FRANC UNDER FIRE

Hawke's Bay Tribune, Volume XXVI, Issue 148, 8 June 1936, Page 7

FRANC UNDER FIRE

Frenchmen Take Savings To England M. BLUM’S PROBLEM By Telegraph—Press Assn—Copyright. LONDON, Juno 7. Gold currencies, which are lighting what most believe is their final battle, have been heavily under lire throughout the week, culminating in panic and flight from francs and guilders. Many Frenchmen actually brought their savings to England in suitcases. A leading bank reported that a man entered and opened a valise, shooting a vast quantity of French bank notes across tho counter and demanding that they bo changed to sterling. They amounted to over £50,000. The panic spread to Holland, where the authorities are doggedly adhering to determination to protect the guilder against the raised bank rate. The Swiss franc also has been very weak. There is no question that the fate ef all gold currencies is bound up with tho franc, on which tho attacks surprisingly ceased when it seemed to be at tho last ditch. Little selling was reported on June 5 and tho control fund was able to stand outside the market. Tho respite was not due to any ennnge of opinion on the long-term outlook, but to the belief that the extreme Left would force M. Blum to adopt stringent exchange restrictions rather than devaluation, to which tho Communists are opposed, possibly because they desire continuance of tho depression which over-valuation of tho franc is causing and which tho granting of the strikers’ demands for higher wages -will accentuate unless the franc is devalued. Big financial interests, including the Bank of France, which were formerly tho 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 tho 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 already is hopelessly fettered in a tangle of currency and other restrictions.

The City also considers that restrictions would prove more dangerous to France than devaluation and would be bound to result in tho creation of a market for black francs, upsetting tho 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 co-opera-tion not to engage in 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,” says tho “Economist.” “AL Blum's task is most difficult, as it is politically inexpedient to take tho responsibility for devaluation, which most likely ho will defer until the autumn through restrictions and embargoes.”

Stock markets are depressed as a result of tho franc situation. Gilt-edgeds continue leaden, Canadian stocks especially being sufferers owing to tho removal of Alberta securities from tho official list on account of the Treasurer’s adoption of New South Wales Lang principles. He has announced tho imposition of a 50 per cent, cut in interest rates, adding: “If bondholders do not take what wo ean give, they will get nothing.” Despite the strong statistical position, butter offers a brighter feature. The trade is optimistic that the advance will continue.

Unseasonable weather is largely responsible for the quiet demand for fruit. The supplies of apples continue heavy.

NEW BANK GOVERNOR

FARIS, Juuo 7. The Socialist Cabinet hus appointed Al. Labeyrie Governor of tho Bank of France in place of the anti-inflationist, M. Jean Tannery, who becomes uu honorary Governor. A Minister of Finance communique says that M. Labeyrie’s appointment should not bo interpreted as modification of the Government’s currency position.