Moreau Threatens

The most potent banker in France, M. Emile Moreau, has never held a post in a private bank. Last week the mere report that he had threatened to resign as Governor of the Bank of France caused consternation among politicians and appeared to have swayed the iron judgment of Prime Minister Raymond Poincare himself. The question at issue was whether to set up the now virtually stabilized paper franc on a gold basis. To this problem M. Moreau brings strictly practical knowledge acquired during an entire lifetime spent in the Treasury and allied services, latterly as Director General of the State Bank of Algeria, and since 1926 as Governor of the Bank of France.

During the week Banker Moreau deprecated but avoided denying an authoritative report that he has threatened to resign unless Prime Minister Poincare ceases to procrastinate in making the paper franc legally equivalent to and exchangeable for its present approximate value in gold--namely 4-c- to the franc or 25 francs to $1.

Give Up Hope? Only an utter layman could think this issue simple, academic, dull. It takes on liveliest political interest from the fact that 6,000,000 French voters hold paper franc Government securities and are bitterly opposed to admitting once and for all that the franc has declined to 4-c- from a pre-War value of 19.3-c-, or about 5 francs per $1. By these millions of voters the hope is nurtured that the franc, which sank as low as 2-c- in 1926, may rise further than its present value of 4-c-, perhaps to the dizzy height of 10-c-. To translate this hope into U. S. terms would be to say that a man who owned bonds worth $100,000 before the War now finds them worth $20,000 and hopes that they may rise to $50,000. Few U. S. statesmen would dare to say, in such circumstances, to one-sixth of the electorate: "Give up hope! Hereafter $20,000 will be the value of your original $100,000."

As M. Jacques Seydoux, Director of the Bank of Paris, said last week: "If France returns to a gold basis now--and she must --it means accepting four-fifths bankruptcy (of the paper franc). Germany accepted complete bankruptcy (of the paper mark)."

Hopes v. Speculators. To the 6,000,000 hope-against-hopers Banker Emile Moreau can say only, first that their hopes are too extravagant ever to be realized, and second that the Bank of France has not sufficient resources to go on protecting the franc against foreign speculators, unless there is applied that potent check to speculation, a law establishing the currency on a gold basis.

For some months past foreign speculators have been trying to force the franc up. They would profit by an upsurge, and by the downsurge sure to follow; and in the meantime France would lose immeasurably through the disruption of business occasioned by unsteady currency. Just now France sits fiscally pretty. Her trade balance is favorable. The Treasury has recently refunded advances previously made to it by the Bank of France to the amount of 900,000,000 francs. Such are the blessings which have flowed from holding the franc steady at its present value for almost two years (TIME, Jan. 3, 1927) under the Sacred Union Cabinet of Prime Minister Poincare.

Last week, however, the buying of French paper by foreign speculators in an effort to force a rise grew so hectic that the Bank of France was able to keep the franc steady only by buying foreign moneys in retaliation at the stupendous rate of some $25,000,000 per day. Clearly such a titanic war of currencies must not go on. It must be stopped by legislation giving a fixed, exchangeable gold value to the paper franc. Last week, Governor of the Bank of France Moreau had sound reasons for threatening to resign if the Prime Minister proposed merely to continue procrastinating.

Sphinx Speaks. To the newly elected Parliament, now meeting for the first time, M. Poincare said, last week: "We must certainly return to the gold standard, and probably sooner rather than later." Sphinx Poincare then exasperatingly proceeded to deliver one of his very longest ministerial declarations, touching with studied brilliance upon numerous detail points of domestic and foreign policy but keeping adroitly clear of the major issue. Shrewd, he knows that his popularity and his Cabinet rest in large measure upon the belief that he, who has stabilized the franc, is the only statesman who can keep it stable until it is put on a gold basis. When that last step is taken his glory may begin to fade. Therefore he procrastinated through the week; but in well informed financial circles it was believed that the strong stand if not the threats of Banker Moreau had determined Prime Minister Poincare to put the franc on a gold basis this summer, instead of waiting until next year as he is known to have intended until recently.