DOLLAR AND FRANC

New Zealand Herald, Volume LXXII, Issue 22010, 17 January 1935, Page 9

DOLLAR AND FRANC

WILD MOVEMENTS FRANCE AND HER-GOLD (Received January 16. 11.5 p.m.) . LONDON. Jan. 16 Wild movements of the franc and the dollar have caused excitement on the foreign- exchange market in London. Banking houses in Paris refused to take gold from the Bank of France for shipment to New York unless a guarantee was forthcoming from the American banks that the gold, on arrival, would be paid for at the official price of 35 dollars an ounce. As the necessary corrective to the demand for dollars against francs in the shape of gold' shipments was not forthcoming the French franc had to break and an advance in the cross rate was the result.

This reluctance to ship gold is due to the belief in Paris that an adverse decision by the United States Supreme Court in the gold clause action will mean that the United States Government will revaluo the dollar at the old parity rather than pay the surcharge in paper dollars. Conditions on the exchange market at the late session bordered upon the farcical. " The truth is," says the Financial Times, " that Paris took fright. It must be realised that in the event of an adverse decision by the United States Supreme Court the Government and Congress will get round the legal position somehow. Certainly they will not resort to deflation." <