The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1926-08-06

ment expenses. Their borrowing Is
partly from Investors who buy
French bonds and partly from the
Bank of France. The latter transac.
ton is the basic element of vicious.
ness in French financial jugglery.
The Bank of France is a private
| institution, partly under govern.
ment control because it Is the de.
pository for government funds
when there are any and partly be.
cause it issues the French paper
currency.
Printing Press Finance
Normally, the right to print paper
money is safeguarded by high gold
reserve in the bank S vaults. Now
however the French government
has disregarded all questions of an
adequate gold reserve. Paper is not
redeemable in gold as it was before
the war. The government borrows
from the Bank of France by the
simple expedient of passing a law
through Parliament authorizing the
bank to increase it's advances to the
governments account. These ad
vances are really made by the print
ing press. The bank prints billions
of new paper francs and turns them
over to the government without in.
creasing its gold reserve in any ade-
quite way.
People in France possessing paper
money, as everybody does. since the
circulation of gold is illegal, have
become frightened least the francs
they hold will never be redeemed
by the bank in terms of real money
So francs constantly are falling, as
if a huge national gambling game
were in progress.
Huge Advances
Advances to the government by
the Bank of France up to two year.
ago amounted to 22,70o 900 00(
francs. Last year they had reached
27,400, 5000 francs and this veal
they have grown to 1880. 900, Oot
francs. simultaneously, the lega
limit for note circulation to be is
sued by the Bank Of France, which
was fixed at $4,000 900. 900 franc.
early in 1925, was raised to $1,000,
100000, in June, 1925, and again in
creased to 5S,500,o0 900 this year.
Behind these huge piles of print
Ing press money, the Bank Of Franc,
has a gold reserve of $1.105, 6S1 900
by normal reckoning. This is no
paper, but the actual yellow meta
| Itself.
1t is interesting to note the ratio
between the number of francs in cir
culation. Divide the number o.
francs by the gold reserve in dollar,
and the result is approximately fort!
the present number Of francs tina
can be obtained for a dollar. AS tn,
number of francs goes up, while tn,
gold reserve re.nains stationary tn,
value Of the franc tends to decline
Living on Loan
The French government has beer
living on what remains Of the 500.
900, 900 loan made two years ago b!
j. p Morgan & Co. to bolster up thu
franc.
France has fallen to Wis pligh
primarily because the French people
refused to bear their financial bur
den of the World War. They expect
ed to make Germany pay all the wal
expenses and present them with {
handsome bonus of several billion!
as well. Therefore, they did not ta1
themselves adequately during the
conflict, as Great Britain did. From
Aug, 1914. to June 80, 1919. France
spent on the war and its immediate
aftermath. 280,65S, 900, 900 francs
During the same period, the govern
ment raised by taxation little more
than $4,000 900, 900 francs, the bal
ance, about 220, 900, 900, 900 francs, be
ing raised by various kinds of loans
At the outbreak of the World War
Frances national debt was 1857 900,
900 francs. To this comparatively
modest sum, France has had to ado
not only the war borrowings Of 800,
900, 900 900 francs, but also constant
loans negotiated since then, due tc
inability of government after govern
ment to balance the budget. The
debt now stands at about 5000.
100000 francs, not including the for
eign loans which the French people
do not count on paying in full.
The French government is pay
ing paper for gold, using paper that
has less and less value and threatens
eventually to be worth no more than
the cost Of printing. When that
happens France will have to accept
the same treatment as Germany and
permit her finances to be admin
istered for the benefit of her credit
ors by modified Dawes plan.
But, there is still time for France
to save herself from this national
tx