Evening star., 1938-01-31
MONETARY DRIFT
DECLARED GRAVE
Writer Says World Has All
Its international Eggs
in Three Baskets,
BY GEORGE T. HUGHES.

NEW YORK, Jan. 81 N.ANA).-
The Van iceland report on ways and
means for international economic re-
construction comes at . most oppor-
tune time-a time when, If the world
heeds, it may BE- saved from the COM
plete disorganization Of eurrencies to-
ward which 1t Is unconcernedly drift
ing.
Unconcernedly. that Is, outside finan-
cial circles which are aware Of the
gravity of the situation. In a certain
sense the set-up Of international cur
rencies Is more vulnerable nowadays
than was the case before the Treas
ury-sapping costs Of the World War
began to take their toll Of currenctes,
putting through the wringer" first
the German mark, in 1928: then the
Italian lira, in 1927; then the French
franc, first sliced a little thinner In
1928; then the British pound sterling,
which slid of the gold standard in
1881: then the Japanese yen, in 1881,
about three months after the pound.
And so on and so forth until our
own devaluation of the dollar early In
1884, with other currencies falling by
the wayside before and since that date
1t is not necessary to be an inter-
national banker or one of the so-called
talent that deal in foreign exchange
to understand why the situa ION is
more vulnerable. The world interna-
tional monetary structure now stands
on but three pillars, 50 to speak-the
dollar, the pound and the franc. Be-
fore World War spending had brought
its sequel of national bankruptcies,
there were some 80 to 40 pillars. all
told, currencies that stood on their
own feet. OF those, Of course, not
more than a half dozen or 50 were
in any way outstanding. But prac-
tically all were self-reliant and able
to command respect in the world to
the limits of their underlying re-
sources
But today the world lacks the pro-
lection inherent in such diversified
ton. 1t has all its international exzs
in three baskets, with the others tied
to one or another Of those baskets.
1t is serious thing, therefore, for
one of those baskets to collapse.
Consider the latest weakness In the
franc. Because of the fight Of French
capital, the British pound has been
looking stronger than it has any rea-
son to be, for, all things considered,
the outlook is none too rosy for Great
Britain's industry and trade.
Suppose the franc goes Through
the Wringer" again. talking with 1t its
satellite currencies. When that is
done there will be no support for the
pound from French capital in flight
from the falling franc. Suppoelng
again-and this is pure supposition-
that the pound turns rather weak
when such support no longer exists.
Then, along with the pound. will be
dragged down all its satellite cur
rencies. the so-called "sterlingeria
That would leave the dollar. perhaps,
as the sole strong pillar around which
would revolve those currencies now
hitched to it, along with those ehoos-
ing to attach themselves later.
1t is not . cheerful thing to con-
sider-this picture Of world With
but three currency pillars TO lean
upon and two of them inseclrelv
founded. while one Of those two is
precariously balanced. There is ground,
Of course, for a division of opinion
as to what sort of foundation under
lies the pound sterling. But the dollar
is far and away the worlds strongest
monetary unit.
Copyright. 1888. by the North Ameri:s1
Newspaper Alliance, Ine)