FRANCE’S BIG DEFICIT

Greymouth Evening Star, 12 August 1936, Page 14

FRANCE’S BIG DEFICIT

NEW MINISTER’S PROPOSALS

PARIS, June 23

M. Vincent-Auriol, the Finance Minister, this afternoon explained his finance policy to the Chamber of Deputies. He opened his speech with the affirmation that the Blum Cabinet “had revolted against the gloomy dictatorship of lies, and was determined to tell the country the truth about its financial position.” , This truth was that there was a deficit of from £120,000,000 to £135,000,000 on the Budget of 1935, and that there would be a deficit of between £85,000,000 and £95,000.000 on the Budget for the current year. To this must be added the £40,000,000 due for repayment to the English hankers, the cost of the measures just adopted by Parliament, possible obligations from changes in the floating debt, and the help that the Treasury might be compelled to give to the big railway lines.

On June 15 the bonds issued by the Treasury totalled £280,000,000, of which £187,000,000 had already been discounted at the Bank of France. “The era of such proceedings has been closed to-day,” said the Finance Minister. “Henceforward our method of payment must be honest. Trickerj sows mistrust and precipitates ruin. But how was the Treasury to find the £130.000,000 to £195,000,000 which it would need before the end of the year?

The partisans of deflation no longer pressed their views. Even if he had shared the sincere and disinterested conviction of the first advocates of devaluation he would have refused to perform an operation profitable to the speculators, whose actions “made him sick.”

Unilateral devaluation would be a snare. Alignment with other currencies w’ould be difficult in. the present monetary uncertainty. One devaluation might cause others and aggravate the monetary confusion in Europe.

Was alignment possible without international agreement? There was, in fact, only one possible policy. It was to appeal to the nation to save, itself, to vanquish egoism and fear and to provoke an economic revival. The gold and notes hoarded by Frenchmen amounted to about £550,000,000. If the fugitive French capital abroad was added to this there resulted an aggregate of £900,000,000 which had been withdrawn from the economic activity of the country.

The certainty that there would be no manipulation of the currency and the rise in prices should bring this capital back. The fate of the franc depended on the will of the French people. The Government could not fulfil its mission unless the will of the nation helped.

A strict and public control over the national accounts would be developed from month to month. A .severe lesson would be given to certain speculators. On foreign markets the Bank of France would use the means necessary to defend the franc. Measures were already being taken against those who by transferring abroad funds which they had not declared, were double traitors to the country. To-morrow he would begin discussions with neighbouring countries on this subject. He would soon have ready a first fist of those who had deserted their fiscal duty. He was about to table a bill on the declaration of property abroad, which would prescribe against fraud penalties, including confiscation. He would also submit a bill for the repression

of false news Injurious to the national credit.

A NEW LOAN. To relieve the Treasury and “liberate the State,” a liquidation and consolidation loan would be necessary. In a few days’ time he would appeal to savers with an issue of short-term bonds in small denominations.

Meanwhile, to meet the Treasury deficit ho would appeal to the Bank of France. Revived trade would bring sound finance. What had been tried in America, was possible in France, thanks to her hoarded capital. For the organisation of credit, the Government was submitting a bill modifying the statutes of the Bank of France in such a way as to make that institution ‘'co-operate more effectively in the general activity of the country."

The Minister declared that he had no intention of nationalising the private banks, but that “the necessary controls" would be established over them and over commercial companies. Taxation would be simplified by the abolition of all but a few imposts solidly based and rigorously collected.

The revenue from stopping evasion would counterbalance the loss on the taxes abolished. Taxes on consumption and the circulation of wealth would be reduced, and there would be just progressive duties on revenue, distinguishing between earned and unearned income. In a few weeks’ time the necessary bills would be submitted.

In conclusion, M. Vincent-Auriol called upon the country to "pull itself together.” No one in his position, he said, could do anything without the support of the entire nation. All he could do was to “illuminate the road to guide the country.”