BOLD STEP TAKEN

Evening Post, Volume CXIX, Issue 104, 4 May 1935, Page 13

BOLD STEP TAKEN

DEVALUATION OF BELGA

THE INDUSTRIAL EFFECT

(From "The Post's" Representative.) • LONDON, April 6.

. Prices • in,... Belgium having/fallen below the 1914 level, the new Belgian Government has taken the expected step and adopted a policy of moderate devaluation. Coupled with this is a social and economic programme.

The Premier, M..Van Zeeland, in the Chamber of Deputies, said that for two weeks the gold standard had, in fact, been suspended, since exchange control had created two currencies, one internal, which had remained unaltered, and one external, which had been steadily dropping. There had been a constant flight of capital which had turn by turn, weakened the banks and the public confidence in them. Now the time had come, if worse evils were to be avoided, tor drastic 'action* He would therefore call upon the House to approve the proposed measure of devaluation, which was in no sense an abandonment of the gold standard, since the belga would still have a fixed though lower value. The Government would do all its power to encourage a general.stabilisation of currencies. Meanwhile, the value of the belga would be maintained by the National Bank at a level to be fixed by the Government and the bank in consultation. Part of the funds required would be found by a revaluation of the gold reserve of the bank at a, rate

equivalent to a 25 per cent, depreciation of the belga. Generally speaking (says the Brussels correspondent of "The Times") it can be said that devaluation is desired by exporters and the banking community, and heartily condemned by the rentiers, pensioners, and all who have small fixed incomesf whose immediate interests are purely" internal. Already, however, there are some who fear that M. Van Zeeland, in his search for a compromise, has. made -the worst of both worlds. He incurs, says the critics, all the odium if not all the risk of devaluation, and has made it supremely difficult if not impossible, ever to have recourse to the expedient again. Yet, they ask, what will happen if the pound and the dollar take a new plunge? What little benefit might have accrued would be wiped out and the whole problem, . but infinitely more complicated, would arise again. BRITISH INDUSTRIES AFFECTED. The lower- exchange value of the belga cheapens the prices of Belflian "opds to'the British, buyer, and to that extent acts as a stimulus to Belgian exports to Britain. During 1934 Britain's total imports of Bel»i=n merfhand'se amounted to £ 14,531.155. nnd Rritain's total exports to £12,912,108. The chief imnorts to Britain are manufactured . goods ; which . compete with Britain's own factories, such as iron and steel, bricks, glass, cotton, and other textiles, machinery, electrical manufactures, and chemicals.

Britain is Belgium's largest exDort market for iron and steel goods. Last year the ciuantitv sent to this co"ntrv iumped from 490.000 tons to 647.000 tons. Bricks imported from Belgium io England last year ro<;e to the new hifh record of' 312,000,000.

English tourists may enioy cheaper VHdflvs in Belgium this summer. All will depend, however, on how the cost of living in Belgium is affected.