"Zay! Zay!"

A fiscal syllogism fateful for Europe last week was this: Developments in Washington tended to weaken confidence in the dollar and make it fall; therefore the British Exchequer, which is resolved for reasons of trade not to let the dollar become much cheaper than the pound, took steps to weaken its own currency. The means adopted was to sell sterling against francs and these the British Exchange Equalization Fund hastily converted into gold to protect itself against possible devaluation of the franc. During the week over a billion gold francs fled France and it was possible although not yet probable that U. S. fiscal manipulations, which have already shoved China off the silver standard, may become a decisive factor in eventually dislodging France from the gold standard.

Thus the atmosphere was tense and dramatic last week when the General Assembly of the Bank of France met with its 15 regents to hear the annual report of Governor Jean Samson Tannery. The Governor was appointed just 13 months ago by then Premier Pierre Etienne Flandin, who instructed him to "loosen up credit" in France and resort to various pump-priming devices. Into the Bank of France swept Jean Samson Tannery, ordered removed the heavy double cur tains favored by his gloom-loving predecessors and installed cheerful, high-power indirect lighting. But that was about all. The regents of the Bank of France, potent oligarchs of orthodox finance, soon took Governor Tannery into camp, assisted in maneuvering M. Flandin out of the Premiership, and substituted for credit-loosening and pump-priming during the eight month Premiership of Pierre Laval a comforting fac,ade of French Treasury orthodoxy behind which burgeoned the deficits from which France has been unable to escape since the War.

Cried Governor Tannery last week: "The feel of gold is what our good people of France need to restore confidence and halt hoarding. The feel of gold coins! The minting of these has been authorized by Parliament and they should be placed in circulation. . . . France's future depends upon confidence. In 1935 our gold reserves declined from 82 billions of francs to 66 billions of francs but this did not result from intrinsic weakness of the franc. It resulted from speculative at tacks, investment of capital abroad -- as when our citizens seized upon the recent rise in Wall Street securities to invest -- and hoarding. All these three forces we are in a strong position to combat!

"The intentions of the American Government,'' concluded Governor Tannery, "as expressed on many occasions, testify to the readiness of Washington to arrive as rapidly as possible at a final solution of the World problem of monetary stability. . . . Also we do not doubt that Great Britain is ready, as soon as circumstances permit, to seek means for bringing about a general return to the gold standard."

Although pious expressions looking toward international monetary stabilization have indeed been made by President Roosevelt and Chancellor Neville Chamberlain of the British Exchequer, their acts in cheapening and artificially juggling the values of the dollar and the pound have been a plain contradiction of these expressions. As for M. Tannery and the regents of the Bank of France last week, what they were actually getting at was not entirely clear. A new Cabinet of the Left Centre took office in Paris fortnight ago, and if devaluation or inflation or "panic" should come soon the kickback from enraged French voters, who will be polling two months hence in a general election, might restore the Right to power, greatly to the satisfaction of the regents. Whatever Governor Tannery thought he was doing last week, such proposals as his scheme to check hoarding by handing out gold coins impressed neutral observers as peculiar. For some years one has been able to get gold at the Bank of France only if prepared to purchase it in bars worth about $14,200 each. Before the Chamber of Deputies last week went the new Cabinet of millionaire Radical Socialist Premier Albert Sarraut. His Foreign Minister is that same moose-tall, fair-haired Pierre Etienne Flandin who as Premier appointed Jean Samson Tannery to be Governor of the Bank of France. Communists and Socialists, elated at the formation of a Left Centre Cabinet in succession to the Centre Cabinet of millionaire ex-Premier Pierre Laval, voiced their satisfaction through millionaire Socialist Leader Leon Blum. Said he: "In our eyes the Cabinet of M. Sarraut has the infinite merit that it is not headed by M. Laval." For the first time in French history the Communist Deputies, when a vote of confidence was asked, did not vote against the Government of France. Instead they abstained from voting at all. Confidence was voted by a majority of 196 in an extremely vague declaration of Cabinet policy which leaves Premier Sarraut's hands virtually free. A humdrum political wheelhorse, the Premier aims merely to hold on until the general election. Cried Sexagenarian Sarraut: "I am an old militant, one who, as he grows older, feels his passionate love for France and for the Republic increase!" This declaration the Right greeted with derisive shouts of "Zay! Zay!"--a pointed allusion to the fact that M. Jean Zay, the new Under-Secretary to Premier Sarraut, is a notorious internationalist who once wrote a poem in which the French flag was called a "dirty rag."

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