Evening star., 1926-12-31

continued from Twenty-second Page.)
stage of collapse. Capital was rush
ing out OF the country despite all
artificial attempts to stop it. In
March, 1924, the franc had sunk to
| nearly $40 cents. The hundred-rnil.
hon-dollar Morgan loan temporarily
turned the tide, but 1t subsequently,
proved to have been merely a stop
gap. In December. 1925. the franc
was selling within less than 90
points-that is, less than a fifth of
cent-of it's 1924 bottom.
France had exhausted outside
means OF help because other coun-
tries were not willing to come to
the rescue until the budget had been
really balanced and until an agree
ment mad been reached for the fund
ing of the war debts. With tre-
mendous issues of new paper notes
| made necessary by the constant
depreciation in purchasing power
the franc went from bad to worse
until In July, 1926. it touched its
lowest In all history, 1.931a cents.
Francs Amazing Recovery.
The subsequent recovery furnished
one of the most interesting Of the
years episodes. IL began with the
formation of the coalition ministry,
the very nature Of which was an ad-
mission that France was in more des-
perate straits than it had been since
war times. This coalition was for
midable enough to override opposi-
tion and to adopt a financial program
in which the world had confidence.
Refugee capital began to flow back.
slowly at first, then more rapidly,
until in the latter weeks of the year
the movement at times became ur-
gent Then. of course, arose the
problem of how French industry and
finance were to ADOPT themselves to
the new conditions. They had made
their calculations upon a very much
deprecated value of the paper cur
rency. Wages, cost of materials, all
other items entering into the opera
tions of manufacturing and mercan-
tile enterprises had been adjusted
according to a very low level for
the franc.
The sudden upturp in the currency
unit was equivalent to an equally
sudden advance in commercial costs
Likewise it meant that securities into
which paper francs were converted
while the latter were going down
became less valuable in the eyes of
their holders. The Paris Bourse went
through some days of severe Iiquida-
tiOn and considerable unsettlement
was reported in business lines. The
impression toward the end OF the
year was that the French govern
ment would like to see the franc come
to rest temporarily around the exist
ing level, giving time for industry
to catch up before a further recovery
was contemplated.
With Belgium II was a case of a
revalorization of the paper currency.
acknowledging as q fact what was
everywhere appreciated, that there
was no chance of ever getting back
to anything like pre-war rates. The
StabiliZation figure was fixed where
under the new conditions, the gold
standard represented less than q fifth,
in terms of foreign money, of what
1t formerly did.
Germany Comes Back Strong.
Toward the end of the year there
was q spread of over IA points be-
tween the selling price of the Ger
man per cent bonds and the italian
Z per cents. both dollar loans with
a similar character OF security and
having not far from the same length
to run. This was no disparageman
to Italian financial progress, but 1t
was a most striking tribute to the
wonderful recuperation of German
credit. The German loans, public and
private, were taken with the utmost
avidity and later commanded con-
stantly rising prices. The attractive
ness of the investment yield as the
result of the money position was, of
course. a factor. but the main CON
sideration was the successful way
in which Germany had met the first
two years payments under the
Dawes plan, following the write-off
of its internal debt and the extinc-
tion of the old paper currency. Ger
man industry, once solidly on its feet.
has received the unstinted support
of foreign capital.
Copyright 1926)
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