Evening star., 1923-09-21
Can Europe Hold Together?
VIII-The Battling French Debt.
BY. JOHN r.. SINCLAIR.

The population of France has de-
creased by two millions since 1918.
Her national annual income per capt.
ia has decreased from $1S5 in 1918 to
| not more than $3.50 today. Her ma
tional debt has increased per capita
from $166 in 1913 to $1,6o5 in 1923.
For every dollar the government OF
France paid in interest charges in
1913. she must now pay $12, while
for every dollar of national income
she had in 1913 to pay with she now
has only 81 cents.
To add to this problem, she is SELL
ing tax-exempt government bonds. BY
issuing these tax-exempt- bonds what
really is happening is this: The sur
plus profits of the large Industrial
groups are more and more getting
under cover and evading future taxes
on their wealth, while the taxpaying
classes of France-middle class peo-
pie and laborers, who live by their
work and not by their Investments
face heavier and heavier tax burdens.
Taxes are being shifted more and
more from the rich to the poor.
| Taxes. to be just, should be based
on ability to pay. Only in this way
can nation grow strong. But the
policy of France is just the reverse.
Even before the war the large f1nan-
cial and industrial groups who,
through Poincare, control the politics
of France. have always followed
policy of indirect taxation. Only the
indirect taxes which can be shifted
are popular with the controlling ele-
ment. When we realize that France
must have ten times as much in taxes
: today as in 1918 and that the present
/, policy of France tends more and more
/ n fhnga of ~
selling to them tax-exempt bonds. we
can understand that the present pol
Icy can lead only to national disaster.
We can conclude. therefore, that
| the French public finances are in
mess and the present policy If con-
tinued for long will only lead to
bankruptcy and repudiation by the
government itself or revolution by
the masses.
Before the war France bought each
year two hundred million dollars
| more goods than she sold. Here is
| the way she paid this account:
| In 1914 she had invested outside of
France 5000 millions of dollars. The
interest on this sum was 400 millions
of dollars year. Again tourists who
went to France each year left about
$50 millions of dollars. Then her
| ships doing a world business gave
| her another so millions of dollars each
year. Now these items which the
economist calls invisible exports"
| totaled 500 millions of dollars a year
two and a ha IL times the amount
needed yearly to square the account.
The problem, you see. was easy and
| simple.
Now let us see what the war did
! to this situation.
l nil - aaIl -
which France has invested" outside,
! 5000 millions was in Russia This is
| now practically all lost OF the bal
| ance 1000 millions of dollars was in
| vested in the Balkan states and
Turkey. France has lost perhaps
S5 per cent of her foreign investments
as a result of the war Her other
| invisible exports yielded her nothing
! from 1914 to 1919. To add to her
| troubles. France has bought during
/ 1900 millions of dollars more goods
| on the world market each-year than
| she has sold. At the same time she
/ has had little or no invisible exports
to help her square this account. Re
1 sult-she has piled up $4,000, 900. 600
of debts outside of France, which
| must sooner or later be paid.
| This foreign debt is equal to 10
! per cent Of the total. 1t is much
| harder to take care OF this 19 than
| of the 81. which she owes to her own
people. Because the foreign debt
must be paid in either gold or goods
| Onvisible exports included. France
cannot pay in gold, for il she sent
! all her gold she could pay only II
cents on each dollar owing outside of
her country. At the same time this
procedure would completely demor-
! alize her internal currency.
| Then If she cannot send gold. she
must fall back on sending goods
= an n Cn1 ~ 40 r.
pay her foreign debt In fifty years
France would be required to sell
$3.50, 600, 900 more goods a year than
she buys. Only by enormously in