Commonwealth and Foreign
M. DALADIER'S SEVEN WEEKS
FROM A PARIS CORRESPONDENT
AFTER nearly seven weeks of office the Daladier Government have two great achievements to their credit. First of all they settled the strike in the heavy industries which, at one time, threatened to bring to a standstill the whole of French aircraft production. Secondly, the Prime Minister and M. Bonnet, his Foreign Minister, went to London and came back to Paris with what was, in effect, an Anglo- French Alliance. The strength of that Alliance was demon- strated during the past week when it brought pressure to bear on both Berlin and Prague so as to ensure a peaceful settlement of the Sudeten German dispute.
Apart from that the new Government's record has been singularly meagre. When they took office on April loth was widely hoped that rapid action would be taken to restore the country's finances and to strengthen its economy. Two days later the Chamber agreed to give them special powers to deal with the national finances and on April r3th the Senate unanimously confirmed the Chamber's decision. Money at once returned, and the Stock Exchange showed its approval by marking up prices. So great was the Government's prestige that even though it was technically a minority Administration it could have done almost anything within reason, if action had been taken at once. Yet up to the present the special powers have hardly been used. It has been argued that the Government, and particularly M. Marchandeau, the Minister of Finance, needed some time to study the position. Yet M. Marchandeau held office as Minister of Finance under M. Chautemps between January 18th and March loth, so that he was presumably well acquainted with the elements of the problem when he returned to his desk in the Rue de Rivoli. Moreover, the Blum Government left behind them a masterly analysis of the financial situation, in which a number of essential reforms were set out in detail. In spite of all this practically four weeks were allowed to slip away before the first financial decrees appeared in the Journal By that time belief in the vigour of the new Government had begun to fade. The feeling of disappointment became even more acute when the public read the financial decrees which appeared on May 3rd, for they were almost wholly concerned with an all-round increase of 8 per cent. in the rate of taxation. Nothing whatever was said about the 4o-hour week. The decrees promulgated on May 25th —after another three weeks' delay—are designed to make it possible to apply the 40-hour week more elastically, but they do not go to the roots of the problem. It should be noted in this connexion that special powers are not required to " amend " the 40-hour week ; the law itself gives to the Minister of Labour authority to alter its incidence ; so that even at this late date the Government have not yet made any use of their special powers to deal with what is commonly felt to be one of the root causes of the French crisis.
It is only right to add that the actual measurable effect of the 4o-hour week, over the whole field of French industry (armaments industries always excepted), is not quite so great as some of its opponents make out, and that more damage has been done by the rigid insistence upon five working days of eight hours each per week than by the actual limitation of hours. That is the reason for the demand made by some employers that the 40-hour week law should be so interpreted as to allow the employer to treat with his men on the basis of 2,000 working hours per annum. That, of course, would mean that if the men had a day off on account of a legal holiday they could be asked to work for a full day on the following Saturday in order to compensate for lost hours. But what- ever the facts of the case, so long as investors believe that the 4o-hour week is chiefly responsible for the present crisis, their belief is as important in its effects as any facts ; because at bottom the French crisis is largely psychological, and it is to be solved only by the removal of fears and grievances, whether real or imaginary. From the investor's and employer's point of view the 4o-hour week in its present form is a grievance. At the same time it is not easy to have much sympathy with the trade union point of view that to modify the 40-hour week is to impose too great a sacrifice on the working classes : after all, there has never been any question of asking the men to work 48 hours for the same pay as they get for 40, and employers have consistently offered to pay overtime rates.
If a modification of the 4o-hour week will revive the investor's faith in the profit-earning capacity of French industry, the devaluation of the franc, and the Government's promise that it will be adequately defended at a rate of around 179 francs to the k has helped to strengthen the belief that the currency has now found its lowest level and has thus given investors the hope that no further unpleasant surprises will be sprung on them. Yet this fresh devaluation of the cur- rency was the result of an accident, not the fruits of deliberate policy. When the franc began to weaken towards the end of April, after having remained stable at around 160 francs to the for some months, the British Treasury warned the French Government against the consequences, and reminded them that the Tripartite Currency Agreement might not be strong enough to stand the strain. So impressed were the French Government with this warning that on April 23rd M. Daladier, with the approval of the Treasury, publicly re-affirmed his fidelity to the Currency Agreement and instructed the French Exchange Equalisation Fund to do everything possible to prevent the franc from falling. Ten days later the Bank of France told the Government that the resources of the Fund were no longer adequate. And on May 4th, half an hour after the United States Treasury had finally consented to further depreciation, M. Daladier broad- cast an address to the nation in which he said that the franc would once again be allowed to find a new level. The next day the rate opened at 179 francs to the £ and money rushed back to the country, to a total of about kioo,000,000 in a few days.
At this new rate French export industry again becomes fully competitive (both Belgium and Italy are already feeling the strain) ; foreign goods become so expensive that imports are likely to fall, thus improving the trade balance—unless the wheat crops turns out to be really bad, as this will force France to import wheat ; and some margin is left for the launching of a programme of public works which is bound to have, to a greater or lesser degree, an inflationary effect.
The degrees promulgated on May 25th provide for an estimated expenditure of some £6o,000,000 on public works in three years. The recent, and, it is hoped, final, devaluation of the franc thus greatly eases the position and may well lead to a true revival if it is followed by financial and economic reforms. But it is important to note that devaluation did not form part of M. Marchandeau's orthodox and somewhat humdrum programme and that it was forced upon him by the pressure of circumstances. Up to the present, then, the Daladier Government have made only slow progress. Yet the rearmament programme imposes such a strain on the country that quick. action to restore the national economy is essential. Perhaps the reali- sation that France must be strong and prosperous if the peace of the world is to be maintained will persuade all classes and all parties to join together in a supreme effort to shake off the shadows of crisis that have hung so heavily over the C011111.1i since 1931.
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