Tightwad Up & Out

With its sumptuous trimmings, its kerosene lights and its antiquated heating, the apartment into which a Frenchman moves when the State appoints him Governor of the privately-owned Bank of France looks and smells like a miser's snuggery. Last week the Bank of France's fusty servants, aging pensioners of the world's second largest gold hoard, gloomed darkly over their frugal supper. Their beloved master since 1930, M. Clement Moret, the National Tightwad and, as such, a national hero, had just been kicked upstairs from Governor of the Bank of France to Honorary Governor. He was going to receive the Grand Cross of the Legion of Honor, and soon a lesser tightwad would replace him, helas. To the fusty servants and to millions of sou-pinching Frenchmen all this was decidedly bad news.

To the Paris Bourse it was grand news. Rumors of mild inflation rippled on smiling lips. Speculators grinned as shares bulged, then moderately boomed. France was getting action at last from her new Premier, the youngest in French history, M. Pierre Etienne Flandin, 45, called Le Gratte-Ciel ("The Skyscraper") because he stands 6-ft.-6 in his socks and sticks up in French politics as something distressingly modern.

It was Premier Flandin who kicked Governor Moret upstairs. The majority of the stockholders of the Bank of France, more than half of whom own only one or two shares, have almost no authority, almost no function except to receive dividends. They receive a yearly dividend of some 300 francs on their 1,000 franc par shares which sell on the Bourse for some 10,000 francs. To the heirs of Frenchmen who bought a share at par and tucked it away in the family stocking when Napoleon I founded the Bank of France, the return on investment is thus at the rate of some 30%. Such shareholders would never have fired Governor Moret. They, too. gloomed as brisk Premier Flandin popped in as the new Governor of the Bank of France last week bland M. Jean Tannery. Since 1925 and 1926 respectively, M. Jean Tannery has been dextrously managing those curious magicians' hats of French State finance, La Caisse des Depots and La Caisse Autonome d'Amortissement.

Le C. des D. manages the greater part of French savings banks funds, La C. A. d'A. is a revolving fund for amortization of the national debt, and both are great stabilizing forces behind the price of rentes (Government bonds). At the art and science of such sanctified price rigging no practitioner is more dextrous than new Governor Tannery of the Bank of France. He is just the Governor for an ambitious young Premier who lunched with President Roosevelt last summer and came away favorably impressed.

Specifically old Governor Moret was dropped last week because he rejected a proposal by Premier Flandin to give business a shot in the arm. The proposal let the Bank of France announce that it will re-discount short-term Treasury bonds, issuing new currency or opening deposit accounts against the paper received. Since this operation in effect reduces the gold cover behind French money (now 80,1390 it tends to be inflationary. To M. Flandin's proposal M. Moret had but one answer, a quiet "mais non." Last week there was every indication that M. Tannery will do as M. Flandin wants. Spokesmen for the young Premier said happily that French banks, which are now loaded up with some 10,000,000,000 of short-term Treasury paper, will soon re-discount this at the Bank of France and consequently will be in a position to loosen up French credit generally. The Treasury will also do some short-term unloading of its own upon the Bank of France, thus getting funds with which to appear to balance the budget without having, to ask the Chamber to vote higher taxes. By this fascinating maneuver the State also avoids another long-term Government bond issue which would badly clog the Paris bond market. "It's clever," Frenchmen agreed, "but is it inflation?"

Neither Premier Flandin nor Finance Minister Louis Germain-Martin and least of all new Governor Tannery of the Bank of France would admit for one moment that they are "doing a Roosevelt" or anything, remotely like it. For the present

French public opinion simply would not stand for that. Loudly and unanimously the Three Monetary Musketeers declared that they will keep the franc an honest, undevaluated gold franc.

"The monetary policy of France remains the same!" cried Finance Minister Germain-Martin. "M. Tannery and I are absolutely hostile to any currency adventures, and are in complete agreement on maintaining the franc at the present gold parity."

In the kerosene-lit apartment, as ex-Governor Moret packed up to leave last week, he found a crinkled prediction penned to him in high excitement four years ago by fox-bearded Montagu Collet Norman who is now in his 15th year as Governor of the Bank of England. "Unless drastic measures are taken to save it, the capitalist system throughout the civilized world will be wrecked within a year," wrote Governor Norman to Governor Moret in 1931. "I should like this prediction to be filed for future reference."

Never a maker of anything so risky as predictions, and always a firm believer that the Gates of Hell could never prevail against sound money, Clement Moret entered the eclipse of Honorary Governor after setting Paris the kind of example Paris respects. Amazingly few years ago he was living with his wife and children in a flat so modest that the rent was but 1,500 francs a year. Soon afterward great Raymond Poincare (considered by his worst parliamentary enemies "abnormally incorruptible") declared that Finance Ministry Clerk Clement Moret was "abnormally honest," had him sent to reorganize the impoverished exchequer of reconquered Alsace-Lorraine.

Though the clerk made good and became perhaps the greatest self-made Governor of the Bank of France in its long history, Mama Moret could never see why she or the children should cut a dash. With papa's salary raised to 500,000 francs a year the Moret moppets continued to go to ordinary Paris public schools. Mama Moret and Paris socialites are unaware of each other's existence. Today the National Tightwad is venerated for having saved a reputed 85%, of his salary while Governor of the Bank of France, salted it away in gold franc bonds.

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