NATIONAL FINANCES

Manawatu Standard, Volume LVI, Issue 174, 24 June 1936, Page 8

NATIONAL FINANCES

Fuencic finance and the French franc , have been disturbing factors in world finance, because successive French Ministers of Finance have not hitherto had the courage to face the facts. Now, however, it would appear that the Minister of Finance in the new Socialistic Government, M. Auriol, has with commendable frankness told the nation the full facts. Owing to the uncertainty of the French monetary position there has been a flight from the franc, and during the past eighteen months £338,000,000 of French capital has left the country; and in addition £78,000,000 in gold and £390,000,000 in notes—which are equivalent to gold since they can be exchanged for the metal on demand, France being on the gold standard—have gone into se'cret hoards and are thus sterilised and valueless to the nation. But the most alarming feature is that a revaluation of the gold stocks of the Bank of France would yield only £212,000,000, or less than a million more than the stock held by the Bank of England, and of this amount £186,000,000 had already been bespoken. The Budget deficit is expected to amount to £91,000,000.

The gold holding of the Bank of France must be considerably more than £212,000,000, and probably what is meant is that this amount is under the control of the Government. France is faced with many difliculties, but desperate diseases can be removed only by desperate remedies, and the remedies proposed by the Minister of Ffinance, while admittedly dangerous, nevertheless are calculated to benefit France in the long run. After all it is not lack of money, but the lack of confidence, that is the root cause of the troubles of France. At the same time it will be of considerable interest to note the reactions of the French people to the new proposals. The Budget must be balanced as a preliminary and that can be done. A much more dangerous position exists in respect of the dollar. In the United States also there is no dearth of funds, nevertheless currency inflation cannot be ruled out. Congress has voted billions of dollars in the face of an unbalanced Budget, and the Administration is committed to huge expenditure. The Public Debt of the United States nowamounts to 34,331,600,60(1 dollars (£6,866,000,000) wdiich is not formidable when spread over a population of abou't 127,000,000. The country is just now seething w-ith political excitement, and until the numbers go up, and the new President‘and Congress are elected, it would scarcely be fair to judge that nation’s position until more settled conditions prevail.