Evening star. [volume] (Washington, D.C.) 1854-1972, 1919-01-05
lend OF WAR FINDS FRANCE
SOLVENT, DESPITE HUGE DEBT
Assistance of Allies Needed, But Greatest
Resource Is in Thrift and Spirit
of the French People.


currency medium except for silver ana
copper small change (whose issue il
also in the hands of the Bank OF
France exclusively, this makes q total
fiduciary circulation needing cover Of
H. Bank cover in immediate LIQUID
assets:
! Gold reserve in bank. a.415.151.5f9
Gold reserve abroad. ...... 2.0s7. l0s. asa
| Credit account of o. S. Treasury Lass. oo0,ooo
short as'e eon a1sasd rs ssS
Permanent advance to state. 200. 100000
Loans on securities. ......-.-... $40. 3ia.S0a
| The total of this part of the bank
cover. consisting of assets which are
practically capable Of immediate real
ization, is thus over $4,000. o00, 900.
Slow Assets of Bank.
Bank cover in assets needing time
Liquidation:
Moratorium commercial paper. 1ols 200 4sx
War advances to state. ........ Ii, 800, 0O0,OOO
/ Trench treasury notes discounted
! for state advances TO foreign
| governments --.-...--......- S.JUO, 600 coo
! This second class of the banks as
sets, though not Immediately reaiiz-
able, is based. for the first heading,
on French business credit. In point
| of fact, the moratorium paper is be.
ing paid off at the rate (week end
ing November 2D of nearly $1,000, 00e
week. For the second heading, t
[ is based on the French states
credit. which, moreover, Is not im-
mediately involved. for perhaps 10.
I O0O.000.000 francs paid into domestic
| circulation and gone into ''hoardinks"
Withdrawn from real circulation.
The third heading is guaranteed by
the credit of the foreign governments
that had recourse. particularly at the
| beginning Of the war, to the money
resources of France. Quite apart
from such assets. the Bank oe
france mas a note cover in gold ana
! gold credits alone Of more than 2e
per cent OF all its notes actually in
circulation (and in a single week after
the armistice the circulation had
fallen over s75.ooo.o00). Counting
commercial paper Immediately reaIiz-
cover in liquid assets is nearly 20. =
hgure higher than has been exacted
Tor money note issues universally ac-
copied in times Of peace. The
promises to pay of the French state
a =. the foreign governments which
1t mas supplied with money during
war are only an addition to this SO
per cent bank cover which exists
T, without them.
Economic Situation in France.
The only part of the economic sit
uation in France, as the war leaves
her, which can now be foreseen n
the bearing of the money situation
on prices and industry. With the
] cessation Of hostilities there has been
an immediate, though not heavy, fall
in such prices as most tended to
produce dearness of living. It re-
mains to be seen if this means more
than the knocking of the bottom out
of a great deal Of war speculation and
| profiteering
rne experience of he American
clvl war is scarcely TO the point.
There the depreciation of the green
PACK ana ITS paper-money character
made 1t currency medium nation
ally and internationally, and thus es-
sentially different from the present
notes CT the Bank of France. The
delay in specie resumption Of such Q
currency, whose depreciation was not
so much real as taken for granted.
confused all natural values. The
steady rise in French exchange in
lpersistently unfayorabie markets like
Holland, Switzerland and Spain, from
the first moment that the fortunes OF
! war began changing shows Sufficient
ly that France Is taking her nor
NAL position. financially and eco
| nomically, with the end of war.
Rise in Exchange Rapid.
That French paper shall rise to par
within few months would be a wish
| father to the thought. even within
! the limits of the Latin union. But
what is true is this: Steadily, ever
since the decisive turn in the war,
French exchange has risen toward
! par in the markets of Holland, Swift
zerland and Spain more rapidly than :
either English or American exchange.
/ since the two latter more exactly
represent the working of supply and
| demand. this can only mean that the
! quick return of France to her nor
NAL financial position is already taken
| for granted in these countries.
| Such recognition, manifested by the
| continual resultant of financial OBJ,
| erations day by day and week. after
| week. is a far more authentic and
| competent testimony to the real
| financial and economic situation OF
| France as the war leaves her than
| any expression of English or Ameri-
; ca opinion could be. England and
ithe United States. indeed, are imam
| cially involved with France, and the
| working of supply and demand. even
IN their economic Is
| teriaLy Influenced by internally con-
ventions. Holland and Switzerland,
on the contrary. have hard-money in
terests. particularly in banking cir
! cles. which, quite apart from senti.
ment unfavorable to France, impel
them to favor Germany and her coali-
ton to the last
During the war this may not have
gone much further than a resistance
of inertia to every upward move
ment in French exchange. but now
there is scramble to- stand finan-
cialiy with the winner. and the sudden
, recognition is of the French situa-
ton rather than of the English or
American. In Spain the turna bout Is
even more noticeable. in spite OF the
highly immethodical character OF
Spanish finance. There anti-French
sentiment of long standing united
with the mortgage claims which Ger
may had spread over the country,
and there too. the financial power
of France. without economic pressure.
triumphed.
Elements of Reconstruction.
The other elements of the economic
situation can be summed up In a
single sentence: They are problems to
be solved much later. There is abso-
,u+aiv no other answer official or from