French Currency and Exchange

Report Outline
Currency Demoralization in France
Inflation of French Currency
Report of French Committee of Experts
New Poincare Finance Measures
Belgian and Italian Exchanges
Special Focus

Since May, 1924, when Edouard Herriot came into power in France, each succeeding cabinet has centered its effort upon finding a solution of the financial problem which would prevent the franc from following the disastrous course of the German mark and the Russian rouble. Each retiring cabinet during these two years has left the franc a little lower than when it came into power. The further drastic declines of the exchange in May and June caused the Briand cabinet to appoint a committee of experts to study and report on the financial situation and recommend measures for its solution. The report of this committee, which was submitted on July 4, 1926, emphasized the critical character of the situation and laid down elaborate and definite measures for reform. These recommendations were based on the necessity for early stabilization of the franc and urged that the finances be separated as much as possible from politics. Among other things the experts recommended the speedy ratification of the French and British debt settlements in order that foreign credits might be more readily available while stabilization was being carried through.

M. Poincare and the Experts' Plan

Aristide Briand, who was at that time in power with his tenth cabinet and with M. Caillaux as Finance Minister, promptly endorsed this program of the experts and asked Parliament for plenary powers to carry out the recommendations. M. Herriot on the left and the Nationalists on the right violently opposed the granting of any such dictatorial powers and Briand's tenth cabinet was overthrown on July 17. M. Herriot, who was asked to form the next cabinet, succeeded in staying in power only until July 21, and on July 23 M. Poincare succeeded in forming the National Coalition cabinet which is at present in power and which includes both M. Briand and M. Herriot.

M. Poincare did not at first seem inclined to follow the advice of the experts, especially in regard to the ratification of the foreign debt settlements, but all the financial measures which he succeeded in putting through Parliament before its adjournment on August 11 indicate that he is veering more and more to their point of view, at least so far as the initial steps are concerned. These measures were passed with almost no opposition and M. Poincare by parliamentary methods succeeded in obtaining from the Chamber practically the arbitrary powers which M. Briand and M. Caillaux had asked for more bluntly two weeks before and had been denied. The French Parliament will not reassemble until the middle of October. Meanwhile, with the first preliminary steps taken, M. Poincare has a breathing space in which to make further plans for financial reform and if he sees fit, for following the recommendations of the experts.