Evening Star Newspaper, September 27, 1936, Page 4

REICH OBSERVES FRANG DEVALLNG Dr. Schacht Won’t Comment ¢ on French Cabinet’s Decision. Bpihe Associated Press. , September 26.—Germany cafl afford to sit tight and watch the developments arising from the pro- pofied devaluation of the French franc, the German press concluded today. The Bourse reacted quietly to the toward realignment of the franc, all h it was taken by surprise by the swift materialization of the situa- tion. Foreign banking cigles, “however, willely expressed the opinion that ad- justment of the mark to the franc, thé pound and the dollar is made in- evijable by the French cabinet's de- cisiod. ~ ; Dr. Hjalmar Schacht, German min- ister af economics and president of the Reichsbank, did not mention the cur- rency problem when he addressed a Mining Association meeting today at Saarbruecken. He evaded direct questions concern- ing the effect of franc devaluation on Germaa policy with the statement: “I am not yet officially informed about devaluation.” ‘The Berliner Boersenzeitung, finan- cial paper, said: “The Reich is not directly con- cerned and we can calmly watch the situation develop. “The German devisen (monetary) system fs firmly stabilized and pro- tected against any eventualities.” ITALY READY TO ACT. Some Francial Experts See Reduc- ®eon in Lira. ROMR, September 26 (#).—Italy was stated authoritatively today to be prepatdd to take whatever measures may Be necessary to prevent reper- cussions here in the wake of the Freneh proposal to devalue the franc. Offcials watched the situation close- ly As financial experts pointed out that Italy probably would await the action of Switzerland and the Nether- langis before any decision is made. 18 Itallan financial quarters opinion was divided on the effect of France's move on the lira, with a slight ma- Jority of experts stating they belleved the value of the lira might be re- duced. POLAND WON'T DEVALUE. Finance Minister Ready to Join Money Accord. WARSAW, September 26 (#).—Eu- gene Kwiatkowski, Polish minister of finance, today announced that Po- land would not devaluate her cur- rency despite France's action. He asserted Poland stood ready to join the international monetary ac- cord announced last night among the United States, Great Britain and France. Warsaw business and financial quar- ters, however, were highly nervous and | all banks, including the Bank of Po- land, refused to buy or sell any foreign exchange. BELGIUM BACKS ACCORD. Note Sent to United States, France and Britain. BRUSSELS, September 26 (4).—The Belgian government today backed the monetary accord among the United States, Great Britain and France with its full approval and support. In a lengthy note to the three countries, the government joined the agreement, which it said would fos- ter peace and establish economic restoration on a firm foundation. The government added that the Bel- glan monetary situation is not af- fected by the move, since the national bank gold reserve was prepared for eventual withdrawal of French gold received in recent months, Gold (Continued From Pirst Page.) w dispose of & large accumulation of sterling resulting from a long favor- able balance of trade with the United Kingdom. It was thought that with the weakening of the pound Russians might have believed the moment op- portune to dispose of their sterling re- serve in exchange for other currencies. The Russian move was a sensa- tional development on the heels of the agreement reached by the three great powers Friday night for co-op- eration in devaluation of the franc. The agreement provided that coun- tries party to it should use “appro- priate available resources” to prevent disturbance of international exchange which might result from the under- standing that Britain and the United States would not wage & monetary war with France. Morgenthau Acted Quickly. Morgenthau, in a specially called press conference, annouriced he had moved swiftly to throw the stabiliza- tion fund behind the pound when he learned of the offer to sell by the Russian State Bank. He was informed of the offering, he said, shortly after exchange deal- ings started in New York yesterday morning. The French and English exchanges were closed. The Treasury chief said the Rus- sian selling knocked the pound from $5.02 to $491. When the Treasury bought pounds, however, the price was pushed back to $4.96. Morgenthsu said the Russian move was “the only instance today of any government, any bank-or any individ- ual trying to artificially influence the foreign exchange " markets in the United States.” = i ‘Then, emphasizing each word, he added significantly: - incidént “I sincerely hope that this will not be repeated.” Questioned as to whether he antici- pated any more attempts to hammer down currencies of the three nations, Reported. Although declining to-reveal at ex- |- actly what price the pounds were; es Compared | |U.S. FRANGVIEW |FRANCE SHOPPING Chart showing the relative By the Assoctated Press. That secrets can be kept—even when three nations are in on them— was generally conceded yesterday as the story of negotiations leading up to the tri-power monetary agreement unfolded. The story disclosed that unprece- dented precautions were taken to prevent a leak on the momentous negotiations, which had been pro- ceeding for several weeks without & hint reaching the usually well-in- formed financial centers. ° When Secretary Morgenthau called reporters around his desk Friday night to announce consummation of the monetary accord by the United States, Great Britain and France, he told them it had grown out of in- tensive negotiations, conducted since the first week in September. Not a word had leaked until the announcement was being prepared Priday night in Paris. There had been some reports from |abroad of Franco-British consulta- tions, but there was no hint that a | far-reaching new agreement pointing | toward currency stabilization was in- volved. Instead, some foreign observers be- lieved that France, although talking with the British, would have no con- versations with this country, at least for the present. value of five rubles to the United, | States dollar. Foreign exchange dealings were temporarily suspended in the world's leading markets, although in unoffi- cial dealings in Wall Street French francs were sharply lower, British pounds and Holland guilders down moderately. s 7 Consulted Roosevelt. Disclosing the circumstances back of his sudden action yesterday, Mor- genthau told newspaper men he had first talked with President Roosevelt at Hyde Park by telephone. He praised Mr. Roosevelt's patience and co-operation in the monetary negotiations between the United States, Great Britain and France, { which started early in September. | “I have had telephone conversa- tions with the President in every freight yard and railroad station in | the United States,” Morgenthau said | with & smile. “I have called him at | 11 o'clock at night and in the wee { hours of the morning. “I have consulted the President on every move and whatever he wal doing at any time, he let it drop for this.” Today Morgenthau will visit Presi- dent Roosevelt at Hyde Pirk for a general discussion of the monetary situation. - Paris __(Continued Prom Pirst Page) international peace and would not raise the cost of living in France. “Certain preventative meum;;" protecting the consumer against im- paired buying power, the premier said, “would be undertaken.” The monetary program, he said, “was not brusquely imposed,” but was the result of “deliberate initiative started last June, which I hope will lead to international pacification.” ‘Those who would devalue the franc today were assured conditional sup- port from the French Communists, previously opponents of a cheapened currency. Political observers re- ported the Communist support was contingent upon compensations for government employes, pensioners and others. Indications were that the govern- ment of Socialist Premier Leon Blum would be asked to pare the franc down to two-thirds its present value. But there was no official declaration of the degree of -devaluation proposed with the aid of an “equilibrium” mone- tary accord with Great Britain and the United States. The three-power accord, which was UNITED _ FRANCE ENGLAND AL STATES OTHERS amount of gold reserves of the United States, France and England. Each symbol represents $500,000,000. American reserves have gained steadily since re- valuation of the dollar in 1933; 000,000 gold in the last three years, and England’s change, though slight, has been upward. France has lost -about $2,000,- —Copyright, A. P. Wirephoto. Secret Can Be Kept, Monetary Pact Negotiations Disclose For its part, the United States Treasury used every safeguard to prevent “a leak” on the negotiations. Even as the co-operative announce- ment ‘was being prepared there were reports America would abandon sup- port of the Franc. Only those intimately concerned with the question were called to con- ferences, and their pledges of secrecy ‘were kept. Without any one being the wiser, Secretary Morgenthau telephoned President Roosevelt daily, communi- cations lines to the Federal Reserve Board and the New York Federal Reserve Bank hummed with details of the negotiations, and conferences with British and French representa- tives were held in Morgenthau's office. ‘The conferees made their way to the Treasury chief’s office through his private elevator, shielded by parti- tions from inquiring eyes. Treasury corridors gave no suggestions of im- portant developments. Priday for the first time, newspaper men had a fleeting glimpse of Jean Appert, financial attache of the French Embassy, as he left Mor- genthau’s office. V. A. L. Mallet, coun- sellor of the British Embassy, who also sat in the conferences, wasn't seen at all. to the disadvantage ‘©f the French when the franc is devalued. Man in Street Watched. Proponents of devaluation, seeking to insure quick parliamentary ap- proval of their measures, anxiously watched the Frenchman in the street to see what his reaction would be. Informed persons said Sunday “would tell the story.” If the thrifty citizens continue their customary Sab- bath pursuits, informed persons felt, there would be little opposition in Parliament. But, it was said, if street out- breaks occurred against anticipated shrinkage in the buyling power of the franc, then the government might look forward to a long struggle. As cabinet ministers and the gov- erning board of the Bank of France labored over monetary measures to submit to the special session of Par- liament, informed quarters believed a gold embargo would be declared shortly to halt the exportation of gold. ‘The emergency session of Deputie; of the Chamber and members of the Senate was called for 9 am. (4 am. Eastern standard time) Monday. To- termed by United States Secretary of the Treasury Henry Morgenthau, jr., gentlemen’s agreement,” in effect “pledged the English-speaking na- tions not to manipulate their money morrow the Chamber of Deputies Fi- nance Committee takes up the task. The importance of the time ele- ment, informed persons held, might force devaluation through Parlia- ment in one day to forestall specula- tion in the franc. Last Change Seen. Paul Reynaud, leader of the devalu- ation movement, asserted tonight: “This is our last chance. We can- not afford to bungle it. The situation is delicate because it is tardy. How- ever, it will succeed if conducted with 1. Man's selid yellow- 2, Ladies’ selid yollow- & e ditme: 3 o4, ging eet with 3 fime brillant $5() diemonds ______ 4. Ladies’ solid white- sold ring. Perf center_diamond. dismonds In mar- «uis shape settings Charge Accounts and Extended Payment Plans Are Available " HTAS OLTIAL Hamilton Says Morgenthau Uses French Crisis . to Cloak Policy Shift. By the Associated Press. CHICAGO, ‘September 26—~John D. M. Hamilton, national chairman of the Republican party, said today the Roosevelt administration’s an- nouncement yesterday that it would co-operate with France in its plan to devaluate the Franc had political im- plications. “A political broadside was issued by Secretary of the Treasury Henry Morgenthau, jr.” Hamilton's state- ment said, “in which he does not con- fine himself to & mere announcement of co-operation with France, but takes advantage of the French monetary crisis to announce a change of policy on the part of the administration in order to forestall further Republican criticism of the short-sighted policy h‘l;hlrh pursued by the administra- tion.” “I do not question the wisdom of the assistance given the French na- tion in this period of grave dificulty,” Hamilton added. “As stated by Gov. Alf M. Landon in his Portland, Me., speech, in which he pointed out the serious consequences of the torpedoing of the London economic conference by President Roosevelt in 1933, co- operation with other nations in the economic field is essential to both re- covery and peace. “However, we have but to contrast Mr. Morgenthau’s statement with the telegram of President Roosevelt to the economic conference to see what a complete somersault the adminis- tration has made. But it is three years too late. “Mr. Morgenthau says: “‘The Government of the United States welcomes this opportunity to reafirm its purpose to continue the policy which it has pursued in the course of recent years, one constant object of which is to maintain the gueatest possible equilibrium in the system of international exchange and to avoid fo the utmost extent the creation of any disturbance of that system by American monetary action.’ “In his telegram to the London Economic Conference in 1933, Presi- dent Roosevelt said: ““The world will not long be lulled by the specious fallacy of achieving & temporary and probably an artificial stability in foreign exchange on the part of a few large countries only.’ “Referring to Mr. Morgenthau's reference to any disturbance in the monetary fleld by American monetary action, it would be unkind to mention the effect of our silver policy upon monetary conditions in China and other silver countries, just as it would be unkind to quote that part of Presi- dent Roosevelt's telegram in which he ibx‘x:dt:': upon the necessity of balanced ——— due regard to the experience of other countries.” A meeting of the council of minis- ters today was understood to have drafted the following monetary bills: 1, To call in all gold. 2. To raise salaries equal to de- cregsed power. 13 Tng rotect short-term bondhold- ers. 4. To adjust public organisation’s debts. 5. To revise customs provisions. With these proposals said to be ready for parliamentary consideration, de- valuationists charted their main course along these lines: 1. Slicing the 65.5 milligram gold content of the franc to between 49 and 43 milligrams—a devaluation of between 24 and 33 per cent. (The French franc's last quotation before the foreign exchange market was closed was 6.58% cents. The United States dollar thus bought slightly more than 15 francs.) 2. A 10,000,000,000-franc stabiliza- tion fund to insure maintenance of the new value of the franc, Reaction Is Divided. Reaction within Prance to the pro- posed cheapening of her currency was divided, with many informed persons holding that the Blum government was in for s stiff fight. Said Vincent Auriol, minister of finance, praising Belgium adherence to the accord: “We expect other adherences to the accord,” which he defined as “a declaration of an economic and mone- tary entente of three democracies.” Despite the efforts of Auriol and Blum, however, the government lead- ers were not united for devaluation. ime bril. ond ri 25 Brilliant gold _ring. Perfeet oy sides __ Bolia Stintant Ladies’ selid yellow- .Ino;l-n 5.-6. $50 MATCHED SET fect _ecenter Glamends on li'f_ .5'3 “wedding rins, G, $22.50 175 MATCHID SIT o 14-k solid gold ding band in -fl to diame; Platinumsmiths INOPEN ARKE| Devaluation Ends Long Fight to Find Prosperity Be- hind Import Quotas. BY_BLAIR BOLLES. France's long struggle to buttress her domestic development behind walls of import quotas comes to an end with devaluation and re-establishes her as & vigorous buyer in the openly com- petitive world market, foreign trade experts in positions of #uthority here agreed yesterday. Such & change in attitude should mean concrete benefits to the United States. This country is still the lead- ing non-colonial supplier of France, but the course of purchases by France in America since the turn of the decade as traced by the Department of Commeroe shows & 66 per cent decline, thus: In 1931 France bought from us goods worth 3,800 million francs; 1932, 2,458 million francs; 1933, 2,167 milion francs; 1934, 2,190 million francs; 1935, 1,774 million francs. The total value of all French imports from all countries has declined from 28,431 million francs in 1933 to 20,945 million francs in 1935, slthough the decline by volume from 1934 to 1935 was only 2.5 per cent. Stresses Treasury View. This expectation of a revival of commerce between France and, the United States and among France and other countries emphasizes the fourth point in the Treasury Department statement announcing the United States’ co-operation in safeguarding the devalued franc: “This Government is convinced,” Secretary Morgenthau said, “that suc- cess of the policy set forth is linked with the development of international trade. In particular it attaches the greatest importance to action being taken without delay concerning the Ppresent system of quotas and exchange controls with & view to their aboli- tion.” In its dealings with a nation like England, which devalued the pound just five years ago this month, the United States has shown a con- stantly increasing trade since 1933, when Britain bought goods from us worth 75,813,000 pounds sterling, compared with 87,502,000 pounds sterling in 1935. Again in the case of Belgium, which devalued the belga March 31, last year, our exports show an increase. Belgian purchases from us in 1934 amounted to 999,000,000 francs, in 1935, 1,324,000,000 francs, a better- ment of 16.4 per cent. The most obvious inducement to French increase of her purchasing abroad on the heels of devaluation is that the adjusted franc will make buying in France more popular. France put up her import quotas because her export market was dis- appearing; nations with cheap cur- rency found it too dear to pay for French goods. The elimination of the buying bar, then, eliminates with it the import bar. This is step No. 1, but the business of preparing France to become active once more in world markets through devaluation goes much farther than this, according to Grosvenor Jtmes, “chief of the finance division™ of the Bureau of Foreign and Domestic Commerce. Must Repatriate Gold. First, said Jones, devaluation will repatriate much of the gold which has been in flight from Paris. Since August the Bank of France has lost 2,297,000,000 francs in gold; the re- serve—although it is 57 per cent of note circulation and deposit liability and the law requires only 35 per cent —is less by 13,000,000,000 francs than it was in January, and by 30,000,- 000,000 francs than it was in 1932, when United States gold was in flight to Paris. ‘The repatriated gold, it is hoped, will be invested in French govern- mental securities and French com- mercial securities; such search for profitable employment of capital in France would, of course, speed the return of prosperity. The return of this capital, too, it was said, would remedy a serious dilemma of the French government— its inability to finance itself except through the Bank of France, & quasi- official organization controlled by pri- vate enterprise for the most part. ‘The Blum government's attempts to raise money from the people by an issue of baby bonds met a stone wall of popular refusal. Only 3,000 million francs worth of the bonds were sold, & negligible amount. The public mis- 9.-10. $100 MATCHED SET Ferfect diamend. set in al =375 . TRl 25 11.-12, $150 MATCHED SET 36/100 perfect in vellow-gold fl:“:fl setting with oix $1 |5 side diam Fish Ill'l' ring set diamonds ____ *10 Stationers A. Kahn Ine. ARTHUR J. SUNDLUN, President - 44 Y_eqrs at 9335 F St.; & few millions in dollars against a fu- Mrs. E. D. Rivers, wife of the Democratic nominee for the Georgia governorship, shown wi School in Lakeland, Ga., where th her class at the Lanier County she has continued to teach since her husband was nominated. Mrs. Rivers is reported to find her chief interest in the educational advancement of the youth of Georgia rather than in the social glamour of the capital city. The Democratic nomination for mount to election in Georgia. r the office is considered tanta- —Wide World Photo. trusted the future and kept their sav- ings in 3 Now, however, with uncertainty at an end as to when and how devalua- tion would come and with lost capital ready to return home, the government feels secure that the people of France will finance France by purchasing its bonds. Intensive buying would push the present governmental interest rate of 5 per cent down to 3 per cent and keep it there and accordingly make future governmental finaneing & cheaper operation. Balance Off Wage Boosts. Secondly, Jones suggested, devalua- tion will offset the increase in prices of consumers’ goods brought about by the Popular Front government insist- ence that wages be increased and working hours shortened. The re- sultant broadening of purchasing power broadens credit. The natural corollary of such an influx of wealth and stability is trade on a large scale, far different from the cramped international marketing produced by France's set of import controls, or quotas, which Premier Laval. a tariff advocate, railed against in vain two years ago. Even with this artificlal method of PFrench market through the operation of the trade agreement signed by Sec- retary Hull and Ambasador Laboulaye May 6. We have increased our pur- chases of wines and laces, and for products from the United States and its territories and possessions France negated ad valorem increases on man- ufactures and semi-manufactures, a¢ well as ordering direct reductions also on a large number of products. Tourist Trade to Revive. | Prance’s improved foreign trade sit- uation is not expected to be limited to the passage of goods across the seas. ture delivery of gold. Belgium established its fund by tak- ing over the profit of revaluation of the gold reserve of the national bank, As with America and England, its purpose has been to stabilize its in- ternational currency unit, the belga, on foreign exchange by movements known only to the members of the government. MOST ILLEGAAL LIQUOR IN DRY STATES AREA Alcohol Tax Unit Supervisor Also Reports More Stills in Boutheast District. By the Associated Press. ATLANTA, September 26.—Super- visor R. E. Tuttle of the Alcohol Tax unit said today the Georgia-Alabara- Florida-South Carolina district yield- ed more illicit liquor and stills dur- ing the fiscal year ended June 30 than any other in the Nation. Georgia and Alabama are legally dry States. In the Atlanta district, which com- prises the four States, he said 3,787 illicit stills, 97,547 gallons of moon- shine whisky and 2,817,672 gallons ef mash—the stuff the liquor is made from—were destroyed. He added that 5,775 persons were arrested on liquor charges in the four States during the year. Reaction Monetary Pact Hailed As “Great Stép” to Revive Trade. By the Associated Press. LONDON, September 26.—Co-opera- tive control of international monies by the United States, Great Britain and France was hailed by monetary au- thorities tonight as the most import ant aspect of the French move toward devaluation of the franc. The monetary accord among the three nations particularly was seen as a “great step” toward the reconstruc- tion and restoratien of international trade. BORDEAUX, France, September 28 (#)—Maurice Thorez, secretary-gen- eral of the French Communist party, declared tonight the party opposed de- valuation of the franc, but would vote in favor of the government measure to preserve the French Peoples Front. The tourist trade, for which France | | has invested billions of francs in| hotels, shipping, railways, is due for | | & revival | To protect itself in the world's money jungle, Prance will follow the | lead of England, America and Belgium |in establishing that mystery of na- | tional financial operations, the stab- | llization fund. | | The stabilization fund is a protec- ‘uun against speculation and inimical | | dealings in a national currency by a | foreign country. Britian set up its | $3,175 million fund almost as soon as | |1t went off gold. How it has been | LIMA, Peru, September 26 (#) — Banks were closed today and the | Prench franc was unquoted following French moves toward its devaluation. COPENHAGEN, September 26 (). --Foreign exchange dealings today were suspended in the Bourse with the exception of the British pound ster- ling and the Scandinavian currencies, which are part of the sterling bloc. PARIS, September 26 (#).—Finan- cial authorities said tonight the drain on Prance’s gold reserve had been halted effectively pending parlia- balancing trade, Prench imports in | Used specifically is kept a state secret. | mentary action on devaluation of the June far outvalued the exports—1,831 | Put in general it acts as & lever t0 | franc, expected Monday. million francs to 1,131 million francs. For the first six months of 1936 im- ports were valued at 11953 million francs, exports 7,712 millions. ‘This unfavorable balance of 4,781 millions was 77 per cent larger than the ad- verse balance in the middle of 1985. Stnce June 15 the United States has enjoyed an improved position in the SidneSf Wes protect the price of the pound | ]throuhom. the world. | America has & fund of $2,000| millions. Secretary Morgenthau keeps it active, but for what particular purposes he has disclosed only twice— yesterday, when he used it to buy pounds from Russia, and two years 2go, when he lent the Bank of France The Bank of France reported no gold had been sold today and no fur- ther shipments of gold abroad were reported. They had been large prior to the rise in the discount rate of the Bank of France from 3 to 5 per cent Thursday and the government's an- nouncement -of its devaluation plan today. SIDNEY WESTinc 14th and G Sts. “FINE AS CUSTOM HANDS CAN MAKE” West-Fruhauf Suits $50 to $95 t, INC. 1 CUSTOM TAILORING IS UNMISTAKABLE OU'RE RIGHT...custom claims are so widely abused in ready- made clothes that it is hard to believe them when they are genuine ... but because they are genuinely custom tailored, no claims made for West- Fruhauf can ever exceed the custom character of the clothes themselves. 4¢h & G Sts. EUGENE C. GOTT, President,