Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-01
TAX CUTS PLANNED
TO AID PARIS MART
New Bill in Parliament Would
Tighten Burden on For
eign Loans.
BY ALEXANDER HENDERSON.
Associated Press Fiancial Writer.

Associated Press Fianeial Writer.
NEW YORK, April i.-Wall Street is
watching carefully the further effort to
improve the position of Paris as an
international money market by the in
PRODUCTION Of the bill in the French
Parliament tightening the taxation
burden Of foreign transactions of French
banks. One article of the bill would
make all loans granted to public COM
munities tax free.
However, the results to date have
been rather limited. Only fraction of
the bankers acceptances which passed
through the bank of France in the past
year were created in Paris. Notwfth-
standing the efforts of both the govern
ment and the management of that in
stitution toward the common purpose
of resuscitating Paris as a world capital
center. More than year ago the plan
was initiated and some of the more
onerouS handicaps were removed.
MOreau's Ambition.
Such an authority as Emile Moreau.
until recently governor of the Bank of
France and who shares with Poincare
the name savior of the franc" for their
success in stabilizing French francs and
credit, said short time ago: 81 have
tried to make of Paris great interna-
ldIle0
TO succeed completely and this is one
of the reasons why / lack compre-
hension Of Partisan public opinion In
the matter"
Conservatism is one Of the universally
recognized characteristics of bankers.
so when a man OF Moreau's ability and
reputation speaks thus, emphasis is
added to his words There is still
great deal to be done.
The Poincare program included the
imposition of taxes on such foreign
financing as a check to the selling of
francs in the foreign exchange market
and the consequent export of capital,
but that was at a time when francs
were VIGOROUSLY weak. Sterilization
was achieved in the Winter of 1926-27
One of the greatest obstacles to pres
ent French purposes is the depression
in the bond market. especially foreign
issues, throughout the world. 1t was
really the middle of 1923 before French
investors were in condition to consider
investments abroad.
BY that time the attention Of the
world was focused on the booming
American stock market. American TO
tations of foreign issues dropped sharply
and foreign bond prices declined sub
stantially. The decline In interest in
bonds was by no means exclusive to
France
Tha country is favored by. one very
important factor-its huge gold stock
which is second in size only to that Of
the United States. 1t is significant that
flotations of foreign bends in the Amer
lean market have been few. Indeed the
new issues which were sold last year
and so far this year have been princi-
pally bonds of recognized gilt-edge
quality.
There is an element in the French
situation OF more than ordinary inter-
est. The abnormal relationship between
the French and British money markets
gives no indication Of changing. The
London market is indebted to Paris to
very great extent. especially on short
term loans. The Bank of France alonee
holds enormous quantities of sterling
exchange.
Invested in Sterling.
Presumably the bulk of this sterling
was acquired by the French previous to
the Poincaire- Moreau program which
French francs were invested in sterling
as safety measure. 1t is supposed also
that considerable quantity of sterling
was borrowed when francs were rising
as the low interest rates in London en-
couraged such borrowing to buy francs
and franc securities.
This situation has had considerable
influence on the prolonged movement
of gold from England to France. The
difficulty is not primarily one of finan-
cial weakness as Great Britain has sub
stantial financial resources: it is largely
British reluctance to raise the redis-
count rate of the Bank of England and
to tighten credit
France has made tremendous progress
since the Sterilization program was
a. n kD1 d. T.. =. 4
expected also that when conditions are
propitiouS for greater international
financing the Paris market will get its
fair quota of loans.