Debt Reaction

In Paris the announcement that M. Caillaux was bringing home for ratification merely a stop-gap debt settlement (see Page 5, THE CABINET) wrought one effect expressible in figures. On the Paris Bourse itself, in spite of the French Government's placing buying orders for 40,000,000 francs, the exchange value of the franc fell from 4.75c per franc to 4.62c.

Developments in the Press were naturally lass capable of being accurately evaluated, but reflected a general tone of condemnation for Mr. Mellon and sympathy for M. Caillaux. The French temperament exploded into many lurid headlines and wild words, such as: "France, with a knife at her throat is being offered up to a God more detestable than the God of War!" But two questions were asked everywhere that summed up the tenor of thinking Frenchmen's worries: 1) How can France keep up her prestige in Europe for another five years, without knowing what her total obligations will eventually be? 2) Can M. Caillaux actually secure ratification by France of an agreement that would force her to pay out over 800,000,000 francs ($40,000,000) a year for five years, and at the end of that time leave the principal of her debt exactly as large as before?

The answers seemed to be: 1) France's prestige will certainly suffer. 2) If a vote of the French people were taken, they would unhesitatingly repudiate the Caillaux agreement; but M. Caillaux has a 50-50 chance of securing its ratification in the Chamber.

That some stormy scenes are to be expected, may be judged from a statement by Deputy Louis Marin: "M. Caillaux's failure is the best thing that could have happened to us. I think he must have sought it himself when he saw he was rushing into an inextricable situation. The Government undoubtedly and the Parliament certainly will reject the proposals he is bringing."

In London it was generally felt that the French-British as well as the French-U. S. debt settlement is now considerably muddled.

The present status of the French-British agreement (TIME, Sept. 7, COMMONWEALTH) is that France must pay England "not less" than what she pays the U. S. And now that an agreement of a purely temporary nature is all that is contemplated between France and the U. S., Britannia will have a hard time trying to figure out what is due her in the long run.