Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-12-20
THE ADVANCE OF THE FRANC
BY FRANK Fl. SIMONDS.

time there is a prospect of real sur
plus.
1t was this circumstance of the
floating debt which wrecked the first
Belgian plan for Utilization. and the
new effort was not undertaken until
Tranquil, the financial dictator, had
cody transformed the floating short
term debt into a long term debt by
mere decree. Exactly the same
course has been followed in Italy. III
any event, the next problem for Poin
care will be to deal with the floating
debt, but it is Plain that he will be
enormously helped if the return Of ex-
ported capital continues, for it will
supply a very large accumulation of
capital TO permit the funding of the
floating debt.
x < x x
There remains the very large ques-
ton as to whether Poincare really
believes in sterilization or valoriza-
ton, that is whether he favorS fixing
new gold value for the franc, as
was done in Belgium, or the slow
restoration of the franc to it's pre-
war gold value. One thing is GER
tain ana that is that when he took
office he strongly inclined to the lat
ter view.
have the advantage of restoring the
value of the vast investments of the
people of France in the government
loans during and after the war. If
the franc were stabilized at it's pres
ent value. for example, that is five
paper francs to one gold franc, these
bOndh olders would lose four-fifthS of
their investment and the process
would amount to an enormous capital
[aUV This II no said Ia the
course advocated by all banking and
Industrial interests.
The difficulty with valorizatiou
would be that 1t would gradually ex-
pand the gold value of the debt of
France until on the basis of totally
restored franc it would exceed $35,-
000,000,000 or a sum equal to the
British debt and twice that of the
American. Such a debt, amounting
to half the wealth of France. would
in the opinion of all experts be far
beyond the capacity of the nation
to bear.
X X X X
What is clear is, however, that If
the present rise of the franc con
tinues, sterilization will come II at
all at a much higher figure than
has been contemplated and mean
time French industry is beginning
to suffer because the appreciation OF
the franc has deprived it of that
advantage in the world market which
has explained the recent prosperity
of French exporters and the state
of approximate balance between eX
ports and imports. Thus while the
bondholders have prOfltted. the bust
ness interest are beginning to be
embarrassed
If the French situation continues
to improve or even if the improve
ment to date is solidly maintained.
of the debt question that the French
that they will certainly insist upon
safeguard clauses which do not af-
feet the money terms but make
French payments to us conditional
upon Germany to France and 1t Is
far from unlikely that there may
be a growing demand for a revision
of the money. terms themselves
which has not yet been asked.
In any event Poincare is unlikely
to bring up the debt question LOT
some time and it is not impropaple
that he has, as yet. not made up
his mind as to what he Will ASK
the French Parliament to do. BEFORE
he took office he was certainly opposed
to the debt agreement as were the
more influential members of his cabi'
net and In the present situation then
Is no imperious necessity which over
bears this opinion. Therefore, at most.
q long hiatus is indicated.
tCopyright. 1926.J