The Sun.
London, England, 1865-06-06 00:00:00

rHE SUN, LONDON, TUESDAY EVENING, JUNE 6, 186,i..

French Finances,

The following is a full translation of M. Thiers's
speech on the above subject : ,

" Gentlemen,—When I last year had the honour of ad-
dressing you for the first time on the state of our finances,
I endeavoured to give a retrospective view of them for the
last 20 years, and to show from what causes our expendi-
ture had risen in the last few years from about 1,500 mil-
lions to nearly 2,300 millions. To me the causes are evident
enough ; and, had there been any doubt, the propositions
now made to us would suffice to remove it. Within the last
fortnight, 360 millions have been demanded for France in
general, and 250 for Paris; in all, 610 millions. It is said
that a law is now under consideration in the Council of
State demanding 100 or 200 millions more, making 700 or
800 millions in the space of a few weeks. I need not dwell
on the causes of the increase of our budgets ; I will only
make a concise statement concerning them. I will after-
wards show the financial situation which those causes
have produced ; in short, I will attempt to present a
balance-sheet of our finances. I believe you will agree
with me in thinking that the causes are these :—Since
our new institutions have diminished the share which
the nation took in managing its own affairs it was feared
that the activity of mind with which I am reproached
might be dangerous, unless means should be
found to occupy the attention of the country. These
means, sometimes dangerous, always odious, have been
wars abroad, and enormous expenditure and great specula-
tions at home. After great wars came small ones—small,
if we consider the number of men engaged, and large, if
we consider their distance and the serious complications
they may cause. The war in Mexico has already cost us
more than the Italian war, to say nothing of the compli-
cations it may entail. The war expenditure has of course
been met by loans, and the public debt has consequently
been considerably increased. Next come our great public
works, an excellent employment for the country's savings
in time of peace, as every sensible man will acknowledge ;
but we ought to proceed prudently. It is a mistake to sup-
pose, as some do, that there need be no limit to the appli-
cation of our savings to public works; agriculture and
manufactures ought to have their share, and if only a por-
tion should be employed by the State in improving roads,
canals, and other means of communication, still less should
be devoted to the mere embellishment of towns. It
is certainly necessary to widen the streets and improve the
salubrity of cities ; but there is no necessity for such vast
changes as have been operated in Paris, where, as I think,
all reasonable limits have been exceeded. The contagion
of example is to be feared. The proverb says that he who
commits one folly is wise. (Laughter.) If Paris only
were to be rebuilt I should not have much to say against
it, but you know that La Fontaine wittily says—

" Tout bourgeoise vent batir comm Oles grander
seigneurs,
Tout petit prince a des ambassadeurs,
Tout marquis vent avoir des pages.'
The glory of the prefect of the Seine has troubled the re-
pose of all the prefects. The prefect of the Seine has re-
built the_ Tuileries, and the prefect of the Bouches du
Rhone wants to have his Tuileries also. Last year the
Minister of State answered me that only a trifling expen-
diture was intended, not more than six millions ; but it
appears from the debates of the Council General that the
expenses will be 12 or 14 millions, and some persons say
as much as 20 millions. I know that the prefect of the
Benches du Rhone is a senator; but if it takes 12 millions
to build him a residence that is a large sum; all the other
prefects will be eager to follow his example, as the prefect
of Lisle has already. Tho sub-prefects also will want new
residences and new furniture. Where would all this lead to?
The Minister of Public Works, full of glory, must have more
consideration for the cares of the Minister of Finance. But
here we have a new Minister of Public Works, with a new
glory to make, and demands for millions multiply. The
Minister of Finance defends himself as best he can, but ap-
pears to be conquered ; he might resist by resigning cer-
tainly, but that is a means borrowed from past years (inter-
ruption). A compromise is at last effected. To spare the
Treasury 100 millions are to be obtained by selling part of
the state forests. For this, however, your consent is neces-
sary, but the matter is settled in principle, and the public
domain will supply the funds which the Treasury refuses.
By whom is this torrent of expenditure to be arrested ?
By yourselves, gentlemen ; your wisdom, patriotism, and
courage can alone achieve the task. Your responsibility is
great, especially in financial matters; in politics your powers
may be contested to a certain extent ; but in questions of
finance they were undisputed. In finances you therefore
are responsible for everything. It is time to halt in this
course of expenditure, and not to imitate those sinners who
are always talking of reforming and after all die in final
impenitence. We aro often told that financial science is
obscure, but the assertion is untrue. Sciences are never
obscure, except through the dulness of those who expound
them, or the charlatanism of those who assume a false air of
profundity. I will take my examples from private life. Lot
us suppose two fathers, one methodical, strict and somewhat
morose ; the other easy and good-natured. The former will
regulate his expenditure according to his income, and fixlimits
which he will not pass; during the year that may cause some
unpleasantness to himself and his family, but when settling
day comes he has neither anxiety nor embarrassment.
The latter takes no such precautions ; he passes quietly
through the year, restricting neither his own expenditure
nor that of his family ; but when he settles his accounts
he finds that he has exceeded his income and is obliged to
encroach on his capital to pay his debts ; and he goes on
from year to year with every increasing embarrassment till
ruin stares him in the face. The stern father meanwhile has
preserved or even increased his estate, and taught his chil-
dren a lesson which will be useful to them through life. ,As
in private life so it is in public affairs. Statesmen have the
same passions as other men, and it is only by resisting these
passions that they can save the State. I will now ap-
ply these reflections to our finances. What is the principle
which governs their administration ? You have five budgets
and I will show you the consequences of that multiplicity.
First, there is the ordinary one, which ranges from 1730 to
1780 millions; this year it is 1700 millions. Then there is
a special budget for the departments and communes, vary-
ing from 230 to 240 millions. Next comes the. extraordinary
budget, from 120 to 140 millions. But that is not all. As
the budget is voted ayearbeforehand, all expenses have not
been foreseen, and at the end of the year a rectificative
budget of 100 millions is required ; so that the total budget
exceeds 2200 millions. Then, when the final settlement
comes, it is found that certain expenses have exceeded the
credits voted, while other credits have not been employed ;
the latter are made set-offs against the former, but there is
always a balance required of from 20 to 80 millions, which
has to be voted by special laws. The budget is thus raised
to 2220 millions or more ; in 1863 it was 2292 millions. Such
is the figure we reach with our five budgets ; and then, like
the father abovementioned, we have to strike the final ba-
lance. This is done by the Court of Accounts, and, when
the result is submitted to the Chamber, if there be an ex-
cess of expenditure, the floating debt is increased by so
much. Last year you made a loan of 300 millions, and it
will be exhausted next year. This is how the budget has
risen to between 2,200 and 2,300 millions. Last year M. de
Vuitry, President of the Council of State, told me that it
would be a childish expedient to divide the budgets for
the purpose of deceiving the Chamber as to their total
amount, seeing that the general situation might be ascer-
tained by adding together a few figures. I replied that it
took me two months to make those additions, and, if I mis-
take not, the reporter has found three months to be neces-
sary this year. though he had numerous documents at his
disposal which Jima who are not members of the com-
mittee have never seen. Your reporter, indeed, has had
confidential communications from the Ministry of Finance
which inform him of things he cannot repeat to us. We

have not the information we ought to have, and yet the re-
porter required three months to work the little sum in
addition to which the President of the Council of State
alluded. It has been said, Calumniate, calumniate ; some
of your calumnies are sure to remain.' We may say,
' Dissimulate, dissimulate ; something is sure to re-
main.' (Murmurs.) We will now see whether the
plan of dividing the budget is not a moans of creating
illusions as to the true amount of the expenditure.
The Hon. M. Gouin yesterday said that the budget was
really 1,571 millions. When the law of accounts comes be-
fore us that budget will be 2,300 millions. Were there any
good reason for thus dividing the budget I would not object
to it. Why should there be one budget for the state and
another for the departments and communes, when all the
expenditure is paid from the same treasury and made under
the same responsibility ? Separate budgets may be reason-
able enough in Austria, which contains distinct kingdoms
and provinces, but there is nothing to justify them in
France. Then there is another illusion, that of the ordinary
and extraordinary budgets. When thousands of millions
were concerned, as in the Srst establishment of railways,
there was some reason for an extraordinary budget, but
when the expenditure is only for ameliorations which may
be effected gradually it can only tend to dissimulate real
expenses. The oxtraordinrry budget contains the expendi-
ture for repairs, which must always be a permanent item ;
why should it then not be put in the ordinary budget ? I
also see in it sums of 5 and 6 millions for the Ministry of
War, which should be considered:ordinary expenditure. In

the extraordinary ibudget of the Marine I see a sum of
12} millions for the arsenals, which ought certainly to be
considered an ordinary item. But we are told that it was
required for the transformation of our navy into iron-
dads. I have seen three of these transformations in the
course of 40 years, and therefore see no reason for calling
it an extraordinary expenditure. In the Ministry of Public
Works, I find five millions for improving the high roads,
but all such outlay has hitherto been considered ordinary
ezpenditure. Then comes the large sum of 33 millions for
payments to railways as guarantee of interest, but some
parts of these payments will last 80 years, other parts 20
and 40 years, and therefore ought to be in the ordinary
budget. The only use of the extraordinary budget seems to
be to make the ordinary budget appear less, and give it a
more favourable appearance when compared with the ordi-
nary revenue. M. Gouin says that our ordinary budget
being 1,900 millions, and our revenue of the same amount,
there is an equilibrium. But even when viewed in that light
there is still a deficit of 30 millions. The division into ordi-
nary and extraordinary budgets serves to put the real re-
ceipts in comparison with what are called ordinary expenses.
As to the other -expenses, they are met by instalments or
other means. The rectification budget also serves to dimi-

nish the apparent amount of the ordinary budget. The
system of rectification budgets is justified by alleging the
impossibility of providing for all the necessary expendi-
ture a year in advance. I admit the necessity of sup-
plementary credits ; but even to justify them, the expen-
diture to which they correspond ought to be really ex-
penses in some degree expected. An eminent member
of the old Chamber, M. Le Pelletier d'Aulnay, was a severe
critic of supplementary credits. But I repeat that the
grand principle of such credits is the unforeseen. We have
the rectificative budget of 1865. Well, gentlemen, read it,
and see if it is composed of expenses impossible to foresee.
Out of 80 millions there are 60 for the occupation of Rome,
for Cochin China, and for Mexico. Can it be said that last
year nobody foresaw we should have to pay all this in the
present year. And doubtless the Minister of Finance last
year never anticipated that he should have to remove the
Post-office to the Rue de Rivoli, for which he is now obliged
to ask 6 millions ? Was I not, therefore, right in calling the
rectificative budget an extraordinary budget deferred? The
expenses of this budget are met by augmentations of receipts
sometimes but not always realised ; by the Mexican Secu-
rities, the great resource of the moment ; and lastly, by
annulments. Then comes the liquidation, when fresh ex-
penses are discovered, ordinarily discharged by annulments,
but these last are found to be exhausted. That is the way
in which a budget of 1,900 millions is swelled to one of
2,200 or 2,300 millions. The form in which a budget ispre-
sented is of great importance ; the present system enables
people to say that we are nearly in equilibrium when we
are very far removed from it. Let us take as an example
the three last years. The budget of 1862, voted in 1861, was
composed of 1,777 millions for State expenses, and 125 for
communal and departmental outlay; 1,902 millions in all
for the ordinary budget. The extraordinary was 67; in all
1,970 millions. In 1862 there came the rectificative budget,
which added 193 millions, accounted for by the great cost
of the Mexican expedition and of the check at Puebla, so
gloriously repaired. The liquidation arrived in 1863 ; and
it was found necessary to add from 49 to 50millions, carry-
ing the whole expenditure to 2,212 millions. The budget
of 1863, voted in 1862, was composed of 1,721 millions for
State expenses, and 217 for communal and departmental,
besides 121 for the extraordinary budget; total 2,061 mil-
lions ; and the rectificative budget and liquidation raised
that amount to 2,292 millions, the highest figure we have
yet known. The budget of 1864 showed 2,105 millions, as
ordinary, and 135 as rectificative ; total 2,240 millions,
swelled by the liquidation to 2,260 or 2,270 millions. The
budget for 1865 was last year voted at a figure of 2,100
millions. The rectificative budget, which we are now dis-
cussing, has added 88 millions, thus raising the figure -to
2,188 millions, and leading to the belief that the total will
exceed 2,200 millions. The budget of 1865 will be smaller
than the preceding for the reason that the Mexican ex-
penses have diminished. I am aware that the Minister of
Finance would gladly see a reduction in our expenditure,
but the Minister of Public Works is fond of renown ; and
it is always difficult to find the Minister who pays and the
one who spends in perfect accord. In the present case
they seem to have arranged matters at the expense cf
third party, purely passive-I mean the sinking fund.
Allow me to say a few words on that topic. When the
State borrows 100 millions there is an annual expense of
5 millions incurred to pay the interest, and 1 million more
is added to redeem the whole debt. At this rate such a
debt could only be extinguished in 100 years, and that
would be bankruptcy. When I was studying finance under
the auspices of that great financier Baron Louis, I came to
the conclusion that to defer for a period beyond 30 years
the extinction of a debt was tantamount to deferring it in-
definitely. But how can a debt be extinguished in a little
over 30 years ? By leaving in the possession of the sink-
ing fund the million of redeemed Relates the next year it
can redeem 1,050,000 Rentes, and thus by force of compound
interest the object may be attained in somewhat over 30
years. Our laws have made the extinction of the public
debt by a sinking fund obligatory. The dotation for that
purpose has become a sacred thing ; but not so the redeemed
Rentes-they can be annulled. And as the spirit of the law
implies redemption when the prices aro high, it is scarcely
just to the holder of Rentes purchased, perhaps, at 84 to
reimburse him at 67. But what is the budget that has been
made by annulling the 65 millions of redeemed Routes ?
The advantage of the measure has not been complete, for
out of that sum it was necessary to allot six or seven mil-
lions to the sinking fund, and seven to the ordinary budget,
so that 50 millions only remained to establish the budget of
1,700 millions; then there were 236 for departmental ex-
penses-in all 1,236 millions for the ordinary budget. Then
comes the extraordinary one. The Minister of Public Works
is not content with the 119 millions which he got last year,
but asks for 144, and the committee makes it 152, but 1936
millions for the ordinary budget, and 452 of the extraordi-
nary make 2,086. Such is the budget of 1866, without count-
ing the rectification budget, which will infallibly come. Now
I will ask you, have you 2,086 millions of receipts in prospect?
I maintain that you have not ; that there is a deficit of at
least 200 millions. We are told, indeed, that the sum total
of expenses can be reduced. I only hope it may. I cannot,
however, agree with M. Farnier-Pages as to the facile sup-
pression of a variety of taxes. There appears to me but
four chapters in which savings can be realised :-Mexico, if
you evacuate it; public works, if you restrict them within
bounds ; the army, if it can really be reduced ; and the sink-
ing fund, if the principle of it, as some say, is really an
effete and antiquated theory. The evacuation of Mexico
will perhaps wound the susceptibilities of the Government.
But let me remind the Chamber of the admirable language
held by M. de Caulaincourt, Duke de Vicence,•lo Napoleon
1., at Dresden, in 1813. Sire,' said he, conclude this
peace ; your amour propre may suffer, but not your glory ;
for your glory is that of France, and it is in no way tar-
nished by the proposals that have been made to you.' I
wish then to hold the same language to you. Lot us imitate
Spain in her conduct regarding Santo-Domingo, since hor
amour propre did not hinder her from desisting from a fault
which would cost her blood andtreasuro without any chance
of success (adhesion from several benches). By evacuating
Mexico you may save about 50 millions per annum. Again,
by a judicious restriction of public works, you may realise
savings to an extent of 20, 30, and in time of 50 millions
annually. But respecting economies to bemade in the army
and in the sinking fund I feel considerable doubts. Can
there be any notable reduction of our army expenditure ?
I think not. In 1830 my friends on the left of the Chamber
demanded such a reduction, but without success, as the
army not diminished, but increased from 280,000 to 350,000
men. Personally I shared the opinion of Marshal Soult,
who thought an effective force of from 360,000 to 380,000
men absolutely necessary. The figure was indeed re-
duced for a moment to 320,000, and what happened in
1840? That it was suddenly raised to 500,000 men,
and at an enormous cost. The year 1848 arrived, and
the effective was carried to 420,000 men, and continued
so for two years. I come now to the Empire. Believe
me I am far from wishing to put the august Prince who
now occupies the throne in contradiction with him-
self, but desire merely to cite facts. Prince Louis Napoleon
had often in his works applauded the Prussian system, and
affirmed that an army of 200,000 men with a strong reserve
was quite sufficient for France. Since he has become Em-
peror we are every day told that France cannot do with
less than 400,000 soldiers. Thus it is that every one talks
of reductions in the army before attaining to power, but
power once gained, nobody carries them out. Gentlemen,
I do not hold this language for the sake of making myself
popular with the French people. The real fact is that pro-
mises aro often made of which circumstances prevent the
fulfilment. For the different foreign services you will
always have 100,000 men out of the country, and if you
then take the figure of the non-effectives at 50,000, out of
the 400,000 you will have 250,000 for our immense territory
at home. What is the state of neighbouring countries ? In
Pruspia the Crown accepts a fearful conflict with the Par-
liament, in order to maintain an effective of 200,000 men ;
Austria has 400,000; Russia, from 600,000 to 700,000.
Those only who have not studied the subject are capable
of calling for reduction. A soldier under arms costs about
430 f. a year; suppress 50,000 men, and what will be the
economy realised ? About 21 millions. Such an economy is
certainly not to be contemned, but nothing on a large scale
can be realised without inducing by negociation all the great
powers to modify their military systems. Nor do I think
there is any chance of success as long as Austria continues
restless about Venetia, as long as Prussia aims at dominat-
ing all the smaller German States, and as long as Russia
shall choose to retain Poland and foster her designs upon
the East. I conclude that any serious reduction of the army
is impossible. I must now say a few words on the sinking
fund. There is a school which affirms that public debts are
not disquieting, but even advantageous, and that England
is happy in having so large a debt, as so many creditors
are interested in her prosperity. Such may be the reason-
ing of merchants at Rotterdam or Marseilles at the sight of
their quays covered with merchandise. Oh, what splendid
commerce !' they might exclaim ; but if the bales contained
goods which they could not pay for they would change their
note. A good financial market ought to be filled with goods
representing the debts of other people. It is good here to
cite the example of the -United States. They redeemed the
whole of their debt ; and well it was for them, for they
were thus enabled to find 20,000 millions of francs to pay
for the re-establishment of the American Confederation.
I do not, however, wish you to redeem all your debt, but
to diminish it. Public debts are like the lakes at
the foot of great mountains ; nature does not empty them ;
but after the snows and rains of winter and spring she di-
minishes gradually the mass of water by the dry heats of
summer. Debts must be paid off in peace, so that we may
be able toborrow when war comes. The Government ought
to buy up a part of the debt, were it only to afford the
State creditors a certainty of finding a market for their se-
curities, which they cannot unless the State maintains its
credit. The English Government, after long neglecting the
sinking fund, has now decided to buy up every year 75
millions (of francs) of the public debt, but yet Mr. Glad-
stone tells Parliament that he does not think that sum suf
ficient, and apologised for not having done more ; but you
who have done nothing in that way for ton years now tell
us that you have fulfilled your duties. When we are told
that the sinking fund, after being entered as expenditure,
is then entered as receipts, the result is the same as if a
private individual, after laying aside 1000 f. to pay his cre-
ditors, should spend them before the year was out. I have
now gone through the several means of economy proposed;
but with regard to the sinking fund, I must say that not to
have effected any reduction of the debt for 10 years, and to
_ continue 15 years longer in the same course as proposed, is'

if I may be allowed the expression, walking blindfold on to
bankruptcy. I know you do not intend to do so; but
it would be prudent not to run the risk. As to any great
economy in the army, I do not see how it is to be accom-
plished. In fact, the only means of realising any economy
are, in my opinion, the evacuation of Mexico and the re-
striction of public works. Now, to draw out the balance ;
have you the 2,086 millions required for your three
budgets ? If you have, go on ;if not, begin at once to
make economies. All your resources amount to only 1,904
millions, so that you still want 182 millions. Against that
sum you set 127 millions from the sinking fund, 18 mil-
lions of supposed surplus on the budget of 1865, in which
the committee has no faith, with 27,400,000 f. from the
Mexican indemnity, 7 or 8 millions from Cochin China,
and other receipts of small amount. This is all you have
towards the 182 millions. But shall you get the
27,400,000 f. from Mexico ? You inserted in the budget of
1864 54 millions of Mexican securities, which were calcu-
lated at 63, but are now worth only 44. Will you sell
them at that price ? This resource having failed in the
budget of 1864, how can you expect to be paid the 27 mil-
lions of 1865 ? The Minister of. Finance has also taken
22 millions from the Army Dotation Fund, but that cannot
be regarded as recipts. In fine, you have only 1,904 millions
of receipts, and your expenditure amounts habitually to
between 2,200 and 2,300 millions, and this deficit you can
only cover by means of the sinking fund and chimerical
receipts. It will never do for the State thus to repre-
sent the finances to be flourishing when they are not,
like the directors of certain joint-stock companies,
who distribute dividends which the state of their
affairs does not justify. Be sure of one thing ; when
you engage in unlimited expenditure, apparently una-
ware of the course you are taking, it is our duty to tell
you that you are on the road to ruin. You will be
obliged either to fail in the engagements you have con-
tracted in the name of France, or to have recourse to ex-
cessive taxation. I ask your pardon for speaking so
warmly, but it is impossible to treat a graver or more in-
teresting subject. I repeat that you are running towards
the double rock, either of failing in your engagements or
of rendering inevitable the imposition of onerous taxes
which may give rise to deplorable divisions. I adjure you
to reflect most seriously on this state of affairs. You are
on the brink of a financial gulf if you persist in the present
course. I ask pardon for distressing you, but it is my duty
to tell you the truth, and I tell it whatever the Jesuit may
be." (Approbation.)