Rise in Value of the Franc:
Some of the Reasons: Changes at Versailles From Our Own Correspondent, Paris, Jan. 23.
The mails are to be blamed for the late appearance of our Paris correspondent's letters in these columns, What actually has happened is not clear but four such weekly letters have bon held up in the post.
The sudden rise in the value of the frane has produced a variety of exp'anotions from experts and incidentally has illustrated the mysterious and perplexing nature of, exchange movements. It is very remarkable that a question of such immediate importance, which touches everybody's pocket at once, should be so difficult of explanation. "Speculation" is the. easiest way of accounting for the ups and downs. Business firms and "operators' buy and sell francs and pounds and dollars and the rest because they think they can anticipate the effects of what will be done to-morrow by other business firms and ''operators." No one, however, knows what proportion of the daily purchases of bills, cheques and instruments of credit is speculative and what proportion represents legitimate transfers of money to pay for goods.
Another explanation is tional credit"—a complex condition made up of the figure "of the national debt, _liabilities to other countries, the amount of unguaranteed paper money in circulation, ete. Advocates of this theory believe the franc has gone up because the Allied conference to meet in Paris to-morrow will at last settle the amount of the German war indemnity and that France will be paid. Yet another theory is that, im consequence of the industrial slump, creditors are forced to accept compromises instead of exacting payment in full, and that, acting on these lines, British and American firms are allowing French debtors to settle their accounts at rates of exchange below those officially quoted.
Lower Prices, Lower Excuance.
Finally we have the view of that venerable economist, M. Yves Guyot, who says that the real cause lies in the fall in the price of commodities. The rate of exchange has simply followed prices. He thinks it will be many years before things are normal again but that a more reasonable position than the present one will be reached in a year or two: but what: is a "reasonable *position" in the international money market? The root of the trouble, of course, lies in the immense issue of paper money made by most countries engaged in the war. Before the war, exchange was automatically regulated by the "gold point." When rates moved too far one way or the other,
Text read from the printed page and cleaned; old type leaves the occasional error.