3. The New Franc

(L’Opinion, January 20, 1948)

A breach has finally been made in the monument of international hypocrisy so cleverly erected right after the war for the protection of paper moneys.

It is to the credit of the French government to have given the first blow to this universal conspiracy to prevent monetary truth from coming to light.

That the new system organized by the French monetary authorities still allows room for many uncertainties and does not resolve all the problems, no one can deny.

It will require many more weeks yet to resolve all the different elements of the new organization for foreign exchange, to expand progressively the freedom enjoyed by industrialists and merchants in their transactions with foreign countries. But the fact to be kept in mind is that, henceforth, a mechanism has been established which will have the twofold advantage of

1. providing an instrument of equilibrium between imports and exports;

2. furnishing a public barometer of the reciprocal value of currencies.

It would be petty to interpret these measures only as means of stimulating French exportation. The real scope of these measures lies in their effort to bring the stability of the franc closer.

It may seem paradoxical to strive for stability and to begin by establishing instability in allowing the rate of exchange to fluctuate according to offer and demand. It is, however, the only procedure that can bring about a stability based not on fiction, but on economic reality.

It would have been a wise policy on the part of the International Monetary Fund to support this new French experiment with less reticence. Either the role of the International Fund will be to aid in the restoration of truth with regard to money or it will serve, at most, to cover, by its communiques, the violations unavoidable in international obligations contracted without sincerity. In the latter case, its authority will suffer a severe blow.

Already, a few months ago, in expressing its ill-humor with regard to free markets in gold, the Fund caused anxiety to those who hoped to find in it the best instrument for the inevitable monetary adjustments. Henceforth it must take the initiative courageously in these adjustments, and, in any case, not hamper them.

But no matter what happens, a step has just been taken toward the return to an international money which no one any longer doubts will be based once more on the free circulation of gold, at least in the relations of countries with one another, if not in internal transactions.

Let us hope that nothing will happen which will cause a step backward. Only restored confidence will give to the new franc in circulation the climate which will permit it finally to find its true place.