New-York tribune., 1921-04-24
Puzzlet, BY Spread in Francs

une talsc tho liberty OF asking your
opinion OF the following matters; An Amea''
securities. Would YOU consider RS French
vestmcnt which ono who is not familiar
with conditions over there could make?
ssn Wonld one eags vf mors by rr
ing In Paris than by purchasing the French
money here. providing the conditions were
the same or rather when purchasing on tn the
ton in last Saturdays Tribune quotation.
rhs value Of A. the French frame 1 is there re
1A14is francs for $l yet the dollar is
quoted in Paris Mt 14.1oia francs in the
same EDITION " your paper whereas or or
cents which would be 1A.24 francs for the
dollar, yet the dollar was quoted In Paris
Win You kindly explain tlle dscTepa D.
is there nuctusting difference between
tho value Of franc in this country and
fdence in the French governments ability
TO come back to a normal and safe posi-
tion financially and am willing to take
chance on IL. MY last question is this As
sumln& that l am not mstakcniin the be
lief that the value OF the franc will be
stored in number OF years. by purchasing
now French Government bonds, receiving 4
cert a In rate OF interest would not gain the
additional amount on the higher value OF
was restored: Kindly state where 7 can
get quota tIons on the present value OF E,u-
iropean government internal and external
bonds?--E. r. *.
Answer--The value Of any govern
mcnt bond is based on investment opn-
ion Is to the stability of the country's
government, the good faith of its peo-
pie, the resources Of the country and
habits of the people as to thrift and
industry. In all but one of these
France ranks IS high as or higher than
any country in the world. The govern
mcnt of France has serious political
problems. Like you, we believe in the
ability of the French people to solve
these problems. During the war France
was forced to water" her currency
and lay heavy burden of debt on her
resources. The watering of the cur
rency, to our mind, raises more seri-
Gus problem than the war debts. France
might pay, and we think she will, her
external debt in gold and still be- un-
able to restore her present paper cur
rency to gold basis. Even in coun-
try such as ours. with undcvclopcd re-
sources immensely greater than those
of France, it took long time
after the Civil War to restore our
paper money to a gold basis.
1t is impossible to discuss the ques-
tion of French currency and French
bonds without being Influenced, and
properly SO, by the friendship which
this country has for France. On purely
economic grounds, Switzerland, al
though its natural resources are much
smaller than those Of France, has a
better credit position. 1t has no seri-
Gus social political or industrial prob
lens, and it has no war debt. It is
largely matter Of chance whether YOU
could get more francs for your Ameri-
can money before you sailed or after
you arrived on the other side. For
elgn exchange rates fuctuate from day
to day and from hour to hour. The
slight differences in quotations that
you have noticed are the result of the
working of supply and demand, which
action is not exactly synchronized by
cable between Paris and New York.
1t would be impossible for a private
individual without elaborate banking
machinery to take advantage Of these
slight variations. That banking oper-
alton is called arbitrage. You would
profit by buying French intervals rather
than externals if the international value
Of the franc is returned to gold
parity. Almost any of the large inter
national banking houses will give you
quotations on both internal and external
foreign government bonds.