The New York herald., 1921-01-16

is due to the fact, frequently stressed IN
despa atches to THE NEW YORK HERALD.
that the French books We're made to
balance only by putting down advances
made TO the devastated regions as en-
tireiy recoverable from Germany and on
this France continues to borrow money
AS VI. Bourgeois stressed In the Senate
yesterday, France cannot continue in this
way without encountertng a terrible
disaster. The Government even now is
obliged to make daily loans to meet ma
turing debts.
Facing Deficit Of Billions.
The minimum amount of the deficit
which the Government faces is placed at
a little more than 1000. 100000 francs
Frederic Francois -Marsal. Minister of
Finance in the Leygues Cabinet in pre-
senting his budget to Parliament placed
the ordinary cost of the public admins
tration, together with interest charges
on Frances debts and pensions, at o.
S25. 100000 francs, while the total in
came from all sources, including taxes
was placed at 22.325, 900, 900. leaving
apparently deficit of 5,5OO,OOO, 900
francs. However, the income from taxa
tion will be greater than NJ. Marsal esti-
mated by between 10 and Is per cent.
and this would reduce the deficit to a
little more than 100000, 900 francs
While the finance committee of the
Chamber of Deputies has already shaved
appropriations for administrative pur-
poses to the extent of about $500. 900, :
600 francs. M. Dumont. reporter general
or the budget, In report just printed
advocates more vigorous control OF cx-
penses. At the same time he declares
that even this will not avail unless Ger
many is made to pay Immediately fo,.
the reconstruction work in the devas-
tated regions "and thereby tighten the
charges which victorious France alone
has had to support since the signing of
the armistice."
High Cost of Red Tape.
Incidentally NJ. Dumont's report re-
veals that out of the 5000, 900, 900
francs advanced by France for the
devastated regions, virtually on the Ger
man account, 1925, 200, 900 francs were
spent for administration expenses this
being typical of French administrative
waste.
Also it has been disclosed that the
Government Is not able to keep it's en-
gagements to reimburse the Bank of
France for war advances, 5000, ,0O0,- :
600 francs derived from the last ma
tonal loan already having been used
for other purposes, and the Government
was obliged to appease the bank by
promising to pay off the advances after
the next twelve months at the rate of
1000, 100000 francs a year.
The conviction Is general, therefore
that veritable crisis has been reached
and that Frances financial condition
demands that there be no longer hesi-
tant action. but that Germany be made
to pay at least something at once. even
II France has to repeat the policy fol-
lowed when she occupied Frankfort and
other German cities.
The suggestion that in order to remedy
the financial situation there should be
more initiation instead of deflation comes
from some authorities here who base this
theory on the experience of the United
States In the years following the re-
belion. These authorities would have
the Bank Of France issue another io.-
coo. 100000 francs in paper on the theory
that French industry IS held up by lack
of currency and that the francs will be
prevented from falling further IN ex-
change value by the restoration of eco
nomic impetus and the increase that
this would cause in exports.
This comedies with the theory OF
Louis Loucheur that imitation OF cur
rcncy Is not TcspoHsippS ioi ahSe .
present difficulties 1t Is shown that In
the United States just after the civil
war the premium on gold was per
cent. but that when the paper circula-
ton had increased sS4 100000 the gold
premium had dropped to nearly per
cent.
Later support for this theory Is found
in the fact that during the period be-
tween April / and July OF last year
the bank note circulation increased 30O.-
600, 900 francs, while the exchange i'm
proved nearly 20 per cent.