LOWER VALUE OF FRANC

Southland Times, Issue 23502, 7 May 1938, Page 7

LOWER VALUE OF FRANC

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UNITED STATES AND BRITAIN DEMOCRATIC UNITED FRONT AGAINST DICTATORSHIP [United Press Assn.—Telegraph Copyright) (Received May 6, 9.45 p.m.) NEW YORK, May 6. Britain and the United States, though opposed to the step at present, acted quickly together to assent to the French devaluation of the franc and present a democratic united front against the Rome-Berlin axis meeting at Rome. The collapse of the franc would have brought disruption of trade with Britain and the United States, and France would have been plunged into a currency devaluation war, which would have played into the hands of the dictators and threatened France’s projected defence programme, which is regarded as the buttress of European democratic stability. The Minister of Finance (M. Paul Marchandeau) announced that the franc had been fixed at 179 to the pound, states a message from Paris. M. Marchandeau later explained that it is not stabilization, but the first operation for a de facto stability which he will pursue with inflexible determination, backed by the help of all Frenchmen.

A special statement gives a warning that the Government will not tolerate any un justified rise in commodity prices. The franc is at present linked only with sterling in fluctuable relation to the dollar.

Over £16,000,000 worth of gold was sent to France this morning as a result of the pegging. A statement on the devaluation of the franc was made by the Chancellor of the Exchequer (Sir John Simon) at question time in the House of Commons, states a British Official Wireless message from Rugby. “At the beginning of the week France informed us,” Sir John said, “that she did not consider it possible that the franc could be maintained at its then level and that she was contemplating a lower rate. France made a similar communication to the United States and, as is provided in the Tripartite Agreement, consultations between the three Governments then took place. France gave an assurance that it was her intention to achieve as the eventual result of her policy a rate corresponding to her economic position and giving to France no competitive trade advantage and that the present downward movement would be the last. In these circumstances, after consultation with America and in agreement with America, we reached the conclusion that the action being taken by France should be regarded as not inconsistent with the Tripartite Agreement That agreement, in view of all three Governments, continues with full force and effect.” Sir John Simon was asked if the Government contemplated that no further approval should be given to the unilateral devaluation of the franc or dollar. “We will deal with the situation as we find it,” he replied. “The honourable gentleman has referred to the dollar. As I have seen in the newspapers and wild rumour suggesting that there might be a lowering in the value of the dollar, may I take this opportunity of saying that that has been officially denied in Washington. Equally, of course, we are not contemplating any adjustments of the sterling exchange.” APPEAL FOR NATION’S CONFIDENCE DRAMATIC BROADCAST BY PRIME MINISTER PARIS, May 5. In a dramatic nation-wide broadcast announcing the restabilization of the franc, the Prime Minister (M. Edouard Daladier) declared that he wanted, as always, to tell the country the whole truth. He said that the State economy was being “drained of its life-blood.” Appealing for the nation’s confidence, M. Daladier said the National Defence Loan would give all Frenchmen a chance to demonstrate their patriotism “as in a plebiscite.” “The whole truth is that our economy has been hard hit,” he added. “The State Budget is inevitably unbalanced and the Treasury needs are a drain on the national savings, lowering the public credit, drying up private credit and menacing our currency. It is not a question of doctrines or experiments, but of any measure contributing directly to the salvation of the country.” The franc opened at 178.9 to £1 and 35.8 to the dollar, representing overnight falls of nine and two francs respectively. Enormous amounts of exported capital are pouring back to France. The influx is so great that the Bank of France is unable to handle all the transactions and has refused to accept amounts below £lO,OOO. It is estimated that the French Equalization Fund has acquired foreign currencies to the value of at least £25,000,000. The fund’s operations in London have gained a further £40,000,000. The continuation of yesterday’s boom on the Bourse has raised rentes a further four points, and most industrials were from seven to 10 per cent, higher. ‘‘PAINFUL IMPRESSION” IN ITALY BUSINESS MEN EXPECT LIRE TO BE ALIGNED LONDON, May 5. The Rome correspondent of The Daily Telegraph says the devaluation of the franc has created a painful impression, as it is bound to assist French textile exports and the tourist industry at the expense of Italy. Italian business men expect the lire to be aligned with the franc, though for reasons of prestige, not immediately.