FRANCE’S GOLD POLICY

Poverty Bay Herald, Volume LV, Issue 17608, 26 October 1931, Page 9

FRANCE’S GOLD POLICY

AS INTERPRETED BY PROF. CASSEL A MEANS OF POLITICAL PRESSURE Gold continues to pour into Franco. Tho cables tell us of 15J tons of gold from Amsterdam, and half a ton from London. What policy lies behind this \nst accumulation, equal to 474,000,000 sovereigns, on October 1, and augmented since? Hoarding, simple hoarding has been one explanation. Professor Gustav Cassel, of Stockholm, a noted economist, sees a deep political motive in the getting together _of all tins gold. In an article in Capital, of Calcutta, he expresses the opinion that the action of France in accumulating gold, intensifying as it has done tho shorts go of tile metal, has been an important factor in bringing about the collapse of prices, which, in turn, was the main cause of the world economic crisis. Naturally France did everything in her power to prevent this conclusion from gaining publicity, and did no! allow this aspect of world economy t r be brought up at international confluences. She lias asserted repeatedly that, she is nut accumulating gold by design, but is receiving it passively as a result, of extraordinary confidence on the part of foreign countries in tho French exchange. To-day she has much the same explanation. Officials of the Bank of France, according to our cables, declare that impending heavy arrivals from America, are entirely due to France’s ability to make profitable purchases through the appreciation of the thane, compared with other currencies.

A DICTATORSHIP THROUGH GOLD

Professor Cassel does not accept this naive explanation. The events of the last three months, he writes, have revealed how France expects to profit from her hoard of gold. At all international negotiations arising from the German crisis Fiance has always emphasised that nothing could be done without her co-operation. All the other Powers were compelled to accept this point of view, and France has thereby created a situation in which she is able to dictate political conditions as a reward for her co-operation. "With un- ' shakeablo stubbornness France has insisted that Germany must give political guarantees beforo she can expect financial assistance. Of the kind of guarantees which France is in the habit io f demanding in such circumstances, Ft he world had already been given an example when France stated her eou- . ditions of co-operation in the international action on behalf of Austria, after i Urn collapse of the Ivreditanstalt. In j that instance, however, Franco failed jin her object of making Austria her ' vassal, because the Bank of England intervened and placed the necessary amount at Austria’s disposal. But in > the case of Germany, the amount in 1 question is far larger, and France can b» sure that it cannot bo provided 1 without her co-operation. France's time for making political coin out of her gold seemed to have come. TIED TO FRANCE “The long term loan of several thousand millions of marks proposed by Franco herself during the negotiations with Germany,” Professor Cassel coni tinues, “was but a logical link in the ! chain of French policy. This loan was only to ho granted against political guarantees, only to be granted against ; guarantees in addition to which 'pledging of Germany’s customs - revenue was also demanded. France’s own contribution to such a loan need not have been particularly huge. It was evidently thought, that, as in previous cases, tlie 1 nited States of America and a number of European countries would take up the major portion of the loan. But the political j advantage was to go to France, i because France, with her vast j arid reserves, could not be disi paused with in a loan operation o'| such magnitude. Franco endeavored to ■ (re "gl ben her position still further by repatriating more gold by means of her foreign 'credits. The object was to make other countries, and particularly England, realise that France was in a br'-i'Gon to prevent, by means of gold withdrawals, oiw independent action on their part. Each day London reported wild exports of from two to five million pounds sterling. Naturally, in .those.' circumstances, the London Conference could not produce any tangible results. Basically, the position remains unchanged. France’s hoard of "old enables lie to maintain her demand for nolit.i----1 o.' concessions froth Oermanv, and site possesses the means of at any time reminding other money markets of their independence on Paris. Naturally, the situation can be interpreted in various wavs, according to one’s political opinions. Those papers which in Ibis connection talk of a Frenrli victory have not the faintest idea of what the interests, of world economy demand. Tim true nature of this so-called victory will probably bo revealed shortly bw the fatal developments which we must now expect.

GOLD A SUBSTITUTE FOR WAR “In any case, it is now clear that Franco regards her gold stocks as a source of power of the first importance. U it is possible to obtain, with tho aid o' gold, political concessions which could otherwise only bo secured by mean’s of- a 'bloody' bin] expensive war, then tho mainteriancp of a very high gold reserve is certainly worth some sacrifice. Franco is therefore going to continue her present policy, and will hold the throat of fresh gold withdrawals over any nation daring to oppose her political demands. But France’s attitude must inevitably produce very fa?-reaching consemiences. Other countries will also substantially increase their gold reserves, so as to avoid dependence on France’s dictatorial poliev in ease of an economic depression.'But a general increase of gold reserves jvonld be directly:opposed to the policy of'economy in the use of: gold ivhich is a preliminary .condition of world economic revival.” 1