Financial Troubles In France

Southland Times, Issue 23228, 17 June 1937, Page 4

Financial Troubles In France

The latest financial crisis in France has a political background disturbed by the after-effects of the Clichy riots, the new demands of Labour, and the continued uncertainty of capital. Yesterday’s cable message reporting a rise in the French bank rate from 4 per cent, to 6 per cent, indicated that the stability which seemed to follow M. Blum’s financial measures of March 5 was more apparent than real. The defence loan, which had been arranged in terms obviously designed to tempt some of Europe’s floating capital to Paris, was subscribed in two days, and this in itself should have been enough to restore financial confidence. But the Popular Front Government has been badly treated by the workers who have received more benefits during its comparatively short term of office than at any other time since the war. The

Prime Minister’s plea for a “pause” in a series of social reforms in some ways more farreaching—considering the background—than those undertaken in New Zealand, has been ignored in a mood of political unrest. “Not for ten years had France been in a stronger position nor had the economic outlook been more promising than on the eve of Clichy,” said M. Blum with justifiable bitterness a few days after the riots. It was just this manifestation of a revolutionary temper which the Prime Minister had been anxious to avert. At a time when, there seemed every chance of coaxing badly-needed capital into • the country the workers of Paris gave unmistakable signs that they were not satisfied with shorter hours and higher wages. Two main factors in the situation can be described as a lack of authority in the Government and the rise in prices as a result of social laws. While the cost of living keeps pace with higher wage rates and the Popular Front Government depends on the support of the Communists it is going to be hard to preserve a political equilibrium. Nor must it be forgotten that the large middle classes which in the main have supported the Government are now growing restive. Many industries have showed signs of slowing down after the first revival in trade, and business men find themselves caught between the increased cost of raw materials and a decline in purchasing power which a bigger wage bill has only partially resisted. Furthermore, the middle classes have been irritated by. innovations —notably the application of the 40-hour week on the “five times eight basis” which means two closing days a week for shops and offices. These difficulties would seem less formidable if £hey were not accompanied by a recurring threat to the franc. “Every time that new financial difficulties occur,” wrote a Paris correspondent of The Economist last month, “public opinion considers the time ripe for a change in government, and the fear of riots reappears.” Hitherto the Government has been helped at critical times by happenings in the outside world. ‘ A rearmament loan in London, an outbreak of strikes in the United States or a sharp rise in costs abroad have an immediate response in the financial markets and bring support to the franc. At the present time the Paris exhibition may have a steadying effect, although the end of an elaborate building programme associated with it will also mean an inflow of unemployed workers to a labour market that is already sufficiently depressed. Few governments—especially in France —have existed so long in such a precarious condition. The strength of the Popular Front lies undoubtedly in the man who has led it so far through so many difficulties.