The Golden Fleece

General de Gaulle continued his assault on the dollar. Since no nation rushed to embrace De Gaulle's earlier proposals that the world return to the gold standard, French Finance Minister Valery Giscard d'Estaing last week announced that France would go back to gold all by itself. Beginning immediately, said Giscard, France will settle all its foreign deficits by paying in gold--a fairly painless move in view of the fact that France has no deficits. More ominously for the U.S. and Britain, he called on the West's major nations to make "a solemn and unequivocal declaration" that from now on they too would settle their deficits in gold instead of in dollars or pounds--an open invitation to everyone to trade in dollars and pounds for gold.

Shaky Grasp. U.S. Treasury officials are convinced that Giscard, 39, an erudite and ambitious money expert who rose through the bureaucracy to become France's youngest finance minister in this century, has little to say nowadays about French financial policy. As they see it, that policy is increasingly framed by De Gaulle, who views economics as a handy weapon but has a grasp of its intricacies that is roughly equal to Giscard's knowledge of military strategy. De Gaulle has come increasingly under the influence of Jacques Rueff, a gold standard devotee and a close economic adviser. This fact has prompted some Paris economists to refer sarcastically to the present as the Golden Age of French diplomacy.

If the De Gaulle-Giscard proposal was unusual, so was the way in which it was presented--as a lecture on monetary policy at the University of Paris Law School. Under usual circumstances, the occasion would not have attracted much more than academic interest. But the huge and starkly modern university auditorium was packed with 3,000 students and a detachment of journalists, who filled every seat, sprawled in the aisles and stood pressed tightly together in the rear. They exchanged loud jokes with Lecturer Giscard. When he mentioned Rueff, they blended boos with applause. They cheered enthusiastically when he spoke in passing of Yale's Robert Triffin, a leading exponent of building on the current monetary system of gold, dollars and pounds.

New Urgency. Giscard d'Estaing's proposal is unlikely to win much support for France. The major nations hold substantial reserves in dollars and pounds, and any weakening of those currencies would hurt them too. De Gaulle's scheme has at least lent urgency to the debate over the world monetary system. Britain is keen to revise that system, and last week Lyndon Johnson pointed out that the U.S. is exploring means of broadening the base for international finance (see U.S. BUSINESS). The majority of financial policymakers believe that new monetary reserves must be created, but the problem is what kind of reserves. The French want a system--perhaps any system in the long run--that would make dollars less worthy than gold. That would give gold-heavy France, whose economy is one-eighth as large as the U.S.'s, a financial stature well beyond its visible means.

This file is automatically generated by a robot program, so reader's discretion is required.