Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-08-08
CAPITAL FLOWING
| BACK INTOLERANCE
Foreign Aid Still Needed to
Prevent Another Anarchy
Relapse.

BY Radio to The Star
.... PARIS, August 7-France has got
p grip on herself in the last three
weeks. The mere fact that the gov
eminent obtained large majorities has
GAINED the troubled atmosphere. Pub
lie opinion, which was wavering on
the brink of panic, has been treasured
with the aid of the whole press, which
has co-operated magnificently.
With confidence restored, eXpatri
eted capital is flowing intol the coun-
try again. while even foreign speak
ers are bulling the franc.
Doubtless some clouds still are dis
terrible on the horizon, but the move
ment should be encouraged abroad
for anarchy is dangerous wherever it
appears, and should France again
relapse in that direction the conSe-
auences would be felt in the remotest
corners of the globe. France needs
Foreign help to avoid that fate
The taxes voted this week are too
heavy. Combined with the increased
discount rate and the rising cost of
living, they inevitably mean new note
issues or economic stagnation, which
would reduce the tax yield Unlike
third of Frances revenues depend on
business being good. Fortunately,
the tax load can be reduced in the
next budget
Furthermore the institution Of a
special sinking fund for redemption
al the Sh0rt-term debt will be sur
rounded with all the soIemnity of the
Congress of Versailles as at the cleo
tlun of a President. But il is a notori-
GUS historical fact that debt amortiza-
7ion, whether internal or foreign. has
never been entirely successful any
where.
United States Creditor of All.
The United States is succeeding in
retiring its internal debt, thanks to
unusual circumstances. President
Coolidge himself says that the last
three years We're more prosperous
than any similar period in American
history. The United States is the
creditor of everybody, with a large
favorable trade balance, which makes
possible the reduction of taxes
1t is quite different in European
countries like France and Belgium.
The latter, instead of redeeming it's
short term debt, has resorted to forced
consolidation. which is equivalent to
Bankruptcy toward its note holders,
bnd which will prevent recourse to in
fernal borrowing for many wears
France will arrive at the same re-
suit by redemption, for what is the
use Of redeeming an internal debt
placed at low rate of interest if it
Is necessary to borrow abroad or at
home at a much higher rate in order
to do so? Obviously, France must
foreGo further borrowing, even for
reconstruction Of her devastated
regions.
This IS the only point on which the
government departs from the expert s
plan. There has been no converse ton
Net with Secretary of the Treasury
Mellon, and ratification of the debt
agreements remains postponed until
Autumn.
Sinking Fund Proposed
The experts proposed endowing a
sinking fund with four billion francs
Of foreign loans. The government
lays this proposal aside Similarly,
the experts, to give greater elasticity
10 the treasury, proposed diminish
ing the advances of the Bank of
France to the state by three billions,
TO be obtained from the first pro
reeds Of financial operations abroad.
and indicated that foreign loans for
sterilization ought to amount to
$500 900 900.
Although there Is talk of dollar and
dlorin credits, all this part of the gov
srnment plan remains obscure. 1t
depends on the conversations Seer
tary Mellon may have here after his
aeturn from Rome. 1t depends, also
on. the efforts by the French this sum
Sner to restore their finances.
IF the reflex of capital as a result
of increased confidence gives the Bank
OF France a substantial surplus for
1nancuvoring funds in the next few
weeks, sterilization might be achieved
without foreign credits, and these
recommendations of tn experts would
become SuperfiuOuS.
(Copyrlght. 1890