Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-18
BY WILLIAM HARD.


Gold and the gold standard will be
one Of the main topics OF conversation
between the American Government and
the French government during the visit
here of Prime Minister Laval OF France,
beginning next Thursday evening.
France continues to withdraw gold
from the United States in large sums.
Part OF the reason is revealed IN the
latest figures received here Of the note
circulation Of the Bank of France.
France, like the United States. though
in a less acute degree. Is beginning TO
suffer from the boarding of money, and
thereupon is beginning to experience
money imitation.
The note circulation of the Bank of
France has gone up $500 100000 in a
year. 1t went up $l50000000 in the
last week OF record. The interpreta-
ton given to that phenomenon here in
governmental fiscal circles is that
French depoSitors like American deposit
tors. are taking money out of bank ac-
counts and putting 1t into vaults and
socks.
In the United States the money in
circulation has gone up alrost 81 ,000,-
100000 in the last year and more than
$40 100000 in the last week of record.
In proportion as money gets withdrawn
from the banks for boarding and thus
although remaining technically in cir
culation, ceases to circulate, the banks
are obliged to use their assets in such
way as to call new money into eX-
iStence.
This process is happening stimuli
taneously in both France and the United
States. The worlds two greatest gold
countries are at the same instant threat
81 lax,I l,t1 g., Iool s
confidence in the business future.
*
The central idea of France in send
ing Prime Minister Laval here is that
the Federal Reserve System of the
United States on the one hand and
the Bank of France on the other hand
should more or less lean up against one
another in order to support one another,
and thereupon perhaps be able to help
support the rest of the world.
Already the Federal Reserve System
and the Bank of France find themselves
to be Virtually partners in many impor-
tant adventures.
On November l there will be Sl25,-
100000 of loaned credits repayble by the
Bank of England to the Federal Re-
serve System. On that same day a pre-
cisely equal sum of money will be SINH
larly due by the Bank of England to
the Bank of France.
On November the Reichsbank of
Germany will owe $25, 600, 900 of loaned
credits to the Federal Reserve System.
1t will on that same day owe precisely
that same amount of loaned credits to
the Bank of France.
These credit debts by the Bank of
England and by the Reichsbank to the
Federal Reserve System and the Bank
Of France come due simultaneously
and in equal amounts and are thought
by the French to require a common
policy between the French and Amer
lean central banking authorities.
At the same time the Bank of France
and the Federal Reserve System have
made credit advances Through the
Bank for International Settlements at
Basel, Switzerland) to the central banks
of Austria and of Hungary. French
loans to Austria and to Hungary are
invariably colored with political con-
Siderations and bargains. Our Federal
Reserve System and our private banks
strive to keep aloof from such bar
gains. 1t nevertheless becomes appar-
ent that through our participation in
advances of credit to the Austrian and
Hungarian central banks we approach
political matters on which a clear I'm
derstanding between ourselves and the
French Is imperative.
X ~
We and the French are partners
again in a vast sum of money which
year. That is the $400,000,000 due then
from the British treasury, 100000 900
of it to banking interest in France and
5000. OOO. 900 of 1t to banking interests
in the United States.
One of the most interesting features
of all these debts is that they are wholly
unlikely to be paid on the dates on
which they are due. The chief point OF
agreement sought between France and
the United States might be said to be
the terms upon which renewals of the
debts in question should be made.s 4,
Two other interesting debt dates of
next year may be mentioned.
In JuIv of next year the Germans will
be supposed to begin paying reparations
again. Virtually nobody here thinks
that they actually WILL
In December of next year the ex-
allied governments of Europe are sup
posed to begin paying debts to the
United States Treasury again. Vlr-
tually everybody here thinks that the
British government will be unable to
resume paying, and that thereupon the
French government, although presum-
ably able to pay, Will not be expected
to pay.
X X X
It will be argued that it would be
unfair to let the British off and not at
the same time let the French off. This
argument is thought likely to prevail.
On the point Of German reparations
a certain exception must be made to
the general rule that the Germans will
not resume paying. 1t is possible that
they may pay the unconditional" part
of reparations-that is, the part that
goes principally to the French.
r,l.e Tzs-@,. ~ mill lace ~ Yena-