Evening star., 1926-08-21
Special Dispatch to The Star.

BABSON PARK. Mass, August 81
Roger W. Babson was today asked
MS opinion as to the French situation
ana whether or not France will ulti
mately go into bankruptcy In max
ing his reply he brings out certain
features of the French character
which we Americans should keep in
mind. His complete statement is as
follows:
Almost every month brings us
news of the collapse of the French
government OF course this is not
serious and does not in any way mean
that the French government has col
lapsed. but simply that the minister
or France has not been supported by
the people and hence, like sensible
man. he has resigned. In the United
States he would have hung on four
years and waited until he was kicked
out. Not so in France and the other
European democracies, which have
many things they can teach us. We
think we are far superior because we
are richer, but we forget that we of
the United States and Canada are liv-
ing like drunken sailors on our natu-
raj resources, while those countries
have no such resources. Therefore,
the first need in understanding the
French situation is to realize that
considering their resources, the
and are utilizing their frugal re-
sources far better than we utilize
ours. The French government is fac
ing difficult situation. but it has not
fallen and will not fall. Furthermore,
1t is earnestly attempting to solve its
problems as rapidly as possible. OF
course it's immediate problem is one
of finance.
Why the Franc Falls.
ALTHOUGH the French people are
well-to-do, the French government is
hard up. Ever since the war the
French people who are naturally
thrifty-have continued to save: but
the French government has constant
ly been spending more than it has
collected in taxes. To make up this
deficit it first borrowed money. but
mostly has been merely manufacture
ing money-that is, issuing more pa
per francs. The franc is. of course
the unit of money in France. as the
dollar is the unit in the United States
and Canada. When the war broke
out in 1914 franc was worth about
90 cents in gold, which was it's par
value meaning that it could he eX-
changed throughout the world for
about 20 cents in gold. Since the
French government mas been print
ing these francs in such huge guam
titles the supply of francs has in
creased faster than the reserve secur
ing them and their price or value in
terms of gold in the worlds market
has fallen. Today the franc is worth
only about 3 cents in gold.
"As the French government prints
more paper francs the value of the
franc declines, but as the government
stops printing the decline stops. One
thing is certain. namely. that this ex-
rope a real lesson in economics which
perienCe is teaching the people of II,I-
should be taken to heart by the pao-
pie of the United States and Canada.
No nation or people can help itself
by printing more money. A nation
is worth only what il possesses-and
its money is worth the same. If
man has 100000 of assets and owes
Sl0Q. 900 of notes. these notes are
worth par; but if he puts out 81 .O00.-
600 Of notes. these notes are worth
only 10 cents on the dollar. Wealth
can be created only by integrity. in
dustry. thrift and initiative Laws,
money. stocks and bonds are mere
nothing in the end except as they
are backed up by these sterling quail
tiles. Moreover. strange to say, the
French people realize this today even
more than do the Americans. We