Buckeye Valley News And Buckeye Review

IN REVIEW

France Devalues Franc: Gold Standard Dropped

FRANCE at last came to the conclusion that it could no longer support the franc and Premier Leon Blum's government decided to abandon the gold standard and devalue the franc to between 4½ and 5 cents. The Netherlands, Latvia and Switzerland immediately determined to follow suit. To save the world from a currency war, the United States, Great Britain and France entered into a "gentlemen's agreement." The exact nature of this agreement was not revealed, but the United States promised to employ its $2,000,000,000 stabilization fund to head off the feared struggle. Certain it is that each of the three nations reserves the right to depart from the pact if and when its own interests require such a course. An expected outcome of the now general dropping of the gold standard may be an international conference for stabilization of world currencies. This might be held in Washington.

Blum called a special session of the French parliament to pass the necessary legislation, and his plan was given grudging approval by the chamber of deputies. Its adoption by the chamber, where the "popular front" has a big majority, was taken for granted, but a fight was expected in the senate. The general project was divided into five sections, as follows:

1. Fixes the new gold content of the franc at a point between 43 and 49 milligrams of gold, prohibits the export or import of gold, and creates an equalization fund.

2. Permits the requisition of gold by the government, obliges individual citizens to declare their gold holdings, creates a tax on profits made from devaluation of the franc, and obliges market traders to reveal their operations in foreign exchange since September 2.

3. Creates a movable salary scale and makes various readjustments in the civil service, pension rates, etc.

4. Provides for readjustment of certain specific taxes such as those on oil, coffee, pepper, tea and sugar.

5. Makes certain changes in the debt structure of such public institutions as cities and communes necessitated by devaluation.

From the Chicago Journal of Commerce is taken this plain statement as to "what France's action means to the ordinary American citizen:"

"Reducing the amount of gold represented by one franc will mean that the average American will be able to travel cheaper in France than for the last two years. French wines should be cheaper in this country and women should be able to buy French perfume for less. That should be true of nearly everything else that France exports to the United States unless this country hikes the tariff on French exports or French prices boom out of proportion to devaluation. Indirectly, franc devaluation may keep Americans from war as the act may be a wedge for currency stabilization the world over and more brotherly relations between all nations. But don't lose any sleep over it unless you are getting an income from someone in France."