French Finances

Press, Volume LXXXI, Issue 24536, 9 April 1945, Page 4

French Finances

iWU tdUIC incooagva *»**'“*** few days have referred to the problems of the French economy. One reported M. Pleven’s mission to London. An agreement was signed settling between Britain and France “ all questions outstanding “.since the war began ’■ and—considerably more important—establishing currency and exchange relations which will “enable France and “Britain to continue to purchase “ goods from each other ”. It is not the continuation of import and export trade that France requires, of course, but a swift and great resumption. and in the first instance a swift and great flow of imports into a country desperately short of consumer goods, raw materials, and many classes of capital goods, notably for building and transport. The questions of export credits and stable exchanges being interlocked, it may be surmised that M. Pleven’s agreement guarantees exchange stability and secures the application of British export credits to French purchases. Second, in a brief message on the Budget, which M. Pleven introduce I immediately after his visit to London, the new taxes were said to be “ the Heaviest ever “ imposed in France Unfortunately. the examples given included only some heavy luxury taxes. Australian messages, however, show that M. Pleven, in a speech expounding an anti-inflationary policy based on increased production, higher revenues, and vigorous saving, announced the strong measure of a capital levy, calculated on a sliding scale. The total aimed at t> spread over four years, is 150,000 million francs. Since the proposal to take a census of wealth had not been adopted as late as the end of January, it seems probable that M. Pleven announced a decision to take the census this year, collection being spread from 1946 to 1949. If so, the impact of the lsvy may be fairly Ik

[well .judged by comparison with j total expected revenue for this year, ! also about 150,000 million francs; but if plans to increase production and revenues generally are effective, the proportion of the levy to total revenue, or, more relevantly, to national income, should be tolerably adjustable. That is the more likely if, as may be supposed, the sliding scale works two ways; i.e., from lower estates to higher, and from the less favourable income years to the more. On whatever basis the levy is adjusted and operated, however, it is impossible to regard it as a risk-free experiment in France. The most recent authorities on the subject (Hicks, Hicks, and Rostas, in “The Taxation of War Wealth”) regard the general levy as, all things considered, a practicable device, but only when a war emergency is “ fully passed ” and when monetary conditions have been securely stabilised. Neither of these requirements is satisfied, or nearly satisfied, in France, where, moreover, the theory of the general levy runs full tilt against the resistance of the most possessive people in Europe. The matter is worth' this degree of emphasis because it seems that M. .Pleven’s announcement signifies the victory of the new Ministry of National Economy and' of its somewhat ruthless, innovating philosophy over the more pragmatically cautious Ministry of Finance. Since the end of last year the Minister of National Economy has enjoyed the virtual supremacy of a super-Minister acting as the effective head of a committee of Ministers concerned in economic affairs, whose decrees and regulations must hat his approval. His authority cannof wax unless that of other Ministers, including the Minister of Finance, wanes; and it was evident, early this year, that relations between the two economic chiefs were strained. Among differences over policy, there was reason to believe, was that over the proposals for a census of wealth and a capital levy. If so, it is the superMinister who has won, although M. Pleven has had his more conventional way with popular loans and savings and stiff taxes. The question is, however, whether a Budget that uses both scoop and shears will prove to be one that the uneasy Provisional Assembly and the uneasier people will accept. A still more searching question is whether the politicians may not beat the air in an unprofitable battle over financial devices, when, the fundamental problem is one of men, machines, labour, and production.