Evening star., 1936-09-27
DevaIuation Likely to Spur
World Upturn-Stocks
Forge Ahead.
MORGENTHAU REPORT
EASES FEARS FOR POUND
Trading Very Light in Foreign
Dollar Bonds, but Some Sharp
Declines Are Recorded.
BY FREDERICK GARDNER,
Associated Press Finan .iaI Writer.

Momentary uneasineSs over an in
dicated sag in the British pound
sterling, in unoficial dealings, was
quickly quelled by statement by Sec
retary Morgenthau in Washington that
1t had been caused by large offering
OF sterling by the Russian State Bank,
which was quickly taken of the
market by the American sterilization
fund.
Declines In sterling in recent years,
it was pointed out. have frequently
been accompanied by a sagging tend
ency in American markets, and the
quick move by the Treasury was viewed
by some as the first successful action
under the agreement between Paris,
London and Washington to preserve
price equilibrium during the adjust
ment Of the French currency.
Stock Leaders Advance.
Prices of several leading stocks
closed 81 to SO higher in the New York
exchange, which was the only major
securities market in the world open
for short Saturday session. Prices
eased of little after an early rise.
but stiffened at the close. Issues up
about 81 to SO included Bethlehem,
above $50; Chrysler, above s122:
American Telephone at SITS, New York
Central at s45.5o. and others. Allied
Chemical jumped So to 1929 and
closed at 1924.
Trading was very light in foreign
dollar bonds in Wall Street. but there
were few sharp declines in some OF
the French issues, which have been
selling at high premiums since France
has continued to pay on these on the
basis Of the old, undervalued dollar
Since the franc is being devalued,
dealers felt it might make a difference
in how payments would I've made on
these issues. The French ~ per cent
issue sold at $140 par value, on $3.50,
and City Of Scissors 8 per cents at
$l55.25, Of So.
Dealings at Standstill.
There were virtually no dealings In
the French franc. although some un-
oficial transactions were reported be-
tween 500 and $40 cents, compared
with yesterdays close Of $685.. its re-
cent gold parity Of 663 and its parity
of 339 cents before the dollar was de-
valued.
Some dealings in the pound sterling
were reported as low as s4.9l. off II
cents from yesterday, which was be-
lieved to be due to the Russian offer
ing. After news that the Treasury
had taken the offering the pound rose
to 1896.
Principal commodity markets were
undisturbed. Cotton, an important
export crop, however, was higher. Al
New Orleans futures rose so cents q
bale and more, and they were higher
at New York. Grains were narrowly
changed at Chicago.
French Gains Forecast.
The temporary embargo on gold
shipments imposed by the French gov
ernment, following successive waves
of exports that drained the Bank OF
France of more than $4,000, ,00o, 900 in
the last two years. was hailed by econ
omists as a harbinger of better times
to the last important continental de-
mocracy.
Devaluatioh is seen by these ana
lysts as the logical climax of this
move.
The reason revaluation of the franc
has been delayed for 50 long, they say
is that the government hesitated to
subject creditors, who have vivid rec
elections of the loss incurred by life
insurance policies, bank deposits and
bond holdings when the franc was
sliced to one-fifth of its former value
in 1927, to another dose of the same
medicine.
Then, too. there was the hope that
rising world prices would eventually
equalize the disparity between the un-
cut franc and the devalued dollar and
pound, especially as internal prices
were falling. The Blum government
however, forcing higher wages and
costs on manufacturers, turned prices
upward and upset grounds for this
faith.
Creditor Enriched.
Through the long period Of defla-
ton the debtor has been faced with
the necessity of making repayments in
francs that became more valuable, ir
purchasing power, as prices declined
This enriched the creditor at the ex-
pense of the debtor, the franc buying
about one-third more today than il
did in 1880.
How will devaluation affect France?
Observers agree almost unanimously
it would be helpful. The debtor could
repay his creditor with q cheaper
franc. one more in line with its buy
ing power a few years ago.
A lower exchange rate for the
franc can be expected, analysts say.
to 60 q long way toward rebuilding
the immensely valuable tourist trade
that was snuffed out when the cur
rency became relatively more expen-
sive than others, notably American
and English. The tourist is consid-
cred to have been one Of the most
important factors in French economy
prior to the depression.
Exports. being mainly luxury items,
also stand to benefit from the larger
number of francs each dollar or
pound will buy. The wines, brandies.
fine cottons and linens, women's
clothes and gew-gaws that are among
the most important exported COM
modities, will meet . world market
trending toward luxury items - II
emerges from depression.
Home industries, being large I'M
NSe dA6pNxR Es9eQ $50