STABLE BUDGET.

Auckland Star, Volume LXVII, Issue 110, 11 May 1936, Page 7

STABLE BUDGET.

SOCIALIST POLICY. Leader of New Government Speaks. FINANCIAL TENSION. United Press Association. —Copyright. (Received 10 a.m.) PARIS, May 10. The Socialist leader and Premierelect, M. Leon Blum, addressing the Socialist Congress amid scenes of delirious enthusiasm, declared that his objectives were restoration of European confidence, recreation of international solidarity and faith in mutual assistance and progressive disarmament. He urged other sections of the Popular Front to participate with the Government and assist in neutralising fascism. Power would be taken oyer in a completely legal manner, co-operating with the present Premier, M. Sarraut, in his effort to bridge the transition between the two Governments and return to a stable Budget.

M. Blum plans to launch a vast methodical public works scheme. He added: "The masses will give us large credits if we show a quick success." Fate of Franc in the Balance. The fate of the franc is hanging by a hair which any day may snap. The Sarraut Government is most anxious not to incur the odium of devaluation before it resigns on June 2, but many people are wondering whether the franc can hold out. The most serious feature of the situation is the panic among small depositors, as the large banking and business houses long ago arranged to transfer their iunds. The gold reserves of the Bank of France and the resources of the commercial banks cannot long withstand the prolonged withdrawals of small deposits, which are being transferred to an increasingly heavy degree to London and Brussels. The panic has spread from France to Switzerland and Holland, where the authorities are less well equipped than France to withstand attacks. Consequently the market has passed from control and the Swiss franc has reached the gold export point, while guilders are rapidly approaching it, with the result that the authorities are faced with a fresh drain on their depleted gold reserves. Queues at Gold-dealers. Amazing scenes have been witnessed in Paris. Long queues have assembled at dawn every day this week at the shops of dealers in bullion and gold coin. The Sarraut Government naturally insists upon defending the franc from attacks from whatever quarter, and has expelled a Pole named Silberfeld for currency speculation. The Minister of Finance, M. B#gnier, insists that there is still sufficient currency in the Treasury to maintain the franc without a gold embargo, the fear of which, in the opinion of the Government, is carrying the public too far. The commercial banks are declining to pay out more than 750 francs in gold or foreign currencies except when absolutely justified. London views the situation more calmly than Paris, regarding devaluation as a "bull," not a "bear," point ill international trade. The chairman of one company says the stabilisation of currencies after devaluation must be a boon to all the international companies in the long run and exert an inflationary influence on commodity prices.

The "Financial News" says: While we agree that the ultimate effect of devaluation, inasmuch as it would provide a basis for easy money and credit expansion, will be to lift commodities, we expect the immediate result to be a fall in commodities, especially if the guilder is devalued. The commodity markets are overshadowed by this fear, which largely accounts for the fall of prices of rubber and base metals. Opinion is divided as to how the devaluation of the franc would affect gold. Probably it would temporarily fall in terms of sterling. Devaluation is likely also to result in a serious repatriation of the foreign capital which helped to bolster up the gilt-edged, oil and gold share markets in London.