FRANCO-BRITISH PROBLEMS

Dominion, Volume 12, Issue 220, 11 June 1919, Page 8

FRANCO-BRITISH PROBLEMS

INTERCHANGE OF TRADE

EMBARGO AND CREDITS

A prominent French financial authority stated in a recent cidiversation with a ".Morning Post" representative that the Franco-British economic problem must be regarded from tho point of view o£ the general economic problem of Europe. In point of fact there was clangor that Jjurope might go bankrupt unless it received aid from tho capital of the United States, 'the universal creditor. The. American financiers, whoso ideas of finance have so long been bounded by the frontiers of their own country, must for 'the snke of Europe and the whole world, learn to think in terms of international finance. So far as concerns Great Britain and France, there are two closely-connected problems involved: the embargo laid by France on British imports and die refusal of Great Britain to.grant further credits to France. As for tho embargo on British imports, this measure was taken by the French Government for two reasons. On the one hand there was .a question of protection for certain French industries which have been temporarily crippled by: tho war, and which are not for the moment m ,1 condition to face foreign competition. Ou tho other hand, the French authorities: are face to face with a very serious situation as concerns the balance of ' La«'t vear Francs exported to Great Britain* rather less than .£40,000,000, while she imported from Great Britain something like .M.000.000, so that, the balance against her was about JJIGO.OOO.OOO. Of course, less disastrous figures from the French point, of view are to bo expected in the coming year, since Franco has no longer to imnort much material needed for the war, but oven so, the situation can only be regarded as very serious, and the French Government was bound to itake measures to meet it. Either France would continue to buy and bono* abroad, ruining her credit, or to restore her financial position slw must stop her people buying,abroad, and impose on them certain privations .tor their country's sake. m • . These privations, duo to the stoppage of foreign imports, are the more acutely felt at the present moment since, despite tho terrible losses suffered by tlu> country as a 'whole, many French towns are passing through a. period of apparent prosperity owing to the presence of the American Army and other foreigners. The French shopkeeper finds himself face to face with an unprecedented demand, which is accompanied by an unprecedented rise in prices and a great scarcity of the products required. The Textile Trades, Take ■ the question of textiles. Last year the importation of textiles into Franco front Great Britain exceeded .{MO,OOO,<IOO, while the entire exports of France to Great Britain were rather below that figure. Tho French textile factories in tho North have been to a great extent ruined by the enemy, though the factories, in Alsace, which should represent about half the total French production, should soon bo able to compensate partially for that loss. In the past there was a very satisfactory interchange of textiles between France and Great Britain. France as a rule produced women's dress materials, which were imported into Great, Britain, while Great, Britain sent the cloth needed for men's clothing to France, Tt was to bo hoped, said the French financial expert. Hint affaire would in normal times bo resumed on the same basis, and that the British 'textile manufacturers would not insishou monopolising tho whole French textile mnrket.. The cmb;rgo on British imports into Franco was, in his opinion, fully justified by the foregoing considerations. It was to bo. regarded as a. temporary measure, necessarv in the transition stage between war and normal conditions. He hoped that within a year it would be cossiblo to resume' the old commercial relations between France and Great Britain.

Buying Sovereigns in New York. Turnine to the question of the credits accorded ""to tho French Government by Great Britain, my authority pointed out that tho attitude of tho British Govern-ment-could by. no moans !>e regarded as in any way retaliatory. French credit was 'in a very satisfactory position as concerned the United States owing to the expenditure of tho Americans in France. Since last August the l'rench Government had not been dependent, on credits accorded by the' British J rensury for the paymont.of its purchases in Great Britain. ' ' Owing to the presence of tho American Army, Franco had been able- to amass a considerable reserve of dollars. With this reserve the French Government purchased British sovereigns in New York, and so settled its liabilities in Great 'Britain. During the last months of IUIB Franco purchased in this way sovereigns To an amount of 150,000,-. 000" dollars, thus. keeping'down her exchange with Great Britain, and, indeed, causing some anxiety in this country that this financial policy might, result iu a serious depreciation of the sovereign, Great Britain's Caso, In January of this'year, however, tne French reserve of dollars was almost at an end, mid Franco found tho British Treasury unwilling, and, indeed, as tho French expert admitted, unable to accord further ciodit. Great Britain,'not being a sell-supporting country-like the United Siratos, lias to have credits with tho countries that supply, her with necessities. Even the extraction of coal it eans indebtedness abroad, in so far as tho miner has to bo fed on imported food. Great Britain at tho present mouiout noeds every available . penny for tho liquidation of the war and for necessary expenditure, arising from tho war, and cannot afford to lend money to Fraure. France is desirous of purchasing in Great Britain sufficient raw material to set her textile industry again working. An expenditure of .£35,000,000 or .000 19 involved, and for this expenditure she cannot obtain an/thins more than commercial credit, which implies payment in full in a year or fifteen months. But, unfortunately, as matters stand, it is impossible to guaranteo repayment in that time.

The pnly solution to the present problem' is to be found, lirst, in the > close accord of the Allies, and, secondly, in the assistance of American capital.