Caillaux and Cabinet

Twice in one day Wizard Caillaux waved his wand before the Cabinet. Presto! he produced a budget for 1926. Presto again! he produced a debt mission to go to the U. S.

The Caillaux Budget. After the War, France for a long time had a system of two budgets. One was an ordinary budget of receipts against Government expenditures, which was made to balance. The other was an extraordinary budget including expenditures for reconstruction of the devastated regions and receipts of German reparations. The expenditures for reconstruction always came up to the budget. The receipts from reparations never did. The result was a constant deficit, although the budget apparently balanced. Finally the extraordinary budget was abolished, but it had sunk France so deep in the quagmire of finance that a call had to be made on Wizard Caillauxtion always came up to the budget. The receipts from reparations never did. The result was a consistant deficit, although the budget apparently balanced. Finally the extraordinary budget was abolished, but it had sunk France so deep in the quagmire of finance that a call had to be made on Wizard Caillaux. then in exile, to draw her out again.

Caillaux's new budget practically reverts to the old two-budget system but in not so violent a form. He produced the usual ordinary budget, which he made to balance by adding 3,500,000,000 francs ($175,000,000) to taxes. He then proposed a sinking fund for the liquidation of War expenses. This sinking fund would: 1) complete reconstruction; 2) pay off France's War debts. It would be fed: 1) by German reparations (which are withdrawn from ordinary receipts) ; 2) by recovery of excessive payments made to various individuals in the devastated regions for reconstruction; 3) by any surplus from the ordinary budget.

Increased costs of pensions, posts, telephone and telegraph increase the ordinary budget about 2,000,000,000 francs ($100,000,000). The deduction of reparations from ordinary receipts, with the above increases of expenses, will require a tax increase of about 3,500,000,000 francs ($175,000,000). This is to be made up: 1) by increasing schedule taxes (roughly equivalent to normal income taxes in the U. S.); 2) by increasing the tax on unproductive capital; 3) by a sliding-scale tax on all revenue from capital (roughly equivalent to surtaxes in the U. S.) up to a maximum of 40%,

The Caillaux Debt Mission. Although the debt mission which will sail for the U. S. was tentatively picked a fortnight ago, the final list of members was not made up until last week. There were a few changes from the tentative plan. Franklin-Bouillon, who had at first been named, declined because--it was averred--he disliked the idea of playing second fiddle to M. Caillaux.

The members of the Mission besides M. Caillaux as finally picked were ten: Senators Henry Berenger, Louis Dausset, M. Chapsal, Paul Dupuy* Deputies Lucien Lamoreux, Vincent Auriol, Maurice Bokanowski, Pierre de Chambrun/- bankers Joseph Simon and Moreau-Neyret.

The chief matter of note about the Mission is that it is composed chiefly of men who command a large following in the several groups of the French Parliament. It looks as if Wizard Caillaux plans to insure beforehand that any agreement which he may make at Washington will be approved at home and promptly ratified.

* Owner of Le Petit Parisien, newspaper with the largest circulation in France.

/- Marquis de Chambrun, descendant of Lafayette, born at Washington, D. C., married to a U. S. girl. He and other descendants of Lafayette are U. S. citizens by act of Congress. His brother Jacques is now a General in the French army in Morocco. His brother Charles is French Minister to Greece.