[126]The British Treasury has issued statements showing that the French people at the end of last year were paying £2. 7s., and the British people £15. 3s. per head in direct taxation. The French tax is calculated at 3.5. per cent. on large incomes, whereas similar incomes in Great Britain would pay at least 25 per cent. This does not mean that the burden of taxes on the poor in France is small. Both the working and middle classes have been very hard hit by indirect taxes and by the rise in prices, which is greater in France than in England.The point is that in France the taxation is mainly indirect, this falling most heavily upon the poor; while in England it is much more largely direct.The French consumers are much more heavily taxed than the British, but the protective taxes of France bring in comparatively little revenue, while they raise the price of living and force the French Government and the French local authorities to spend larger and larger amounts on salaries and wages.The Budget for the year 1920 is made the occasion for an illuminating review of France’s financial position by the reporter of the Finance Commission, M. Paul Doumar.The expenditure due to the War until the present date amounts roughly to 233,000 million francs (equivalent, at the normal rate of exchange, to £9,320,000,000) whereof the sum of 43,000 million francs has been met out of revenue, leaving a deficit of 190 billions.This huge sum has been borrowed in various ways—26 billions from the Bank of France, 35 billions from abroad, 46 billions in Treasury notes, and 72 billions in regular loans. The total public debt on July 1 is put at 233,729 millions, reckoning foreign loans on the basis of exchange at par.M. Doumer declares that so long as this debt weighs on the State, the financial situation must remain precarious and its credit mediocre.[127]January, 1921.[128]An authorised interview published by the daily papers of January 28th, 1921.M. Briand, the French Premier, in explaining what he and Mr Lloyd George arranged at Paris to the Chamber and Senate on February 3rd, remarked:—‘We must not lose sight of the fact that in order to pay us Germany must every year create wealth abroad for herself by developing her exports and reducing her imports to strictly necessary things. She can only do that to the detriment of the commerce and industry of the Allies. That is a strange and regrettable consequence of facts. The placing of an annuity on her exports, payable in foreign values, will, however, correct as much as possible this paradoxical situation.’[129]Version appearing in theTimesof January 28th, 1921.[130]The Manchester Guardian, Jan 31st, 1921.[131]Mr John Foster Dulles, who was a member of the American delegation at the Peace Conference, has, in an article inThe New Republicfor March 30th, 1921, outlined the facts concerning the problem of payment more completely than I have yet seen it done. The facts he reveals constitute a complete and overwhelming vindication of the case as stated in the first edition ofThe Great Illusion.[132]As the Lorraine ores are of a kind that demand much less than their own weight of coal for smelting, it is more economic to bring the coal to the ore than vice versa. It was for political and military reasons that the German State encouraged the placing of some of the great furnaces on the right instead of the left bank of the Rhine.[133]It is worth while to recall here a passage fromThe Economic Consequences of the Peace, by Mr J. M. Keynes, quoted in Chapter I. of this book.[134]There is one aspect of the possible success of France which is certainly worth consideration. France has now in her possession the greatest iron ore fields in Europe. Assume that she is so far successful in her policy of military coercion that she succeeds in securing vast quantities of coal and coke for nothing. French industry then secures a very marked advantage—and an artificial and ‘uneconomic’ one—over British industry, in the conversion of raw materials into finished products. The present export by France of coal which she gets for nothing to Dutch and other markets heretofore supplied by Britain might be followed by the ‘dumping’ of steel and iron products on terms which British industry could not meet. This, of course, is on the hypothesis of success in obtaining ‘coal for nothing,’ which the present writer regards as extremely unlikely for the reasons here given. But it should be noted that the failure of French effort in this matter will be from causes just as disastrous for British prosperity as French success would be.[135]See Part I, Chapter I.[136]English Review, January 1913.Lord Roberts, in his ‘Message to the Nation,’ declared that Germany’s refusal to accept the world’sstatus quowas ‘as statesmanlike as it is unanswerable.’ He said further:—‘How was this Empire of Britain founded? War founded this Empire—war and conquest! When we, therefore, masters by war of one-third of the habitable globe, whenwepropose to Germany to disarm, to curtail her navy or diminish her army, Germany naturally refuses; and pointing, not without justice, to the road by which England, sword in hand, has climbed to her unmatched eminence, declares openly, or in the veiled language of diplomacy, that by the same path, if by no other, Germany is determined also to ascend! Who amongst us, knowing the past of this nation, and the past of all nations and cities that have ever added the lustre of their name to human annals, can accuse Germany or regard the utterance of one of her greatest a year and a half ago, (or of General Bernhardi three months ago) with any feelings except those of respect?’ (pp. 8-9.)[137]Lord Loreburn says: ‘The whole train of causes which brought about the tragedy of August 1914 would have been dissolved by a Russian revolution.... We could have come to terms with Germany as regards Asia Minor: Nor could the Alsace-Lorraine difficulty have produced trouble. No one will pretend that France would have been aggressive when deprived of Russian support considering that she was devoted to peace even when she had that support. Had the Russian revolution come, war would not have come.’ (How the War Came, p. 278.)[138]Mr Walter Lippmann did tackle the problem in much the way I have in mind inThe Stakes of Diplomacy. That book is critical of my own point of view. But if books like that had been directed atThe Great Illusion, we might have made headway. As it is, of course, Mr Lippmann’s book has been useful in suggesting most that is good in the mandate system of the League of Nations.
[126]The British Treasury has issued statements showing that the French people at the end of last year were paying £2. 7s., and the British people £15. 3s. per head in direct taxation. The French tax is calculated at 3.5. per cent. on large incomes, whereas similar incomes in Great Britain would pay at least 25 per cent. This does not mean that the burden of taxes on the poor in France is small. Both the working and middle classes have been very hard hit by indirect taxes and by the rise in prices, which is greater in France than in England.The point is that in France the taxation is mainly indirect, this falling most heavily upon the poor; while in England it is much more largely direct.The French consumers are much more heavily taxed than the British, but the protective taxes of France bring in comparatively little revenue, while they raise the price of living and force the French Government and the French local authorities to spend larger and larger amounts on salaries and wages.The Budget for the year 1920 is made the occasion for an illuminating review of France’s financial position by the reporter of the Finance Commission, M. Paul Doumar.The expenditure due to the War until the present date amounts roughly to 233,000 million francs (equivalent, at the normal rate of exchange, to £9,320,000,000) whereof the sum of 43,000 million francs has been met out of revenue, leaving a deficit of 190 billions.This huge sum has been borrowed in various ways—26 billions from the Bank of France, 35 billions from abroad, 46 billions in Treasury notes, and 72 billions in regular loans. The total public debt on July 1 is put at 233,729 millions, reckoning foreign loans on the basis of exchange at par.M. Doumer declares that so long as this debt weighs on the State, the financial situation must remain precarious and its credit mediocre.
[126]The British Treasury has issued statements showing that the French people at the end of last year were paying £2. 7s., and the British people £15. 3s. per head in direct taxation. The French tax is calculated at 3.5. per cent. on large incomes, whereas similar incomes in Great Britain would pay at least 25 per cent. This does not mean that the burden of taxes on the poor in France is small. Both the working and middle classes have been very hard hit by indirect taxes and by the rise in prices, which is greater in France than in England.
The point is that in France the taxation is mainly indirect, this falling most heavily upon the poor; while in England it is much more largely direct.
The French consumers are much more heavily taxed than the British, but the protective taxes of France bring in comparatively little revenue, while they raise the price of living and force the French Government and the French local authorities to spend larger and larger amounts on salaries and wages.
The Budget for the year 1920 is made the occasion for an illuminating review of France’s financial position by the reporter of the Finance Commission, M. Paul Doumar.
The expenditure due to the War until the present date amounts roughly to 233,000 million francs (equivalent, at the normal rate of exchange, to £9,320,000,000) whereof the sum of 43,000 million francs has been met out of revenue, leaving a deficit of 190 billions.
This huge sum has been borrowed in various ways—26 billions from the Bank of France, 35 billions from abroad, 46 billions in Treasury notes, and 72 billions in regular loans. The total public debt on July 1 is put at 233,729 millions, reckoning foreign loans on the basis of exchange at par.
M. Doumer declares that so long as this debt weighs on the State, the financial situation must remain precarious and its credit mediocre.
[127]January, 1921.
[127]January, 1921.
[128]An authorised interview published by the daily papers of January 28th, 1921.M. Briand, the French Premier, in explaining what he and Mr Lloyd George arranged at Paris to the Chamber and Senate on February 3rd, remarked:—‘We must not lose sight of the fact that in order to pay us Germany must every year create wealth abroad for herself by developing her exports and reducing her imports to strictly necessary things. She can only do that to the detriment of the commerce and industry of the Allies. That is a strange and regrettable consequence of facts. The placing of an annuity on her exports, payable in foreign values, will, however, correct as much as possible this paradoxical situation.’
[128]An authorised interview published by the daily papers of January 28th, 1921.
M. Briand, the French Premier, in explaining what he and Mr Lloyd George arranged at Paris to the Chamber and Senate on February 3rd, remarked:—
‘We must not lose sight of the fact that in order to pay us Germany must every year create wealth abroad for herself by developing her exports and reducing her imports to strictly necessary things. She can only do that to the detriment of the commerce and industry of the Allies. That is a strange and regrettable consequence of facts. The placing of an annuity on her exports, payable in foreign values, will, however, correct as much as possible this paradoxical situation.’
[129]Version appearing in theTimesof January 28th, 1921.
[129]Version appearing in theTimesof January 28th, 1921.
[130]The Manchester Guardian, Jan 31st, 1921.
[130]The Manchester Guardian, Jan 31st, 1921.
[131]Mr John Foster Dulles, who was a member of the American delegation at the Peace Conference, has, in an article inThe New Republicfor March 30th, 1921, outlined the facts concerning the problem of payment more completely than I have yet seen it done. The facts he reveals constitute a complete and overwhelming vindication of the case as stated in the first edition ofThe Great Illusion.
[131]Mr John Foster Dulles, who was a member of the American delegation at the Peace Conference, has, in an article inThe New Republicfor March 30th, 1921, outlined the facts concerning the problem of payment more completely than I have yet seen it done. The facts he reveals constitute a complete and overwhelming vindication of the case as stated in the first edition ofThe Great Illusion.
[132]As the Lorraine ores are of a kind that demand much less than their own weight of coal for smelting, it is more economic to bring the coal to the ore than vice versa. It was for political and military reasons that the German State encouraged the placing of some of the great furnaces on the right instead of the left bank of the Rhine.
[132]As the Lorraine ores are of a kind that demand much less than their own weight of coal for smelting, it is more economic to bring the coal to the ore than vice versa. It was for political and military reasons that the German State encouraged the placing of some of the great furnaces on the right instead of the left bank of the Rhine.
[133]It is worth while to recall here a passage fromThe Economic Consequences of the Peace, by Mr J. M. Keynes, quoted in Chapter I. of this book.
[133]It is worth while to recall here a passage fromThe Economic Consequences of the Peace, by Mr J. M. Keynes, quoted in Chapter I. of this book.
[134]There is one aspect of the possible success of France which is certainly worth consideration. France has now in her possession the greatest iron ore fields in Europe. Assume that she is so far successful in her policy of military coercion that she succeeds in securing vast quantities of coal and coke for nothing. French industry then secures a very marked advantage—and an artificial and ‘uneconomic’ one—over British industry, in the conversion of raw materials into finished products. The present export by France of coal which she gets for nothing to Dutch and other markets heretofore supplied by Britain might be followed by the ‘dumping’ of steel and iron products on terms which British industry could not meet. This, of course, is on the hypothesis of success in obtaining ‘coal for nothing,’ which the present writer regards as extremely unlikely for the reasons here given. But it should be noted that the failure of French effort in this matter will be from causes just as disastrous for British prosperity as French success would be.
[134]There is one aspect of the possible success of France which is certainly worth consideration. France has now in her possession the greatest iron ore fields in Europe. Assume that she is so far successful in her policy of military coercion that she succeeds in securing vast quantities of coal and coke for nothing. French industry then secures a very marked advantage—and an artificial and ‘uneconomic’ one—over British industry, in the conversion of raw materials into finished products. The present export by France of coal which she gets for nothing to Dutch and other markets heretofore supplied by Britain might be followed by the ‘dumping’ of steel and iron products on terms which British industry could not meet. This, of course, is on the hypothesis of success in obtaining ‘coal for nothing,’ which the present writer regards as extremely unlikely for the reasons here given. But it should be noted that the failure of French effort in this matter will be from causes just as disastrous for British prosperity as French success would be.
[135]See Part I, Chapter I.
[135]See Part I, Chapter I.
[136]English Review, January 1913.Lord Roberts, in his ‘Message to the Nation,’ declared that Germany’s refusal to accept the world’sstatus quowas ‘as statesmanlike as it is unanswerable.’ He said further:—‘How was this Empire of Britain founded? War founded this Empire—war and conquest! When we, therefore, masters by war of one-third of the habitable globe, whenwepropose to Germany to disarm, to curtail her navy or diminish her army, Germany naturally refuses; and pointing, not without justice, to the road by which England, sword in hand, has climbed to her unmatched eminence, declares openly, or in the veiled language of diplomacy, that by the same path, if by no other, Germany is determined also to ascend! Who amongst us, knowing the past of this nation, and the past of all nations and cities that have ever added the lustre of their name to human annals, can accuse Germany or regard the utterance of one of her greatest a year and a half ago, (or of General Bernhardi three months ago) with any feelings except those of respect?’ (pp. 8-9.)
[136]English Review, January 1913.
Lord Roberts, in his ‘Message to the Nation,’ declared that Germany’s refusal to accept the world’sstatus quowas ‘as statesmanlike as it is unanswerable.’ He said further:—
‘How was this Empire of Britain founded? War founded this Empire—war and conquest! When we, therefore, masters by war of one-third of the habitable globe, whenwepropose to Germany to disarm, to curtail her navy or diminish her army, Germany naturally refuses; and pointing, not without justice, to the road by which England, sword in hand, has climbed to her unmatched eminence, declares openly, or in the veiled language of diplomacy, that by the same path, if by no other, Germany is determined also to ascend! Who amongst us, knowing the past of this nation, and the past of all nations and cities that have ever added the lustre of their name to human annals, can accuse Germany or regard the utterance of one of her greatest a year and a half ago, (or of General Bernhardi three months ago) with any feelings except those of respect?’ (pp. 8-9.)
[137]Lord Loreburn says: ‘The whole train of causes which brought about the tragedy of August 1914 would have been dissolved by a Russian revolution.... We could have come to terms with Germany as regards Asia Minor: Nor could the Alsace-Lorraine difficulty have produced trouble. No one will pretend that France would have been aggressive when deprived of Russian support considering that she was devoted to peace even when she had that support. Had the Russian revolution come, war would not have come.’ (How the War Came, p. 278.)
[137]Lord Loreburn says: ‘The whole train of causes which brought about the tragedy of August 1914 would have been dissolved by a Russian revolution.... We could have come to terms with Germany as regards Asia Minor: Nor could the Alsace-Lorraine difficulty have produced trouble. No one will pretend that France would have been aggressive when deprived of Russian support considering that she was devoted to peace even when she had that support. Had the Russian revolution come, war would not have come.’ (How the War Came, p. 278.)
[138]Mr Walter Lippmann did tackle the problem in much the way I have in mind inThe Stakes of Diplomacy. That book is critical of my own point of view. But if books like that had been directed atThe Great Illusion, we might have made headway. As it is, of course, Mr Lippmann’s book has been useful in suggesting most that is good in the mandate system of the League of Nations.
[138]Mr Walter Lippmann did tackle the problem in much the way I have in mind inThe Stakes of Diplomacy. That book is critical of my own point of view. But if books like that had been directed atThe Great Illusion, we might have made headway. As it is, of course, Mr Lippmann’s book has been useful in suggesting most that is good in the mandate system of the League of Nations.