New Formula

Questions of financial policy loomed last week as the annual convention of the Radical-Socialist party opened at Nice. Before the convention appeared M. Herriot, Radical standard bearer, to insist that France can balance her budget only by a direct levy on capital. Likewise appeared M. Caillaux, Finance Minister, to plead for the powerful support of the convention, in order that he might be given one more chance to balance his budget by "orthodox" means.

It was recalled that these two statesmen have both wrestled long and unsuccessfully with French financial affairs. Six months ago the Herriot Government fell because it had had to inflate the national currency in order to carry on at all. As he stepped down from office, M. Herriot announced his conversion to the capital levy scheme as the only thing that could save economic France.

Came "Wizard Caillaux," as the Painleve Government steppd up to power, and attempted to work many miracles which have failed. His internal 4% gold loan which was to have absorbed the great weight of defense bonds and brought relief to the Treasury has not achieved adequate flotation. The Moroccan War and M. Caillaux's uncertain U. S. debt settlement have further contributed to send the franc tumbling down to 22 to the dollar, and have caused Caillaux himself to admit that the Bank of France can see its way clear to facing its present obligations without inflation, for only a few weeks longer.

Despite such a record, super-optimist Caillaux blandly informed the conference at Nice that he had more schemes up his sleeve for converting or consolidating France's internal debts and juggling with her allied obligations. He declared that he could not "divulge" his plans, vowed that Germany had tried a capital levy three times unsuccessfully, swore that he would resign rather than introduce it, and apparently expected the conference to express confidence in his famed "Wizardry," now wearing rather thin. The upshot of the matter was that M. Herriot, after imploring M. Caillaux tearfully to throw up his lot with the capital levy, negotiated a compromise with the bald necromancer.

As adopted by the convention in a resolution cyrstalizing the financial doctrines of the party, this new "formula" urges the Government to exact "a special contribution on all forms of fortune and capital." This phrase, is interpreted as urging that interest payments be suspended on all French Government securities and the sums thus realized used to recoup France financially. It is thought that a levy on interest may succeed as being more "orthodox" than one on capital. For the moment M. Caillaux has pledged himself to the measure "as a member of the Radical Party, though not necessarily as Finance Minister." He appears to have kept the conference from jumping on his neck and that of the shaky Painleve Government without actually committing himself to anything very definitely.

Frenchmen wondered if he was such a bad wizard after all.