Gold-Edged Security

The French take pride in the artistic appearance of their paper money, but the only French currency that has their unswerving faith is a little gold coin about the size of a U.S. nickel. The napoleon (named for the ruler who first issued it) has a nominal value of 20 francs, or less than a cent. On France's free money market, it brings 4,000 francs ($11.40). But the visitor to France is not likely to pick up many napoleons. The thrifty, inflation-wise French keep their gold--an estimated $5 billion worth--hidden away in socks, sugar bowls and mattresses.

Successive French Finance Ministers have despaired over the problem of getting at these private gold hoards. But last week Premier Antoine Pinay, a shrewd businessman, thought he had found the way. He announced a new government bond, the value of which would be tied to the price of the gold napoleon. As the free market price of the napoleon goes up, so will the price of Pinay's bond: unlike the napoleon, the bond will also pay 3 1/2% interest. Since every Frenchman knows that the government can bring the market price of napoleons down by minting more of them, Pinay's bonds got another guaranty: the government will buy them back any time at the price, in francs, at which they were purchased. The tax-wary French were also assured that they may hold the bonds anonymously, thus transfer them at death without the inheritance tax collector hearing of it.

Launched with all the fanfare of a War Bond drive, Pinay's gold bond issue brought 17 tons of hoarded gold into the Paris treasury coffers in the first four days. At Dijon a man who wouldn't give his name traded in gold ingots worth 75 million francs (approx. $214,000). The bond issue had to pull in 400 to 500 billion francs to be a success. Pinay, who plans to use the money to finance war reconstruction projects, beamed as the returns came in; he was once again proving himself France's most resourceful Premier in many a long day.

Pinay's growing reputation as a man of decision emphasized clearly De Gaulle's growing weakness. In March, 27 Gaullist deputies bolted their party to vote Right-Winger Pinay in as Premier. Last week, on the eve of a vital confidence vote in the Assembly, 47 Gaullist deputies (out of 118) told General de Gaulle that they would no longer blindly oppose Pinay, but would vote according to their own political consciences. This decision may spell the end of General de Gaulle's hope of being elected to power in France.

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