GOLD BLOC’S FIGHT FOR LIFE

Timaru Herald, Volume CXXXIX, Issue 20063, 21 March 1935, Page 9

GOLD BLOC’S FIGHT FOR LIFE

COLLAPSE OF BELGIAN CABINET SHATTERING EFFECT ON CURRENCIES United Press Association—By Electric Telegraph—Copyright BRUSSELS, March 19. The Government has resigned owing to the Opposition campaign against the Government measures to safeguard the franc. The Prime Minister (M. Theunis) in announcing his resignation declared that the co-operation of the Chamber of Deputies was essential to maintain the stability of the belga, which the Opposition’s systematically unjust campaign had endangered. An official of the National Bank, which controls all the gold dealings, declares that the gold standard will not be abandoned, since the entire Right Wing, with two exceptions, also the Left Wing of the Senate, have decided to maintain it. The New Cabinet is likely to be a kind of National Government, comprised of Catholics, Liberals and Socialists, which will control 176 seats in the Chamber. In order to protect the guilder the Dutch Government announces rigid economies in the budget, saving £8,500,000. There is general uneasiness owing to the resignation of the Belgiam Government. The flight to sterling on the Bourse is coupled with the sharp fall in the belga. Rush to Sell Belgas The Belgian Cabinet resignation came as a shock to the London foreign exchange markets, where the week-end news created an- impression that the belga was saved. The immediate effect was a rush to sell belgas and other gold currencies against sterling. This reduced the market to chaos. The final sterling exchange on Brussels was 20.58- net, a movement of 30* in favour of London. The City Editor of the “Times” says: The resignation of the Belgian Cabinet disturbed the foreign exchanges. All gold currencies were depreciated in terms of sterling. ,

IS BELGIUM GOING OFF GOLD? IMPRESSIONS IN UNITED STATES United Press Association—By Electric Telegraph—Copyright (Received March 20, 5.5 p.m.) NEW YORK, March 19. Belief that the resignation of the Belgian Cabinet signified forcing Belgian off gold, and the crumbling of the gold bloc shook the foreign exchange market. Prices of the belga and all gold currencies broke sharply, while sterling jumped 4i cents to 478*. The dollar rose to 100.66 cents, against the French franc, which fell more than three points to 6.59 cents, or below the gold export level. The belga dropped 16 points, the Dutch guilder 1.3 of a cent. The Swiss franc also weakened. EFFECT OF GERMANY’S ACTION GOLD COUNTRIES UPSET United Press Association—By Electric Telegraph—Copyright (Received March 20, 5.5 p.m.) LONDON, March 19. “The Yorkshire Observer” says: “Germany’s recent huge wool purchases are undoubtedly connected with her conscription plans. The wool industry is most sensitive to international events and Germany’s action is likely to result in further repercussions. The present exchange rates mean that the gold standard countries can buy wool absurdly cheaply from countries off gold. Germany’s action may have encouraged firms in gold countries to speculate in raw materials, particularly wool, as a cheap, safe investment for their funds in the event of their countries abandoning gold.