FRENCH FINANCES.

Auckland Star, Volume LXIV, Issue 247, 19 October 1933, Page 6

FRENCH FINANCES.

The perennial, and to the foreigner, the mysterious problem of the French Budget is again before the world. The budgetarysituation has become so serious that the Government has brought down a comprehensive emergency measure in addition to the ordinary Finance Bill. Hitherto there has been strong opposition to either increased taxation or diminution in Government expenditure. M. Herriot made an effort to balance the Budget, but he fell from power before he could introduce his measures. M. Paul-Boncour was overthrown before he could improve the financial position. M. Daladier introduced new taxes, but they created a great deal of discontent. A Taxpayers' League was formed to protest against any new taxation, and in one case forcible resistance was offered at an auction sale of agricultural implements for non-payment of taxes by a farmer. It was contended that taxation had reached a point when it could not be increased without seriously endangering commercial transactions. An almost equally vigorous resistance was offered to any diminution in Government expenditure. Public officials and public services entered emphatic protests, and were supported by the Radical deputies. Formerly it was the practice of French Ministers of Finance to borrow to meet budgetary deficits. For some time, also, deficits were allowed to accumulate in the expectation that they would eventually be wiped out by German reparations. That hope has now gone, and the prospects of France being able to float further loans on favourable terms while the Budget is unbalanced are not encouraging. The recent converted 41 'per cent loan has depreciated, and higher interest would have to be forthcoming for any new loan. This would militate against the loan which may be necessary next year to repay bonds falling due and to finance public works. The only alternative to loans and fresh taxation seems to be some form of inflation, and against that the French people have been resolute. Taxation and economy are the only means of supporting the franc at its present gold level, and the realisation of this has enabled the Government to introduce the drastic emergency measures necessary. France is not a wealthy nation in the same sense that Britain is, but it is a thrifty nation. ' There is still a considerable reserve of hoarded wealth, and much of this has escaped taxation in the past. The deficit in the Budget is large, but it is not beyond the power of the people to meet it. The deficit is very largely the result j of unwillingness on the part of French' Ministries in the past to face the situation. The Government is now doing this with courage and resolution, and its policy will enhance French credit in the markets of the

world—if it is not overthrown.