Evening star., 1954-10-17
French Economy
Cut in Sugar Beet Production HeruIds New Era
Of Realism, Competition Under Mendes-Fr
Ry Crosby S. Moves

Except for purely military aid.
the reliance on American generosity
to plug the gaps in the French
budget must stop. he said. The
answer, however, could not be found
in simple belt-tightening austerity.
Economic independence could not
be won at the expense of millions
of politically and socially restless
French workers.
The solution called for radical
surgery on the economic machine
itself. France, the most richly en-
dowed nation in Western Europe.
peopled by an industrious and in
genious race, was hamstrung by an
industrial system dedicated to creep
ing conservatism and inefficiency.
Low Notionol Income
The national income stood where
it had in 1929. Since 1850. French
industrial production had increased
only is per cent. compared to 80
per cent in West Germany. 81 per
cent in italy and II per cent In the
Netherlands.
To help revive the country.
Mendes- France demanded-and re-
ceived-unprecedented powers from
the National Assembly.
Under the terms of law passed
in August, the government is now
free to change any provisions in the
current budget as it sees fit. 1t can
spend money without parliamentary
authorization, revise the fiscal sys-
tenn, wipe out subsidies and price
supports, coordinate road and rail
transport, force manufacturers to
share profits resulting from in
creased output with their workers.
and develop a new system for
financing Frances expensive social
security system.
There is only one joker to the
Assembly's generosity: Full powers
also carry with them full RESPONSE
bility. In a field where every effort
at reform inevitably treads on SEN
Sitive toes, the governments plan
to revolutionize the French economy
is loaded with political dynamite.
Three New Funds
The revolution has started plac-
idly enough. The first series of de-
crees set up three new government
funds designed to smooth the way
and soften the impact of what was
to come. .s
The first was a "reconversion
fund.-" designed to help producers to
modernize or change their produce
ton. The second, known as the "re-
employment fund.-" is aimed at
re-educating workers in new meth
ods of more productive fields Of
employment. The third would A.
nance the redistribution of small
industries on more efficient geo.
graphical basis. re
The sums allotted for the first
three months were modest, too-$6
million each for reconversion and
unemployment. SO million for in
duStrial decentralization. 49,
The aim of the plan is to cut
down on inefficient operations. The
heart of Frances production prob
lem is the percentage of small.
inefficient, iIl-located plants. Five
million workers are scattered among
no less than 1.9 million private in
dustrial and commercial enterprises
many of them marginal ventures
where small production volume re-
suits in high costs and higher prices.
While the government hopes to cut
down the number of these marginal
operations, it is also standing by
with funds to ease the pain, to COM
pensate lost interests, regroup pro-
ductive forces and re-employ
workers.
Last Monday M. Mendes-France
made his first move to help French
workers. He announced a modest
2-cent increase in the minimum
hourly wage. Prices have not risen
in the last six months, SO 1t is
expected that the raise will be real
instead Of apparent, like so many
in the past. The move may sIso
have the effect of squeezing some
Of the more inefficient enterprises
out of business.
Toriffs Attacked
On another front the government
Is moving against the protective
tariff walls around the French econ
omy that have coddled its ineffi-
cheney.
At present only SIS per cent of
Frances requirements are allowed
by law to be imported from compet-
ing nations in the Organization for
European Economic Cooperation.
Today the government is whack-
ing away purposefully at this pro-
tectionist network and has promised
the OEEC to raise the percentage
of unrestricted imports to 65 per
cent by November /. The foreign
competition, it is hoped. will cause
some Of the protected, inefficient
producers to perk up.
The most concrete evidence that
M. Mendes-France meant business.
however. came with the decision on
what Is known here as the sugar
beet scandal" It showed he was
ready to do q politically unpopular
thing to aid the economy. That II
something other Premiers have
Stunned like the plague.