Money: Apr

SINCE the monetary crisis of last fall, the main prop under the French franc has been the stubborn pride of Charles de Gaulle. Now, without his formidable non, talk of devaluation of the Continent's weakest currency has assumed a new tone of inevitability. Even the West Germans seem ready to assist in a broader change of currencies by increasing the value of the robust mark. The only real question in France is when and how much.

After De Gaulle's departure, speculators rushed to buy marks, knocking the franc, the dollar and the pound to the lower limits set by the International Monetary Fund. The prospects of another franc devaluation--the eighth since World War II--caused French bank notes to sell at a 10% discount abroad, and the price of gold in Paris reached record highs. French reserves fell for the twelfth consecutive week, while German Bundesbank reserves jumped by $400 million. Only the strict French currency controls prevented a much sharper shift out of francs and into marks.

TIME'S European Economic Correspondent Robert Ball reports: "Perhaps France could limp through this year without devaluation, just as the mark might squeeze through without a parity change (though this is less likely). But one is bound to ask why. A clean break fairly soon would be better for France and for the world monetary system than living with a sick franc for months."

Such action is highly unlikely before a new French government is installed in June. Even then, the Germans will weigh carefully any boost in the price of marks before their own national elections in September. Revaluation would lower the income of German farmers under the complicated Common Market price-support system, and Bonn's party leaders are worried about losing the farm vote. Yet a change in parity is almost assured by the vivid contrast between the mighty West German economy and the inflationprone French economy--menaced by excessive wage demands while handicapped by obsolete plants and an unfortunately anemic capital market. German Economics Minister Karl Schiller had hoped that his country's real growth would slow to 4.5% this year, but has lately conceded that it will run about 5.5%.

Finance Minister Franz Josef Strauss said last week that Bonn might revalue if other strong currencies--the Swiss, Dutch, Italian and Belgian--would also rise slightly. As Strauss told TIME'S Ball: "We know perfectly well that the D-mark is undervalued against certain currencies, but this is not the case against certain others." Officials of most of the countries in question disagree.

The Germans are talking about revaluing by 8% to 10% if the franc is dropped by the same amount. Any major increase in value of European money would tend to help the U.S. balance of trade--which posted a $215 million surplus in March--by increasing the price of imports. Without revaluation, it will be a long, uneasy summer in the foreign exchange markets.

Bankers and government leaders hope to achieve long-overdue reform of the international monetary system, which limps from one crisis to the next. Last week Germany's Strauss called for "an agreement on better coordination of policies." That would include not only a change in French and German parities but also an expansion of world monetary reserves to meet the needs of growing trade.

Now $73 billion, those reserves have been static for the past five years. The most widely discussed measure would be to create a pool of Special Drawing Rights (SDKS) under the IMF. European bankers are talking about quickly enacting the SDKS and then issuing $10 billion worth in the next five years. With De Gaulle out of office, that kind of monetary cooperation should at least be easier to accomplish.

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