Evening star., 1932-07-17
Effect on British Gold.

The French are known the world
over as canny traders. Frenchmen have
been investing their thrifty savings in
foreign lands for many generations.
French bankers had been buying up
short time obligations in various foreign
markets, especially in the United States.
At the time when the new franc was
launched on a stable basis, Frenchmen
had foreign balances, payable In gold
either on demand or in the near future
to the volume of 81 500 100000
World financerS, international bank
ers were well aware Of this situation 1t
placed France in strong strategic
Rorid trads she Baanees to be
tied in gold on her demand. She was,
in effect, the master player on the
worlds financial chess board, in a posi-
tion to move gold here and there at
will.
A striking instance of the power
which these gold holdings gave to
France was exhibited when in the Au-
tumn of 1881 her bankers suddenly
called upon the Bank of England to pay
over a balance of S1O0,0O0,000 which
was owing. The Bank of England made
the payment but this gesture of France
had the effect of throwing the mighty
Great Britain off the gold standard
1t seems difficult TO believe, but even
the United States Treasury and Ameri-
can bankers became keenly concerned.
France commanded millions in gold in
this country. There, we're, actually
strong fears that the all-poWerful
American dollar might go the way Of
the British pound sterling and fall from
the gold standard through French de-
mands for her gold. However, the
transactions of the World War had re-
suited in such an unprecedented flow
of gold to the United States, greater
than any such stream in the history
of the world, that America withstood
the shock We paid and paid and paid.
It will be remembered by newspaper
readers that all during the last Spring
and Winter items appeared to the ef-
feet that his ship had sailed with S25,-
O0OO in gold for France, that ship
was bearing away S75,000,000, and SO
on. Shipment after shipment left our
shores and on many an occasion the
governor of the Federal Reserve Bank
of New York was in emergency tele-
phone conversation with the governor
of the Federal Reserve Board at Wash
ington or the Secretary Of the Treasury.
Strain Is Over.
Several legislative measures were pro-
posed TO provide ways of increasing the
currency issue without increasing the
requirement for gold cover. The Colds
borough bill, an out-anG-out imitation
measure, was urgently debated; the
Glass -Steagall bill, designed to release
gold, was actually passed. Hoarding by
individuals aggravated the situation and
still the gold went out.
It must not be understood that the
government of France, our debtor to the
extent of some 81 1000 900, 900, was with
drawing this gold. No government was
involved in all this gold manipulation.
French investors, French bankers, who
over long period had been accumulat-
ing American investments, were the
ones that called the turn. AS their short
term or demand investments came due,
instead of extending the time, renew
ing the investments as might have been
expected, they said Pay up" In or
der to uphold American credit the
American borrowers had to pay and,
in order to remain on the gold stand
ard, payment had to be made in gold.
These American borrowers were not the
Government, but private corporations,
individuals, the issuers of bonds, notes,
acceptances and other evidences Of in