Manawatu Daily Times France’s Financial Crisis

Manawatu Times, Volume XLIX, Issue 3280, 25 February 1926, Page 8

Manawatu Daily Times France’s Financial Crisis

To follow closely political events in France during her present financial troubles is by no means an easy matter. France is certainly in a very precarious state, and there are many who can see more than a mere financial or political crisis in the near future. The value of the franc, which in pre-war times was 100 centimes in gold, has fallen to something like 18 centimes, and the urgent necessity of immediate measures to check its fall has repeatedly been stressed by several successive Finance Ministers, without being able to gain the support of the Senate and Chamber of Deputies. The people of France have lost confidence in their own currency and French investors are investing heavily in foreign securities, causing a regular exodus of capital abroad.

The reasons and causes of France’s present fiscal position and financial troubles are of long standing. They date back, in fact, to the commencement lof the great war. Carrying on a devastating war for four years entirely on borrowed money, the French nation was lulled into a false security by a fictitious prosperity. Even when the German indemnity failed to materialise—upon which great hopes were based—and the dangers of the situation became only too obvious, French politicians refused to face the responsibilities and preferred the issuing of milliards of paper money, to the less popular, but sounder proposition of finding capital by way of taxation. - This state of affairs has now existed for years, and Prime Ministers and Finance Ministers have come and gone without being able to command the confidence essential to sound and successful political leadership. Poincare, who in 1924 already foresaw the absolute necessity of heavier taxation, paid the penalty of his conviction by forfeiting the confidence of the Chamber and Senate. Herriot preferred to occupy himself with problems more congenial to the people of France, and left taxation severely alone. Caillaux, the wizard of finance, was temporarily restored from disgrace by Painleve, but owing to his personal unpopularity as much as to anything else, failed ,to find support for his scheme of a, sinking fund and a State Bank. Loueheur, Briandk first Finance Minister, fared no better and now, Doumer’s resignation is expected almost any time. So grave, in fact, is the position that certain French newspapers openly mention the possibility of a revolution. It must not be thought that the French people and politicians are not aware of the fact that salvation may only he found in increased taxation. The fight which is going on in the Chamber of Deputies and Senate is centred around the incidence rather than the principle of taxation, each party fighting for its own section. While the Socialists and Communists are advocating a capital levy, other factions are asking for an increased income tax; a tax on payments received in professions; taxes on all purchases and sales of securities on the Bourse, or indirect taxation such as increased custom duties on imports, as well as a tax on all exports. In the meantime, it is difficult to foretell how the situation may develop. The printing press is continuously working overtime and the franc is steadily falling. If Briand is forced to part with Doumer, or is Briand himself chooses to go, the position in France may become most grave. At the same time, according to latest cables, there appears to be some slight prospect of the present deadlock coming to an end. Better counsels seem to prevail with the finance committee as well as in the Chamber of Deputies and Senate, and it appears that the voting of 5.585 million francs, necessary to balance the 1926 budget, is more or less assured. . Although the sudden conversion of such a hostile majority would be regarded as most difficult—if not wholly impossible —in a British Parliament, it is yet most typical of French politics and politicians. M. Briand is expected to make the whole issue a question of confidence in the Government, and hopes, by a personal appeal, to obtain a majority, though a day or two ago, such an event must have appeared an impossible task It may be said that M. Briand is playing for larger stakes, in fact is staking his very political existence and French politics will form an interesting topic for the next tew days. ''