The Hard Course

"I expected better of the general." snapped a longtime Parisian Gaullist last week. "The least we can say is that we are surprised and hurt," wailed the National Federation of Veteran Prisoners of War. Charles de Gaulle, by his actions last week, dramatically refuted those critics who say that he uses high-sounding rhetoric to avoid taking unpopular action.

De Gaulle was racing against the clock, hustling to reshape French political and economic life before the expiration of the special powers he has exercised since last June. Keenly aware that he will lose the right to legislate by simple decree once he is formally inducted as President this week (see below), De Gaulle spent the last days of his premiership grinding out laws so distasteful to France's vested interests that no government of the Fourth Republic had ever dared to adopt them.

Moment of Truth. De Gaulle's immense but simple ambition was to put France's economy "really and basically in order." Explaining his plans in a radio broadcast, he insisted that the only way France could hope to achieve long-term prosperity was on a foundation of verite et severite. The verite was to be found in his abolition of scores of cushions, subsidies, favors and discriminations that have concealed the realities of the French economy even from the French themselves. The severite would soon be plain on every price tag.

France's heavy budget was based on an unhappy recognition that the costly war in Algeria would go on. It also reflected an awareness of France's deepening recession--83% of France's manufacturers have cut back production in recent months. De Gaulle reckoned that France must increase its investment in housing and industry in 1959, and must continue the economic development of Algeria. Yet if De Gaulle's 17.5% devaluation of the franc (TIME, Jan. 5) is to achieve its purpose of making French products internationally competitive, France cannot afford another round of inflation. De Gaulle's solution to this economic Chinese puzzle was to devise a 1959 budget that increased government investment by almost $500 million, yet sliced the anticipated deficit from $2.5 billion to $1.2 billion. The trick: a massive slash in government subsidies and social benefits, accompanied by a $625 million increase in taxes.

Beautiful Name. Every Frenchman, rich or poor, peasant or city dweller, would feel the effect. Without food subsidies the price of bread would rise 6%, milk 5%, macaroni 10%. Without government subsidies to nationalized industries cigarettes, coal, electricity and train tickets would be more expensive. For all veterans, except those over 65 or with more than 50% disability, there would be no more pensions. ("This is to give new value to the beautiful name of veteran," enthused Veterans Minister Edmond Michelet.) For farmers there would be no more subsidies for the planting of olive trees, and there would be higher taxes on tractor fuel and tools.

For France's well-to-do, traditionally among the world's most adroit tax evaders, there would be sharply increased income taxes and a new method of assessment according to "external signs of wealth." Regardless of what a taxpayer may declare, the government will add $1,200 to his taxable income if he has a maid, about $1,300 if he has a small car less than five years old, another $1,200 for each racehorse he owns. And if a man is unwary enough to possess more than six such external signs of wealth, the assessors will automatically double all their arbitrary additions to his income.

Harsh Proposition. De Gaulle, and his conservative Finance Minister Antoine Pinay (a small-town tanner before entering politics) added two other anti-inflationary controls. To keep wages in line, they abolished the old system of pegging salaries to the cost-of-living index--though to compensate France's poor for increased food costs they decreed a 5.5% raise in the minimum wage. And by the removal of import quotas on a wide list of products. France's manufacturers would be exposed to so much foreign competition that it would be difficult for them to raise prices. Had these measures of "truth and severity" been proposed by anyone but De Gaulle, France would surely have been in for a vicious round of strikes, profiteering and social unrest. De Gaulle himself, despite his prestige, probably could not have dared subject them to parliamentary debate. As it was, the prevailing French response seemed to be one of pained resignation rather than revolt. In France's mood of renewed national pride, and of reluctant awareness of peril, Paris' Le Monde pointed the moral: "There is no reform without effort and no recovery without sacrifice."

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