Gold Flight

Retired from active service since January, little General Maxime Weygand, favorite of Marshal Foch and onetime Inspector General of the French Army, emerged from obscurity last week to take part in the ceremony of relighting the Eternal Flame under the Arc de Triomphe. He was greeted with wild cheers. One passer-by refused to take his hat off. That started a fist fight. Nationalists in the crowd suddenly began to shout: "Put Weygand in Power! Weygand for France!" His admirers nearly tore for the clothes off the little soldier, forced police to hustle him to safety. It was a small but significant sample of France's current temper. Across the river in the Palais Bourbon porters were filling all the inkwells and placing a large brass dinner bell on the Speaker's desk, for the most powerful, least responsible legislative body in the world, the Chamber of Deputies, was about to meet. Every Frenchman knew what they were faced with: an immediate budget deficit of ten billion francs ($658,300,000), that was causing the French franc, keystone of Europe's gold bloc, to tremble on the verge of devaluation. Either the Chamber must swallow its pride, vote extraordinary powers to the Flandin ministry or else the Cabinet must fall and France head into another inflation like that of 1925-26.

One Frenchman in every 20 holds some sort of Government job. Deputies are elected for four years, can throw out any cabinet at will and neither hell nor high water can budge them. The emergency government of kindly old Gaston Doumergue tried valiantly to pare Government expenditures and failed (TIME, Nov. 19). Knowing what their country was up against, shrewd French investors sent a thin trickle of capital abroad. Then week after week as the condition of French business, the size of the probable deficit, became more & more apparent, the gold flow grew. Last week it was a torrent.

Within the past six weeks more than three billion francs in gold have left the underground bombproof vaults of the Bank of France for foreign countries, chiefly the U. S. If it could be stopped, there was no immediate worry because the bank still has about 80% gold coverage for its sight engagements. But could it be stopped? With exports limp and the franc dropping on foreign exchange, the Bank of France was last week forced to the extraordinary action of raising the discount rate twice within three days, first from 2.5% to 3%, then to 4%.

With his broken arm still in a cast, hulking Premier Flandin held daily bedside conferences with elderly, crop-headed Finance Minister Louis Germain-Martin and Governor Jean Tannery of the Bank of France. In 1926 white-chinned old Raymond Poincare had been able to halt a similar crisis by increasing taxes, by floating a heavy loan on the Government tobacco monopoly. But in national prestige Premier Flandin was no Poincare.

To the rescue at this point went paunchy Edouard Herriot, onetime Premier, and leader of the Radical Socialists. He promised the Goverment the full support of his party, keystone of the Flandin government. Since Premier Flandin was still too sick to face the Chamber himself, Finance Minister Germain-Martin was delegated to speak for him this week, with the following proposals:

To save the franc, Premier Flandin wanted from the Chamber "extensive powers in economic and financial matters." He demanded power to govern by decree until Jan. 1, stipulating that all decrees be ratified by Parliament before May 31, 1936 when the present Chamber's term ends. The Cabinet wasted no time in giving unanimous approval to an enabling "emergency bill," sent it on to the seething Chamber where the Radical Socialist Party was already threatening to split on the extent of Flandin's "extensive powers."

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