FRANCE'S FINANCIAL CRISIS.

Hawke's Bay Herald-Tribune, Issue 44, 8 March 1937, Page 4

FRANCE'S FINANCIAL CRISIS.

The Government of M. Leon Blum, having with fairly satisfactory results dealt with the industrial ^oubles that faced it on taking office, is now confronted with something of a financial crisis. The post-war political history of France, with its so frequent changes in the personnel of its Administrations, eonsists mainly of a series of crisis of one Mnd or anotherj with varying but generally ver^r short periods of comparative quiescence in between. That headed by M. : Blum, the Socialist Capitalist, is appanently going to prove no exception. Whether or not arising from the measures taken for the ! settlement of labour difficulties, the new Government is now finding a fresh problem in the wa| of inducing subscriptions to the loan, largely for armament purposes, whieh it had proposed to issue. For this purporSe it is found necessary to coiidilliate, or at least to reassui/e, prospective lenders. In this regard, it has to'be borne in jnind that a very large proportion, perhaps the bigger halL, of French State loans is drawn directly from the pockets qf the thrifty middle dlass, which ciOnstitutes the main body of "rentiers," a quite substantial contribution doming evett from the industrious peasantry. Of the biggeT capitalists fipm whom support is also required, many have taken fright at the possihle lengths to which Soci&listic legislation might go and have sent their money abroad for what they regard as safer investment. It is M. Blum's task now to cairn the apprehensions of both classes and to induce the small fry to let loose their Stocking hoardings and the higger men to recall their capital. At the same time there is talk of the need, in the interests of international trade, to bring about some further devaluation of the fraaic in terms of foreign currencies, a movement which, of course, does not suit the rentiers. How the two needs are to be reconciled is one of the problems which the Blum Administration is now set to solve. Its difficulties are in no Way eased by the fact that the British Government, with its own £40O-million of rearmament loan money to raise, will afford no encouragement to lending to France. In any event, British investors have not yet fqrgOtten Ihe fact that those who during the war, with their own Government 's' consent, committed their money to French war bonds had to accept eventual repayment in francs which had been deliberately depreciated to one_fifth of their original exchange value. Last October, it will be remembered, Great Britain, tbe United States and France came to an understanding on the sttbject of currency exchange values. By this the franc was to be stabilised on the footing of 105 to the £-sterling, "equalisation" funds being made available to steady it round about that rate. Great hopes were entertained that this was the beginning of a general movement to regularise inter- ' national exchanges and so help to revive international trade. However, we hear now of a suggestion that the franc should be again devalued to the rate of 113 to the £-sterling, though it is said there are hopes of this being avoided. In any event, the> situation is one eausing a good deal of disquiet both at home and ahroad, though no doubt Germany and Italy will regard with more than complacency Franee's difficulties in financing her new armament prograinme.