Evening star. [volume] (Washington, D.C.) 1854-1972, 1919-01-05
Special Correspondence of The Star.

NE u ol ScIIHdH poWSI
SO much sooner than was ex-
pected and the hurrying up
of peace preliminaries have
wholly transferred the interest of the
public from what has happened in the
past financial year to what is going
to happen in the next one. The ces-
sation of hostilities has come hard
upon the floating of the fourth French
war loan, which already had been
named happily the liberation loan"
According to the policy adopted by
the French government from the be-
ginning of the war. the loan is is.
sued not alone to provide for the COM
ing years expenses, but almost equal
" to reduce the floating debt remain
ing from the war and to stay the eX-
pansion of bank note issues.
Treasury Notes Issued.
This policy has been aided by con-
tfnued and successful issues of short
term treasury notes or national de-
tense obligations: for these serve both
to make the floating debt manageable
and to ease the fiduciary circulation.
Credit arrangements with the United
States and adjustments during the So
journ and support of the American
eXpeditionary forces in France help
further to the same credit. And this,
more than ever before. is necessary
now that active war finance is ceas-
ing and every new effort must be di-
rected to bear the financial burdens
of the coming peace.
France issues from the war I'M
doubtedly solvent. with credit intact,
and with ready money in it's govern
taoy nd n
the economic revival for which the
whole world waits. That she Will
need the continuous aid of her allies
for the immediate reconstruction that
is to restore her people to normal
conditions, is true; but that is only
the counterpart of the fact that she.
more than any other. has had to bear
the physical and economic strain of
the war.
Question of Economic Recovery.
Such, practically. is the financial
situation of France as the war ends.
However much the future may add to
her resources in the way of indemni-
ty or reparation for damages. or res
toration of property destroyed or pill
LACED, the finances of France have
one sure base from which to begin
the work of peace. thrifty people
that is not willing to let itself die or
remain u past Will az
complish the task inevitably and
spontaneously, no matter what meas
ures its government may take.
1t is governments business to lead
the way in the things which are I'M
der government control; and the or
ganized economic bodies of the coun-
try, stock exchange and bank. indus
try and agriculture, have to follow
this lead. So far as can be discerned
in these first days of transition, the
financial trend is negatively toward
reduction of the dearness of living;
positively toward an increased value
of money instruments, with a stimuli
taneous increase in their distribution
to the best advantages among the
country's varying needs. The ques-
ton of credit, which is ESSENTIALLY in
ternational, is subordinate to all this.
and should not be allowed to obscure
or confuse the real facts in the case.
Money Situation in France.
For some years to come money" In
France has meant banknote issues
This is not the paper money. which
used to mean notes or bills reducfbie
to a governments promise to pay and
engaging only its credit. French notes
are the issues of the Bank of France,
a responsible private corporation to
which government guarantees the
monopoly of such issues.
The notes do not depend for their
value of government or on huctu-
ating political situation. except within
the limits of the governments prom
Uses to pay back to the Bank of
France the particular advances which
it has received from the bank. The
financial cover of the banknotes is,
first. the banks and not governments
possession of 4 gold reserve. which in
strengthened by a silver reserve, hav-
ing a fixed gold value in Belgium,
Switzerland, Italy and Greece; sec
ond, direct gold credits from valid
securities pledged and accepted
Sbroad for the purpose, or gold cred
particularly by the United States, and
third. French commercial paper under
active discount or rediScount at the
Bank of France, similar paper held
over from the beginning of the war in
virtue of the moratorium. and being
steadily, though slowly, paid off:
fourth, governments added debt to
the Bank of France for non-interest-
bearing advances that have been made
in the banks notes for payments at
home, among which are the payments
for expenses in France of American
justment of which is to balance a like
amount of credit extended by the
United States to France; fifth. gov
eminent debt to the Bank Of France
for its use of the banks credit abroad.
French Pay Their Debts.
This analysis of the actual financial
cover of French banknotes is neces-
sary to make clear how far, in theory
such note issues merit the qualifi-
cation of imitation" and paper
money" and how far in practice the
abundance in circulation of such
money is likely to affect the DEAFNESS
of living left over from the war as
one of its greatest financial burdens
Governments debt To the Bank of
France is guaranteed by the credit
of the French nation. The commercial
paper which has been discounted by
the Bank of France has for its guar
antee the credit of the French people
in all their business relations, and
where the moratorium is concerned,
in their banks from which most of
the "prorogued" paper was taken over
at the beginning of war.
The French people VIGOROUSLY pay
their business debts. Even the cases
OF the moratorium will suffer no long
delay, except for the portion belong
ing to the devastated regions, and
these constitute a separate financial
problem. to be settled by the state and
without any possible influence on gem
eral money credit.
The French governments RESPONSE
bility for the fiduciary money of
which issued the money: and this is
sufficient to keep the fiduciary circu-
lation from political changes and
chances.