Evening star., 1933-12-01
CLIMAX NEARING
IN GAME OF GOLD
Paris Crisis, Like That Of
Britain in 1891, Believed
+ Key to Situation.
BY DAVID LAWRENCE,


The game Of gold-or perhaps it should
be called the battle Of currencies--is
reaching q climax which may. in the
next two or three weeks. or even
sooner. compel far-reaching decisions OF
policy on the part Of the United etates
Great Britain and France.
The same old prejudice against re-
valuation of the unit of monetary value
which has always preceded sterilization
is causing dtssensfon in every major
country, but the key to the present
monetary crisis lies in France. Keep
your eye on Paris" might be said to be
the slogan of the hour. for the events
transpiring there are curiously parallel
to those which preceded the British sus-
pension Of the gold standard in Sep
tember. 1881. Here are the facts:
l. The French budget is unbalanced
2 French prices are high, due to the
abnormal gold supply there.
8. French boarding of gold has been
rapidly increasing Of late.
4. The French cabinet has been ex-
periencing series Of changes. and the
fall OF the present cabinet. which has
been in power only q few days, is ex-
pected.
Flight Of Capital Begun.
5. The flight Of capital from Paris to
England. Holland and Switzerland has
begun.
8, The French government Is borrow
ing nearly 500, 900 900 to meet Decem-
Der bills and is offering a f1ve-year bond
at q discount.
z. The official statement of the Bank
OF France shows the largest loss OF gold
as yet registered.
Under these circumstances, how can
the United States fix q definite gold
content OF the dollar in relation to for
eign currencies? The British equaliza-
ton fund Is trying to keep the British
pound from rising and is buying French
francs and turning them into gold. thus
pense Of France and also adding to the
demand for gold, which. Of course. sends
the price per ounce upward. This Is in
dependent Of the influences set in mo-
ton by the r. F. C.'s purchases Of gold
In other worr there are times when
the United States doesn't have to offer
to buy gold at a higher price in order
to force that price upward
What is the meaning Of the game?
When will It end and what effect will
1t have on American trade? These are
national questions and are being asked
everywhere as the Presidents gold policy
fails to be explained oficially to q be-
wildered populace.
Rules Aid and Well Knokn.
But the rules of the game are old and
well known. Before there can be stabil
ization of currencies in the world there
must be what is called parity" Of
purchasing power of currencies and q
relationship between them that is as
nearly satisfactory as possible to each
country that :tabilizes or rather fixes
the gold content Of its unit Of currency.
The American objective is a dollar
somewhere between so and 66 cents. If
a satisfactory relationship to European
we shall fix the gold content at that
point. But the decision depends on
some factors beyond our control. Sup
posing the French price structure be-
gins to be affected adversely as gold
boarding increases and q gold panic
causes flight Of francs to other coun-
tries? The French would probably be
forced in self-protection to impose an
export embargo and thus go off the
gold standard. This step would de-
preciate the franc in terms of the
dollar and the pound and would upset
the whole foreign trade situation.
Cooperation Essential.
Can this be avoided? Yes. by CO.
operation between the Bank Of France.
the Bank of England and the Federal
Reserve Bank of New York. But the
moment for consultations has not yet
arrived. 1t Is not believed that time
will come until manipulations of the
American Government in the gold mar
ket have been extended to bring the
price Of gold somewhat beyond its
present position.
1t is expected, of course that France
and Britain will be in receptive mood
toward q consideration of stabilization
plans because Of the enormous dangers
that hang over the British pound and
French franc in the event that the
dollar Is to be stabilized The possi-
bility that American owners of foreign
currencies will wish suddenly to convert
their holdings into dollars will cause
embarrassment in Paris and London.
The demand for dollars will come at
time when exchange may not be able
to stand the strain. For this reason the
problem of sterilization becomes inter-
national. That is why France. Britain
and America will probably talk things
over before any major move toward
gtqblllgQtlOn Will be made. Meanwhile,
the game Of dollar depreciation will
fconvrioht 1o3a,