DAY BY DAY.

Waikato Times, Volume 108, Issue 18164, 31 October 1930, Page 6

DAY BY DAY.

Holders of french Government 5 per cent. Rentes are

French Loans and British Investors.

faced with the probability of a £24,000,000 loss

in January next (writes “Trustee” in the Daily Herald). At the end of 1915 the-Bank of England, with the consent and approval of his Majesty’s Government, was authorised by the French' Government to receive applications towards a London issue of 5 per cent. French National Defence Loan. When British investors came forward with their monetary aid to the French Republic and subscribed to this loan, it took about 27 & French francs to purchase £l. On this basis, and at a price of 88 per cent., the loan was floated. All went well until the French franc began to deteriorate in terms of British pounds. Then the'value of this franc loan began to move with the exchange. This movement culminated in October, 1928, \Vhen the ‘ French franc was officially revalued at 124.21 to the £l. This meant a definite and permanent loss of 75 per cent, of the original subscribers’ capital and income. France is now one of the most prosperous nations. Many people think that if the loan is repaid, as it may be on January 1 next, British holders should receive back what they lent, and not 25 per cent, of it. This is a reasonable view. Quite conceivably, should the French Government pay back the loan in the deflated currency, it might later decide to bring back the franc to its old level in relation to the £, especially bearing in mind that rate of 124.21 is fixed “until further notice.” Statements have been circulated recently that the French Governmen does intend to pay off this loan at face value, and also a similar one issued in 1916, at the earliest date. This would mean a loss of £24,000,000 to British investors, without taking into account the loss already incurred through interest which has been paid since the value of the franc deteriorated. Negotiations are now proceeding between the British and French Governments. Professor Henry Clay, Economic Adviser to the Bank

Taxation and Unemployment.

of England, delivered an address at the Bristol Rotary fllnh nn “Tflva-

luud on Taxation and Unemployment,” reports the Bristol Times and Mirror. Professor Clay said: "There are two elements in. the problem of unemployment represented by the 2,000,000 recorded unemployed. There is the unemployment caused by the world depression of trade which set in about a year ago, and has roughly increased the number of unemployed by two-thirds; and there is the unemployment from which we were suffering before this world depression, the 7 or 8 per cent of unemployment in excess of the average unemployment of pre-war years that has been with us continuously through world booms and world depressions since 1921. This persistant mass of unemployment represents the effect of the war, and measures the extent of our failure to adjust our industry’to the changed conditions of the post-w'ar world. To-day the fertilising flow of new capital to the points at which it will promote industrial expansion most is tapped at the source by Income and Surtax, and depleted 'by Estate Duties. Where before the war-only Is 2d.} or at the most Is Sd, in the £l, was diverted to the Exchequer, to-day 5s Gd, Bs, or elm 9s in the £1 is so diverted. The situation with which the country is faced is this. Some of the greater older industries will never employ again anything like the numbers they used to employ. They are still contracting, and even so are making great losses. By rationalisation or other economies it may ibe possible to slop the loss and prevent a further con--traction, even . to permit a fresh growth. But in the most favourable circumstances the country will have to find other openings of employment for 100,000 workers whom cotton would have taken before the war, twice that number whom coal would have maintained, and so on. There never was such an urgent need for encouraging : the development and ex-, pansion of such industries, or sections of industries, as are still profitable, and have the possibilities of ex-

pansion before them. Yet we continue to divert to public and social services, all maintained at a level more appropriate to the price levels of 1924, or even 1920, than of 1930, the funds that are needed to finance this expansion.”