New-York tribune., 1921-11-28
French
Effort to Push
Franc to Par
NNonservaiive Financial Pol
ICY for Small Investors
insisted Upon by Large
Majority Owning Bonds
Seek 10 Balance Budget
Look Beyond Present Cener-
alton in Preparations for
SettlingCovernmentDebts
spcctcl Gable to The Tribune

COPYRIGHT, l92l New York Tribune Inn.
PARIS, Nov. Rcacting against
the capital tax theory advocated by
Leader Herriot of the Socialist party
in the Chamber of Deputies, public
opinion is being galvanized In favor of
a conservative financial policy for
France.
Finance Minister Doumer insists
upon balancing the budget for ordi-
nary expenditures, depending upon
German reparations payments for ex-
traordlnary expenditures connected
with restoration of the devastated re-
glons plus the eventual return of the
franc to par. 1t will take fifteen years
owing to the gradual reduction of
l,o00.o00 900 francs annually in note
circulation from the high point of
nearly 10000 100000
The Bank Of Frances loans to the
government have been reduced to "a
100000, 600, the lowest since 1919. and
by the end Of the year a further reduc-
tion TO 00,000,000 francs is fore
shadowed. The government since the
Revolution has favored agriculturists
and small investors against big bust
ness, and France is not yet internation-
~-At PNWSllui, UuC sNlStS primarily co
satisfy the need of home consumption.
The national wealth is owned almost
exclusiS ely by small holders of govern
ment and municipal bonds and first
mortgages, as we'll as petty land own
ers, who demand that their incomes be
secured even If stockholders of iron
and steel companies get no dividends.
lndustrialists vainly demand intla-
ton, but the tremendous majority
OF possessors of fixed incomes are
determined that the loss in buying
power through depreciation of the
franc to less than two-fifths of it's
normal value be remedied in the fu-
ture. Old first class countries such
as France consider themselves perpe-
tual and their citizens look far beyond
the present generation.
This is exemplitied by the fact
that, the. 3 per cent perpetual
bonds which have existed for more
than century We're selling in 1880
at less than "a, while in 1905 they
had reached 104. The market is heavy
for stocks and strong for government
bonds, as the revalorized franc would
mean continued def7ation with heav-
Ter taxes.
The present fall of the franc is
explained by three factors, of which
the uncertainty of German repara-
tions payments is the greatest. 1t
was suggested in the Chamber of
Deputies that if Germany goes bank
rupt France take a first mortgage on
all German industries.
A hopeful factor was the Septem-
ber return of s5,000,00o,o0o gold marks
of the German customs levy as repara-
tions payments, which alone would
thus make available more than 1,000,-
00O,0 900 gold marks annually, while the
balance so far as France is concerned
could be supplied in kind.
There IS a strong feeling among the
Allies that France may get more than
her share this way. Increased demand
/ in trade circles for raw materials is
depressing the franc. This being
/ largely seasonal, the spring should see
larger exports. Moreover, there is no
doubt that the dollar in the United
States has been depreciating in buying
power in the last few months, which
tends to depreciate foreign currencies
in that it checks buying abroad.
Dehation is proceeding in Western
Europe more slowly than in the United
States.