France To Devalue The Franc Irrespective Of British And Monetary Fund Opposition

Wanganui Chronicle, 26 January 1948, Page 5

France To Devalue The Franc Irrespective Of British And Monetary Fund Opposition

MOVE LIKELY TO CUT STERLING IN HALF; KILL BRETTON WOODS

(N.Z.P.A.—Copyright.) Received 11.45 p.m. LONDON, Jan. 25 France is expected to devalue the franc as from midnight. Most agencies and Sunday newspapers predict that the new franc rate will be 864 to sterling against the present rate of 480. The papers say the French move brings the devaluation of sterling nearer. Britain has strenuously opposed the French plan. The Chancellor of the Exchequer (Sir Stafford Cripps) flew to Paris on Friday to confer with the French authorities. Sir Stafford has returned to London, but had no comment to make except that an official statement on the matter would be released later. That is expected at 7 o’clock tonight. The French Government announced that it intended to go ahead with the plan to devalue the franc despite British protests and regardless of the International Monetary Funds’ decision. A Foreign Office spokesman said. “There is no possible compromise.”

The British United Press correspondent says it is reliably reported that France informed Britain and the United States that the frane would be devalued as from midnight on Sunday, with the export frane at 900 to the pound sterling. The French Cabinet has adopted a Bill providing for a free market in gold and certain foreign currencies. The Government will place it before the National Assembly on Monday. The Cabinet Secretary said the Bill would satisfy existing exchange regulations. He added that Sir Stafford Cripps had shown extreme goodwill and understanding of the French situation. There had been no difference of opinion among the French Ministers on the Government's financial policy, or in negotiations with foreign Governments. The International Monetary Fund had not yet made a decision on the French financial plans. The French Government would announce ,ts decision on devaluation of the franc simultaneously with the Monetary Fund’s decision. Observers interpret the statement as meaning that Cabinet has decided to proceed immediately with the devaluation scheme. The “Observer’s*' financial correspondent says Britain’s objections are based on the threat of unstable exchanges and competitive currency depreciation seemingly implicit in the French open market. CURRENCY RATE FORECAST The “Sunday Dispatch” states unilateral devaluation might cause a European currency race, which will jeopardise the Marshall plan. .The "Sunday Express” comments: The French plan threatens to cause the Bretton Woods structure to collapse. It will tend to show the pound’s true international value, which is believed to be nearer three dollars than four.

halve Britain’s purchasing power abroad. The Minister of Finance (M. Mayer) said he had delayed issuing a communique o.i devaluation because of new conversations that began yesterday in Washington, where the International Monetary Fund is discussing the French plan. M. Mayer denied that France would automatically be excluded from the Monetary Fund if she over-rode its veto. “The fund’s statues are very supple on that point,” he said. “In any case almost anything is better than the uncertainty and uneasiness caused by weeks of press discussion of the French proposal.” He regretted opposition to the plan from Britain and in the Monetary fund, but France was forced to go ahead with the measure. "We were willing to discuss and negotiate but finally had set a time limit,” he said.

According to rhe “Sunday Dispatch’s” Paris correspondent, the French plan would enable anybody to buy pounds in Paris at haff the present official rate, which would