New-York tribune., 1921-10-10
First Phase of Postwar Re-
adjustment Completed;
Reduction of Production
Costs Now lndustry's Aim
Wage Cuts Sweep Nation
Decision to Balance Budget
Favorable Sign; Markets
Show Only Small Changes
Specia, Cable to The Tribune

/ shown that France, like the United
States and Great Britain, has COM
pleted the Inevitable postwar reduc-
ton of inflated retail values, and is
now embarked cautiously but firmly
along path which will bring produc-
tion costs down to such a level that
basic industries can be maintained on
paying basis.
This first phase has been achieved in
eight months with less hardship than
other Allied countries suffered, as is
proved by comparison OF the maxi
mum unemployment in France in Nav
OF 10000 with England's average of
100000 for the last fifteen months.
Most industries are now running. at
a loss in the second phase of the re-
adjustment, this being designed to pre-
cede a reduction in wages Of 80 per
cent TO permit manufacturers to sell
proatably at present prices and de-
velop hold on foreign markets. No
severe deAation has been attempted, as
that is contrary to French tradition
aud temperament but conservative
policy of stablization has been the all
/ absorbing preoccupation of the govern.
ment.
Pre-War Revenue
Before the war France obtained n
revenue OF five milliards francs, but
with taxes now doubled it is estimated
that with the franc at the present ratio
OF SO per cent to the old value a budget
OF twenty-five miliards should be OBJ
tainable with return Of normal con-
ditions.
The satisfactory feature OF the pres
ent situation is that the Ministry Of
Finance has determined to balance the
ordinary budget and abandon in the
future the present policy of borrowing
I to cover deficits. Future expenditures
will be based on receipts. With the
ordinary budget short two and d half
miliards OF francs, there is q tendency
70 supply this by additional economies
rather than doubling the turnover tar
Economics effected by suspend
ing employees' wartime indemnities
amounted TO 700000,000 francs. plus
10 per cent reduction in government
services, which IN seven years increased
from 4 TO 10 milliards. The moral
effect pf such action has been potent
aud wage cuts are going on all over
/ France.
Difficulties Looming
Financial difficulties have been caused
hy the unce rtaiuty of reparations pav
/ merts vhicn should cover four Of tho
seven milliarda required for pensions
and reconstruction expenditures.
Franco : counting on good rather
than gold. and il - probable thst thr
compensatlon will eventually be oh.
tanned in this paN, although fer the
next i've wears the government mu st
advance largo sums IL cash which
would keep lntercst ratc4 up and cred {
strained r the government is obliged
20 rely on its own efforts In the quar-
ter ending August t. France received
from Germany 15O.ooo,o coo gold marx
or securities i'm Kind. Ia tho present
quarter this has becn largely exceeded.
tor the hrst tnc since tho war bo n
countries hAvc been co-operatino TO
their mutual benefit
One OF France ieadin- economists
estimated French economnev IA 1920 at
tnlrtY-fvc milla of fraucs. most Of
which has been absorbed by govern
msnt and municipal loan
Cities Get Loans
Six weeks ago Nerdun and Rheir, :
raised 10000. GOA france each under
government auspices. other cities fol
loving ~ the market for fund Tho
new government 6 pr cent lean or
three mlliards caused a drop Of 20
80 opeu. Nsh Low. r.s.t.
6 4 !, - o