4.03, the open market cross rate had lately been the 30.5 per cent devaluation of the South African less than $3.00. This disparity has been greatly pound against the dollar will no doubt stimulate reduced by sterling devaluation and the subse- the expansion of gold production and of associated quent changes in official and free exchange rates. secondary industries. But the South African bal- In Bangkok, for example, the dollar-pound cross ance-of-payments position will continue to be rate based on free market quotations for the two strained, although it might be relieved somewhat currencies was $2.55 in mid-October; this is fairly by a renewed inflow of foreign funds following close to the new $2.80 official value of sterling. devaluation. India and Pakistan. Pakistan has not had serious Devaluation required renewed efforts toward in- difficulties with its balance of payments since parti- ternal stabilization and early steps were taken to tion. Its deficit with soft currency areas other than raise the discount rate and extend price control. India has been offset, more or less, by an export On , the Government froze the prices surplus with India and by an excess of capital of goods not previously subject to price control. movements from India to Pakistan over those in On October 13, the Reserve Bank raised the dis- the reverse direction. In trade with hard currency count rate from 3 to 3.5 per cent, the first change areas, Pakistan had a surplus in 1948 and a moder- since June 1941, as a signal for a more cautious ate deficit in the first half of 1949. In view of the lending policy by the banking system. The steps 30 per cent drop in raw jute prices in the harvest- are calculated to restrain the inflationary pressures ing months of July-September 1949, Pakistan's resulting from higher prices of hard currency im- balance-of-payments prospects have recently become ports and from increased investment activity in somewhat less favorable. mining and associated industries. Other considerations influencing Pakistan's deci- There was no easing of import controls follow- sion presumably included the desire to avoid infla- ing devaluation. In fact, the raw material import tionary repercussions and the aim of reducing the plan announced shortly thereafter was sharply dis- fiscal burden, in local currency terms, of Govern- criminatory against hard currency supplies. State- ment debt payments due to India and of imports ments since then indicate that foreign exchange al- of capital goods. locations will be increased for the first half of 1950 The appreciation of Pakistan's rupee against the but details of this modification are not yet available. Indian rupee has price-raising effects in India, and it has increased the areas of economic friction between SOUTHERN ASIA AND FAR EAST the two countries. In each dominion open gen- Devaluations of British and Continental - eral licenses for imports from the other have been pean currencies automatically carried along the cur- suspended. India has prohibited private exports rencies of dependencies in the Far East—Malaya, of coal to Pakistan. Jute mills in India, wishing to Hong Kong, Indonesia, and Indo-China. Three of utilize the Indian devaluation to regain a larger the independent commonwealth countries in this place for burlap in world markets but largely rely- area—India, Ceylon, and Burma—acted immedi- ing on the neighboring dominion as their source ately to devalue their currencies in step with the of raw material, are expected to press for a reduc- pound sterling. Balance-of-payments difficulties in tion in the Indian rupee cost of raw jute, which India and Burma, and the effects in Ceylon of low is Pakistan's leading export product. and declining rubber prices, were regarded as con- The Reserve Bank of India has announced that clusive reasons why these countries could not allow it will not quote a rate for the Pakistan rupee. It their currencies to appreciate against the pound. seems probable that, in the absence of official quota- Pakistan, however, decided to keep the dollar value tions, free or black markets for the exchange of of its rupee unchanged. These divergent decisions Indian and Pakistan rupee funds will develop.

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Since prices of goods moving across the border and able and should have little difficulty in meet- capital values on the two sides will hardly adjust ing competition in sterling area textile markets, immediately to the new difference between the despite the subsequent appreciation of the yen two , hitherto identical in value, considerable against sterling currencies. arbitrage may develop. Large increases in Japanese exports—chiefly to Thailand. Rice exports are the mainstay of Asian markets—of machinery and metal products Thailand's favorable balance of payments and are and chemicals and other industrial products, have sold chiefly for sterling currencies. Thailand has been regarded as essential for a future balancing been countering the potentially inflationary effects of Japan's international accounts. The prospects of large rice exports at abnormally high world prices for early and rapid growth of such exports have not both through heavy taxes on these exports and by been bright and have probably been affected ad- using an official exchange rate which, if applied to versely by the appreciation of the yen against other commodities generally, would greatly over- sterling. On the other hand, reduction of yen costs value the baht. This disparity between the official of production and the success of the entire stabili- rate and the market rate has now been narrowed zation program should be easier to attain at the somewhat for dollar exchange though not for ster- existing parity. ling. The new official rates are 12.50 baht to the dollar, and 35 baht to the pound, representing a AUSTRALIA AND NEW ZEALAND 20.6 per cent devaluation against the dollar and a Australia. The Australian Government decided 14 per cent appreciation against sterling. The dol- to devalue its pound by the full 30.5 per cent, lar export price for rice is likely to decline, but thereby preserving the 20 per cent discount of the Thailand hopes to get a somewhat higher price in in relation to the pound sterling. terms of sterling. The United Kingdom, however, The new dollar value of the Australian pound is has refused to pay a higher price and it is not clear $2.24. what new adjustments Thailand will make in its Prices of Australia's major export products were rice policy. not affected uniformly by the devaluation. Meat The changes in the official exchange rate give ex- and dairy products continued at the predevaluation porters of tin and rubber a somewhat more favor- price established in the long-term purchase agree- able rate than before, in compensation for the ment with the United Kingdom, while wool and moderate decline which has occurred in dollar prices wheat prices rose in terms of Australian currency. for these commodities following sterling devalua- Prospects for increased dollar earnings from ex- tion. Half of the export proceeds from tin and 20 ports to the United States are improved by the per cent from rubber must continue to be surrend- devaluation. It appears probable that the cheap ered at the official rate, while the remainder may sterling trade in wool will be eliminated and Ameri- be sold in the free market. can purchases, which were sharply reduced last year In the free market, through which payments are by the high sterling prices prevailing in the auc- made for minor exports, commercial imports, and tions, may respond to the lower dollar costs. Sales private financial transactions, the sterling rate of lead, hides, skins, and furs may also be favor- moved from 63 baht before sterling devaluation to ably affected. The higher sterling price of gold 55 four weeks later, paralleling the change in the will stimulate gold output, which has been con- official rate, while the dollar rate remained between siderably below prewar levels, and should reduce 21 and 22 baht to the dollar. the need for mining subsidies. Japan. No change has been made in the yen- New Zealand. The New Zealand pound, which dollar rate. Before the present uniform rate of 360 had been appreciated by about 25 per cent to parity yen to the dollar was established in , with the British pound in , was re- cotton textiles had been priced for export sale at duced to the full extent of sterling devaluation. a conversion factor that gave a relatively high value Since only 12 per cent of New Zealand imports to the yen in terms of the dollar. For textile ex- come from the dollar area, the impact of devalua- ports, therefore, the introduction of the uniform tion upon the cost of living is likely to be felt rate had the effect of devaluing the yen. As a mainly as a result of a general upward tendency result, cotton textile exporting became highly profit- in sterling area prices. The devaluation should aid

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dollar earnings to some extent, especially if cheap manufactures. Many Latin American countries ap- sterling transactions in New Zealand hides, skins, parently feel that the dollar prices of their export and wool are eliminated. The higher price of gold commodities will not generally suffer substantial should lead to some increase in the limited New declines and that a devaluation applying to all Zealand production. foreign transactions would unnecessarily increase the already high profits of the export trade. In some countries—Argentina is the primary The 9.1 per cent devaluation of the Canadian example—domestic inflation had reached a point dollar was primarily intended to assist Canadian where it was becoming increasingly difficult to industries in cushioning the impact of sharp reduc- secure a level of exports to the dollar area sufficient tions in the dollar prices of European goods. It to maintain indispensable imports from that area. should also reduce demand for U. S. products. Even prior to the general devaluation of currencies, After considerable improvement in 1948 with a several of the Latin American countries, including resulting 496 million dollar increase in gold and Mexico, Chile, and Colombia, had taken action to dollar reserves, the worsening in Canada's cur- provide incentives to greater exports either by rent balance with the United States led to a re- general devaluation or by the granting of more duction in reserves from 1,067 million U. S. dol- favorable rates to specific export commodities. The lars at the end of March to 977 million on June 30. persistence of inflationary pressures has, however, The decline was checked in the third quarter, when made most Latin American countries avoid any reserves rose slightly. general devaluation so long as dollar receipts are The appreciation of the against fairly well maintained and import controls and pen- most currencies of Europe and of the sterling alty exchange rates are sufficiently effective in pre- area should improve the trade balances of these venting severe balance-of-payments deficits. countries with Canada, the outlook for heavier In some respects the devaluation of other cur- purchases from the United Kingdom being par- rencies may promote better balance in the inter- ticularly favorable. The problem of a trade surplus national accounts of the Latin American republics, with Europe, which must in some way be made particularly those having a basically strong trade convertible to meet the payments deficit with the position relative to the soft currency area and a United States, will nevertheless persist as Canada's weak trade position relative to the dollar area. The fundamental balance-of-payments difficulty. The appreciation of the dollar in terms of soft currencies recent permission given to the United Kingdom to should in itself tend to shift some Latin American use its EC A allocation to the extent of 175 million imports of manufactured goods from the dollar dollars for the purchase of Canadian wheat is there- area to the soft currency area, and to shift some fore an important temporary measure of assistance Latin American exports from the soft currency area to Canada as well as to the United Kingdom. to the dollar area. This desired shift—which has Subsidies to the gold-mining industry will be re- been sought mainly by direct controls in many coun- duced in 1950 by the full amount of the increase tries—should occur as a result of the European de- of the Canadian dollar price of gold resulting from valuations whether or not the Latin American cur- devaluation and the Canadian Government has an- rencies are devalued. On the other hand, where nounced its intention to eliminate these payments export commodities are competing on a substantial by 1951. scale with exports of countries that have devalued, an adjustment of exchange rates may be necessary LATIN AMERICA to maintain the flow of exports. Thus conflicting No Latin American countries, with the excep- considerations relating to the appropriateness of de- tion of Argentina, Uruguay, Paraguay, and Peru, valuation are present in the case of several coun- have readjusted their exchange rates following the tries. widespread devaluation of other currencies. Coun- Argentina. After suspending all exchange opera- tries whose foreign trade is chiefly with the United tions for two weeks, Argentina announced on Oc- States (primarily those in the Caribbean region) tober 1 a series of adjustments in its multiple ex- are little affected by the devaluation; they may pos- change rate system which, with some important sibly obtain some reduction in prices of imported exceptions, maintain the prior sterling-peso rela-

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tionship and represent in general a 30.5 per cent some important commodities included in the Anglo- devaluation of the peso in terms of the dollar. It Argentine Trade Agreement. appears that shifts in rate classifications for various The Argentine authorities have also announced commodities will in some cases modify the effect that they plan to re-establish an auction market in of changes in rates. These shifts make the effective which exchange will be sold for the import of devaluation of the peso in terms of the dollar range certain commodities, presumably luxury goods. In between 13 and 43 per cent for export transactions recent years the auction market has been relatively and between 19 and 39 per cent for import trans- inactive. actions. Furthermore, some important export com- Uruguay. Uruguay, following the Argentine an- modities and certain essential imports will continue nouncement of a change in exchange rates, intro- to be transacted at the pre-existing dollar-peso rate. duced a series of changes in its system of multiple The spread between the lowest and highest rates exchange rates. The new system leaves unchanged applicable to both imports and exports has thus the pre-existing rate of 1.52 pesos per dollar for been increased. In the free market for nontrade the three basic export commodities (meat, wool, transactions, the value of the peso depreciated by and linseed) and for wheat. With respect to most 23 per cent in terms of sterling and by 46 per cent other exports, rates more favorable to exporters in terms of the dollar. have been established. These new rates, depending While generally serving to promote exports and upon the commodity to which they apply, represent to discourage imports (particularly to and from a devaluation of the peso in terms of the dollar areas which have not devalued), the new exchange from 4.5 to 27.7 per cent. On the import side, the rate system provides for the maintenance of the old pre-existing rate of 1.90 pesos per dollar applies dollar-peso rate and for an appreciation of the peso to about 80 per cent of the commodities imported in terms of sterling for certain important types of while a new penalty rate, devaluing the peso by trade transactions. The special character of these about 22 per cent in terms of the dollar, applies transactions should be noted. Most basic agricul- to the remaining nonessential imports. The offi- tural export commodities which have not been cial free market for nontrade transactions has been given the advantage of a devalued rate are com- retained. modities which are purchased in Argentina by the The new exchange rate system eliminates some State trading corporation (IAPI) and then sold, of the rates formerly in effect on exports, but gen- often under the terms of trade agreements, prin- erally increases the spread between the lowest and cipally to countries which have already devalued. highest rates applicable both to exports and imports. The appreciation of the peso rate applicable to Retention of the basic export rate for meat appar- receipts from the exports of these commodities to ently reflects Uruguay's expectations that sterling areas which devalued need not discourage their prices will be adjusted upward under bilateral exportation since the Argentine State determines agreements. In contrast to Argentina, Uruguay the peso price at which such commodities shall has not provided a more favorable rate for raw wool be purchased from producers and negotiates the exports, which have in recent years accounted for export price with foreign buyers. Likewise, the nearly 40 per cent of Uruguay's total exports. Uru- competitive position of these exports can be main- guay, it should be noted, has not suffered from tained by administrative price reductions. Such domestic inflation to the same extent as Argentina. reductions in export prices of some cereal grains The favorable new export rate of 2.35 pesos per dol- have been announced. It would appear, therefore, lar, which applies to manufactures of wool and that the new sterling-peso rate for basic export com- leather and to other minor goods, appears to reflect modities may serve primarily as an occasion for an the intention of the Uruguayan Government to Argentine request to the British that the sterling maintain and encourage industries based on native price of meat under the Anglo-Argentine Trade materials. It is apparently in this area that the Agreement be renegotiated. The establishment of Uruguayan authorities feared an adverse effect fol- a more favorable sterling-peso rate for the purchase lowing the Argentine and European devaluations. of certain essential imports (such as fuels) from The new penalty rate applied to nonessential im- the sterling area may encourage the importation of ports should help to limit the import demand, which

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is also kept in check by various direct restrictions. Peru. On November 14 Peru announced the Paraguay. On November 7 Paraguay announced temporary abandonment of its official parity rate a new system of exchange rates which, while re- and the adoption of a series of simplifying revisions taining the previous parity for certain transactions, in its exchange control system. Prior to these re- represents a general devaluation of the guarani in visions, in some cases foreign trade transactions terms of the dollar. The new set of rates, two were negotiated at the fixed official rate, in other covering exports and four covering imports, con- cases at the exchange certificate rate, and in still siderably simplifies the situation prevailing imme- others at both of these rates. Although complete diately before this change, when there were at information is lacking, it appears that under the least 40 effective export rates and a somewhat new system all trade transactions will be negotiated lesser number of import rates. in the exchange certificate market. The rate in The new export exchange rate of 4.92 guaranies this market has fluctuated recently between 16 and per dollar, which covers about 90 per cent of total 19 soles per dollar as against the fixed official rate exports, represents a 25-38 per cent devaluation of of 6.50 soles per dollar. The exchange certificate the guarani in terms of the dollar, depending upon rate will probably continue to fluctuate freely; con- the effective rates previously applicable to specific sequently, it is difficult to gauge to what extent commodities. there will be an effective devaluation of the sol. The old rate of 3.12 guaranies per dollar appli- Since no provisions for nontrade transactions have cable to essential imports—approximately 25 per been announced, presumably such transactions will cent of the total—has been retained. Other import continue to take place in the free market. Rates rates represent a depreciation of the guarani to an in the free market have been quoted as much as extent difficult of determination in view of the com- 3 per cent higher in terms of the dollar than rates plexity of the pre-existing system. in the exchange certificate market.

CURRENT EVENTS AND ANNOUNCEMENTS

Federal Reserve Meetings Resignation of Branch Director The Conference of Presidents of the Federal Re- On October 14, 1949, the Board of Governors serve Banks met in San Francisco on November 2-4, accepted the resignation of Mr. J. E. Wheat, At- 1949. torney at Law, Woodville, Texas, as a director of The Federal Advisory Council held a meeting in the Houston Branch of the Federal Reserve Bank Washington on November 13-15, 1949, and met of Dallas. Mr. Wheat had served at the Houston with the Board of Governors of the Federal Reserve Branch as a director since January 1, 1945. System on November 15, 1949. Admissions of State Banks to Membership in the Resignation of First Vice President of the Federal Federal Reserve System Reserve Bank of The following State banks were admitted to Mr. Charles B. Dunn resigned as First Vice Presi- membership in the Federal Reserve System during dent of the Federal Reserve Bank of Chicago effec- the period , 1949 to October 15, 1949: tive November 1, 1949. Mr. Dunn had served as General Counsel of the Federal Reserve Bank of Chicago from January 1, 1934 to February 26, 1942, East Pasadena—Southern Commercial and Sav- when he was appointed Vice President as well as ings Bank General Counsel. He was appointed First Vice North Da\ota President effective October 25, 1945. Gilby—The First State Bank of Gilby

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