The Wanganui Chronicle MONDAY, JUNE 25, 1928. STABILISING THE FRANC

Wanganui Chronicle, Volume LXXXIII, Issue 20181, 25 June 1928, Page 6

The Wanganui Chronicle MONDAY, JUNE 25, 1928. STABILISING THE FRANC

'J’H.E REFERENCES to the stabilisation of the franc, made by the leading financial journals, show that this step is regarded as one of the greatest importance. When M. Poincare took office the franc, which before the war was worth nearly tenpenee, had fallen to under twopence, and the violent fluctuations made it the medium of very heavy speculation. Two years ago the industrialists of Northern France put forward a plan for a big foreign loan, secured on the turnover of French industry, to enable the franc to be stabilised. They were vigorously supported by the mass of State bondholders, who were faced with the loss of the greater part of the capital thus invested, and the opposition came from exporters who, able to buy cheaply in France, could under-sell competitors in foreign markets.. The problem of stabilisation has caused the fall of several French Ministries, but they were not as secure in their tenure of office as is M. Poincare. Since taking office the French Premier has brought the franc from about 240 to the pound to 124, and has taken the necessary steps to maintain it at that level for the past year, so that stabilisation at 125 would not precipitate an economic crisis.

Of late months the Bank of France has been importing large quantities of gold with the dual object, it has been stated, of “increasing the metallic cover for our notes and preparing for effective convertibility, and also to put a brake on foreign speculators.”

Commenting on the suggestion that the franc should be stabilised at 125 to the pound sterling, a financial writer said: “A year’s experience has shown that it is as good a price as can reasonably be expected. To change again would be to throw the franc into the melting pot. There would be panic and confusion, and nobody could tell where the franc would stop were it to begin to slip again.”

Germany, by means of an international loan, stabilised its currency, and Belgium, Austria and Italy have successfully faced the same problem. France has been the weak link in the chain, and the recent international conferences of bankers in Paris were taken to indicate that the financial forces were being mobilised to enable the Republic to set its house in order. The outcome should be of importance, especially in the world of commerce, and should strengthen that financial stability held by experts to be the chief hope of European recovery.