MONEY AND MARKETS

Evening Star, Issue 22359, 8 June 1936, Page 9

MONEY AND MARKETS

BATTLE OF THE GOLD CURRENCIES SPECULATORS ADOPT WAITING POLICY BUTTER PROSPECTS BRIGHT Press Association—By Telegraph—Copyright LONDON, June 7. Gold currencies, which are fighting what most believe to be their final battle, have been heavily under fire throughout the week, culminating in a panic flight from the franc and the guilder. Many Frenchmen have actually brought their savings to Bitgland in suit cases. One leading bank has reported that a man opened his valise and shot a vast quantity of French Bank notes across the counter, demanding that they be changed into sterling. They amounted to over £50,000 sterling. The panic has spread to Holland, where the authorities, doggedly adhering to their determination to protect the guilder, have again raised the bank rate. The Swiss franc also is very weak. There is no question of the fate of all gold currencies bound up with the franc, on which attacks surprisingly ceased when it seemed to be at the last ditch. Little selling was' reported on Friday, and control was able to stand outside the market. The respite was nolj due to any change of opinion on the long-term outlook, but to a belief that the extreme Left will force M. Blum to adopt stringent exchange retrictions rather than devaluation, to which the Communists are opposed, possibly because they desire a continuance of the depression which the overvaluation of the franc is causing, and which, granting strikers’ demands for higher wages, will accentuate unless the franc is devalued. Big financial interests, including the Bank of France, formerly inflexible opponents of devaluation, are now paradoxically supporting it, as they realise that if wages must rise it is safer to have an elastic paper franc than a rigid gold one. In the prevailing uncertainty speculators prefer to adopt a waiting policy. London dislikes the idea of a managed franc, and considers that exchange restrictions on the German model would open up a terrifying prospect for European trade, which is already hopelessly fettered in a tangle of currency and other restrictions. The City also considers that restrictions will prove more dangerous to France than devaluation, and are bound to result in the creation of a market for black francs, upsetting the market in international securities and commodities, and accentuating the depreciation of the franc, and even leading to unregulated inflation. The ‘ Economist ’ points out that British, French, and American cooperation without competitive devaluation would mean a big step towards the revival of international trade, especially if Germany takes the opportunity to revalue the mark. The future lies in the hands of Paris, and M, Blum’s task is most difficult, as it is politically inexpedient to take responsibility for devaluation, which most likely he will defer until autumn through restrictions and embargoes. STOCK MARKETS DEPRESSED. The stock markets are depressed as a result of the franc situation. Giltedged securities continue leaden, Canadian stocks beng especial sufferers owing to the removal of Alberta securL ties from the official list following on the Treasurer’s adoption of the New South Wales Lang principles, announcing the imposition of a 60 per cent, cut in interest rates and adding that “ if bondholders do not take what we can give them they will get nothing.” The commodity markets have been unhappily enlivened by violent fluctuations in the price of tin, which dropped £lB in three days. The fear that restrictions will not be renewed at the end of the year has become serious to the Australian-Malay Group and the Federated Malay States. The Chamber of Mines has stated that Malaya would grant no further concessions to her detriment while tin mining is expanded elsewhere. Yet it seems inevitable that Siam must be granted substantial concessions. The only possibility .ems to be to grant them at the expense of Bolivia, whose power is weak. Zinc touched the lowest level of the year. Lead reacted sympathetically, despite a strong statistical position. BUTTER. Butter offers a brighter future. The trade is optimistic that the advance will continue, FRUIT, Unseasonable weather is largely responsible for the quiet demand for fruit. Apple supplies continue heavy.