The Franc in the Balance The French Budget season, and
with it the open season for recurring scares and crises, is with us again. 31-; Laval and his Finance Minister appeared before the Finance Committee of the Chamber on Tuesday to defend the economy decrees that have been issued during the recess. Economy is never popular, and. the Com- mittee has been trying to modify the decrees in several particulars. But M. Laval was on firm ground when he pointed out that he had been given a mandate to defend the franc, that a balanced Budget was essential for that purpose, and that any relaxation of the drastic deflation imposed by the decrees would unbalance the Budget. " Balance " when used with reference to a French Budget is a purely relative term, and the Treasury will in any case be borrowing something like 12,000,000,000 francs (f96,000,000 at par) this year. But it is undoubtedly true that so long as the franc clings to gold, one bout after another of deflation will be necessary. Where A Laval showed less sense of reality was in arguing that the alternative to clinging to gold was devaluation which would " unleash the forces of inflation." One might enquire where are the forces of inflation which have been unleashed by devaluation in Great Britain, Belgium Scandinavia or, indeed, anywhere in the world, or in what way the British or Belgian rentier has been hurt by devaluation.
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