The Timaru Herald WEDNESDAY, DECEMBER 6, 1933. FRENCH BUDGET IMPASSE.

Timaru Herald, Volume CXXXVII, Issue 19665, 6 December 1933, Page 6

The Timaru Herald WEDNESDAY, DECEMBER 6, 1933. FRENCH BUDGET IMPASSE.

Two alternative methods of escaping from the French budget impasse are suggested by patriotic Frenchmen—a general election or a National Government of the British type. It is stated, with some measure of authority, that the chances of survival of a Cabinet headed by M. Chautemps are regarded as dim, but the electors are becoming impatient at the spectacle of successive governments being overthrown while the deficit mounts. Obviously the position of the political leaders of France is becoming increasingly difficult. Hence the growing anxiety of the French people. Besides having on his shoulders a difficult international situation, the French Prime Minister also has to deal with a budget crisis, which may yet hurl the nation into financial chaos. The French budget situation is such that if the negotiations for a substantial measure of disarmament fails, and France is compelled, as she certainly would be, to undertake heavy additional expenditure on armaments, the results on the national finances Would be disastrous. Then a balanced budget would be out of the question. It is doubtful if the real seriousness of the position is realised by the rank and file of the many political factions that make political stability, something of an impossibility. Nevertheless, the fact that the demand is being made for a National Government on the lines of the Admniistration that saved the credit of Britain, is the one encouraging sign which seems to suggest that the real position is being slowly realised by the people generally. The financial situation has apparently been easy.' The Bank of France has bulged with gold. The franc has been holding its own. Plenty of money has been forthcoming to subscribe the Treasury Bonds issued by the Government. Money from abroad has been flowing to France in a steady stream. It is only now being realised that the franc, as a well-known economist has put it, in fact only looks well because other currencies look so ill. The last Budget has never been balanced, and there still remains some £24,000,000 (at par) to be found to square it; and at the time the Budget was passed the Prime Minister only succeeded in calming the banking world, on which he is largely dependent for the wherewithal to carry on the country’s affairs, by the promise of the rapid production of a plan of financial redressment. On top of this deficit, it is estimated that the 1934 Budget will be some £64,000,000 on the wrong side. France has, iu fact, for some time past not been paying her way. In the last eighteen months successive Governments have borrowed no less than £256,000,000. That is £50,000,000 more than the debt repaid by the sinking fund since 1926. In other words, Franca has set her foot on the slope which formerly led to the collapse of the franc. Parliamentary paralysis has been the main cause of the failure of successive Governments to set the financial house in order. The Chamber is made up mainly of small groups, each fighting the other; and many bound by election pledges or otherwise to powerful vested interests. But now the situation lias become so acute that something must be done. Revenue is falling with declining trade, and high taxation, which has already reached the limit of productiveness, has, coupled with the fantastically high cost o. living, gone far towards crippling French foreign trade, already at a serious disadvantage through the depreciation of competitors’ currencies. Moreover, the French taxpayer positively refuses to pay more taxes. It is plain then that reduction of expenditure remains the only way out, aud here every political leader, regardless of party colour, encounters considerable difficulties, since the Socialists, upon whom every French Cabinet depends for its very existence, will not agree to reductions of pensions and cuts in the salaries of the civil service and Government departments generally. The alternative is heavier taxation or economy on armaments. Hence, at the moment, two issues are of the utmost importance for France; one is an international disarmament convention that will prevent a new race in armaments developing with disastrous results to all peoples; and the other, is the indispensable factor upon which economic stability can be built, and that is the balancing of the nation’s accounts.