AT THE moment when hostilities ended and France was completely liberated, the new French Government headed by General de Gaulle faced a singularly grave financial situation. This can be pictured by a few statistics. The daily indemnity paid to the Germans during the occupation, first amounting to 300 million and finally to 500 million francs, had increased the bank note circulation from 142 to 572 billions. The level of official prices, taking 1938 as the basis for comparison, had risen from 102 to 276; but the real level, reflected by black-market prices, had approximately quadrupled. Expenditures in the 1945 budget reached 512 billions (not including 88 billions outside the budget), while receipts amounted to 207 billions -- whence could be foreseen a deficit of about 300 billions.

These figures evoked a double problem, at once monetary and financial. Was it feasible then and there to fix on an acceptable rate of exchange for the franc with the pound and the dollar, from which it had been cut off for five years? Secondly, could budgetary expenditures and receipts be balanced while the foundations of the French economy were shattered? -- while the railways, bridges and roads remained partly destroyed and the system of electrical production and distribution was in chaos; when coal output was reduced by half; when automobile production and repair had not functioned for five years; when there was a dearth of gasoline; and when foreign trade was practically suspended, which meant that the only way to pay for imports was to draw on the reserves of the Bank of France?

Budgetary problems, monetary problems and problems of reconstruction thus loomed up at the same time and inextricably intermingled. It is hardly surprising that at the outset proposed solutions were hesitant and uncertain. However, one fact seemed obvious and dominated all the others: the systematic inflation organized by the Germans had to be stopped as soon as possible. The military and administrative expenses of the state must be reduced and efforts concentrated on reconstruction. Thrift must be encouraged and bounds set to the rise of prices.

Such were the opinions of Frenchmen who, after having suffered four years of the occupation, still kept in mind the monetary and financial mistakes made after the First World War. They thought that the Government's primary task was to put its financial house in order as the sine qua non of getting production under way.

But these views were bound to come into immediate collision with entirely different political concepts, the outgrowth partly of passions roused by the occupation itself, partly of divergences of opinion between the French who had been outside France, in exile in London and Algiers, and those who had remained in the country throughout the war. Equally courageous in their resistance to the enemy, these two groups were nevertheless profoundly divided by the dissimilarity of their experiences. From the start, in consequence, financial good sense had to yield to political considerations.

To begin with, concern over military needs took precedence over all others in the mind of the new Chief of State. General de Gaulle considered restoration of the combat power of the French Army to be of first importance. He thought a large number of soldiers supplied with the most up-to-date weapons must be kept under arms. In a country ruined by five years of German occupation he planned to create the active army which it should have possessed at the beginning of the war. His aim seemed not so much to reëstablish the prestige of France in the eyes of the beaten enemy as in those of her allies, east and west.

This conception resulted in maintaining and even increasing French military expenses to a degree no one could have expected at the moment of liberation. Over a long period our foreign purchases were mainly in the field of war matériel -- airplanes, tanks and motor trucks. At the same time, nearly 2,000,000 men were kept under arms, a figure quite disproportionate to the country's actual needs. In a recent speech, Minister of Finance Schuman stated that at the beginning of 1946 the army still numbered 1,800,000 men. It has since been reduced to about 500,000. But during the first six months of 1945 the military expenses represented about 40 percent of the budget of ordinary expenses. Today they have been reduced to 29 percent, a proportion almost the same as that in Great Britain and the United States, where army expenses form 30 and 31 percent of the budget.

A second and very different concern dominated the minds of the political leaders during the first and second years after the liberation. They wished to increase the purchasing power of the working class, whose wages had been systematically kept at an abnormally low level by the occupying Power and the Vichy Government. To raise the wage scale was indispensable; but this redress of wages, as well as of salaries of state employees, would inevitably be reflected in the price of goods so long as the quantity of these remained the same. The considerable difference in price between commodities sold at the legal rate and those sold on the black market forecast an inevitable price increase. At the outset, at least, there could be no question of increasing production of goods. The maritime transport at our disposal was practically nil. The absurd division of France into as many separate economic units as there are departments kept the least favored departments in penury. As for increasing agricultural production in a country deprived of artificial fertilizers for four years and working with reduced manpower, this could not be reasonably expected before at least a year after the return of the prisoners from Germany. The increase of wages and salaries thus was inevitably reflected in a considerable rise of prices which, in turn, quickly reacted on state expenditures.

This preoccupation with giving help to workers and government employees (as was, I repeat, perfectly legitimate after four years of want) was associated with another completely contradictory concern, namely, to stabilize the price level and avoid the deadly cycle of a complementary rise of wages and prices.

The political and economic general staffs that arrived in France from London and Algiers after about four years of exile had been impressed by the efficacy of the economic controls exercised in Great Britain and the United States. The system of rationing applied in those two countries (under much more favorable conditions than in France), as well as the system of subsidies aiming to prevent price rises in certain products, seemed to them particularly effective. Back in France, their first care was to strengthen such measures or apply them where they had not existed before. This is not the place to speak of rationing, except to say that, after five years of rigorous constraint, means of alleviating rather than reinforcing it should have been sought. Subsidies to prevent rises in the price of bread, meat and coal could only increase the sum total of expenses at a time when budgetary receipts were lowest and when every effort should have been made to avoid useless expenditures. These subsidies in the 1945 budget amounted to nearly 50 billions, or 9 percent of the total.

Thus from all sides, under the pressure of military men, government employees and workers, and finally of politicians who feared the consequences of too quick a price rise of essential commodities, budget charges soared rapidly -- but without the means of obtaining sufficient income making an appearance.

Later on I shall point out what the budgetary situation is today. First, however, let us briefly consider the monetary situation as it existed at liberation, and how it has since developed.

Metropolitan France at the time of the liberation had no foreign exchange rate. The only currency with which exchange was made was the mark; the rate was 20 francs for one mark. This rate was extremely unfavorable to the franc and, on the other hand, very advantageous to the occupation troops. Systematic pillage of a conquered country by stabilizing its rate of exchange is a financial invention which was unknown in epochs when monetary circulation was primarily metallic; but it is easily operated in paper-money régimes. During the First World War the Germans had already made considerable use of it in the occupied territories of France, Belgium and Poland.

On the other hand, a rate of exchange of 200 francs to the pound sterling and 50 francs to the dollar had been put into effect soon after the debarkation of the Anglo-American troops in North Africa. These rates hardly differed from those in force in 1938. When they arrived in France from Algiers, the financial general staff wished to maintain them, even though they gave the franc much too high a value in relation to the two other currencies. As a matter of fact, if one compares the rise in prices in France, England and the United States during the war, one sees that the wholesale price level in France corresponded to the coefficient 4 or 5, while in England and the United States it needed to be multiplied by only about 1.5 compared to 1939. This exchange rate made French merchandise seem excessively dear to holders of pounds or dollars. Allied soldiers complained from the outset. However, since French imports from abroad were managed in 1944 exclusively by the state, and since, furthermore, the Allied leaders wisely wished to make it difficult for their troops to buy in a country already swept clean of merchandise, the maintenance of this rate seemed acceptable at first.

But as soon as hostilities ended the problem of importing civilian commodities had to be faced, a problem closely bound to that of French exports. It then became obvious that the official rate of exchange was prohibitive for most of the export commodities. On the other hand, the French had an obvious advantage in procuring foreign currencies at this very favorable rate for purchases from Switzerland, England and the United States. The fact was quickly appreciated by the few Frenchmen who at that time managed to travel in England or Switzerland.

In December 1945, the French Government, seeing its reserves of gold abroad rapidly diminishing and realizing that without exports France would be unable to procure indispensable commodities and tools of production, decided to devalue the French franc. It stabilized it at a rate of exchange of 480 francs to the pound, 119 to the dollar, and 27.63 to the Swiss franc. These are still the rates today.

But during the interval the level of French prices continued to rise. Could this rise have been prevented? On that point there has been the sharpest disagreement between the economists who came from Algiers and those who had remained in France. The former were influenced by the ideas bruited about in London during the war and by their conversations with Belgian, Dutch and even certain English economists. In their opinion, a further rise of prices and fall of exchange could be stopped only by an abrupt reduction of monetary instruments (bank bills and creditor accounts current in the private banks). Starting from the premise that a good part of the purchasing power created during the occupation was hoarded by individuals and had not yet been put into circulation, they thought they could prevent a further rise by destroying this purchasing power. This idea of a deflation caused by reduction in value of the instruments of payment harks back to the beginning of the nineteenth century. It is a highly debatable theory, with hardly any experience to support it. The Belgian Government nevertheless applied it at once with great energy. It blocked private accounts in the banks and proceeded to an exchange of bank notes which was to end in the destruction of a part of the notes given up by the holders.

The French situation was very different, however, from the Belgian. In the first place, the French Government did not physically possess the new notes that would be necessary to effect an immediate exchange. Secondly, Belgium was a creditor of the Anglo-Saxon countries for considerable sums as a result of its deliveries of merchandise to them, especially from the Belgian Congo. The balance of Belgian accounts was therefore at least momentarily favorable vis-à-vis the Anglo-Saxon countries. Belgium could import considerable merchandise from them in the assurance of being able to make payment, thanks to her credits in London and New York. Lastly, and above all, Belgium had decided on an energetic financial policy which was intended to achieve relative budgetary equilibrium beginning in 1946. The continued inflation from which she suffered during 1944 and a part of 1945 resulted from the expenditures of the Allied armies on her territory much more than from her own expenditures.

Those Frenchmen who opposed a sudden amputation of monetary circulation first emphasized the technical difficulties of a blocking operation applied to 40,000,000 inhabitants, compared to the mere 6,000,000 in Belgium. France, moreover, had not a single favorable element in her balance of accounts. Besides, skepticism was permissible about a simple cut in purchasing power as a means of reducing prices. Previous experiments of the kind had proved ineffective if not accompanied by a rapid increase of the quantity of merchandise. And it was impossible to count on any considerable production of foodstuffs or manufactures. Above all, the Government showed no disposition whatever to move toward balancing the budget, which alone would have calmed public fears of a coming inflation.

The Minister of Finance then in office had no other choice than to follow a middle course. He decided first to contract a substantial loan which, he believed, would enable him to cover at least a part of the budgetary deficit; and secondly he proceeded to exchange bank notes without synchronously blocking accounts. The loan issued at three percent proved very successful and brought in 125 billions. The exchange of notes, in June 1945, principally resulted in influencing a great number of note holders to open bank accounts. The amount of bank notes in circulation was in consequence reduced from 550 billions to 445. At the same time the total of deposit accounts in the four great banks rose from 314 billions to 371. This increase resulted in an immediate augmentation of subscriptions to short-term Treasury bonds, since the sole employment offered to banks of deposit for their receipts was investment in bonds. Lastly, about 30 billions of notes were not presented to the Bank of France, which allowed it to deduct that amount from its liabilities.

The result of the operation was therefore to put the Treasury in possession of considerable sums at a moment when its expenses were huge and its tax receipts very meagre. But this relative affluence of the Treasury, while it relieved the Minister's immediate worries, risked causing him to forget that the resources he had used to cover current expenses were exceptional and would not occur again. Furthermore, these resources reassured the public, which was badly informed on the situation, delaying considerably the moment when the issuance of new bank bills would become necessary.

The operation could have no effect on prices, since all the sums deposited in the Treasury necessarily had to be put back into circulation. The total purchasing power of the country had suffered no curtailment. The rate of circulation of the currency was greatly accelerated, since funds which till then had been hoarded were being spent by the state.

Most important of all, nothing was done to reassure the discerning part of the public which looked not just at the present situation but at what lay ahead. Price rises in fact result not only from a consideration of the present currency total but from fears regarding its increase. They are the result not only of consumer demand, but also of hoarding by owners tempted to build up stock piles in fear of future inflation. This double action -- increased demand of consumers fearing imminent price rises, and curtailed offers by producers fearing currency depreciation -- has a powerful effect in stimulating price rises. The French Government should therefore have taken every method of dissipating these fears, especially by demonstrating that all means were being employed to establish budgetary equilibrium.

Alas, the Government took the exactly opposite course. On December 31, 1945, M. Pleven estimated the budgetary expenditures at 438 billions and the receipts at 289. This meant a deficit of 149 billions. Nine months later, on September 3, 1946, M. Schuman estimated budget expenses at 581 billions and receipts at 372, which would give a deficit of 209 billions. Thus, in nine months expenses had grown by 33 percent, the anticipated receipts by 30 percent, and the deficit by 40 percent.

These figures give a quite inadequate idea of the situation. In fact, to the strictly budgetary expenditures should be added the deficit of the railways, the cost of reconstructing transport and the cost of nationalized enterprises, altogether 73 billions. To this sum, again, should be added 114 billions, the cost of reconstructing private enterprises. Consequently, the total expenses falling on the state for the year 1946 reached 768 billions, as compared with normal receipts of 372 billions. The difference between these two figures, 396 billions, will have to be covered by loans, by the liquidation of requisitioned foreign holdings, and finally by advances of the Bank of France, that is, by the inflation which M. Schuman estimated at 100 billions of notes. Such was the situation at the beginning of September 1946.

What instantly strikes one in this picture is how expenditures shot up. How did it happen that in a year and a half they had reached 581 billions? Of this total, civil expenses accounted for 411 billions and military expenses for 170. The military expenses consequently represented 40 percent of civil expenses and 29 percent of the entire budget. Obviously, they were out of all proportion. It is absurd for the French military budget to represent the same proportion of our expenditures as the American and British do of American and British expenditures. On this point the French public has made up its mind. The contrast of military opulence with national poverty, and the continuing manufacture of armaments which will be completely outmoded in a few years, has scandalized everyone familiar with the situation. Yet so far the stubborn resistance of the military hierarchy has succeeded -- as it did in 1918 after the last war -- in slowing down the deflation of the armed services which successive ministers of finance so much desired.

Civilian expenditures are also out of all proportion. One evilomened expense consists of the subsidies by which the state hopes to maintain certain products at prices more accessible to consumers. During the war this policy might have had some usefulness in helping to keep down living costs, especially for the working classes. But after peace was restored it had no further raison d'être. It works only when the prices of the products subventioned are kept at their normal levels. When an inflationary policy raises the general level of prices, the sole effect of subsidies is to retard, without preventing, the price rise of particular products. That happened in France. Since the general index of prices had risen in two years from 276 to 812 (October 1946), the relief afforded consumers has been imperceptible. On the other hand, the disadvantage of the contribution to the budgetary deficit is only too real.

Politicians are loath to admit that the rise in prices originates in the budgetary deficit and the resulting inflation. They stick to an official policy of lowering prices while refusing to admit to themselves that the mainspring of the rise is the budgetary deficit. If the public were confident that there would be no further inflation, they would be far less frightened by some increase in prices. In reality, increase is an indispensable condition for price readjustments based on the current situation resulting from sellers' offers of merchandise on the one hand and buyers' purchasing power on the other. If the creation of purchasing power were definitely stopped, preventing the periodic augmentation of private incomes, prices would soon reach a ceiling above which no purchasers would appear. At that precise moment the fall in prices would begin. The temporary rise preceding this decisive moment would therefore have proved salutary. But so far, whenever prices have risen, at the very moment income began to be insufficient to cope with them the state has intervened to raise them still higher by a new inflation. Thus it systematically prevents the effect price rises normally would have in diminishing private expenditures and initiating a price decline.

Besides ending subventions and reducing military expenses, the Government could effect substantial economies in a number of the civil ministries. The Ministry of Information, for instance, could be liquidated. The personnel of the Ministry of Food should be reduced in proportion as the produce markets are freed from restrictions. It is true that certain ministries, such as those of National Education and Hygiene, have scarcely enough personnel to fulfill their tasks. On the other hand, the multiplication of formalities and controls in all the ministries has entailed an unhealthy proliferation of bureaus and civil servants. These can be limited in many cases only by abolishing all the absurd formalities they are called on to apply. A reduction of expenses is therefore closely linked with deliverance from police, economic and administrative controls. The liquidation of these services should be undertaken as soon as possible.

Mention should be made here of another source of increased expense -- the nationalization of a great number of industries. No one now denies that these nationalizations have cost the state heavily. I am not discussing the principle of the thing. Throughout Europe a powerful wave of opinion holds that the industries basic to a nation's economic life should be managed directly by the state, and should no longer remain merely under its surveillance. In time of war, when all the national forces must be concentrated under a single command, public opinion is worried at seeing essential defense industries in non-government hands. It fears some foreign or selfish influence may gain control. But even admitting that the nationalization principle may be morally justified, its practical value will depend primarily on the technical results. So far, the procedure has beyond doubt put burdens on the state. Its extension to other industries can result only in increasing these burdens further. This project should consequently be resolutely abandoned.

M. Schuman has estimated the probable receipts of the ordinary budget at 372 billions, which seems reasonable, since the tax receipts have continued to grow in the past year. It would indeed be extraordinary if they had not increased, considering the continuing rise of prices and incomes. As for reaching 581 billions, however, the sum required to balance expenses, that is quite another matter.

Given what we know about the present income of the French people, can we reasonably hope for any such sum? According to the most reasonable estimates, the French people during the past 30 years have paid on the average about 25 percent of their income in taxes. In order not to exceed this very high figure, their total income must reach 2,324 billion francs. The most dependable estimates of total French revenues are in the neighborhood of from 1,500 to 1,800 billions. Moreover, such high estimates as these could not have been made had not inflation (not increase of production, as would be the case in a normal economy) continually supplied new revenues. A figure like 2,324 billions could be attained only at the price of a new inflation, in other words, of a new depreciation of the franc, with all its attendant consequences.

The conclusion is that a substantial reduction of current expenditures is indispensable. If they are brought down to about 450 billions (which would presume an income of 1,800 billions) there is a chance of not exceeding what the taxpayers can reasonably pay.

But the extraordinary budget still remains to be covered. Its expenditures can be classified under two headings: replacement of destroyed national equipment (ports, canals, railways, bridges, public buildings, electric production centers, etc.); and reconstruction of private buildings (houses, factories, etc.). Some people suppose that all this can be financed by a new emission of paper money. Ingenious theories have been propounded to the effect that a productive inflation does not have the same effect on prices as an inflation resulting from a deficit. All experience gives the lie to such ideas. Their inspiration can be traced to the much-advertised work bills, put out in Germany in 1933, which did not provoke price increases. But the German situation at that time was wholly different from France's today. Germany had from eight to nine million unemployed, and the sole fact of returning them to work was sufficient to augment revenues without provoking a price rise. Furthermore, at that time there was a worldwide depression. In France today, on the other hand, there is an acute shortage of manpower, and in the world as a whole there are rising prices. Importation of foreign manpower is a pressing need. But if paper money is created to pay for this extra manpower, the result will be a price rise in all markets, followed by new demands for wage increases. This sort of a solution is a mirage. Reconstruction can be achieved only with the help of loans floated in France and eventually abroad.

The existence of public and private credit which will enable the state and private enterprise to find the needed sums in the French market or abroad is consequently indispensable. These sums will not be obtained unless the lenders, French or foreign, are convinced of the stability of the currency. By the logic of things, then, one has to view the monetary and the budgetary problems together. There will be no monetary stability without a budgetary balance; there will be no budgetary balance without monetary stability; and, above all, there will be no public or private credit without stability.

It is often asked in the French and foreign press whether the franc can be maintained at its present level or if it must undergo a new devaluation. As I see it, the following are the basic facts on that question. First, we must remember that the present level of prices in France is not the product solely of the interaction of existing public purchasing power and the quantity of merchandise offered; it is determined even more by the public's forecast as to future prices. But up to the present no financial plan has been proposed. Balancing the budget seems to have been the least of the worries of the last two Assemblies; and the efforts at reduction attempted by the Ministers of Finance have thus far had no visible effect. The French public, therefore, remains convinced that the rise in prices is going to continue. Buyers consequently are eager to buy; on the other hand, sellers keep their commodities in reserve. Present offers and demands are falsified by the perspective of future developments. This situation would immediately change if the public became convinced that the Government and Parliament had the will to balance the budget and stop the emission of paper money. We should then see merchandise offerings increase and prices fall. Financial reform is thus the preliminary condition for any stoppage of the price rise.

The upward trend of prices has also been stimulated by the Government's control policy, especially with regard to agricultural products. Despite the more than dubious statistics of the Food Ministry, everyone knows that production of many provisions -- meat, eggs, vegetables, potatoes -- is very nearly at prewar levels. No Frenchman believes that the production of wine or wheat, supplemented by colonial importations, is inadequate to supply the population. The almost complete disappearance in certain regions of milk and butter is another inexplicable paradox. Each time the control ceiling for certain products like meat was raised, supplies came into the private markets. But whenever the ceiling was lowered, the markets were empty and the black market price rose. A policy of decontrol, facilitating transfers between regions and a unification of prices over the entire territory, would soon bring about a price decline -- provided inflation were stopped. Improvement of transportation, and especially of maritime transportation, also would obviously help.

These comments suffice to make it clear that a mere comparison of price indexes in France and abroad is not enough to determine the true parity between the franc and foreign currencies. That parity cannot fairly be estimated until after a financial program, enforced by public opinion, has been devised and applied.

When all is said, we find that the key to the problem consists in balancing the budget. Once this has been achieved, or even seriously attempted, the psychological factors which today falsify the operations of buying and selling will be replaced by influences which will tend to stabilize or lower prices. Elements favorable to stabilization will immediately appear, and the technical problem will be solved with relative ease.

This last problem is a double one. First, it consists in guaranteeing France sufficient exports to enable her to pay for her imports. A price level slightly lower than the present one would suffice to increase French exports. But the longer it takes to get the financial reform under way, the greater the risk that the price rise will destroy our export trade. In the latter case a new fall in the franc will be inevitable, with grave consequences for the entire internal price structure.

The other aspect of the problem consists in relinking the French currency with foreign currencies and reconstituting the French stock of international money, that is, of gold. The purchase of domestic gold at a suitable price and the reconstitution of the metallic reserve of the Bank of France will become practicable when belief is restored that the stability of the franc is near. There are considerable quantities of hoarded gold in the country; indeed, according to dependable estimates they amount to three or four thousand tons. The hoarding occurred especially during and after 1936. It is a fair presumption that under similar circumstances we could repeat the experience of M. Poincaré in 1926, when a golden stream flowed into the Bank of France under the impetus of restored confidence. The tremendous variations in the price of gold on the free market show that the present rates are the result of psychological factors which will disappear when confidence is restored. As happened under M. Poincaré, a diminishing purchasing price might be announced for all gold brought to the Bank of France, the price to be stabilized at a rate at which the Bank would promise to maintain its convertibility.

If the necessary steps are taken, there is nothing in my opinion to prevent the rate from being identical with today's official rate. But the rate does not depend on France alone. It will be determined by the price levels of countries with sound currencies, and especially the United States. If these levels begin to fall, the entire French problem will have to be considered anew.

As this article was being completed a new factor intervened -- the experiment begun by M. Léon Blum and continued by M. Ramadier's cabinet. The Government ordered all producers and dealers to lower prices by 5 percent, with another 5 percent decrease in view three months later. The psychological effects were considerable. All shops at once put up signs announcing the new prices. Industrialists and farmers also made efforts to comply, though this was not always easy. At the same time, the price of gold fell sharply on the illegal exchange, and there was a spectacular 20 percent drop in stock exchange values.

Quite aside from the brake which the new policy placed on rising prices, it had another advantage. It put industrialists and, above all, the Government in a position to oppose new wage and salary demands. Since government efforts now tend toward a reëstablishment of purchasing power, exaggerated increases in wages and salaries would compromise the results that the new measure was designed to produce. A fall in the cost of living, if it could be secured, is much more important for the workers than a nominal rise in wages. In a word, the new policy gives the Government a breathing spell in which to devote itself to the essential task of balancing the budget. For it goes without saying that the new policy can be effective only if the principal cause of the price rise is eliminated, namely, the budgetary deficit and its inevitable concomitant, the printing of paper money.

The Ministry of Finance has already announced certain significant measures. It is proposed, in particular, to reduce the number of employees, perhaps by as much as 50,000. That would indeed be an excellent start. But, as pointed out above, no such program can be realized without suppressing an important number of the control and enforcement agencies which have been created during the last six years. This cannot be accomplished without abandoning the controls themselves, which is the same thing as saying that administrative reform is linked closely with political economy. In the matter of food supply, it becomes more and more important to return to the free market in a number of commodities. Public opinion is convinced, and rightly, that the markets for meat, wine, wheat, sugar, etc., could be left largely to regulate themselves. Only the big cities now suffer from inexplicable scarcities; country districts are fed as well as they were before the war. It is in this field that the greatest effort should be made. The quicker the black market disappears, the quicker the resulting benefits can augment the growth of budgetary receipts.

The present experiment will succeed only on the express condition that the respite which it provides for reëstablishing public finances on a sound footing is availed of to the full. If there is a balanced budget, industrialists, traders and farmers cannot refuse to make the real sacrifices demanded of them. The Government's decisiveness thus will determine the success of its new policies. In a period of controlled economy, government responsibilities increase with government powers. The Government itself therefore must set the example. Recent declarations of M. Robert Schuman, Minister of Finance, and of M. André Philip, Minister of National Economy, show that they are conscious of the extent of this responsibility.

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  • CHARLES RIST, Professor of Political Economy at the University of Paris; chief French financial adviser at the World Economic Conference; Economic Adviser to the Ministry of Blockade, 1939-40; author of many works
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