Word: franc
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Dates: during 1960-1969
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Idle Factories. Some critics feel that Ortoli's optimism may be premature, but France has, in any case, been long overdue for a dose of expansion. Charles de Gaulle's stubbornly conservative economic policies, aimed at strengthening the franc and avoiding inflation, slowed the country's real economic growth to a point (4.4% last year) that was unhealthy for both France and its Common Market trading partners. The output of French factories rose a mere 2.2% in 1967 and, as a consequence, one-fifth of the country's industrial capacity lay idle early this year...
...small firms are expected to go out of business entirely when the full impact of the wage raises hits them in the fall. Despite exchange controls forbidding most Frenchmen from taking more than $200 a year out of the country, the flight of capital remains a drain on the franc...
...four-month-old "two-tier" price system. Under that arrangement, the U.S. now sells bullion at the official $35-per-ounce price only to foreign central banks, thus forcing private speculators to purchase gold on the open market. Gold fever has also been dampened by the fact that France is no longer in a position to cash in dollars for U.S. gold. On the contrary, a good part of the gold that has flowed into the U.S. comes from France, which has been forced to dip into its hoard to defend the beleaguered franc...
Below $40. Britain was not the only troubled country to come away from Basel with cause for optimism. Another was France, whose reserves of gold and dollars have so far dropped from $6.8 billion to $5 billion in its crisis. To help France battle speculative attacks against the franc, the Bank for International Settle ments and central banks of five countries (the U.S., Belgium, The Netherlands, Italy and West Germany) agreed to provide Paris with short-term credits totaling $1.3 billion. At the same time, the Basel conferees sought to dampen gold speculation by devising a scheme by which South...
Three Reforms. Even so, Western diplomats may find temporary solace in the fact that for some time France will lack the economic strength to speculate against the pound and dollar. Despite its announcement of impending nuclear tests, France must also slow down the development of its force de frappe, whose creation runs directly counter to the present world trend of bringing nuclear weaponry under controls. Charles de Gaulle will now have to pay much more attention to domestic affairs. He has already moved fast in the area of greatest peril, the economic front. Despite France's huge foreign-reserve...