The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo. TUESDAY, APRIL 6,1926. FINANCES OF FRANCE.

Auckland Star, Volume LVII, Issue 80, 6 April 1926, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News and The Echo.

TUESDAY, APRIL 6,1926. FINANCES OF FRANCE.

For the cause that lacks assistance, For the vrrong that needs resistance, For the future in the distance, And the good that we can do.

Some progress towards the rehabilitation of the finances of France has been made by M. Peret, \ the fourth Finance Minister within a year, who has piloted his proposals through the Chamber with a degree of success beyond that achieved by any of his predecessors. He has secured the acceptance of the Senate to a majority of his new schemes, but they have struck out the clauses relating to the sugar and oil monopolies. These are the crux of the whole proposals, and, if the Senate persists in its attitude, the Government will either be compelled to resign or to recast its whole scheme, an almost impossible task in the face of the long succession of failures of the past, and of the daily inbreasing gravity of the situation.

Inflation, indecision, and inability to make the Budgets balance, have gradually brought about a position which is extremely precarious, and may, at any time, become catastrophic, and the knowledge of this may induce the Senate to grant the monopolies without which M. Peret's schemes would be of no more use than those which have already been scrapped. The whole financial mechanism of the country has become diseased, and has been steadily, if slowly, disintegrating, despite the fact that the general prosperity of the country has maintained a high level, and there is practically no unemployment.

This disintegration is manifested in a variety of ways, but chiefly by inflation of currency, coupled with a strong demand for foreign securities and a growing disposition to get rid of French Government bonds, the threat of a capital levy, the continuous downward 'trend of'the franc, a diminishing flow of working capital for the major industries, and smaller profits, coupled with higher prices and interest rates, which are. steadily mounting.

•An analysis of the French Budgets for the past seven years shows that each of them has shown a deficit of many thousand millions of francs, ranging downward from. 42,600,000,000 in 101© to' 4,500,000,000 last year, and aggregating in all nearly 180,000,000,000. The total revenue in that time from taxation sources was only 131,800,000,000. These staggering figures do not include interest on the French debt to the United States or to Great Britain. A further revelation of the appalling position is the fact that while in pre-war days the French national debt amounted to oneeighth of the national wealth —the highest in the world—it had risen last year to over one-third, a pledging of national credit not far below the breaking point. The debt owed abroad is now equal to thirteen per cent of the national resources, involving a tremendous annual export without return.

: M. Peret's proposals are all palliative; they may result in a balanced Budget this year if the Senate can be prevailed upon to vote, the monopolies, but they will not go any distance towards the restoration of the national credit. They may result in a cheek on the downward course of the franc, but they will scarcely assist in its recovery to any marked degree. The flight of capital has greatly, assisted the franc on its road to a parity with the old German mark, and that flight must be checked before any stabilisation can be expected. A return to pre-war parity is impossible under any system of taxation, levy, or other financial meihod, but courageous grappling with the position might lighten the gloom of the general outlook. For gloomy it is. It is apparent that there can be no great expansion of the agricultural production of the nation; the iron and steel industries cannot rapidly improve in the face of international competition; the national income cannot radically and rapidly change with a stationary population; and, finally, the decline in the, returns from the factories checks trade development.

Since little help can therefore be expected in these directions the restoration of French credit is a Herculean task, and it is not likely ■ that any serious attempt to secure it will be made until a period of balanced Budgets gives the nation, time to take stock of the whole .position. The Chamber was very emphatic in its rejection of M. Loucheur's proposals made in December for an additional eight thousand million francs because members considered them excessive, though the Finance Minister regarded them as .the minimum of safety. That is indicative of the general attitude of the Chamber; an unwillingness to face the facts and lay additional burdens on their constituents, the political creed of a great many of whom is limited to an antagonism to the payment of taxes.