The French franc and the US dollar have a long and intertwined history. Understanding their relative value over time offers insights into economic and political shifts. This article delves into the historical exchange rate between the franc and the dollar from 1916 to 1940, drawing upon archival data from the US Federal Reserve.
Franc to Dollar: A Fluctuating Relationship
The exchange rate between the French franc and the US dollar wasn’t static during the period from 1916 to 1940. It experienced significant fluctuations influenced by global events like World War I and the Great Depression. The US Federal Reserve meticulously documented monthly exchange rates, providing valuable data for historical analysis. For instance, in January 1916, one franc was equivalent to 17.1045 US cents, or inversely, 5.8464 francs equaled one US dollar.
Calculating Cross Rates: Franc Against Other Currencies
The US dollar served as a benchmark for calculating exchange rates between other currencies. Using a process called arbitrage-free cross rate calculation, the value of the franc could be determined relative to currencies like the British pound, German mark, Japanese yen, Australian pound, Brazilian milreis, and Argentinian peso. To illustrate, the January 1916 data reveals:
- The US dollar to French franc rate: 17.1045 cents per franc (5.8464 francs per dollar).
- The US dollar to British pound rate: 476.80 cents per pound (4.768 dollars per pound).
- The calculated franc to British pound cross rate: 27.8757 francs per pound (5.8464 francs/dollar * 4.768 dollars/pound).
Data Sources and Considerations
The historical exchange rate data utilized in this analysis originates from the “Section 11: Currency” report within the Banking and Monetary Statistics, 1914-1941, published by the US Federal Reserve Bank. It’s crucial to acknowledge certain limitations. While the data reflects official exchange rates, it may not fully capture arbitrage opportunities that existed due to the gold standard. Additionally, the German mark underwent significant structural changes and hyperinflation during this period, rendering some of its exchange rate data unusable for accurate comparisons. Specifically, data for the Papermark between May 1917 and August 1919 is unavailable, likely due to World War I.
Conclusion: Understanding Historical Context
Examining historical exchange rates like the franc to dollar provides valuable context for understanding economic relationships and events. While these archival figures offer a snapshot of the past, it’s important to consider the limitations of the data and the specific historical context in which these rates existed. For researchers and historians, this data provides a foundational understanding of monetary policy and international finance during a turbulent period in global history.
