19 JUNE 1926, Page 32


The French nation is now learning by experienCe how inclined and slippery becomes the path of inflation the longer it is pursued. During recent weeks we have had further large expansions in the Note Circulation of the Bank of France and the Advances by that Institution to the State. The latter have certainly been connected to some extent with the repay- ment of Government short-term bonds, but, including the expansion in the Note Circulation, the net result has been further inflation, and it is not at all surprising to find that during the past week the franc has established a fresh low record at about 180 to the 2, while the weak tendency of the exchange is shown by the fact that for dealings three months ahead the quotation has been more hire 188 francs. During the last twelve-month in which the franc has been rushing downwards so many tentative schemes and proposals have been put forward by the French authorities that it is difficult now even to recall some of them. In all of them, however, there has seemed to the observer to be a complete inability to recognize the magnitude of the problem which has to be solved, and consequently the proposals—for most of them have been proposals rather than schemes carried into effect—have failed to inspire the confidence which was necessary to arrest the fall in French currency. Meanwhile, English investors in French Loans issued here during the War have suffered heavily through holding on to their coupons, believing that long ere this the French Government would have handled the currency crisis with courage and with skill. Once again the fall in the franc has involved a ministerial crisis, and it is useless to look for a settled Ministry until the Currency troubles have been effectively dealt with.

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