HANGING BY HAIR.

Stratford Evening Post, Volume IV, Issue 127, 11 May 1936, Page 5

HANGING BY HAIR.

Will Franc Will Able To Hold Out?

CRISIS IN FRANCE. Press Association —Copyright. London, May 3. The fats of the franc is hanging by a hair which any day may snap. M. Albert Sarraut’s Government is most anxious not to incur the odium of devaluation before resigning on June 2, but many are wondering whether the franc will hold out.

The most serious feature of the situation is the panic of small depositors, for the large banking and business houses iong ago arranged the transfer of their funds. The gold reserves of the Bank of Franco and th» resources of the commercial banks could not long withstand the prolonged withdrawals of small deposits, which are being transferred in increasingly heavy amounts to Lomdon and Brussels. 4 A_ The panic spread from France to Switzerland and Holland, whose authorities are less well equipped than France to withstand attacks. The market has passed beyond control. The Swiss franc reached gold export point and guilders are rapidly approaching it. Consequently the authorities are faced with a fresh tedrain on the depleted gold reserves. Amazing scenes were witnessed at Paris, where long queues assembled at dawn every day of the week at the shops of bullion and gpld coin dealrers. Forward markets were demoralised. The sterling rate for three months was marked up from 4.72 to 6.75 frames in 24 hours, equivalent to almost 45 per cent, per annuam.

The Sarraut Government naturally in- ! sists on defending Franca from attacks, | from' whatever quarter they may come, I and has expelled the Pole, M. Silberfeld, j for currency speculation. M. Marcel 1 Regnier, Minister of Finance, insists that I there still is sufficient currency for the j treasury to maintain the franc without a I gold embargo, the fear of which in the i opinion of the Government is carrying i the public over far.

London's view of the situation is more J calm that that of Paris, regarding de- j valuation as a •‘bull," and not a “bear,” ’ point in international trade. The chair- ; man of Unilever Ltd. declares that the I stabilisation of currencies after devalua- j tion must be a boon to all international I companies and in the long run exert an | inflationary influence on commodity \ prices.

The r manctal News says that white ; agreeing with the ultimate effect of de- { valuation, inasmuch as it will provide a 1 basis of easy money and credit expan- i sion which will lift commodities, it ex- ! pccts the immediate result will be a fall i in commodities, especially if the guilder • is devalued. The commodity markets are i overshadowed by this fear, which largely accounts for the fall in rubber and ; base metals. Opinion is divided upon how devalua- i (ion of the franc would affect gold Pro- j bably there would be a temporary fall in ; terms of sterling. Devaluation is likely j also to result in a serious repatriation of ■ foreign capital which has helped to bol-*; ster un the gilt-edged oil and gold share | markets at London. ”" i