The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-03-17
oreign Comment
Special Dispatches to The Argus from
Paris bureau of The Consolidated Press,
10 re de 1EIysee.
Frances Debt.

france S DGOI.
Paris March 16-Fgures just published
indicate that Frances national debt the close
! of the year 1921 was almost double the amount
of national debt existing at the end of the year
| 1918-the year in which the war ended These
figures were compiled by NJ. Henry Cheron, re-
porter of the budget in the senate finance COM
mittee until he taken into the Polncare
cabinet as minister of agriculture
In other words, in the three years since the
war closed France has accumulated almost as
much additional debt in all the years OF
peace and war that preceded
The total debt at the end of 1918, according
to NJ. Cherons figures, was 171,6SS,OOO,OOO
francs
The total at the end of 1921-just a few
weeks ago-was 236,775, 100000.
Included in this debt is S5,556,000 900 francs
of foreign debt, including debts to America and
England. The par" value of these debts is
about 80 900, 10000. but as they are payable in
gold account must be taken of the depreciation
of the paper franc. Their value in paper francs
is therefore, about two and one-haf times
greater than their par value
The internal debt of 241,O0O, 100000 is split
into several categories. First come the per
petuar rentes,' or government bonds that are
not to be reimbursed by the treasury. This
form of government paper, unknown in Amer
lea is a popular form of investment in France.
Total of these bonds outstanding is over 101,-
900 900, some paying per cent tpre-war),
others issued during the war paying 4, D and
per cent.
There are also different series of bonds
with fixed maturities, amounting in all to near
ly 46,009.000,000 francs.
The rest of the internal debt is floating"
and amounts to $4,000 100000 francs About
two-thirds of it is in the form of national de-
tense notes" which little else than interest
bearing currency. They are payable on de-
mand, or at short term.
The remainder of this floating debt is large
ly made I'D of advances to the state by the
Bank of France.
There is a considerable body of opinion in
France which favors the retirement of this in
terest-bearing floating debt by the issuance of
bank-notes Why, say the leaders of this move
ment, should not the state at once retire the
national defense notes. which bear per cent
interest, exchanging for them similar notes
which would bear no interest at all, but would
circulate as currency? Thus the state would
save three four billions year in interest
charges. To the objection that this is "inf1a-
ton" these people reply that the existing notes
circulate practically currency, and have just
as great inflationist tendency.
1t is also asserted that the retirement in this
manner of the floating debt would Immediately
enhance the value of the long-term and perpet-
ual bonds, which now quoted far below par.
The issuance of short-term notes which bear
high interest without tying up capital for long
periods has in fact depressed the market for
less liquid securities.
For instance it is calculated that the hold
ers of the 11S,000 900 600 francs worth of per-
petual and long-term bonds paid the state for
these investments about 104 900 900 ,0O0-for US
ually they were issued at slightly under par.
But today the market value of the securities is
only SO 600 900 000-about rs per cent of face
value, or IS per cent of the issued price.
And that only tells half the story, for
large part of the bonds were paid for in francs
at par-god francs-and their present value
is quoted in the deprecated paper franc, worth
only 40 per cent of a gold franc. So for most
of these investors, their holdings are today
worth less than one-thrd of what they paid for
them, expressed in terms of gold
This Furthermore, tells but a small part of
the story of the enormous losses suffered by
French investors in 'gilt-edged" securities. For
besides the government issues there are end
less billions invested in quasi-public enter
prises-railways, state-backed loan and credit
institutions ETC., etc, all of which are in the
same situation.
Until the past year the banks, on the other
hand. have done remarkably we'll Bank stocks
went skyrocketing after the close of the war
but it is now becoming apparent that this pros
perity was largely fictitious, built upon declin-
ing exchanges. and now that the tide has set
in the opposite direction, some of the French
banks are in difficulties.
The recent sharp rise in the value of the
franc found numerous banks with large hold !
ings of foreign money, specifically dollars and
pounds, for which they paid from 10 to 20 per
cent more than they can now sell them for. |
And while some of this foreign money was
acquired in the routine of normal banking |
transactions, great deal of it, it is rumored, !
was bought purely for speculation.
Altogether French fnanciers, both public |
and private, is in unhealthy state and the |
effect of the moratorium laws in concealing |
this condition and "tidng over" shaky institu- |
tions is creating atmosphere of alarm. If |
were half as bad as they are painted |
in the rumors that flying about Bourse cir !
cles crash during the next few months would |
be inevitable. Just how bad the situation is |
nobody knows.