Evening star., 1936-05-10
French Leftist Victory and
Italian Conquest Are
Major influences.
PARIS GOLD LOSS TOPS
TOTAL OF 100 MILLIONS
Incoming Government Talks Capi.
tai Levy on Big Fortunes and
Bank Naturalization.
BY CHARLES F. CPEARE.

has happened in this country in tht
last week has the Importance for the
future of world affairs contained II
the decisive Leftist victory in France
on Sunday and the conquest of Ethi.
opia announced later by Italy.
The immediate effect of the former
was a rapid flight of capital from
France to England and to the United
States and an effort to check it by
another advance in the discount rate
of the Bank of France. The present
government. to be displaced in June
is determined to support the franc
and prevent devaluation.
The incoming government is in
definite as to its monetary policies
though it has insisted on nationalist
ton of the Bank OF France and is now
talking of a capital levy on large
French fortunes as means of balanc-
ing the budget and providing employ
ment in public works.
French Reserves Sink.
In this latest crisis the Bank oi
France has lost over s100 .000,O 900 gold
It's gold reserve is the lowest in years
Some way may be found to defer
devaluation of the franc for another
few months, during which time ar
rangements may be made between
Great Britain and the United States
to ease its effect. Or the imminence
of it may crystalline the many attempt:
to bring about a currency stabiliza-
ton conference.
To the American mind the gains
in the French Parliament of the Com
munist party seem ominous. 1t sug-
gests for France something of the
same political fate that faced Ger
many when the party of Hitler made
its first astonishing success in Sep
tember. 1880. As a matter of fact
there is more political integration in
France today than in years and an
outlook for greater internal peace
than has prevailed during the tenure
of present government. The serious
question with France just now is her
currency, not her Communists. This
may be most influential in the near
future on investment and speculative
markets here and abroad.
Domestic Trade Gains
Attention has been drawn from do
mestic events by the prominence in
the news of the day of developments
in Europe. However. there remains
much to establish the fact Of sound
and improving business situation.
Proof of this is given in larger divi-
dends declared by General Motors,
and by two members of the Standard
Oil group of refiners and distributors,
as well as by dozen or more corpora
tions conspicuous in their lines of in
dustry.
The class one railroads, in spite of
the severe winter in the Northwest
and the floods in the Middle West and
Northeast, were able, in the March
quarter, to show a return on their
property investment of 21l per cent,
as against 1.73 per cent a year ago.
Building activity takes a conspicuous
place in, the trade reviews from vari-
Gus Federal Reserve centers of the
country. Along with it are indications
Of a labor shortage.
AS for the tax bill, there is more
likelihood that it will be reframed and
become a measure accommodating it
self to legitimate corporation practice
than that it will pass in its present
form. The chief difficulty of its pro-
ponents is to prove that it will realize
as much as it proposes to abandon.
The present effort of objectors is to
destroy the contention that additional
taxes are required to meet Government
needs in the next fiscal year. The
valid objections to the tax are the
penalties 1t imposes on weak corpora
tionS. the indefiniteness of its retuSn,
the jig-saw puzzle character of its
set-up and the fact that it avoids the
simple and direct taxes that might.
without much opposition, be imposed
Doth on corporations and individuals,
as proposed by Senator King.
Would Raise Income Tax
His plan provides for corporation
taxes OF Is per cent on net incomes
up to $4,000 and so to IS per cent
above $4,000 and the lowering of per-
sonal exemptions from 81 900 to $500
Tor single and from $4,000 to $4,000
Tor married persons, an increase in
the normal tax from four to six Der
cent and surtax of six per cent on
net surtax income between $4,000 and
$4,000. This is direct and understand
able and will produce more than the
measure now being debated in Con-
gress and arousing much heat through
out the country.
The recovery in stocks seems to i'm
ply that the April reaction was mainly
caused by weak technical market con-
ditions. About half of the average
loss had been regained at one time this
week.
The investment market has cooled
on a bit. Too much has been Of
fered in too short time at too high
prices. Then there is the new COM
petition of $50,000, 900 more each week
OF y. s. Treasury discount bills. The
high grade security market is sensitive
to election trends. Considering its
technical and undigested condition, it
would be logical to expect a quieter
phase until after the June conven-
tions. This would be beneficial.
'Copyright, 1896. by the North American