LOWER VALUATION

Poverty Bay Herald, Volume LXIII, Issue 19131, 28 September 1936, Page 5

LOWER VALUATION

FRENCH FRANC REVISED GOLD CONTENT STABILISATION EFFORT THREE-POWER TALKS LEGISL ATION SOUG HT (Elec. Tel., Copyright—United Press Assn.) (Reed. Sept. 23, 11.30 a.m.) LONDON, Sept, 27. Messages from Paris state that, following consultations with representatives of Britain and the United States of America, the French Government has decided to devaluate the franc. This step is being taken in the* effort to ensure a more stable basis for the cur rencies of the three countries.

■'The necessary legislation for the-read-justment of the franc to the pound and dollar will be submitted to an emergency session of the French Parliament on Monday, together with a measure to compensate French nationals suffering heavy loss. The Bank of France, meanwhile, is taking' steps to avert specula tive manoeuvres.

The step was foreshadowed by an official decree closing all stock exchanges throughout France until further notice and the announcement by M. Auriol, the Minister of Finance, that the French Government would ask Parliament for the power to requisition all gold in France.

The bill to be introduced in the French Chamber to-morrow stipulates that a declaration of gold held must be made by companies and private indivuals in respect to amounts over 50 grammes in weight. A tax equal to the increased value of gold will be imposed on all gold holdings. The bill will seek to authorise the Government to reduce taxes on necessary foods in order to avoid an increase in the cost of living. SETTLEMENT OF LOANS Another bill grants an advance of 3,000,000,000 francs for a settlement of mortgage loans M. Auriol stated that the Government was doing its utmost to prevent an unwarranted rise in prices. He added that negotiations with Britain and America had been proceeding since June, the objective being to end the economic war and create an alignment avoiding monetary and financial difficulties. A stabilisation fund of £130,000,000 will maintain the stability of the new franc, the gold content of which may be up to 49.43 milligrammes of gold of .900 fineness.

The hill does not fix the value of the franc, which the Government may decree between 43 and 4!) milligrammes of gold. Import, export or business in gold will be illegal without the authorisation of the Bank of France, which will administer an equalisation fund of £100,000,000 under Treasury control.

The basis of the currency agreement between England, France and America is believed to bo the holding of the franc at 105 to the £ and the dollar at 4.86 to the £.

It is understood that there will be no direct embargo in France on gold exports, but the minimum number of francs that can be exchanged against gold will be fixed so high as to make business practically impossible. .GOVERNMENT PROFIT The requisitioning of all gold will, under the new price, give the Government a profit estimated at between £175,000,000 and £230,000,000, more than compensating for the failure of the "baby" bonds. The Government's stiffest obstacle will be the Senate, where it is expected devaluation will be attacked for reducing the purchasing power of fixed incomes and injuring French investors, who lost 80 per cent of their money in the 1928 devaluation. The devaluation decision speedily aroused a controversy. M. Reynaud. former Minister of Finance, recalls that he urged the step in 1934, since when Fra'nco had lost 30,000,000 francs in gold, and the condition of her people had become worse. "This is the last chance. Don't let us muddle it," he added. On the contrary, former Ministers, M. Marin, M, Mendel and M. Bonnet, condemn the decision,' M. Mendel declaring that devaluation is a downright swindle.

OFF GOLD STANDARD DUTCH INDICATION AMSTERDAM SURPRISE (Reed. Sept. 28, 11.30 a.m.) LONDON, Sept, 27. Resultant, on the French decision to devaluate the franc, a message from Amsterdam says it is officially announced that the maintenance of the gold standard by Holland is no longer possible, owing to the French and Swiss action. The sudden change of Dutch policy has created general surprise. The Bourso will be closed for two days. The Dutch Government and the Bank of the Netherlands have decided to place an embargo on the export of gold from to-day. The Dutch Government has issued a statement that Switzerland's decision to devalue forced Holland to reconsider her attitude, and theie is now no possibility of maintaining Holland's monetary policy unchanged, as she would be the only country in the world on the gold standard, and therefore would feel, to the highest degree, the pressure on the exchange rate and gold reserves. Ro, in order to avoid being forced off the standard by a weakening of gold reserves, Holland has decided to place an embargo on the export of gold. An earlier message from Borne stated that the Government, after a long conference, announced a decision to devaluate the Swiss franc. The Swiss Government is submitting proposals to the Chamber on Monday, and is closing the stock exchanges on IMonday and Tuesday. A Brussels message says that the Belgian Government is adhering to the Anglo-French agreement, and is not devaluating the belga. A Warsaw report states that Poland is not following the devaluation measures of France and Switzerland. A message from Rome states that the Italian Cabinet will meet on Tuesday to discuss the financial policy of Italy. It will participate in the stabilisation agreement if invited.