Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-11-26
Observers Who Expect Early
Embargo Likely to Be
Deceived.
SOUND MONEY VIEWS
DOMINATE SITUATION
Suferings of Postwar Imitation,
Despite Boom, Are Recalled
Too Vividly.
BY PAUL SCOTT MOWRER.

BY Radio to The Star.
PARIS, France, November 25-Those
numerous observers in London and New
York who seem to be expecting France
to 80 of the gold standard almost any
day now are likely to be deceived
This possibility does exist, but the
SOund-mOney instinct is still exceeding.
ly strong here and, barring unforeseen
contingencies or accidents, the Bank of
France Is in such a well fortified posi-
ton that it should be able to cope with
the situation for some time to come,
even in the face of political uncertain
ties and gradual decline Of confidence.
If initiation is again INDUCED in here
1t will only be as last resort and with
extreme reluctance. The people SUI
fered so much in the last imitation era
that they recoil with horror at the
thought. Yet the last imitation occur
red in relatively favorable circum-
stances, when business was good
throughout the world and was booming
in France because of the vast recon-
Struction work in the devastated
regions.
European Crisis Faced.
Today, with business bad and a Ger
tain amount Of unemployment, suffer-
ing from imitation, it is feared, would be
much worse even than last time.
Furthermore, there is European po-
litical crisis Of grave proportions. Ger
many, every one here believes, Is stead
lily rearming. The question is, what is
France going to do about it, If any
thing?
AS Edouard Herriot, former premier
and war minister in the late Sarw.ut
cabinet, told the French Chamber Of
Deputies on Thursday night: When
there is no money. a nation is not free"
The danger which threatens France
might take one of two forms. Either
foreigners who put their money in
France for safety might lose confidence
and take it out, dragging with it a
lot of French capital. Thus the gov
eminent would be forced to put an
embargo on gold and let the franc
fall Or the same result might occur
as an outcome of sudden sterilization
of the American dollar or the British
pound, or BOTH without previous agree
ment with the Bank Of France.
In this case, with doubt persisting as
to the future of the franc, there would
be a vast rush of capital, it is antici-
pated, to London and New York.
Decision Vital to U, S.
This question is Of vital importance
to the United States because if, at about
the time it is ready to stabilize, France
goes of the gold standard, the disorder
in the economic and financial realm
would be merely prolonged and world
prices will inevitably continue to sag.
1t must not be forgotten that what
happens eventually to the franc Is like
ly to affect the entire gold bloc, that Is
to say, the group of well-to-do indus
trial countries whose total populations
are greater than that Of the entire
non Oriental or non-colored population
of the British Empire.
France, with its high costs and prices,
is undoubtedly in an anomalous posi-
ton in the Nqx& of today. French
policy for the present. has been to gain
time, hold out and hope for the best.
Its main endeavor for the present IS
to balance the budget. This, II it could
be done. would, it is assumed, make the
franc safe and improve the govern
ment's credit and reassure foreigners
in France.
For the rest, France hopes that
Great Britain and the United States
will ultimately stabilize in common
accord with France and that world
prices will soon rise so that French
prices will not be obliged to drop.
Keeps Strong Status.
Technically this country is still in
strong position. 1t has less unemploy-
ment than elsewhere is better balanced
economically than most other countries
and has suffered less in the depression.
The Bank Of France, according to
ThurSdav'S figures has a S7Q 600 0C0-
O0O-Franc gold reserve and its note is
sue is covered by nearly 30 per cent
The AZ per cent government bonds
issued last year now stand at 81. In
these circumstances lOng.term borrow
ing is difficult Some 10000, 000, 900
issued, which are constant menace to
the treasury because, as Albert Sarraut,
newly retired premier, just told the
Chamber, they are increasingly hard to
place for renewal.
The French balance of international
payments seems heavily in deficit.
France is a creditor country accustomed
to buying abroad more than 1t exports,
but tourist expenditures and incomes
from foreign investments, which nor
mally make up the difference, are now
greatly reduced.
The amount Of foreign capital which
might, If alarmed, try to leave France
100000 to $4,000, 000,0 900 francs. The
Bank Of France lost more than 3,00O,-
100000 francs in gold last month and
the outflow is continuing, the Chamber
was informed last night, at the rate of
from 100000 to 100000 francs a
week.
Copyright, 1881