.FINANCE--PUBLIC & PRIVATE:
[By OUR CITY EDITOR.]
IDEALISM AND REALITIES.
[To the Editor of the SPECTATOR.] STR,—A fortnight ago, when referring to the fall which had already taken place in the franc, I expressed the view that a still further decline was only too probable. During the past week the outstanding feature has been a further fall in French currency, and the franc has dragged with it some other foreign currencies, notably Belgian and Italian, while even the British pound has also suffered. To th 'uninitiated it may, perhaps, appear strange that sterling should have sympathized with the depreciation in French currency, but the main explanation of the phenomenon is to be found in the fact that much of the selling of French currency has been on foreign—especially American—account through London, while the evidence of economic chaos in Europe afforded by the slump in the franc has probably, stimulated American selling of European currencies generally. When expressing the view a fortnight ago that a further fall in the franc was probable, I was certainly inspired by no kind of information as to what tactics might or might not be pursued by the French authorities, but simply by a recognition of the fact that whatever remedial measures might be applied, time would be required for their effect to be felt, just as in the beginnings of inflation the effect is sometimes not seen upon the exchange of a country for a considerable period. If the French Government, aided by the Bank of France, is able to stop all further inflation and to secure at a compara- tively early date a Budget equilibrium based on ordinary revenue and taxation rather than on fresh borrowing, the effect will unquestionably be felt ere long upon the exchange, but time will be required to restore confidence shaken by the inflation period. For the fall which has already occurred a number of reasons might be given, and I am not disposed entirely to pooh-pooh the French rumours to the effect that the fall during these critical weeks of the reparation crisis has been accentuated by sales on German account. On the contrary, I believe that the reports are correct, for confirmation of them is forthcoming from many impartial and disinterested quarters. Nevertheless, I am sure that the impartial French banker and economist will be the first to recognize that the main cause of the slump in the franc is to be found in the reluctance of French Governments since the Armistice period to look. facts frankly in the face. " Idealism " in this particular case has meant that the French have revelled in the ideal of devastated areas being restored, and of Budget equilibriums being reached out of speedy large repara- tion payments. Facing the facts would have meant that while pressing certain claims upon Germany, the French Budget makers would have refused to rely upon those expectations, and would have financed the restoration of the devastated areas with the minimum amount of inflation and would have taxed more severely.
Instead, 'however, French politicians and statesmen— and 'they have certainly not been alone in that respect —elected to follow the line of least resistance, with the rcsult that curreney and economic laws, which cannot be defied with impunity, have asserted their power in the present unparalleled fall in the franc. Just, how- ever, as I have not hesitated to express the view that a further fall was probable, so I should like to register an c)4PressiOn of confidence in French ability, French thrift, mid French courage as calculated ultimately to overcome these difficultieswhen once the facts are fairly faced.
It is not in France alone, however, that there is reluctance to " face facts " and to prefer Idealism to Realities. Crippled as may be the powers of the present Socialist Government in the direction of big legislation, its aims in everything pertaining to the industrial life of the community are only too clearly revealed, and in. the view of the City at all eYent.s..those aims are not only unsound but are demoralizing. The proposed extension of the system of doles is not only the sheerest folly, but just as the system so far pursued has been a direct incentive to idleness, 'so,' if it is extended, its harmful effects will be still more far-reaching. At the risk of being misunderstood and considered unfeeling, I would like to say outright that the system of lavish doles, and even of insurance grants where the employer is called upon to bear a large share of the burden, seerns to be based upon an idyllic but incorrect view of the mass of the wage-earners of the country. It presumes that men and women are eager not merely for remunera- tion, but for actual work, and- that within the allotted hours of labour there will be eagerness to render value to the employer. • That such wage-earners exist in every department of work can readily be conceived, but their numbers are diminishing daily, becaUse the orders nf the day are given now, not by this section but for the most part by the idle and unfit, who, thoroughly lazy themselves, desire to impede the progress of those who are efficient and conscientious in the discharge of their duties. It is a process which has been undermining our industrial position for years past, and is imperilling our economic solvency. Possibly the solution of our _industrial depression and acute foreign competition lies along the lines of greater mass production with larger output, smaller profits, quicker returns, and, incidentally, more employment. This, however, as I recently pointed out in these column's, is quite impossible under the present tyranny of Trade Union restrictions. Until we face the one cardinal fact of the present situation, namely, that there can be no raising of the general standard of living for the masses of the community until something is done to add to the country's power to produce new wealth, there cannot possibly be any return of real national prosperity. On the contrary, the danger is that we shall drift towards both economic and social anarchy.—I am, Sir, yours
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