Evening star., 1934-02-11
Possibility of French Move
Regarded as Threat
to Recovery.
ACTION MIGHT FORCE
RENEWED DEFLATION
Evidence That American Stabil-
ization Fund Is Being Used
to Aid France Is Cited.
BY CHARLES F. SPEARE.


tCoDyright. 1894. by the North American
Newspaper Alliance. IncD
NEW YORK, February 1o.-The
Importance Of the French crisis to
this country. ventring cautiously on
program Of dollar devaluation, lies
in its effect on the monetary policy
OF the leading nation still on. gold.
France still holds in her central
bank about s3,000 100000 of the VEL
low metal. The ratio of gold to sight
liabilities is in excess of IS per cent.
This gold, however, is sought after
by the rest of the world, and with
the margin between the gold price
here and abroad 1t is not possible
for France to resist this attraction.
Therefore, further heavy losses of
gold are inevitable. The advance in
the French discount rate Thursday
to 3 per cent is protective measure.
The troubles of France are deep
seated, both economic and political.
They include high taxation, a high
cost OF living and unemployment
on the one hand, and on the other
lack OF political unity, loss of respect
by the public for the present system
OF government and constant fear of
war. The franc is believed to be
| overvalued and facing revaIuation.
The loss Of a gold base would be
unfortunate for the United States. in
the event that France abandons gold
1t might lead to further defation
mere and abroad. It is to the interest
OF this country that France remain
| on gold while the experiment in ar
| t1flcial imitation is being carried out
In Washington. There has been evi-
oence this week that the American
stabilzation fund was being used to
assist France in steadying her credit
position.
L. S. Public Patient.
1t is quite significant that the
/ United States is now the only great
| power that has not been faced by
revolution In the years since the war
and, especially, during the era of the
great depression. In some WAYS the
American people have suffered losses
and experienced privations as severe
as those in England, Germany and
France. They have accepted these
with remarkable patience and with
| little open complaint
| What, however, would have been the
| situation in America had there not
been the outpouring Of private and
| public funds for relief during 1892
and 1888 and had all 1884 appropria-
| tons OF this character been can
| celled? Last November there were
approximately 100000 receiving
relief from public funds In the mid
ole OF January the number of those
on the civil works pay roll was
4,039, 900, at an average wage of SIS 80
| a week
The president of the American
| Federation of Labor estimates that
there are still nearly 100000 persons
without even temporary employment.
| The budgets for aiding the farmers,
| for assisting the artisans, laborers and
the white collar" class are stupen-
| dous. Anxiety is expressed over the
| end of it all and the problem is pre-
| sented as to how the cost is to be
1iquidated. What has been and is to
be expended may eventually prove to
have been low-priced insurance
has had this week and which England
| only avoided by installing the dole"
Aid to Debtor Urged.
The social philosophy of the admin
istration obviously runs counter to
the traditions and practices of Ameri-
/ can business. 1t penetrates deeply
into corporation life. There are daily
evidences of this 1t was expressed in
the address Monday by the head of
the Reconstruction Finance Corpora
ton before a group of New York State
bankers, who were advised to lend
their funds more freely, else the Gov
ernment would take the Job out of
their hands; and later by President
Roosevelt in his proposal for a gen.
eral lowering Of interest rates on
corporation bonds and mortgages.
The choice is given creditors of
making it easier for the borrower
who is suffering from high carrying
costs or being compelled to do 50.
The recent United States Supreme
Court decision in the Minnesota
mortgage case made it clear that there
may be less rigid character to con-
tracts, during an emergency, than had
been presumed. The difficulty now is
to determine whether precedents &C
cepted in a time of economic crisis
will later be part of oH legal code.
1t is natural that the administra-
tion should regard interest rates on
private capital as high when great
amounts of public money are offered
and Government paper snapped up
at low rates. The 212 per cent Treas
ury notes sold last month at par are
quoted at l0020. This week 9l-day
bills we're taken on an o66 per cent
basis and six-month certificates at
0.994 per cent.
Discount Rates Cut.
The lead Of the New York Federal
Reserve Bank in reducing its dis
count rate to / q per cent has been
followed by the Cleveland, Boston,
st. Louis and Dallas banks, so that
the average official money rate of the
country today is much below the rul-
ing rate for new loans. This fact
the borrower has been quick to grasp.
1t plays part in the strength of all
high-grade corporation bonds out
standing and is facilitating the sale
of new issues of municipal loans, Of
which there have been more than the
usual number this week The re-
covery in the market values of bonds
of several billion dollars since No
vember, when the status of banks ap-
plying for entrance into the Deposit
Insurance Corporation was estab-
lished, has been of tremendous i'm
portance to the banks and insurance
companies.