19. An American Opinion on the Gold Clause of the Pinay Loan

(L’Opinion, August 14, 1952)

I am pleased to submit today to the readers of this journal an American opinion that in my eyes deserves the greatest attention.

I refer to a passage in the monthly circular of the National City Bank, one of the two or three most important American banks. This circular is respected in the entire economic world for its prudence and sureness of its appreciations. It is looked for with impatience by the men in business and those in the government. It concerns itself this time with the Pinay loan, and especially with the gold clause that is its principal characteristic, and here is what it says about it. I quote textually.

“These last two decades have been a period of confusion and of doubt in regard to gold. More and more there has spread the sophisticated opinion that gold was a relic of the past, that the belief in its utility was superstition and a myth worthy at most of coarse and primitive peoples, but unworthy of advanced societies. This feeling has been reinforced by the closing, during the war, of the gold mines of the United States and of Canada. Some have declared that it was the prosaic end of an object which came right after love in the list of human desires, but had no longer any use save to fill sick teeth.

“Yet,” continues the circular, “the absurdity of these opinions [the English word “non-sense” is still stronger than the French word “absurdity”] has been brought to light at one stroke by the offer in France of a loan with a gold guarantee. It is not through simple affection for the yellow metal that the French authorities have linked the new securities to gold, but for an eminently practical reason. By that the Pinay government hoped to induce the French public to lend its savings to the Treasury, thus avoiding other inflationary types of financing that would risk reducing still more the value of the franc.”

The American author thus dismisses at the same time the critics of the gold-clause, who considered it reactionary homage to obsolete ideas, and those who stated that it had nothing original, being but a variety, like any other, of indexed loans.

He replied in advance to those who, taking as a criterium of the success of the loan the quantity of gold it would bring to the Treasury, easily triumphed when that quantity proved modest.

I have always thought, for my part, that the importance of the choice made by Mr. Pinay resides less in the amounts of metal recovered by the Bank than in the affirmation, at a particularly opportune time from a national and international point of view, that the only valued standard was gold, by reason of its stability in relation to merchandise and its universal acceptance.

But the article of the National City Bank does not concern only France. One may suppose that this position, following the meeting in Mexico of the International Monetary Fund and the Bank for Reconstruction, is aimed also, and even more, at Anglo-Saxon opinion which, once more, will have to revise its doctrines on the subject of the best means for returning to this famous convertibility of the currencies, of which everyone speaks now, but whose conditions so few people sincerely accept.

Let us hope that the article which we have just quoted will awaken in them salutary reflection.