Evening star., 1936-09-27
Death Knell of
Gold Bloc Is
Sounded.
SWISS JOIN
PARIS MOVE
Soviet Raid Upon
Pound Repulsed
by Treasury.
BACKGROUND

BACKGROUND
Fine years OF stubborn resistance
by q little group OF European na-
tions to the growing movement for
loWer. ualuation of currencies in
terms OF gold ended yesterday when
Sutherland and Holland decided to
tolloU the action OF the French
government in deUaluirg the franc.
DDindling international trade
and increasing political tension,
traceable in part to the refusal OF
some nations to desert the gold
standard in order to reualue pith
international stabil,zdtion, haze
marked the career OF the European
gold bloc"
Great Britain, which left the
gold standard in 1881, and the
United States, Which did so in 1884,
haze agitated intermittently for the
past tpo years tor stdbilizdtion
after reDaluation OF the gold
bloc" currencies.
The might of the United States
Treasury's S2,00O,000,000 stabilizatior
fund was thrown into the foreign ex-
change markets yesterday to protect
the pound. franc and dollar as Swift
Zerland and the Netherlands sounded
the death knell of the European gold
bloc" by following the French decision
to devalue the franc, perhaps by as
much as one-third.
The government of the Netherlands
which with France and Switzerland
clung to the gold standard after other
major powers had quit it, announced
last night it could no longer maintain
its present monetary policy" the
Associated Press reported.
The decisions of France and Swift
zerland to devalue their monetary
units caused change in the Dutch
governments position, an official
statement said. Earlier the govern
ment had announced the Netherlands
would not change its monetary policy
despite the French action.
Gold Enlarged Today.
The Bank of the Netherlands and
the government reached an agree
ment for an embargo on expectation
of gold. effective today, it was an
nounced after a cabinet meeting.
Stock exchanges will be closed to-
morrow and Tuesday.
The official declaration said:
THE government has reconsidered
its monetary policy following meas
ures taken by France and Switzerland.
Beng the only country on the gold
standard the Netherlands feels the
highest pressure on the exchange and
the geld reserve.
Consequently its considers it i'm
possible to maintain its present none
tary policy"
Switzerland had joined France
earlier in her move to devalue the
franc.
The Swiss Federal Council after first
voting to maintain the gold standard,
announced that the government would
convoke Parliament tomorrow to ap-
prove a new alignment Of the Swiss
franc.
Alignment Forced.
An official government communique
said:
After taking cognizance of the ac-
ton of the government of the French
republic in devaluating the French
franc about 80 per cent, the Federal
Council considers itself forced, in the
interest of national economy, to an
alignment of Swiss moneys"
The council said it would detail the
reasons for its action later.
Serving blunt notice the United
States would "go the limit" to protect
its monetary agreement with Britain
and France, Secretary Morgenthau
swung into action Americas huge sta
bilization fund to block what he said
was q Russian effort to depress the
British pound.
His action constituted the first pub
lie move to enforce the "gentlemen's"
agreement announced Friday night by
France, Great Britain and the United
States looking toward stabilization of
their currencies.
Informed that Russia had ordered
the sale early yesterday of 100000
pounds of sterling "at any price," Nor
genthau told special press conference
he Immediately" countered with an
order to buy, using $4,000 from the
stabilization fund.
In Moscow Soviet officials denied last
night. however, that Russia had un-
loaded English pounds with the idea of
breaking down their value, according
to the Associated Press.
One explanation of Russia's action
in selling pounds was that it was done
(See GOLD, Page A-4.)