FRENCH FINANCE
The Financial Crisis of France. By the lion. G. Peel. (Macmillan and Co. 10s. 6d. net.) The French Debt Problem. By H. G. Moulton and C. Lewis. (G. Allen and Unwin. 8s. 6d. net. New York : The Macmillan Co.)
WHEN a proud nation is conscious of trouble, it is a delicate matter for foreigners to draw attention to the ills, to discover them to outsiders and in tracing the causes necessarily to point out faults in the past at least. Yet Mr. Peel has written with such friendly tact and encouraging sympathy that he can hardly give offence to any Frenchman. It may well surprise him to find that an Englishman has studied the matter so carefully. British readers should certainly he glad to avail themselves of the information given here, which not only arouses interest in the affairs of a friend, and ally, but in these days of inter-
national finance and inter-allied debts must concern them directly.
Mr. Peel begins by tracing the confusion inherited from the ancien regime, and even from Roman government in Gaul. In spite of the great work of Sully, Colbert and others, Necker took over a crushing burden and Napoleon stepped in by founding in 1800 the Banque de France, one of the stable institutions that' still preserve his influence. Social problems made it natural that until the Revolution the land should be the source of taxation. It had been possible for Table and others to reckon that from sixty to eighty per cent. of the wretched peasants' income went in taxes, Seignioral dues and tithes. Now his oppressors were to pay, but the land would still be the source. The policy of Napoleon began to move steadily towards indirect taxation. Thus the habit began, or the inclination was met, which still prevails ; for the French- man's cheque to the collector or his hoarded cash is still-drawn froni him with more acute pain than a tooth. Indirect taxa- tion has another blessing in his eyes in that it does not entail a revelation of the jealously guarded secrets of the counting house or the family income. While this was the general tendency, certain vicious habits crept into France's financial methods. The system, for example, of the imp& de reparti- lion is too much like farming out the taxes to the local authori- ties. The' Ministry of Finance-fell into evil habits of which it is not yet cured ; underestimating the cost of Colonial expansion, of small wars and armaments, of political schemes to which the Government was committing the country with- out due warning of the price to be paid ; supplementary estimates of enormous size ; budget after budget which did not balance even if it could be made to appear to do so on paper.
Through the nineteenth century France, like other nations, steadily increased her Government expenditure as &dime grew, but even that strongly individualistic liberal and great economist, M. Leroy Beaulieu, admitted that taxation had not outrun _the growth of national wealth. The Franco-
Prussian War would have been accepted. by everyone as an excuse for financial difficulties. In fact, however, it probably did more good than harm in that sphere by inducing a grimly determined spirit in the nation .;. .hy 1883 conditions were as bad as ever. Then the " armed, peace " began to cast its shadow under which expenditure -grew steadily. In 1913;
according to Mr. Peel's method of reckoning, only nineteen per cent. of the revenue was really found by direct taxation. France entered the Great War without any chance of expanding any system by which wealth would bear its burden as according to modern ideas it shbuld. • The War was a plausible enough excuse for financial chaos in any country, and, though we may regret it now, it is of no
use to blame the French GovernMent for fighting on. borrowed money. Mr. Peel reckons that roughly the War was 'financed in France by borrowing as to- eighty per cent. from- within France and as totwentY per cent. from outside." , It is after the War that her policy becomes so difficult to defend. Her rulers may plead that outsiders cannot understand their difficultieS and that the blame lies with the nation as.' a whale, to whom victory has not brought that grim determina- tion that was found in 1871. Certainly, while Mi. • Lloyd George's election talk about squeezing the German orange and searching German pockets was not taken much more seriously here than his platform pledge to hang the Kaiser, in France M. Poincare steadily rubbed in the notion that an exhausted and impoverished Germany could produce enough bullion or some- thing to repay France for all her war expenditure and to repair her regions devastees. One good mark 'should be given to the Ministry of Finance which produced in 1024 the remarkable State-paper,-the Inyentaire de la Situation Financiere de hi France. Mr. Peel takes us through this recent history -down to the last resignation of M. Caillaux, a figure whose whole career evidently fascinates him. We need not summarize the clear account of the efforts to raise loans or pay them off„ nor the political valse de porlefeuilles, especially as so much has happened since M. Caillaux's last efforts.
It is encouraging to -find how -hopefully this -student of French finance looks forward to the future. Everyone who has been much in France lately has been struck with the appearance of internal prosperity ; money circulateti freely so far from her workers being unemployed she. calls in Italians, Poles and Africans to increase her production. Mr. Peel goes further. He believes that she is."'alreadY 'engaged in slowly reconstituting her external investments," and that it is not only the exchange that enables her to show a favourable trade balance. She may have some distilipointritentit over he Dawes Scheme, and, worse than that, her expenditure in Morocco and Syria may be serious checks, and yet with time and courage all her difficulties should be overcome. We earnestly trust that he will soon be proved right.
With Mr. Peers book we must mention The French i);,b1 Problem, published for the Institute of Economics, established by the Carnegie Corporation. It is a very thorough examination of its subject, but far less attractive than Mr. Peel's. As a review of the whole subject it should be most useful, like a blue book, for reference. It may be dile to its statistical rather than human spirit that it rates French taxation as very high, and asserts that Frenchmen do pay their taxes in full. The assessments and payments, however, both show that the regent du five is regarded as " fair game." It is of interest to find that the authors believe that the franc could and should be stabilized at about 75.
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