Word: franc
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Dates: during 1930-1939
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Last week the eyes of the world's money changers were fixed upon the baroque façade of a four-story building in the Rue de la Vrillière in Paris. There behind the portals of the Bank of France was the solid centre of another of those swirling convulsions in French finance which off and on for years have threatened to dislodge the franc from gold. This time it looked as if the perennial prophets of the franc's doom might at last be right. By ship, plane and train gold was pouring...
Meantime the lame-duck Sarraut Government lashed about for foreign exchange speculators to tag as franc raiders, expelled one luckless Pole from the country as an example, discussed innumerable measures for the "defense'' of the franc, hoped it could pass on to the incoming "Popular Front" the unpleasant task of actual devaluation. Cried Finance Minister Marcel Régnier: "So long as I am Finance Minister there will be no measures restricting the gold standard. . . . We have ample reserves for our defense and the Bank of France possesses every means of action needed...
Principal action taken by the Bank of France last week was to boost the rediscount rate from 5% to 6%, the normal central banking method of inducing capi tal to remain in a country. But the flight from the franc continued...
...strength of that statement the franc rallied sharply at the beginning of this week, and stocks on the Bourse bounded up. Nevertheless, devaluation of the franc is implicit in any French New Deal. French foreign trade and, politically more important, French tourist trade have suffered woefully from devotion to gold. Having taken a 79% devaluation in 1928 and endured the preceding inflation, the French people, particularly its millions of small investors, hate & fear the idea of currency tampering. Lately, however, Jean Frenchman has begun to feel the terrible grind of deflation, and a shot in the economic arm, if reasonably...
Except in luxury lines like lace, perfume, hosiery, jewelry, most U. S. businessmen would have only academic interest in devaluation of the franc unless Britain deliberately pushed down the pound, perhaps leading in turn to another cut in the dollar. Consensus was that no such cycle would follow, that in world conditions recovery in France would more than offset the temporary confusion caused by a franc cut loose from gold...