Word: france
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...Gaulle announced that the next day he would go on the radio to explain what he intended to do to defend the franc in lieu of devaluation. He could apply many of the same remedies that British Chancellor of the Exchequer Roy Jenkins had imposed last week on Britain. He could reduce government spending still further, raise taxes and institute currency and trade controls in an attempt to stanch the outflow of francs...
...spurning devaluation as a way out of the franc crisis, De Gaulle was being faithful to his genuine, almost mystical belief that the sanctity of France depends on the stability of the franc. As he put it in 1963: "Neither Italy nor Belgium has a government. The United Kingdom and Germany are on the eve of not having one. We are the only country that is stable and sound; this I have brought, and it will last after...
Whether it will or not remains to be demonstrated, for the consequences of the general's decision last week are difficult to foresee. There is always the possibility that the measures he is taking in lieu of devaluation may somehow succeed in stopping the run on the franc. France, after all, is in a far stronger position than Britain was when it devalued last year. Britain's gold and foreign-currency reserves had dwindled to a dangerously low level. France, despite the recent heavy losses, still has $4.1 billion in gold and reserves, and in addition to that...
Moreover, the French economy is essentially sound. In food and industrial resources, France is largely self-sufficient. It is not yet in real balance of payments difficulties. The crisis of the franc was primarily created by the lure of volatile capital funds into the mark by speculators who believed it was about to be revalued. In strict and narrow economic terms, France does not need a devaluation...
...only does the current international monetary crisis reinforce cliches about national character; it also reveals that Germany is even stronger and France is weaker than many observers had previously believed. The French government is paying the price for giving in last spring to striking workers' demands for big wage increases. Those demands had been caused largely by the De Gaulle government's past policies of creating prosperity by holding down wages and skimping on social needs. In addition, France has long suffered from the tendency of many of its people to distrust their own currency, to put profit...