EUROPEAN EXCHANGES PANIC GALE FORCE CRISIS HITS MONEY MARKETS

PANIC GRIPPED the continental money markets yesterdav after the shock decision by the Swiss authorities io float the franc, ope's strongest currency. The big banks and speculators waited tensely for an announcement from the Swiss National Bank on the next move of their war against the dollar.

In London, the centre of the Euro-dollar market, the price of gold rose steeply by 15 points and the dollar slipped down 21 points against sterling.

The rapid events of the last two days, started by the effective devaluation of the Italian lira, spell the complete breakdown of all monetary relations inside and outside Europe.

A mood of economic nationalism is sweeping the main financial centres. This is encouraged by the big banks and the authorities. The watchword The economic war now unleashing itself across the capitalist world is 'every man for himself'.

The count down to crisis began in August 1971 when Nixon removed the gold backing from the dollar and left Europe stranded with $70,000m of the increasingly worthless American currency.

The capitalist heads of the world attempted to restore some semblance of order in December 1971 with the Smithsonian agreement where new currency rates against the dollar were agreed.

But this bid failed. The new 'official' price for gold of $38 an ounce could not contain the wave of speculation in favour of the yellow metal-gold has continued to go up and up in price on the free market.

Another hammer blow was delivered last November when the ten big world banks officially buried the two-tier gold system by allowing settlements of debts in paper currency. This applied particularly to Britain and Italy with big trade of the Euro-dollar market, and the dollar slipped down deficits who both refuse to release what remains of their precious gold assets.

Meanwhile the Americans have responded with an open declaration of trade At his inaugural ceremony on Saturday President Nixon made it clear that America would look after her own interests in the international economy.

His declaration coincided with the decision of the American airlines to undermine the French and British aircraft industry by placing the future of the Concorde in jeopardy.

But the renewed currency war on the dollar will mean an acute crisis for the European capitalist nations. Germany alone now maintains a fixed rate of exchange — once the holy grail of world trading relations.

This means the German Bundesbank will have to bear the brunt of speculation against the dollar or float the mark.

The crisis on the trade and monetary front is already spilling over onto the stock markets.

After Monday's record 18-point collapse of share values, shares fell once more on London Exchange. The industrial capitalists, too, know that they face a future of economic war, intensified • by the worst crisis of monetary value since 1929.

Gold is now the only stable basis of exchange, which means that the future of all paper money becomes more and more speculative.