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The ordinary budgets of 1914 and of 1021, it will be seen, balanced. The latter, however, almost five times as big as that of 1914, only balanced thanks to 5,200 million fr. of extraordinary revenue derived from the war profits tax and the disposal of war stocks. The ordinary budget of 1921 has also, side by side with it, an extraordinary budget of 3,000 millions, entirely covered by loan resources, and a budget of recoverable expenditure, under the terms of the Peace Treaty, by which Germany and her allies had become responsible. This budget comprised the sums necessary for reparation of war damage, caused among others to civilians who lost in life or limb or were victims of any act of cruelty which has lowered their health, their capacity for labour, or touched their honour; to prisoners of war who have been badly treated. Germany also owed pensions or compensation to the military victims of the war, wounded, sick and invalided, the amount of the sum being the capital value of pension or compensation due to them; the cost of relief given to prisoners of war and their families, allowances given to the dependents of mobilized men, the losses incurred by civilians who were obliged to work without pay, and all damage done to property.

According to the Treaty of Versailles the Reparation Com- mission had to fix the total debt to Germany as it did by the prescribed date, May i 1921, the figure being 132,000 million marks (gold), to which was added the sums lent to Belgium by the Allies; Germany was to pay an annual interest charge of 5 % on the debt, and i % for amortization. The annual pay- ment was to be 2,000 million marks (gold), and a sum equal to 26% of the value of German export trade. The complete annuity, that is to say, 6% on 132,000 million marks, would amount to 7,920 millions. If Germany was to reach this figure her total export trade must amount to nearly 25,000 million marks (gold). The French share of the moneys obtained from Germany being fixed at 52%, it is easily seen how small a sum

he would obtain to meet the charges arising from the reconsti- tution of the devastated regions and the payment of pensions. These figures for the year 1921 were (in millions of francs):

Mlmstry of Finance 3,827

Justice (Judicial and Prison Services) I

Foreign Affairs 2

'Var 14

ublic Instruction 244

"ine Arts 30

Technical Instruction I

Colonies I

Agriculture 9

Public Works 393

Posts and Telegraphs 26

Merchant Shipping 14

Liberated Regions 10,231

Pensions Services 1,737

Hygiene 10

16,540

The expenditure of the Ministry of Finance comprised pen- sions to invalids, widows and orphans; allowances to elder relatives; pensions to civil victims of the war; the salaries of the staffs employed by these different services ; the reconstruction of documents destroyed during the war; the reinstallation of administrative services in the liberated regions; and of tobacco manufactury of Lille. The Ministry of Justice had to meet the expenses of reconstituting the Actes de I'Etat Civil; the register of mortgages ; of repairing the damage done to prisons and other institutions. The Ministry of War had to meet the charges arising from the repair of barracks and other necessary buildings. The Ministry of Public Instruction had charge of the central and departmental orphanages, and had on its books at the beginning of 1921, 587,000 children, who, at 360 fr. a head, would cost 211 millions; 120,000 more children were to be adopted. Fine Arts would require 30 millions for the protection and repair of monuments and public buildings damaged by war. The claim of the colonies arose from the losses suffered by Mahommedans. The Ministry of Agriculture had to repair a number of institutions such as the agricultural school of Rethel and the industrial schools at Douai, and make good the havoc wrought in the forests. Public Works required 100 millions for

road building and other works, 70 millions for the rebuilding and working of electrical power stations in the liberated regions, 90 millions for canals, 50 millions for railways in the north and the east, 83 millions for extraordinary expenditure on Alsace- Lorraine railways, due to the condition in which they were left by the Germans. The Ministry for the Liberated Regions claimed 10,231 millions, a sum which was reduced by Parliament to 9,000 millions; 7,000 millions of this would go in payment of war damage and advances for industrial reconstitution; 140 millions were devoted to relief for the inhabitants; 720 millions to works undertaken by the State; 220 millions for transport. These figures give but a general idea of all the work that had to be accomplished in the devastated districts. The Ministry of Pensions required 28 millions for the staff and central adminis- tration; 1,470 millions for advances on pensions and bounties; and 4 millions for the relief of the families of the killed.

These 16,000 million francs of expenditure had to be added to 20,000 million already granted for the same purposes, as recoverable expenditure, in the financial year of 1920. It was thus a total of nearly 37,000 million francs that France had already advanced in two years to the account of Germany.

Apart from these budgetary credits other expenditure swelled the total, which, capital and interest included, was estimated to be 60,000 million francs on May i 1921.

The key to the financial situation of France is in this budget of "recoverable expenditure." Had Germany carried out her undertaking; that is to say, had she paid to her conquerors a sum corresponding to the admitted damage done, the situation of France, although still serious, would not have been one beyond her power to face. By working energetically, as she had begun to do, at reducing expenditure, and perfecting the system of new taxation, France should be able to have a regular revenue of 20,000 millions to balance expenditure, which ought to be brought down to that figure. To do this, the various new services which were created during the war, and which in different ways had led to excessive expenditure, must disappear. The coal and wheat control must be got rid of, and the State merchant fleet sold as quickly as possible. The railway budget must be bal- anced; all useless expenditures suppressed, and only the most urgent public works, or those likely to be productive within a very short space of time, undertaken.

Meanwhile, awaiting the settlement of the debts of Germany, the French Treasury in 1921 had to meet the following charges in thousands of millions of francs:

Ordinary Budget

Extraordinary Budget

Recoverable Expenditure

Supplementary Credits

Repayment of Foreign Debt

Deficit on Prev'ous Budgets

Special Account

Railways

Repayments to the Bank of France

22 . . . 3

16

2

6

2

. . . . 3

i

2

57

III. Tlte State Balance Sheet Railways. It is possible to do for the French State what is done by every individual and every company: that is, simply to draw up a balance sheet, to make a statement of the State's resources and commitments, of its credit and debit. Naturally we do not, as in the case of pri- vate concerns, find that the credit equals or is greater than the debit. The fundamental and essential source of a modern State's revenue is taxation levied on its citizens. Its real wealth, therefore, lies in the individual wealth of the latter, and consists in their sum total. Nevertheless, apart from this resource of annual tribute, the State possesses a domain which varies in importance according to the nation, and which does represent something. It is only the paying elements of such a domain which can be usefully entered on a balance sheet.

France possesses her sea coasts; land which in certain parts has been left by the sea; her lakes, rivers and navigable streams; canals; ports; forests, national roads, and the bridges and other works connected with them; public buildings, palaces,