Evening star., 1936-09-25
FRANC ISSTUD|ED
BY M0|R|GE|N||T|HAU ] ! |
Secretary conters With
Treasury Experts on French
Monetary Situation.
D. the Associated Press.

y the ASsocteteo Freeg. k5t,.
Secretary Morgenthau conferred
with Treasury experts today, presum-
ably on the French monetary situation.
Treasury onicials maintained their
customary silence on the conference,
but it was reported the French situa-
ton was being canvassed in line with
the Treasury,s policy Of scrutinizing all
major foreign monetary developments.
The question of French devaluation,
and how 1t would affect this country.
was said to embrace consideration Of
the Governments policy on gold 'ex-
ports.
Although this policy generally pro-
vides for exports only to gold standard
countries, several exceptions have been
made for the licensing Of exports to
central banks Of non-gold standard
nations.
II France should devalue the franc
and remain on the gold standard 1t
was considered probable no change in
the present export regulations would
be necessary.
Action Problematical.
If, on the other hand, France and
the other gold bloc countries went of
gold-which would have an effect
similar to an arbitrary cut in their
currency's gold value-then consid-
Grafton probably would be given to
revamping export regulations.
This country's monetary gold stock
now stands at $10,786, ,000, 900, Q new
high level, which resulted largely from
the heavy movement of the metal
from abroad.
In reply to his criticism that the
New Deals gold-buying policy was
giving foreigners q whip hand over
American economic conditions. Sem
ator vandenberg was told yesterday
by Secretary Morgenthau the policy
had contributed to recovery.
The correspondence between the
Michigan Republican and the Treas
ury head was made public by the
Treasury.
Vandenberg asked . series Of ques-
tions regarding gold purchases and
asserted that. by enabling foreigners
to build up big holdings of American
securities, they had brought peril to
our own domestic situation"
He based his complaint on the
ground that when gold streams into
the United States it Is sold for dol
lars which are used to buy American
securities. Should foreigners decide
to liquidate the securities. change the
dollars back into gold and take the
metal out Of the country, the Nations
economy would be dealt . depression
blow. he argued.
Upward Movement Held Aided.
Replying, the Treasury chief said
dollar revaluation under the gold
policy stopped q downward sweep of
prices "and helped to initiate an up
ward movement" stimulated business
activity, wiped out some Of the gross
injustice between debtors and credi-
tors created by sharply falling prices
and enabled exporters to regain their
competitive position In foreign mar
kets.
vandenberg said that through the
influx Of gold, foreigners now own
about $4,000, ,000, 900 Of American Sc
curities and other holdings "on instant
call"
Asserting that heavy Withdrawals Of
foreign capital in 1891 "demoralised
our stock markets, shook our banks
and deepened the risors Of the de-
preston" vandenberg added that the
present situation makes "our financial
structure and our price structure rest
to . considerable extent on foreign
judgment or caprice"
Morgenthau, however, said the size
Of foreign holdings here should be no
cause for alarm"
Naturally" he continued, ain the
determination Of our credit policy con-
slant and careful attention is given tc
them"