The Franc in Danger Monday's debate at Westminster was swiftly
followed by the announcement of the new French Government's measures to restore financial stability, which involve allowing the franc to sink once more flow its exchange rate of 112 to the £ to an unprescribed rate, which may be 125 to the £ or lower. Unfortunately it seems that this step, despite M. Bonnet's assurances, may cause a breakdown in the Tripartite Mone- tary Agreement. Its immediate result will be to give the empty French Treasury, which M. Bonnet stated on Tuesday to have only £182,oco available, a profit on its gold holdings. On Tuesday dealings in francs were suspended, the Bourse was closed, and a moratorium declared on Bills in gold or foreign currency. This measure will give the Cabinet a breathing space in which to apply its " cure " for France's financial crisis. It will include a loan to the Treasury from the Bank of France and, it is to be hoped, at length a consider- able increase in direct taxation and measures to prevent tax evasion ; it is reported, also, that M. Bonnet has taken soundings in Washington for a loan of some k400,000,000. If these measures succeed in achieving M. Bonnet's intention of balancing the Budget, the restoration of confidence which will follow, combined with the Government's new power to devalue to an unspecified limit, may be enough to attract back to France some of the £35o,000,000—k55o,000,000 of French capital now held abroad ; and the " strike of capital " which brought down M. Blum is more likely to end under a Radical- Socialist than a Socialist Government. It is fortunate that M. Bonnet's plans are coupled with a promise not to introduce exchange control or to abandon the social policy of the Front Populaire.
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