THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, OCTOBER 26, 1925. CRISIS IN FRANCE.

New Zealand Herald, Volume LXII, Issue 19158, 26 October 1925, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, OCTOBER 26, 1925. CRISIS IN FRANCE.

The falling franc has dragged down more than one French statesman. M. Caillaux is likely to be the next. When he was called to office in the Painleve Ministry, after M. Herriot's loss of the Premiership, his summoning created a sensation. During the war his pro-German sympathies were expressed with ail abandon that challenged prosecution. He was officially indicted and condemned. France provided the unusual spectacle of a former Prime Minister, possessed of remarkable ability and influence, being publicly degraded. An amnesty saved him from the extreme effects of his sentence, but it seemed certain that he had been banished for ever from public life. He still had admirers, however, even in high places in his own country. Anatole France, the great author, wrote to him, in a letter meant to bring consolation in his eclipse—"A party which was unable to prevent the war, and to terminate it before the ruin of the country, sought to remove from power, by a most iniquitous verdict, a great citizen." Against the indignation of millions was urged the belief of many that he was another Dreyfus, condemned out of hand but sure to have exoneration when the storm that overthrew him should be forgotten. The hope of his return to political leadership was prophetic. M. Painleve, stepping down from the comfort of the Presidency to the turbulent arena of party warfare, met a double necessity for strong coadjutors and the placation of opponents. He made a clean sweep of M. Herriot's Cabinet and called to his aid M. Briand as Foreign Minister and M. Caillaux as Minister for Finance. Both of them had marked leanings to the Left. The latter's elevation evoked particularly bitter criticism. ''Better financial bankruptcy than the moral bankruptcy implied in M. Caillaux's return," the Nationalists protested. An adjournment postponed the menace to the Government. M. Caillaux tactfully refrained from political provocation and devoted himself to the task of his technical role. The storm died down ; but in its re-arising murmurs to-day the tones of the old hatred lend its menace a grim intensity.

France sorely needed, when the Herriot Government was so drastically reconstructed under M. Painleve, capable direction in finance. Although foreign policy had played the major part in earlier political crises, M. Herriot's fall was not occasioned by dissatisfaction of leadership in it. The country's internal affairs created deep anxiety. Thcv were in a state of muddle. The evils of inflation were serious. The falling franc had damaged commerce, reduced national finance to chaos,, and shaken foreign credit. Whatever the specific means to be adopted, it was realised more or less clearly that the nation must submit to greater sacrifices in the interests of financial stability. The remedy of the Socialists and the Radicals was a capital levy, but the new Minister lost no time in openly rejecting their proposal. He derided it as visionary and ignorant. Instead, he propounded a plan for raising three milliards of additional taxation needed to balance the Budget. There was an immediate restoration of confidence, at home and abroad. There never had been any good reason for doubting the country's resources, and even the constitutional reluctance of the peasant population to pay taxes was impotent to check a resurgence of buoyancy. But the situation was not materially improved. A shortage of currency persisted. There was still to bo faced the necessity of finding means to pay the holders of some twentyfive milliards in bonds maturing in the. second half of this calendar year. Altogether, despite the reawakened optimism, the outlook was undeniably grave. A realisation of this has asserted itself, producing the present political crisis.

Beside the 10 per cent, capital levy advocated by the Socialist leader, M. Leon Blum, there has been advanced bv a Royalist economist a scheme to 6 sell certain national monopolies calculated to produce sufficient to meet immediate obligations. On the relief so gained, it has been urged, there would follow an appreciation of the franc and a readiness on the part of bondholders to defer the presentation of their claim for payment. But it is certain that the present Chamber, with its strong element favouring nationalisation, would not pass such a measure, however financially sound. Faced with these pressing fiscal and political difficulties, M. Caillaux has promulgated his plan. Its main features are (1) a transfer to the Minister of the powers now belonging to an authoritative as the Economies Commission; (2) an increase of note circulation from fortyfive to fifty-one milliards : and (3) an offer to bondholders of the privilege of subscribing to a loan at A per cent., this to be paid according to its gold value, that is, according to the value of the dollar on the day of issue. There is evident in this plan a definite further inflation, bound to have evil effects eventually. But that has not been the only ground of criticism. The promulgation of the loan has not met with the success anticipated. Further, the virtual assumption of a Ministerial dictatorship has aroused furious resentment. France does not welcome a financial Mussolini, whatever her need for a strong man at the Treasury. M. Caillaux's position is precarious indeed, and that of the Ministry, should he retain office, is not any more secure.