France in Difficulties

Press, Volume LXXI, Issue 21639, 25 November 1935, Page 10

France in Difficulties

The indications are that France is at present on the verge of another of her periodic politicoeconomic crises; and although the gold reserves of the Bank of France are still strong enough to stand a very severe drain there are so many complicating factors that the situation must be regarded as more than usually dangerous. The chief of these factors is the economic war against Italy. As we have insisted from the first, sanctions are a two-edged weapon, liable to cause as much harm to the countries applying them as to the country against which they are directed. And if the political as well as the material effects of economic sanctions are taken into consideration, it must be admitted that at the moment France is actually in a worse position than Italy. With a completely nationalised banking system, an absolutist form of government, and a people willing to make sacrifices in the name of patriotism, Italy can probably hold out indefinitely against economic pressure. But whereas in Italy sanctions have strengthened the national morale, in France they have produced nothing but dissension and division. The right parties in the Chamber of Deputies, and the Fascist organisations outside the Chamber, are violently opposed to the coercion of Italy; the parties of the centre have acquiesced half-heartedly in sanctions because failure to apply them would involve a breach with Great Britain; and only among the Radicals and Socialists is there any enthusiasm for the Government's policy. Politically, sanctions have left the French nation in a state of bewilderment and doubt. Economically, they may well mean the difference between victory and defeat in the struggle to save the franc. Last month M. Laval admitted frankly that economies, deflationary measures, and government by decree had been carried to the limit and that for further recovery France must rely upon currency stabilisation and a revival of trade. The use of sanctions has made the prospects of a stabilisation agreement seem indefinitely remote, since any agreement reached while Italy is under economic pressure is liable to be upset by a drastic devaluation of the lira. Moreover, Italy is—or was—one of France's best customers and it is generally understood that the Bank of France has heavy commitments in Italy. Another factor contributing to political instability is the ominous increase during the last year or so of the strength of the extreme right and the extreme left. The amalgamation of the Socialist and Communist parties to form the "Popular "Front" has been accompanied by a corresponding consolidation on the right, with the result that the bourgeois parties of the centre, M. Laval's most steadfast supporters, have been seriously weakened.