NEW POLICY

New Zealand Herald, Volume LXXIV, Issue 22671, 8 March 1937, Page 11

NEW POLICY

FRENCH FINANCE CONTROL OF EXCHANGE EXPERTS APPOINTED defence loan plan future of the franc By Teleeraph—Press Association—Copyright (Received March 7. 5.5 p.m.) LONDON, March O Despatches from Paris state that the Council of Ministers has decided not to control foreign exchange and - to authorise the free importation ot - and dealings in gold from March S. The council also resolved to launch a big national defence loan. The Bank of France previously had "bought gold at the pre-devaluation rate. The new measure is expected to lure gold from its hoarding places. The defence loan, which will be for an -unspecified amount, will be the only ]c-.m the Treasury will issue in 1937. JS rict instructions hare been given to in Departments to curtail expenditure 1 supplementary Estimates will not be .^ranted. Sales of Francs in London A committee of experts has been -- appointed to supervise the operation of - the Exchange Equalisation Fund and take steps to prevent fluctuation of prices. The Bourse responded strongly and Government and industrial stocks -7 are higher. Dealings in the franc on the London - Exchange yesterday were erratic. Initial selling evoked strong support from Paris. Heavy selling of francs all day brought down* the spot trade rate to 106f = The Paris correspondent of the Times states that four banking experts will • control exchange under the leadership of M. Charles- Hist, honorary director ■a-

of the Bank of France. Their appointment is generally approved yet paradoxically it has stimulated sales of French currency as the views of M. Rist and two of. his colleagues - suggest that the 'franc shortly will, be allowed to find a level near the lower limit, equivalent - to 113 to the pound, set by the devaluation law. ' President to Appeal to Nation The Government, by appointing the committee, has changed its monetary policy without changing its Finance Minister and simultaneously has transferred a delicate task from a harassed politician to detached technicians. Another correspondent says an indication of the gravity, of the situation is the fact that the President, M. Lebrun, has arranged to broadcast later through every wireless station a "solemn appeal to the nation" to support the defence loan. It' will be the first time that any President will have broadcast such an appeal. The, loan bonds will guarantee the compensation of holders in gold in the of the decline of the franc. No ■ French Government has given such a guarantee since the crisis of 1926. Issue of Loan Delayed The issue of the defence loan has been postponed at least until Wednesday owing to the necessity for modifying the technicalities of the monetary law regarding the fr°o negotiation of gold, and for clarifying the position of the experts who are to manage the exchange fund. It is expected that - .the essential measures will be passed on Tuesday. Accordingly M. Lebrun's " broadcast appe'al has been postponed from this evening. " M. .Blum in>a broadcast address to-

night explained that the measures were aimed at permanently solving a situation in M'hich mere expedients would

, be, dangerous and devaluation disastrous. He pointed out that the Government expected " the repatriation of imported capital. The loan, said the Prime Minister, would be issued in francs, pounds and dollars, which are the currencies of the Powers who signed the monetary agreement of October. The investor would thereby be projected against variations in currencies and could be repaid in the most advantageous way. The Government required £200,000,000, which was normal in a crisis. As half of it corresponded to the extraordinary armaments credits it had been decided to cover them by loan.

NEWS IN AMERICA TREASURER'S CONFERENCE (Received March 7, 7.10 p.m.) NEW YORK. March 6 The Washington correspondent of the New York-Times says the French financial developments have had repercussions there. The Secretary of the Treasury, Mr. Henry Morgenthau, conferred with the new French Ainbas- ... sador, M. Bonnet, the Counsellor at the-,British Embassy, Mr. J- Mallett, the Governor of the New York Federal . . Reserve Bank,, Mr. ' Harrison, and - President Roosevelt. Mr. Morgenthau declined to reveal the character of the discussions, but it • : is understood .they dealt with the " Problems of the tri-party currency - stabilisation in connection with the conetnPlated French loan. Reports that sJ-Sv" loan will be floated in the United It.;- ■ States, or at least partly subscribed in |s§§S country, are deprecated in WashIt is insisted that there will be 'domestic restrictions under the Johnson -J:, .'Act, • it