DANGER OF SPECULATION.

New Zealand Herald, Volume LXIV, Issue 19550, 1 February 1927, Page 11

DANGER OF SPECULATION.

FRENCH CURRENCY. STABILISATION URGED. CAILLAUX STATES VIEWS. By Telegraph—Press Association—Copyright. (Received Jan. 31, 9.5 p.m.) A. and N.Z. PARIS, Jan. 31. In the course of a speech at Le Mans the ex-Minister of Finance, M. Caillaux, advocated the immediate stabilisation of the franc. He said he considered its revalorisation by successive stages would render necessary large.. reductions in wages and would lead to arrears in the payment of pensions and similar charges. M. Caillaux said other nations had stabilised their currencies,, and France alone was in danger of being the victim of speculation. The Paris correspondent of the Christian Science Monitor, of Boston, writing some weeks ago regarding conversations which had just .taken place between the French Premier and Finance Minister, M. Poincare, and Mr,. Reginalc? McKenna, the British banker, said;— Two tendencies manifest' themselves in France, one in favour of immediate stabilisation, the other insisting upon a further revalorisation of the franc. Roughly speaking, business men would prefer stabilisation, and even think that in the interests of trade, especially' the export trade, the franc is already • too high. Others believe it is grossly unfair to those families who invested in French securities that the Government does not make an attempt to raise the value of the franc. The franc is worth, according to the exchange, only 17 per cent, of its former value, though certainly France is a richer country to-day than before the ■war. Frenchmen naturally are. not. content. permanently to lose 133 per cerffc. of their money. They consider it is unnecessarythat the State should declare ,an 83 per. cent, bankruptcy. If the State began to repay the bank it would be eventually possible to return to parity, but the State would have an excessive burden of debts. Whatever figure is eventually fixed as suitable, having regard to the legitimate claims of thrifty Frenchmen and the possibility of the Government meeting 1 its obligations, M. Poincare is not yet con--vinced that the franc has sufficiently, recovered. .•. . . f -, Mr. McKenna expressed the advice which British finance eommonly proffers.. He counselled M. Poincare to stabilise quickly, lest speculation should carry the franc too high. Indeed, there is stilldanger of . a political upset and the, franc is again falling too low. British banks, and doubtless American, arc ready to help float a loan to make the task easy. ■ But ratification of the debt accords is necessary. Such advice is .not altogether welcome. Many quarters ask why" British finance formulates theories which tend permanently to depreciate the franc. .They are confident that France can, if it" chooses, preserve its financial independence and save itself. On the other hand, Louis Loucheur makes a resounding -speech recommending stabilisation without- revalorisation. He admits that theoretically the_ franc can be restored, but paints a vivid picture of industrial upheavals during the period of restoration, with workmen opposing a readjustment of wages, shopkeepers continuing to sell at' paper rate, and a budget absolutely crushing because the gold basis and interest on loans, whether expressed in' paper or gold, are irreducible. , : * This battle, between stabilisation ancT revalorisation is being fought behind the scenes. The Parliamentary proceedings are uninteresting. The struggle is else-; where. - ■ • :.