SAVING THE FRANC

King Country Chronicle, Volume XXIX, Issue 4731, 10 August 1935, Page 5

SAVING THE FRANC

UNITED STATES ACTION. Mr. Henry Morge'nthau, the United States Secretary of the Treasury, discussing the action of the United States Government in coming to the assistance of the French franc, said that it was done to avoid a worldwide devaluation. "The offer we made," he said, "was in the name of the President and the Secretary of the Treasury." He explained (states the London Daily Telegraph) that when the situation of the Bank of France was seen to be critical because of inability to ship sufficient gold to America to prevent a collapse of the franc he consulted Senators Pittman,. the Democratic leader, and McNar, the Republican leader. Through them he obtained the approval of both political parties to a proposal to supply "millions of dollars" for the purchase of francs. This was done o'n May 30, a Bank ; Holiday in America, when the Guaranty Trust Company was the only American bank operating in the foreign exchange market, and its resources were insufficient to assure dollar-franc gold parity. Mr. Morgenthau declined to give the exact amount contributed by the Treasury, but said that Government intervention was sufficient quickly to stem the panic in fluctuations of the franc, a measure which he described as "mutually advantageous" and an "act of common decency." The action of the Government was undoubtedly due to a fear that the collapse of the franc would be followed by the devaluation of the currencies of other countries, and lead to a general dislocation of foreign trade markets, which from the American point of view have shown an improvement. Financial interests in contact with Mr. Morgenthau look for a period of relative calm on foreign exchange during the European summer. One influential authority has suggested that if this is maintained it may even lead to a movement for temporary stabilisation.