Save the Franc

In a month as Premier of France, wispy-looking Antoine Pinay, 60, had lost nine pounds. Most of it he lost preparing for the showdown that came last week over France's 1952 budget. He well knew that the budget had been the downfall of his two predecessors--Rene Pleven and Edgar Faure. They tried to balance the budget by taxing more; he proposed to do it by spending less. His simple suggestion had a staggering success.

In the Chamber of Deputies one evening Premier Pinay, a newcomer to the political big time, went straight to the heart of France's economic turmoil. "Currency," he said, "is the image of our country. As soon as the franc recaptures its position, France will return to its former rank." To restore the franc--and France--Pinay demanded ten different votes of confidence. He got them, all in one night--a new record. His plan:

P:Slash government expenditure by 110 billion francs.

P:Cut down government investment in capital construction (e.g., dams and power plants), encourage private investors to put up the cash instead.

P:Grant an "amnesty" to all previous tax delinquents.

P:Punish all future tax dodging severely (e.g., post the names of all offenders on public notice boards).

The Hero. His amnesty proposal provoked the most serious opposition. Self-righteous Communists denounced it as "immoral"; Gaullist Deputy Andre Diethelm called it "a pact with the devil." Pinay fought back. From his notes in a big cardboard folder he drew some startling statistics. Example: French peasants and the petit bourgeois have hoarded more than 15 times as much gold as there is in the Bank of France. The obvious reasons: 1) Frenchmen distrust their own paper currency, which seems to buy less every day; 2) many wealthy Frenchmen have avoided paying taxes for so long that they no longer dare invest their money for fear of being found out. By restoring confidence in the franc, and by waiving prosecution of past tax offenders, Pinay hoped to lure back into useful circulation some $10 billion worth of hoarded jewels, dollars and bullion. He won his point narrowly: 259 to 210. At 1 a.m., his budget passed intact.

A singularly ordinary Frenchman who runs a tannery in Saint-Chamond, the shoelace capital of France, Antoine Pinay celebrated his victory by staying up until 2 a.m. in a middlebrow beer parlor on the Seine's Left Bank. At week's end he left Paris for the French Riviera, intent on getting back his lost nine pounds.

He had become, almost overnight, the most popular politician in France. "Everywhere I go," reported Minister of the Interior Charles Brune, ". . . Pinay is applauded in the newsreels. He is the first politician since De Gaulle who has received spontaneous applause."

Frenchmen like Pinay because he boldly attacked the problem that troubled them most: high retail prices. In his four weeks in office, butter prices had fallen from 880 to 760 francs per kilo; milk and cheese were down 15%. Pinay had worked no miracles (meat prices are still rising). As a right-wing businessman, he had merely consulted the men he knows best: France's business leaders. He persuaded department-store owners to back a price reduction campaign. He called it "Save the Franc." Some cynical shoppers thought the price cuts were more apparent than real; still, they were a step in the right direction.

Double or Quits. By fortunate coincidence, French gold is flowing back home from riot-torn Tunisia, and industrial production is at an alltime high. Result: the franc is growing stronger (the dollar bought 36 francs fewer than it did the week before). No longer did people talk about the inevitability of devaluation.

This did not mean that France was back on its feet, or that Pinay had succeeded. But he had already passed one political miracle: proving that the hitherto solid Gaullist bloc could be split, and that a government could be formed without kowtowing to the Socialists (TIME, March 17). Now he was gambling, double or quits, on a return of confidence. If tax dodgers went on dodging, if France's hidden capital stayed in hiding, if stores raised prices and labor pushed up wages, the defense of the franc would collapse. Pinay had done his best; the rest was up to everybody else's common sense.

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