b) By assisting in the convening of international scientific meetings, more especially such as are held in Denmark; by arranging for foreign scientists to teach in Denmark, and by giving grants to foreigners desirous of studying in Denmark and to Danes desirous of studying abroad, more especially when engaged upon work of an international character.

c) By assisting Danish scientists to get their work published in a world language, especially when the work in question is outside the scope of the Carlsberg Foundation or the Royal Society of Arts and Sciences.

d) Furthermore, the Foundation may support any other form of research calculated to promote its object.

ECONOMIC CONDITIONS

AND THE MONEY MARKET IN 1925

By no other factor was the economy of Denmark in 1925 affected to anything like the same degree as by the fall in prices, which assumed particular rapidity round about the middle of the year as a consequence of the simultaneous and heavy fall in the foreign rates of exchange. As was recorded in »Denmark, 1925«, the Act of December 20th., 1924, introduced measures to prevent a further decline in the value of the Danish krone and to help towards a gradual increase. During the spring months of 1925, however, the speed of the increase grew, doubtless due for the most part to a prolonged labour stoppage, which contributed very largely towards reducing imports whilst exports were kept moving at good prices. Later on there was a considerable amount of foreign speculation and, despite heavy buying on the part of the National Bank, the foreign exchanges fell so rapidly in the summer months that the average rate of sterling (par: 18.16), which had been 26.86 in January, 1925, was 20.23 in August, 19.77 in September, and 19.50 in the last month of the year.

Monthly Averages of Copenhagen Exchange Rates on London and New York and the Official Wholesale Price Index:

To this fall in the exchange rates there was a corresponding fall in the wholesale price index, the figure for January, 1925, on the basis of 1913 = 100 being 243, and for August 197, and it thereafter continued to fall steadily until it was down to 158 in March, 1926, at which date sterling was quoted at about Kr. 18.50. That the level of domestic prices follows the foreign exchange rates so closely, and particularly the rates of the dollar and sterling, is connected with the special economic structure of Denmark, which finds expression in a considerable volume of imports and exports. And whilst it is normal that imports, when they comprise many commodities, should rather quickly influence the level of domestic prices, the fact that exports have the same effect is doubtless a phenomenon peculiar to Denmark, arising out of the circumstance that for the most part the exports of the country consist of refined agricultural produce (butter, bacon, eggs, etc.), and that the prices fixed for these goods on the world market become, when converted into Danish kroner, the prices which apply in the home market. Further, the retail price index figure, which for January, 1925, was calculated at 221, had by January, 1926, gone down to 194, and, as wages are to a great extent regulated according to this retail index figure, the fall in the latter involved an equal reduction in wages and thus opened up the possibility of a further drop in prices.

Such a considerable fall in prices naturally led to great difficulties, particularly for the industrial trades, and on the whole it would have been hardly possible without really catastrophic effects had the major portion of Danish exports not been agricultural produce, for which prices were for the most part rising on the world market well into 1925, and in the production of which wages play a comparatively small part. These exports, therefore, are relatively more favourably placed than industrial exports are in a period of decline. But despite this, the decline in prices must naturally be felt very heavily on many agricultural properties bought when prices were higher, whilst as regards industries the decline, apart from other difficulties, has been responsible for an unemployment which was by comparison twice as extensive as in the previous year. Although it is probable that it will be some time before the effects produced by the price fall have been fully liquidated, it was possible already in the spring months to trace a decline in the unemployment figures, essen

tially because building, owing to the milder weather, was again able to resume its activities, and presumably it may be expected that the demand will again increase in all directions where it may be taken for granted that the price fall has in some measure reached bottom.

As to the money market, the movements in the rates of exchange and prices were naturally of great significance here also. The speculation which took place in the value of the Danish krone in the summer of 1925 unloaded considerable sums of foreign currency on to the Danish market, and the proceeds, estimated at about 100 million kroner, were deposited in the Danish banks, only for the most part to be again withdrawn during the course of the autumn, when the value of the krone was consolidated. Simultaneous with this, the loans and deposits of the banks gradually declined, and a number of banks had to write off larger or smaller amounts when closing their books for 1925. With regard to the Landmandsbank, these movements led to the prolongation of the State guarantee of all legal claims upon this bank (depositors as well as other creditors) in so far as they cannot be covered by the bank's own funds, the Act of March 9th., 1926, extending the period of the guarantee for four years until April 1st., 1932. But for the banks generally the circumstances named did not involve difficulties of vital importance to their solidity, partly because of the policy of consolidation which has been observed for a number of years, and partly because of the policy of credit restriction which the National Bank introduced in March, 1924, and insisted upon being carried out. This latter has contributed towards keeping stocks low in Denmark, with the result that the clients of the banks, and consequently the banks themselves, have been shielded from losses which the fall in prices would otherwise have made unavoidable.

The restriction of credit, together with the labour stoppage and the fall in prices, have brought about a considerable reduction in the deficit on the balance of trade. This deficit, which in 1924 totalled 210 million kroner, only amounted to 130 million in 1925, and the greater part of this sum has been covered by shipping and other »>invisible« receipts.

The calculation of the capital balance as at 31st., December, 1925, has shown, too, that Denmark's total foreign indebtedness remained almost unchanged throughout the year, new loans con

tracted having been balanced by the repayment of earlier debts, particularly the Exchange Equalisation Fund referred to in >>Denmark 1924 and which was repaid in December, 1925, with a sum corresponding to £5,000,000.

It is therefore expected that during the course of the present year the value of the Danish krone will without difficulty be able to traverse the short distance still left back to the old gold parity. The earlier Currency Act of 1924 was amended by a new Act of December 15th., 1925, wherein the National Bank was placed under obligation to maintain a dollar rate corresponding to a krone value of not less than about 89 gold øre; and as, if no new further period of exemption is granted, gold redemption at the full par value will be automatically resumed from January 1st., 1927, it is believed that the value of the krone will remain for the present unchanged at the level of nearly 98 øre at which it has been since the middle of February, 1926, and that it will move up to parity towards the end of the year.