Business: Francs & Frenchmen

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Last week the eyes of the world's money changers were fixed upon the baroque façade of a four-story building in the Rue de la Vrillière in Paris. There behind the portals of the Bank of France was the solid centre of another of those swirling convulsions in French finance which off and on for years have threatened to dislodge the franc from gold. This time it looked as if the perennial prophets of the franc's doom might at last be right. By ship, plane and train gold was pouring out of France in huge daily shipments, which have depleted that country's gold stocks by $200,000,000 in the past fortnight, by about $500,000,000 in the past year. These sums did not represent withdrawals of foreign balances in French banks. That type of skittish liquid capital has long since sought other havens, notably London and Manhattan. French capitalists themselves were converting their wealth into gold, sending it out of the land before the new Chamber of Deputies with its heavy Leftist majority assembles next month (TIME, May 11).

Meantime the lame-duck Sarraut Government lashed about for foreign exchange speculators to tag as franc raiders, expelled one luckless Pole from the country as an example, discussed innumerable measures for the "defense'' of the franc, hoped it could pass on to the incoming "Popular Front" the unpleasant task of actual devaluation. Cried Finance Minister Marcel Régnier: "So long as I am Finance Minister there will be no measures restricting the gold standard. . . . We have ample reserves for our defense and the Bank of France possesses every means of action needed."

Principal action taken by the Bank of France last week was to boost the rediscount rate from 5% to 6%, the normal central banking method of inducing capi tal to remain in a country. But the flight from the franc continued.

As the week went on it became apparent that a good part of the fear was generated no less by the actual victory of the Popular Front than by the uproarious Rightist press, whose dire predictions on the future of France could be compared in the U. S., perhaps, to a session of the National Association of Manufacturers under the New Deal. In France, however, these die-hard fulminations were taken seriously, with the result that the Paris Bourse was in a near-panic.

Indeed, Premier Albert Sarraut called for reassurances from Leon Blum, millionaire Socialist leader of the Popular Front. Professing surprise that uncertainty surrounded his program, that cultured old Jew announced: "The entire efforts of the Popular Front aim at reviving all the sources of national activity. And such revival is impossible without large confidence from the country itself. Therefore, we would be going directly against our own aims were we to precipitate disorders and tumult."