The Evening Star MONDAY, JANUARY 29, 1934, AFFAIRS IN FRANCE.

Evening Star, Issue 21631, 29 January 1934, Page 8

The Evening Star MONDAY, JANUARY 29, 1934, AFFAIRS IN FRANCE.

It has often been said that a country gets the Government it deserves. France is apparently not satisfied that politically she does get her deserts, for she is' perpetually changing her Cabinets. The average standard of French politics is not high. It used to be said that in point of honesty French politicians were an unfair reflection of French commercial honesty. The long war period seemed to effect some purge, but recent news from Franco indicates that there has again been a lapse', and the Parisian crowds have taken to demonstrating against the Chamber Deputies. Meanwhile there is difficulty in securing a Government, to carry on the business of the country. The main reason is fairly obvious. By devaluation of the -'franc some difficulties were overcome, but others were created, and at the present moment France is hard put to it to avoid inflation of some kind. The 1934 French Budget has to face an initial deficit of 6,000 million francs. Moreover, during this year repayment is due of the ten-year bonds issued in 1924. Altogether payments falling due amount to 17,000 million francs, and there are certain symptoms that public confidence not only needs stimulating, but maintaining. It is believed that a great deal of hoarding of money is being practised in France to a degree far in excess of the traditional penchant of the people for this form of provision for the future. Withdrawals from the savings banks are in excess of the deposits, the adverse trade balance is increasing, and it seems to be agreed that a prompt and complete balancing of the Budget is more than merely highly desirable. To achieve this heavy taxation seems the only method; but the French people are notoriously already overtaxed, according to their ideas of taxation, and they appear also to bo adepts in the matter of tax evasion. Altogether the French economic situation is said by outside experts to be showing distinct evidence of weakness. And unquestionably France is watching America’s currency measures with no little concern, particularly her gold purchases. Up to the present the French losses of gold have been insignificant. The ratio of the Bank of France’s reserve to its sight liabilities is well over double the legal minimum of 35 per cent. The bank is thus technically in a strong position to defend the currency, and the chief source of weakness is the political situation and the alarmingly unbalanced Budget. A great deal of foreign capital has taken temporary refuge in France, and if the uncertain outlook began any big scale withdrawal of this it might start internal nervousness and a flight from the franc. It is not inconceivable that a French Government might abandon the fight for the franc. Franco is a’ more self-sup-porting country than any that could be named off-hand, except the United States; but a large proportion of her exports come under the heading of luxuries, and this trade has been hard hit by the world lack of purchasing power. Even in the best of times her exports rarely showed a largo balance over her imports, and the balance of trade was made up by invisible exports, of which the tourist traffic was the lending item. But world depression has greatly diminished the number of oversea visitors, and with most of the

rest of the world going off gold the former advantage of a low cost of living due to a favourable exchange, ceased to exist as an attraction to outsiders. Then, again, Germany’s default in reparation payments increases the French deficit, for France’s consequent default to Britain and America does not make up the loss of income by a very ponderable amount, lu the endeavour to become self-supporting Franco has adopted the policy of limiting imports by imposing quotas and surtaxes. One notable instance was quoted here by Mr Forbes last week—wheat being about 9s Cd per bushel in France. Agriculture has always been highly protected there, but in the summer of 1930 the duty on imported wheat was raised to 80 francs a quintal. This stimulated heavy sowings, and the last two harvests have been very abundant. Franco has now on hand big surplus stocks of wheat, and it was thought Advisable last summer to fix its price at 115 francs a quintal. This has hardly produced the intended effect. Wheat has been hard to sell at the legal price, and growers have been accepting down to 90 francs, and as the price of bread remains high on the nominal basis of wheat at 115 francs the middlemen have been having an exceptional innings. To diminish surplus stocks it is proposed to feed wheat to cattle and to export some, necessarily at a loss, some of which the Government will shoulder. The same thing happened in New Zealand last year. Protection to the wheat grower and a favourable season left a surplus, and New Zealand became an exporter at a loss which had to bo borne by tho community as a whole. In Franco there is severe criticism over State intervention in fixing the price of wheat, as it encourages over-production when export is very difficult, and for the time the French Ministry of Agriculture has held up export licenses. , The difficulties of any French Government are considerable. Despite demonitisation, the war burden represents a third of all public expenditures, and the one million French Civil servants are electorally strong enough to prevent tho Government from retrenchment in that form. There is general opposition to taxation increase, which is not surprising if the estimate be true that one-half of the French private incomes have suffered a decline of 35 per ceift. in the last three years. Unemployment, though relatively small, is' growing, and the peasants and the middle classes are showing plain signs of discontent, partly due to desire to possess the showy products of the machine age—which one may term Americanisation —and partly to the anti-patriotic propaganda being disseminated by the public school teachers, who as a body hold radical views and appear to work overtime in spreading disruptive social and economic theories.