Evening star., 1938-05-06
SLASH IN DOLLAR
BELIEVED SPEEDED
Change in Franc to Bring
Pressure for British and
u. S. Action.
By GEORGE T. HUGHES.


Special Dispatch to The Star.
NEW YORK, May 6-Stabilization
OF the franc at the rate of l79 francs
to the pound closes one chapter in
world currency depreciation. but 1t
does not write finis to the book
As the financial editor of the Lon
don Times comments. the franc. on a
basis of comparative prices, has been
"underval,ied since the middle Of
1887. Wholesale and retail prices in
France. expressed in gold. which were
formerly well above foreign gold prices,
are now we'll below them" The same
authority goes on to point out that the
latest monetary review Of the League
Of Nations puts the theoretical franc
sterling rate, according to the respec-
tive levels Of wholesale prices and
the cost Of living in France and Brit
ain at the end of 1887, around 1885
francs to the pound.
In other words. under the new set-up
the pound is overvalued and the pros
pect of a depreciation of sterling Is that
much stronger. Going a step further,
additional depreciation of the dollar
can no longer be ruled out
Made in Good Faith.
For the present doubtless the new
relationships can be maintained The
French premier solemnly insists that
from now on the franc will not be al
lowed to drop below its new sterling
parity The franc can now only i'm
prove. and 1t will recover because the
government will pursue that result
with q Arm will" is the way the
French finance minister states it. In
Washington and in London rumors of
dollar devaluation, now or at any time
in the future, are derided.
These protestations may be accepted
as made in good faith and with every
intention Of keeping them, but events
are stronger than the resolves Of
statesmen. When Sir John Simon,
British chancellor of the exchequer.
was discussing franc devaluation in the
House Of Commons he was asked by q
Conservative member if this was not
the third occasion In three years that
France had given assurance that no
further devaluation was contemplate
ed" Sir John did not reply. OF course,
there is no reply.
Many Factors Involved.
Whether this latest "stabilization"
of the franc will work a permanent
cure OF French financial ills depends
on many other things. 1t is reported
from Paris that capital is already
being repatriated, which is all to the
good.
Doubtless the new defense loan will
be a success and certainly the imme-
diate strain on the French treasury
is removed. For permanent recovery,
however. French production must be
stepped up. and that cannot be done
without establishing peace between
capital and labor and modifying the
French new deal to whatever extent
necessary toward this end.
Premier Daladiers statement that
French economic life is in a very
bad condition; that legitimate profit
is tending to disappear; that partial
unemployment is increasing in every
branch Of industry: that our trade
balance is impoverishing u.s. that our
production figures are a humiliation
for all Frenchmen" is not painting
the picture too darkly. Currency de-
probation will need to be supple
mented by other steps.
Whatever Washington or London
may say. opinion on the Continent is
that sooner or later the dollar will be
devalued to the limit allowable under
the law. A banker just back from
Europe. who himself believes that the
price of gold here will not be raised,
admits that expectation Of just that
coming to pass is almost general on
the other side
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