Pleasant & Unpleasant

"It is very pleasant," said French Finance Minister Rene Mayer one day last week, "to cooperate with a man who has as sane ideas as Sir Stafford Cripps." Nonetheless, he was not taking all Sir Stafford's ideas. This week, despite Crippsian objections, the French devalued the franc in a way that, Cripps thought, threatened the pound.

The French had simply made up their minds to stop biting off their noses. With the franc artificially pegged at 119 to the U.S. dollar (when its real value was closer to 340 to the dollar), the French were losing too much world business. If people with dollars could get more francs with them, they could buy more of what France had to sell, from cognac to Citroens. Also, by offering more francs for a dollar, Mayer hoped to lure out of hiding hoards of gold and dollars, valued at hundreds of millions.

The British were horrified. The Mayer plan had involved open currency trading in Paris--with the value of dollars, francs and pounds sterling jibbing this way & that as might be determined by the open market. This reminded the British of something they did not like to think about: that the pound sterling, artificially pegged at $4, would sell at $3 or less in a free market.

After long talks, Rene Mayer made one concession in the final plan he announced at week's end: France would permit no open trading in the pound. But it still might be possible for dollar-holders (e.g., U.S. traders who import from Britain) to buy francs on the open market, use them to get sterling credit at the official rate through a French agent--in effect, getting a pound for about $3. The British feared that dollars would be diverted from Britain to France, that Britain's booming export trade would bring in fewer dollars than Cripps had planned on. Moreover, with the cheaper francs, French exporters would be able to undersell British rivals.

Except for the assurance that France would try to stop cheapening of the pound, the French went ahead with the" Mayer plan. They pegged the "official franc" at about 214 to the dollar for use in the export-import trade, planned to set up a free market for trading in dollars.

The whole thing had served to dash into British and French faces the fact that western European union (see above) had historic economic obstacles. In Washington, the International Monetary Fund (which must approve major currency devaluations) officially disapproved of the French action after an eight-day debate. "Sometimes," said wizened Camille Gutt of Belgium, Fund Managing Director, "we stayed up all night. Sometimes we didn't eat. It was not pleasant."

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