AFTER an interval of precarious peace France is again at war. Again she is fighting not only for her existence, threatened by German imperialism, but for principles of liberty and individual human dignity without which the French people do not think life worth living. At first glance her situation seems difficult. She has had to start a new war when not yet finished binding up the wounds of the old. She had just emerged from the depression of 1931-36, which left a heavy burden of public debt. Her currency had lost four-fifths of its value as a result of the World War and half of the remaining one-fifth in the depression. Yet there are grounds for believing that she can organize her economy to weather the storm even if it lasts a long time.
In spite of the heritage of the World War and the depression, France enters this conflict in more favorable circumstances than prevailed in 1914. Then, too, war caught us in the midst of financial difficulties. For several years social legislation and rearmament had drastically increased expenses. Receipts had not kept pace, because France still had an antiquated flat-rate tax system. The fiscal reforms first proposed in 1907 had evoked violent political controversy; and it was not until the end of July 1914 that Parliament adopted the principle of the income tax.
This time the possibility of war was anticipated and our effort to prepare for it began as early as a year ago. First of all the budget was put in order. Administrative reorganization reduced certain civilian expenses; appropriations for public works were cut; and new taxes were established that would produce an added 15 billion francs per year. The new taxes included a sales tax of 1 percent, the proceeds earmarked for armaments; and the special levy on earned income was raised to 5 percent. Unfortunately, these are not very democratic taxes, but they will bring in a good yield in a period of rising prices and increased money incomes. The floating
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