Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-08-29

settlements are ratified.
II France should stabilize the franc
at cents. that is. it's present value,
and fund her domestic debt at 4 per
cent, it would cost her around $780,
900 900 annually. This sum. added to
the cost Of her foreign debt, would
be in round figures 1925, 100000 an
nually, against $250.000,000 before
the war. Such an increase, while
considerable, would not be excessive
and the burden would not be beyond
the capacity OF the ration to bear.
But to accomplish this end one must
perceive that it would be necessary
to sacrifice the hopes of all those who
together loaned the government $685.
009, 900 900. True. the market value
of the securities has now fallen to
81 600. 900. 900. but there has always
remained the hope that the franc
would ultimately be restored to par.
Old Mark Wiped Out.
In Germany the old mark was ac-
tually wiped out. or allotted a de-
risory value which amounted to COM
plete reputation. Thus the German
people lost all that they loaned to
their government before and during
and after the war. In France the
loss would be ve-siXths. Whereas
France would still have to pay her
domestic creditors $160,000,0 900 Ger
many Is paying almost nothing. BY
contrast, while France would be pay
ing her foreign creditors $160.000, 900
Germany under reparations must pay
anything up to half a billion, the half
Of which comes to France.
If YOU assume the sterilization Of
the franc at 3 cents and also the
continuation of German PREPARATIONS
at a sum not to fall below $325.0O0,-
900, then the actual situation of
France would be that she would be
paying her domestic creditors $162.-
100000 annually, while she would re-
ceive from Germany and pay her
foreign creditors, Britain and the
United States, an equal sum. Thus
in fact her total Indebtedness would
cost her less than it did in 1918.
But the preliminary step is the alb
clifton of the vast sums lent by the
French people to their government, a
capital levy of $4,000 900, 900, in
reality already made, but not become
irrevocable this side of sterilization.
This step taken, the French debt
would be reduced to capital on
gold basis Of $4,000. 900 900 and $5.-
900 .000.0 900, more than half, would be
covered by German reparations, if
Germany continued to pay even mod
erately largely.
Now as France has not actually de.
clined in wealth since the war, her
losses having been balanced by the
acquisition of Alsace Lorraine, with
It's great iron and considerable potash
deposits. and as. In addition. the sums
raised for reconstruction have gone
to giving northern France a vastly
haf IND, trio &c oil
that, once sterilization has come. the
problem of the debt will disappear.
because France can now bear slight
ly smaller debt charge than she car
ried without trouble in 1914.
Question of Taking Loss.
balancing her budgets will not he
difficult when her debt charge Is thus
fixed. Her military and naval ex-
penseS have been much reduced since
1914. Thus once the inevitable dis
turbance incident to sterilization is
over. there will be no real problem in
France, If you assume that the
French people will bear the hardship
of the temporary upset calmly.
1t is plain that during sterilization
the cost Of living will rise. The cost
of production will also rise, and
France will lose in export trade and
face unemployment. But this unem-
ployment will not be charged upon
the treasury. as in Germany or Brit
ain, because there are 100000 for
eign workers in France who have no
claim on the French Government and
would have either to tighten their
belts or go home. Undoubtedly.
French foreign trade will lose in vol
ume, but it may lose little in actual
return, because it is notorious now
that it is running with little or no
profit, and if continued at the present
pace must soon run at a loss.
Once France has stabilized then,
her budget will balance automatically.
because the trouble rests in the ex-
cessive debt charges. She will not
face continuing domestic prostration
ndustrially. as is the base of Britain.
because her industrial plant is built
for the domestic market and not
mainly for foreign trade. She will
continue to produce most of her food
and can look for adequate foreign
earnings through the export of iron,
articles of luxury and her tourist
trade, which earns $250,000.000 gross
a year, to pay for her raw materials
which must be had abroad.
When the British had restored the
pound sterling to par, on the con-
trary. they had raised their debt to
par. 1t now aggregates between 800
600 .o00. 900 and $685. 100, 000. 900. and the
annual cost is between $3.50, 100000
and 81 SOC, 100000 But putting the
pound at par so raised costs of pro-
duction that the British were unable
to compete with the eheapmoney
countries, while obsolete methods and
machinery put them at loss in COM
peting with America. At the same
time the world market for their chief
product. coal, was restricted and con-
tinues to shrink.
Would Be Great Sacrifice.
The greatness of the French sacri-
flee. however, should be appreciated.
A good deal of nonsense about taxa
ton is talked of here in America. 1t
ia true that the British pay higher
taxes than the French. although not
much higher, while the French pay
vastly more than we do. But the SAL
walton Of the French situation de-
ponds on the consent of the holders of
So, 600, 600, 900 of French government
securities to seeing them marked
down to less than SIS ,000, 000. 900: to
their assent to a capital levy without
precedent save in the case Of Ger
many.
The strength of France lies in the
fact that it is a well balanced coun-
try economically. 1t has. to be sure,
to buy coal. oil, copper and cotton.
But IL has for sale iron. potash, its
great wine production which Is large
" without competition in the world.
and all the peculiarly French prod
ucts which the world buys only in
Paris. Add the tourist traffic and ii is
plain that France has little to fear.
Compare Britain. where so per cent
of the employed work for the foreign
trade, where tive-sixths of the food
must be bought abroad. Compare