Evening star., 1926-11-14
|STORY OF FRANCS
RISE is DISCLOSED
Conversation With Morgan
Held Responsible for
Bull M0vemeHt.
By GERVILLE REACHE.

PARIS, November 13.-The secret
Of the recent rise Of the franc, which
caught most of the Paris tinanciers
unawares, has been learned by the
writer. This puzzling bull" move
ment, led by New York, resulted from
conversations between Premier Poin-
care and J. P. Morgan and between
Premier Poincare and NJ. Tranquil,
the Belgian finance minister.
Just before sailing for America Mr..
Morgan saw the French premier, who
declared his intention of obtaining
ratification of the Mellon-Berenger
agreement with reservations, and
then attempting to stabilize the
franc at about 2.80 cents, which was
somewhat higher than the then pre-
vailing rate. The great American
banker left the audience full of con-
f1dence.
Similarly, M. Poincare refused M.
Franqui's proposal to stabilize French
and Belgian francs simultaneously.
at the same figure, asserting he could
revalorize the French franc first.
Optimism Impaired.
Mr.. Morgan departed via London.
and impaired his optimistic views to
certain city men. Meanwhile, Am
sterdam learned NJ. Poincare's reason
for refusing to cooperate with M.
Tranquil. This was sufficient to un-
leash the formidable bull" specula-
ton which only now is being liquidated
by profit takings, as yet on a small
scale.
Does Frances real situation justify
such optimlsm?
Yes-and no.
President Coolidge's speech was
coldly received in official circles. 1t
is particularly emphasized that while
the United States seeks to enchain its
debtors for 62 years, the President
admits that America will have recov-
cred from the wars effects in 30
years. even with reduced taxes.
Therefore, Americas attitude toward
France will scarcely aid the French
government in the coming months.
The cabinet probably will not have
serious difficulties before the end of
the year. The budget will be voted
without serious opposition, but with
out enthusiasm. Only the commu-
nists will oppose it violently. but the
other parties will withhold their
whole-hearted approval, leaving the
cabinet entire responsibility.
Despite rising prices, the final
quarter will show the heaviest tax
returns in history. some $400, 600
600. Thus the treasury is unembar-
rassed and the recent Mussolini in
terview promises better relations
with Italy, while the Franco-German
parleys continue PEACEFULLY.
Moderates May Lose.
But the governments tight-rope
exercises will begin soon after New
Year. 1t is quite probable that the
Moderates will lose about 20 seats to
the Socialists in the January sena l.
torial elections, thus giving the left
elements a new lease of life in the
last year Of the legislature.
Then the tax returns will diminisi
considerably while the treasury will
have unusually heavy payments Is
make abroad and at home. FOreig
payments alone during the first qua
ter of 1927 amount to $60,000,00O. y
for internal payments, the govern
ment already Is considering issuine
Z per cent treasury notes to NEE
them. Finally comes the debate OF
interallied debts. The Republican
Democratic party, NJ. POincare'
chief supporter, after hearing a re
port advising categorically against
ratification, even with the transfer
and safety clauses, adopted the fol-
lowing resolution:
1.-The debts must be acquitted on an
equitable basis, that Is in proportion
to our reparations receipts and in a
reasonable manner compatible with
the return to normal financial life. :
The same day, LIE Temps. semi
official organ Of the government and
of the Bank of France, declared, con
cerning the treasury's stocks of dol
lars:
In such circumstances we cannot
consider seeking further credits
abroad, especially since offers are
made on conditions to which France
could never subscribe"
Thus many a slip Is possible before
the Mellon cup touches French lips
and ratification Is farther away than
ever. M. Poincare told Mr.. Morgan
that he intended it, but between now
and January he doubtless will find
reasons for postponing q debate on
which so many of his predecessors
have foundered.
Copyright. 1926.)