The Wanganui Chronicle. WEDNESDAY, JANUARY 28, 1947. THE DEVALUATION OF THE FRANC

Wanganui Chronicle, 28 January 1948, Page 4

The Wanganui Chronicle. WEDNESDAY, JANUARY 28, 1947. THE DEVALUATION OF THE FRANC

yHE devaluation of the franc proceeds from an unstable political situation superimposed upon an unsatisfactory economic condition. French political life remains unsatisfactory, partly because of inherent defects in the French character, partly because of the unwillingness of the country to live within its means. This does not mean that France is to be condemned out-of-hand for its latest action regarding the currency, for it must be remembered that there are not a few countries that are spending more than they are earning today. Too many individuals have too little faith in the community to secure for them a fair deal, consequently they take the steps that are open to them to secure what they deem to be their rightful reward, notwithstanding it being demonstrable that such a step will bring no permanent gain. On October 8 M. Alphand, Director of Economic Affairs in the French Cabinet, told the press that France would exhaust all her dollar resources within about one week un'ess additional outside help were provided. In a broadcast speech on the same day the Prime Minister of France made it clear to the nation that the country was living beyond her means and that the root of the present French crisis lay in the disparity between national needs and national resources He said that financial and economic stability could only be achieved by a prompt and effective restoration of a balanced budget, and announced cuts in State expenditure totalling 23 per cent. To end inflation and to restore fianeial equilibrium he proposed the following measures: (Ij The distinction between ordinary and extraordinary budget would be eliminated in 1948. Formerly, some 260 out of 900 milliards of francs came under the headings of reconstruction and investment, and were financed by borrowing. Now the whole budget would be financed exclusively by taxation without recourse to banks or loafhs. Only State payments of war damage indemnities would be from loans as the money became available to the State. (2) Expenditure would be planned in terms of revenue. This decision would impel cuts in civil and military ex penditure, delays in reconstruction work and reduction administrative costs. (3) Emergency cuts, including (a) public works, and expenditure by local bodies (b) only half the usual contingent of Army recruits would be mobilised in November, the rest to be called up after the reform of the Army had been completed, (o') Development on national railways and electricity supply would be cut. (d) Existing legislation imposing building licenses would be made effective. (4) Fiscal reforms would be introduced to raise receipts by imposing more effective taxes on the professionals, agriculture and commerce. He estimated that such reforms could raise receipts in 1948 from the anticipated G4O milliard to 690 milliard.

M. Ramadier seized the occasion to repudiate allegations which he said were made in France and abroad that the French are making an insufficient-effort. The average working week had risen since 1938 from 39 to 45 hours and he declared: “It is a categorical imperative of our economy that we can only stabilise the situation by stiffening of our own endeavours.” He said that Autarchy would according to experts’ estimates mean the reduction of the present standard of living by half. France, he said, must seek collaboration with all countries “from Russia to Argentine” and notably with the’U.S.A. The difficulties in the way of implementing such a programme have been aggravated by the conduct of the Communists. When in the cabinet the Communist Ministers sought to gain kudos both going and coming. They condemned measures that were unpopular, and when they did not do so their following did for them, and took full credit for the popular measures. When his Communist colleagues in the Cabinet voted against the economy measures, when they came before the Assembly in May, M. Ramadier dismissed them from the Cabinet and filled their places with others from the remaining supporters of the Coalition. On 1 other side of the political stage is the new movement launched General de Gaulle. The French Peoples Ra”y, the R.F.P. for short, claims to be above politics and uartieularly above party polities. His movement provides a rallying point for nonCommunists, but it is also an additional and ihle factor in the political scene. Were the Communists to seize power by force De Gaulle would no doubt provide the counterpoise in action American aid defeated the. Communists in France, but the continuance of strikes and the demands for higher and still higher wages have gone on reducing the effectiveness of the measures designed to bring about economic equilibrium. Hence the demolition of the franc.