Wichita Daily Times (Wichita Falls, Tex.), Vol. 20, No. 108, Ed. 1 Sunday, August 29, 1926 Page: 41 of 65
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A-TX712***
WICHITA DAILY TIMES
SUNDAY. avovsT so. UN
PART THREE
RENCH PEOPLE IN FUNDAMENTALLY WHOLESOME STATE
Economic Situation Good and
Sound-Only Financial Condition
Gives Cause for Apprehension
By FRANK H. SIMONDS
WASHINGTON, Aug. 28.—Two weeks ago I discussed at length
the conditions in Great Britain, economic, social and political, which
explain the present crisis and the continuing difficulties. What, by
contrast are the equally vital circumstances in the French situation?
The last statement of the number of British unemployed receiving
government aid fixed the figure at nearly 1,700,000, while this was ex-
clusive, of course, of at leapt an equal number actually unemployed by
reason of the miners’ strike. At the same date the number of French
receiving government aid was 372 and in the same week several thou-
sand foreigners had entered France and obtained Jobe while the offi-
cial liat of positions vacant amounted to more than 12,000.
The French situation, thea, must
be perceived to be totally different
from the British. Industrially
France is busy as perhaps never
before la her history. Ths coal
mines of the devastated area are
producing an appreciably larger
yield than before the war, while
the small coal areas acquired in
Lorraine have added to the French
supply. France has replaced Bri-
tain an the third country in the
production of iron and steel end is
actually crowding Germany hard.
Germany holds second rank, while
we lead. "
employment and somethin* of the
boom in French industry.
French agriculture is certainly
prosperous. Many, many thousands
of Spanish and Italian farm labor-
era have come and are coming into
France and not a few are actual-
ly taking up abandoned farma in
the center and south, where depopu-
lation has taken place. The Iset
census of Francs, taken thin last
winter, showed a gain of • mil-
lion and a quarter In five years
and also marked the presence of
three million foreigners, two-thirds
of whom had come since the end of
One can say, to begin with, then,
that none of the major difficulties
which confront Britain, Germany
and even Italy, complicate the
French outlook. To live. Britain
must sell from about one-half to
two-thirds of what she manufac-
tures. sad buy feed and raw mate-
rials. Her main sources of Incoms,
to balance her enormous outlay for
foreign goods and raw materias,
were before the war threefold
namely the earnings of her foreign
investments, the sale of coal and
the returns from her merchant ma-
rine engaged in the carrying trade
of the world.
And her main troubles at the
moment arise from the fact that
the investments have been greatly
reduced by the war, the foreign
market for coal has enormously
contracted and is still contracting
and ths supply of foreign freights
is vastly inferior to ths capacity
of her merchant merino.
There to a fourth circumstance In
the British case, which aleo touches
the French: the stabilizing of the
pound sterling greatly increased
the eoat of British production, while
the decline in value of the franc
enabled the French to produce more
cheaply. France has been dumping
nil sorts of things, notably iron
and steel and textiles, net alone in
markets once British but in the
British Isles themselves. This ex-
plains something of the British un-
Be Longer An Advantage.
It is, however, a fact that in the
process of inflation the moment ar-
riven when the advantage due to
cheaper production is loot by the
increased cost of materials abroad.
For a time one undersells abroad
because one has ths law materials
and labor is cheaper, but as the
homo currency declines in value
purchases abroad become eo expen-
sive that la the end not only to
the advantage loot but the country
selling cheaply is actually selling
for less than coot and thus la
diminishing Ite capital. It la at thlo
point that Franco haa now arrived.
Tol. economically, F ranee is
sound for the simple reeson that
she is a self-contained country,
whose industry is mainly occupied
in filling the domestic market and
depends only slightly on foreign
sales, and whose agriculture la al-
most sufficient to feed the country
and does not leave any large deficit
to be supplied by foreign purchases.
In addition, France haa a very large
return alike from productions which
are non-competitive and have n
world market to themselves and
from the vast tourist trade which
peace came. It is perhaps approxi-
mately $24,000,000,000 and that to-
gether with the pre-war debt the
French obligations now amount to
$30,000,000,000 and that thla value
represents the gold value at the
time of the borrowing.
The French debt has then been
expanded to a sum fl vs times as
graat aa before the war and where
the eoat annually of the debt bur-
den was perhaps $250,000,000 in 1913
it would now be almost $1,250,000,-
000 were the gold standard main-
tained. But thlo burden to beyond
the capacity of the country to car-
ry. What haa happened? The frano
has fallen from a little less then 20
cents to just three—and it has been
below two at one moment Thus
the face value of the present French
domestic, say $25,000,000,000, the
gold value, is little more than $4,-
000,000,000. In addition there are
the British and American debts,
which amount to 2,000,000,000 and
$3,000,000,000 respectively. On these
France would have to pay $162,-
000,000 annually. If the proposed
debt settlements are ratified.
If France should stabilize the
frano at three cento, that is, Ite
present value, and fund her domes-
tie debt at four per cent It would
cost her around $160,000,000 annual-
ly. Thla sum, added to the cost of
her foreign debt, would be In round
figures $525,000,000 annually,
against $250,000,000 before the war.
Such an increase, while considerable
would not be excessive and the bur-
den would not be beyond the ca-
pacity of the nation to bear. But
to accomplish this end oae must
perceive that it would be necessary
to sacrifice the hopes of all those
who together loaned the govern-
ment $25,000,000,000, T-ue, the mar-
ket value of the securities has new
fallen to $4,000,000,000 but there has
always remained ths hops tbst ths
frano would ultimately be restored
to par.
In Germany the old mark waa
actually wiped out, or allotted a
derisory value which amounted to
complete repudiation. Thus the Ger-
man people loot all that they loaned
to their government before and dur-
in* and after the war. In France
the loss would be five-sixths.
Whereas France would still have to
pay her, domestic creditors $160,-
000,000 Germany la paying almost
nothin*. By contrast, while Franca
would be payin* her foreign credi-
tors $160,000,000 Germany under
reparations must pay anythin*.up
to half a billion, the half of which
comes to France.
If you assume the stabilization of
the franc at three cents, and also
the continuation of German ropera-
tton# at a sum not to fall below
$825,000,000 then the actual situa-
tion ut France would be that she
would be payin* her domestic credi-
tore $162,500,000 annually, while she
would receive from Germany and
pay her foreign creditors, Britain
and the United States, an equal
sum. Thus in fact her total indebt-
edness would cost her less than it
did in 1913.
But to the preliminary step is the
abolition of the vast sums lent by
the French people to their govern-
moot, a capital levy of $20,000,000,-
000, in reality already made, but
not become irrevocable this side of
stabilization. , This step taken, the
Franck debt would be reduced to a
capital on n sold basis of $9,000,-
000,000, and $5,000,000,000, more than
half, would be covered by German
reparations, if Germany continued
to pay oven moderately largely.
Now aa Franco has not actually
declined in wealth since the war,
her losses having been balanced by
the acquisition of Alsace-Lorraine,
with ita great iron and considerable
potash deposits, and aa, In addition,
the sumo raised for reconstruction
have gone to giving northern
France a vastly better industrial
equipment. It is clear that, once sta-
bilization has come, the problem of
the debt will disappear, because
France can now bear a slightly
smaller debt charge than she car-
ried without trouble in 1914.
Balancing her budget, will not be
difficult when her debt charge is
thus fixed. Her military and naval
expenses have been much reduced
since 1914. Thue once the inevitable
disturbance incident to stabilisa-
tion to over, there will be no real
problem in France, if you assume
that the French people will bear
thimeipreahip of the temporary upset
It is plain that during stabilisa-
tion 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 unemployment will not be
charged upon the treasury as la
Germany or Britain, because there
are 2,000,000 foreign workers in
France who have ao claims on the
French government and would have
either to tighten their belle or *o
home. Undoubtedly French foreign
trade will loop in volume, but it
may lose little in actual return, be-
cause It ie 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 hae stabilized, then,
her budget will balance automatic
eally, because the trouble rests to
the excessive debt charges She
will not face continuing domestic
prostration industrially, as la the
case of Britain, because her Indus-
trial plant is built for ths domestic
market and not mainly for foreign
trade. She will continue to produce
most of her food and can look for
adequate foreign earrings, through
the export of iron, articles of lux-
ury 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
contrary, they had raised their debt
to par. It now aggregates between
$30,000,000,000 and $35,000,000,000
and the annual cent is between $1,-
250,000,000 and $1,500,000,000. But
putting the pound at par so raised
costs of production that the Brit-
ish were unable to compete with
the cheap money countries, while
obsolete methods and machinery pus
thsm nt a loss in competing-
America. At the same time i
world market for their chief prop-
uct, coal, was restricted aad con-
tinues to shrink.
The greatness of the French sic-
(Continued on Page U*.>
• CONGRATULATIONS TO THE HOLT HOTEL AND HOLT PHARMACY
• You’ll Find Your Favorite Cigar
Y. B.
LOVERA
PORTINA
EL VERSO
BERING
A.
MEDALIST
EL TORO
JOHN RUSKIN
SAM’L L DAVIS
TRAINMASTER
AT THE
eve • • • • stellle
*y.Py9 •9 •
comes annually.
Now to understand ‘the difference
between the British and French
situation, the fundamental differ-
once, a simple figure may help. The
British are la the position of a
great manufacturing establishment
which cannot earn the costs of op-
eration because it cannot find a
marhst for much of its production
and in addition cannot compete
with foreign rivals because of the
costs. It cannot pay ita operatives
enough to live and yet compete
and it cannot find markets for what
it produces at any cost.
The French situation is quite dif-
ferent. There is ne trouble in find-
la* markets, there is no problem
with respect of paying the em-
ployeen a Ilvin* wage, the problem
lies wholly in the fact that the con-
cern is overcapitalized, it cannot
earn a return on ita capital stock.
Let me illustrate what 1 mean.
Before the war the French debt
waa la round terms $6,000,000,000.
It waa the largest debt in existence
but it was carried by the country
without any great difficulty. In
ths war Francs borrowed at home
and abroad vast sums of money and
continued to borrow for reconstruc-
lion of the devastated area after
POULTRY
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FRESH EGGS
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We Pay Top Prices on Poultry, Eggs,
Butter and Hides
504 Tenth St.
Phones 5100-3288
Of Course
THE POSTAL TELEGRAPH
AND
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Wichita Daily Times (Wichita Falls, Tex.), Vol. 20, No. 108, Ed. 1 Sunday, August 29, 1926, newspaper, August 29, 1926; Wichita Falls, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1697443/m1/41/: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting Texas State Library and Archives Commission.