Black Markets May Be Menace To The Pound

Wanganui Chronicle, 28 January 1948, Page 5

Black Markets May Be Menace To The Pound

SECRET PLANS TO STOP THEIR EFFECT (N.Z.P.A.—Copyright.) Reed. 5.40 p.m. London, Jan. 27 Secret plans io prevent Paris black market operators from undermining the pound are being prepared by British and French Treasury experts, according to the “Daily Herald,” whose Paris correspondent says that the British Government is determined, following devaluation „of the franc, to avoid any situation which might lead to the forced devaluation of sterling. Britain, he points out. could insist on trade only by licence with France; could shut down transferability of accounts: could reimpose stricter exchange control, including the reimposition of full-scale postal censorship. Price advantages French exporters get from the devaluation of the franc, the correspondent adds, are not regarded as a serious menace to the British export drive. Britain may get competition from France in certain high quality silks and cottons, but the British Government, anxious to see French economy strengthened, is prepared to face limited competition. Recd. 5.5 p.m. London, Jan. 27 Financial observers believe British measures to defend sterling are likely to aim at controlling any exports which threaten to bring in francs instead of dollars, and prevent the flow to Paris of any sterling which threatens to find its way to the black market, says Reuter’s political correspondent. Exchange control would be more difficult and it is feared that the psychological effect of a French free market may endanger the general stability of currencies and

prejudice sterling in the eyes of otheij countries. It is stated in London that such anxiety is not justified as Britain does not contemplate altering the rate of sterling in relation to other currencies. London quarters think the salient point ’is that the depreciated rates ot sterling and other currencies against the dollar in Paris will not be on the black market but the officially recognised tree market, which will handle substantial transactions. The free dollar rate may thus come to be regarded as an effective rate. No actual danger will arise unless the French authorities fail to prevent black market dealings in sterling against free dollars. The correspondent says Britain might have to block certain sterling balances to prevent them reaching Paris. British controls would also have to cover transfer between respective outlying areas, say between Burma and Indo-China. The “Daily Express" says currency experts fear pound leakages through Far Eastern countries in the sterling area, and in French colonies remote from London and Paris exchange controls. For example, British rubber might be bought from Malaya for francs sold at cut rates to America for dollars.' “The Times." in a leader, says the new French policy is dangerous and unwelcome, and if it tempts other countries to emulation with similar plans ultimate results would be unpredictable, but so long as the danger is confined to the French plan there should be no threat which the British and French exchange authorities, acting together, cannot keep within bounds. The Associated Press says that throughout Europe, France's decision so far has had little effect on either the dollar or the pound, which has been selling at a discount in relation to the dollar on all currency black markets. The “Daily Mail's” Paris correspondent says money exchange offices in Paris refused to pay the new rates of 864 t 0 the Pound, although the official Gazette had published the new prices. The blacK market rate was 850 francs.