Paul Reynaud
I
FRANCE, of all European countries, has staged the most amazing revival. Confronted by mortal danger, the French people have belied those prophets of despair who called her decadent, even moribund. They are rallying with fighting spirit around the symbols which have made their country great.
France has always been something of a riddle to foreign observers. She is something of a mystery to herself. Her tradition is full of paradoxes, and her own sons have spoken of her now with boundless enthusiasm, now with sardonic bitterness. As with all truly human beings, her strength and her foibles defy logic. The easy slogans about national character lead to a maze of contradictions.
When I was in France in the spring of 1938, all was gloom and uncertainty. Early in April the Blum Cabinet had fallen. Frantic yet unsuccessful efforts at forming a National Union Government after the seizure of Austria by the Nazis had ended in failure. Austria’s surrender had been a terrible shock to French prestige. It was, as so often happens, this defeat in foreign policy that ‘finished’ the Socialist regime of the Front Populate, while the lingering ruins of the great International Exhibition stood as a painful reminder to French bourgeois pocketbooks that the government of Léon Blum had been expensive. And the French do watch their pennies.
France felt herself weak and at the mercy of Adolf Hitler, who in Mein Kampf had left no doubt as to his determination to cripple the country he considered the greatest obstacle to his own domination over Europe. Was Hitler a new Napoleon, more formidable since he had at his disposal the bestdisciplined, most highly industrialized, and most scientifically-minded nation of Europe? Some Frenchmen even resented this apparent plagiarism of political methods. One important industrialist, in commenting upon the Austrian coup, remarked in all seriousness: ‘This seizure came as a complete surprise. Only a Latin, we supposed, could do a thing like that.’ Other Frenchmen, when told about this remark, said that many of their countrymen had admired the way it was done: ‘une chose bien faite.’ There was something of the professional soldier’s admiration for a brilliant stroke of the sword in their expression. But, since it came from outre-Rhin, it was the more alarming when you contrasted such cold-blooded determination with the indecision and weakness of France. As a gifted French business man mockingly said to me, looking out upon the sunny Champs-Élysées: ‘If Hitler came riding down this avenue, the sides would be lined with people cheering him on.’ A desperate mood, and no doubt a whimsical exaggeration, but characteristic of the French state of mind in the spring of 1938. But things had not as yet come to the worst pass.
The Daladier government of moderate radicals, augmented by some conservatives, came into power in April. Little was changed at first. In June, French people were saying that all was futile, that the Daladier crowd were worse than the Front Populaire. True, some twenty billions of capital had been flowing back to France in the course of May, but the financial and economic troubles continued unabated. So, after a brief spell of relief, the flight of capital recommenced; unemployment continued; government deficits were met by the printing press, and the prices went on rising. The country seemed less prepared to meet a challenge of the axis powers than ever. The Daladier government dragged along its depressing course, until in September the defeat of Munich seemed to seal its fate. Munich was the more shocking to the amour-propre of France as treaties bound her to the support of Czechoslovakia. Clearly France lay helpless at the feet of Hitler. Disgust and bitterness ran high as capital fled and production halted.
Two months later, all that was changed. Capital began to return, industries were starting up, unemployment was falling. What had happened? M. Paul Reynaud had taken over the Ministry of Finance to carry out his Three-Year Plan. Who is this man, too little known as yet to the outside world, but the real power behind the new financial and economic policies of the French Government of today? To understand his program and his action, we have to know the man.
Small of stature, Paul Reynaud is, like many small men, laden with energy. He is frank and open, and dresses like an American, without a vest. As you enter his room he comes forward to meet you, his steel-gray eyes fixed upon you in a friendly grin. He grips your hand firmly, unhesitatingly. I noticed that his suit was rather informal, darkish green, with a shirt to match, his tie of a dark red, well chosen to set off the green of the suit. There is nothing stuffy or pompous about him, nothing of the Monsieur le Ministre which so often greets you in French officials, even before they ‘arrive.’ One can readily believe that he is welcome in certain fashionable salons, along with M. Léon Blum; the two men, politically so far apart, maintain very amicable personal relations.
Paul Reynaud is the scion of a well-to-do family from Barcelonnette, a small town near Grenoble. One likes to think that here the distinguishing features of the sturdy Alpine stock have combined with the intelligence and resourcefulness of the French Midi, reënforced by the verve and magnanimity of Spanish blood from Barcelona. At any rate, the proprietary families of Barcelonnette derive their wealth from a strange, outlandish source: they have owned and developed many of the large department stores in Mexico. These transoceanic business contacts, presumably started in the days when the ill-fated Maximilian sought to set up his imperial throne in Mexico under the ægis of the Third Napoleon, have undoubtedly given them a wider horizon than is commonly found in small provincial towns.
Paul Reynaud did not go into the business of his family. He became a corporation lawyer, and soon went into politics. His political life, however, has been that of the lone wolf. His domineering temper, backed by a very superior intelligence, has always chafed at the curbs which group loyalties inevitably impose. In France, where all politics is a matter of personal loyalties, diffused through small groups, this is even more of a handicap than elsewhere. But Reynaud’s abilities are so extraordinary that he soon became what is known as a député ministrable, a member of the Chamber of Deputies who might be considered for a cabinet post, particularly as regard for his ability was reënforced by regard for his very considerable fortune. It is rarely a handicap in politics to have extra money to spend, least of all in France. Though roughly and generally associated with the conservative groups on the right, his ever-readiness to strike out along his own path, as his candid, rational mind suggested, has given him a unique position. For years it has been the rôle of Cassandra.
Reynaud takes considerable pleasure in the many occasions when his hardheaded pessimism made him right. He was in the United States just before the great crash; on the boat he predicted it to one prominent American banker. His reasoning, as always, was rather simple, almost rustic. ’It is unsound to borrow money at 10 per cent to buy stocks yielding 2 per cent.’ But, unlike many other men who had their eye on the stock exchange, Reynaud foresaw the long duration of the crisis. In March 1931, when he was in the ministry of Laval, he almost ridiculed Tardieu’s optimism that saw prosperity just around the corner. He wrote a letter to Le Temps in which he said that France would be in the throes of the depression before long — a most unpopular idea at a time when many Frenchmen were flattering themselves that they were not going to be troubled by the disasters of the spendthrifty and reckless Americans, the Empire-burdened Britishers.
In this same period, Paul Reynaud took a vigorous stand in favor of devaluation. He thought it unwise for France not to follow suit when the pound sterling, la maîtresse des échanges, had been devaluated, and positively foolish after America had also abandoned the gold standard. But his own conservative friends were unalterably opposed to looking the facts in the face, and at one of these bitter debates a cabinet colleague almost cried as he shouted at Reynaud, ‘You have destroyed a cathedral!’ Paul Reynaud has never been afraid to face the facts. Soon after the war, when it became apparent that the economically crippled German Republic would not be able to pay reparations, Reynaud was one of the few who advocated the acceptance of Rathenau’s scheme to have the devastated regions rebuilt by German workers. As usual, his was a voice crying in the wilderness.
Reynaud’s grasp of economic and monetary problems is so incisive that one naturally wonders about the sources of his deeper insight. For in our complex society the ablest men are always those who realize the need for advice and counsel from specialists. For all the mocking about the brain trust, it is generally acknowledged that the underlying idea was sound, indeed of permanent significance, though there is no particular advantage in having such advisers flaunted before the public. M. Reynaud has a few brilliant younger men associated with him as his personal staff — an arrangement which is facilitated by the French tradition that each cabinet minister shall have a rather extensive personally appointed secretariat, his cabinet.
M. Reynaud also owes a great deal to a brilliant banker-economist, M. Istel, a man of wide international experience and real insight. M. Istel is somewhat critical today of Reynaud’s policy; he feels that Reynaud has become too conservative, under the influence of his great staff of professional civil servants in the Ministry of Finance, and that he tends to subordinate the economic problems to fiscal considerations. In fact, Istel insists that France today is pursuing an actually deflationary policy; he points to the fact that bank deposits have risen from 115 to 130 billions, while loans have declined from 65 to 26 billions, if calculated on the basis of relative gold content of the franc. In keeping with this, Istel claimed that real wages in France had fallen between 1936 and 1938. Nor would he allow that French capital had returned as a result of the government’s policy. He pointed out that most of the French capital came back because the enterprisers actually had to have the cash, and that at best it was only a small percentage of what had left. M. Istel estimates that 140 billions actually left, while only about 25 billions returned. Hence the French economy was laboring within a strait jacket of capital shortage.
It is difficult to assess these views definitively, as economists violently disagree on some of the fundamental issues involved. What matters politically is that M. Reynaud, as always, followed his own head in deciding what policy to pursue. This is as it should be; advisers who become controllers are very dubious assets.
II
Whether you agree with him or not, you have to acknowledge that Paul Reynaud has one of the keenest heads amongst European politicians today. This superior intellectual equipment is reënforced by great industry and strength of will. He works in a very interesting fashion. Not trusting to the vagaries of even an excellent memory, he continually makes notes about points which seem to him of special significance. Menu cards are often covered with his handsome, strong writing. These notes he makes the basis of more elaborate office memoranda, written out by hand too, on large foolscap. These memoranda show a man of intense creative energy, for they are full of corrections, additions, emendations. They also reveal a very systematic mind; invariably they are carefully organized, with each point labeled 1, 2, 3, and A, B, C.
Such memoranda for new legislation or alterations in present policy are given to his special collaborators, one a brilliant young lawyer, the other an economist-statistician, whose task it is to draft legislation based upon these general conceptions. As a result of his industry, Paul Reynaud has become the dynamo behind the present government, continually pushing it into new fields of emergency effort by presenting the cabinet with carefully worked out proposals for legislative and administrative action. As every governmental activity has a fiscal aspect, the Minister of Finance is, of course, in a peculiarly advantageous position for such continuous initiative. Unlike our system, with a separate budget bureau under the President, the French system assigns the budgetary problem to the Minister of Finance, so that Raymond Poincaré, when he wanted to reconstruct the finances of France in 1926, took on that ministry in addition to his position as Prime Minister.
Today, as a result of Reynaud’s vigorous and dynamic leadership, the Ministry of Finance has once more become the ‘ planning centre ‘ of French economic reconstruction, and here the crucial decisions for the Three-Year Plan are made.
The Three-Year Plan reveals that France is no longer living under a functioning parliamentary system. Mockingly, a French historian remarked to me, ‘The trouble with our parliament is that it works when it doesn’t work, but doesn’t work when it works.’ From the spring of 1938 until November 15 of that year, parliament abdicated its powers to the government, gave it plein pouvoir — that is, the full power to make décrets lois. These decree laws may, of course, like any laws, be changed or abrogated by parliament when it reassembles, but, as the winter showed, the French parliament found it no easier than the German parliament to abrogate such emergency measures once they were on the statute books. And after Hitler seized Prague, in March of this year, the government demanded and received another plein pouvoir which it has recently used to prolong the life of the present parliament until 1942. Should we conclude that France has already abandoned parliamentary democracy? There are not a few observers who would claim that. There is, indeed, no precedent in the history of the Third Republic for such governmental extension of the life of a parliament which happens to support it — in peacetime. But may it not be argued — as it certainly is argued — that, though no mass killings are taking place, Europe is actually at war? Certainly, from a fiscal standpoint, the situation is dominated everywhere by gigantic and possibly bankrupting efforts at armament outlays which vastly exceed national resources. M. Paul Reynaud’s entire policy is in fact dominated by considerations of foreign policy and national preparedness.
On the wall opposite his desk, in the ornate office of the Tuileries Palace, Paul Reynaud keeps constantly in view the map of Europe which Nazi propagandists have dotted with red spots, claiming half of Europe as rightfully theirs. I was much struck by this discovery, and consider it very significant; for I have myself reprinted this map in my Foreign Policy in the Making. It reveals at one glance the aggressive conception of Nazi domination throughout Europe. You would not expect such a map in the office of the Minister of Finance. It shows that he looks upon his job as that of fortifying France for the inevitable hour when she meets Nazi ambitions on the battlefield. As he said in his great speech in which he urged French workers not to support the general strike: ‘A year ago, on my return from a trip through Germany feeling the imminence of the peril, I said publicly that the fate of liberty in Europe depended upon the production of our war-material factories, and in order to develop them I demanded unanimity in France. You know what it has cost us not to have succeeded in establishing it. All I have done in the three weeks since I have taken over the Ministry of Finance I have done in order to make you strong. I do not want my country to be an ideal enemy for some, and for others a dubious ally.’
When Paul Reynaud look over the Ministry of Finance, on November 2, 1938, he had less than a fortnight left for transforming his ideas into decree laws. For the government’s plein ponvoir expired on the fifteenth, as I have said. Nor could Reynaud be sure of the support of his cabinet colleagues; many distrusted him, considering him a social conservative and a nationalist, not without good reason. In fact, the Ministry of Finance was not offered to Reynaud by Daladier until Reynaud had tendered his resignation, demanding that the plan of the then Minister of Finance, M. Marchandeau, for an exchange control should be abandoned. Reynaud’s argument was very simple: ‘Exchange may be a solution for Herr Schacht and the German economy, because they owe a lot of money, and so exchange control meant simply that they would not pay any more. But we are a creditor nation, and hence exchange control would amount to telling the others that they need not pay any more.’
But of course the issue was really how to stop the flight of capital after Munich. Reynaud was of opinion that you should stop it by making capitalists feel safe in France, not by forbidding them to go elsewhere. After considerable haggling, primarily over Reynaud’s insistence that the forty-hour policy must be modified, he became Minister of Finance, having won out in his fight for a recognition of the view which he had already pressed in the spring when negotiating with Léon Blum for the establishing of a National Union Cabinet: ‘You cannot pursue a policy of vast and expensive social improvements and at the same time expect the country to get prepared for a life-anddeath struggle with a power twice the size of your own in men and resources.’
In the months past Reynaud has coined and popularized some sharp slogans: the state spending vast sums for public works he denounced as Santa Claus, and the forty-hour week he dubbed the ‘two-Sunday’ week. His entry into the Ministry of Finance meant good-bye to the ideas of the Front Populaire. He was ready to face the anger of the tradeunions or anyone else, if necessary. In response to the dangers of Fascist-Nazi aggression France had produced another fighting incarnation of her Jacobin tradition, the tradition which had produced Robespierre, Gambetta, Clemenceau. Undisturbed by oratory, though capable of it to a high degree, Reynaud felt sure that an attempt at a general strike such as the Socialists threatened was merely bluff and would fail miserably. Reynaud had, in fact, been ready to meet such a strike in April. But the time was not ripe for it then, in the opinion of Daladier and the Radical Socialist command, and that is why Reynaud had refused to shoulder the responsibility for the Ministry of Finance at that time. For him, it was all or nothing. Since he conceived the Ministry of Finance as the central planning office from which to set right not only the budget but the national economy, he had to wait.
III
In order fully to appreciate what Paul Reynaud has done, it is necessary to remember the condition of France in October 1938, after the Munich Pact was signed and sealed. The fatal weakness of the country was manifest enough, but what were its distinguishing features? France’s difficulties were partly economic, partly fiscal. The lack of morale and the lack of military preparedness were factors of only secondary importance, one can say in retrospect, for both were rectified as soon as the economic and fiscal difficulties had been faced. The fiscal weakness had its roots in the attempt to combine far-flung public works with armaments on an unprecedented scale.
To deal with this problem, Reynaud put a stop to new public works, thus saving two or three billions, on the assumption that the slack would be taken up by armaments. In a careful exposition of his policy, before the Senate on December 28, 1938, he made perfectly clear his conviction that these public works stood in the way of effective armament. He recalled Lloyd George’s famous remark that it is better to pay a worker who works than to support an unemployed man who does nothing. A seductive idea, he exclaimed, but unfortunately it is wrong: because, he argued, such publicly supported work projects draw needed workers away from industries which produce consumable goods. He pointed to the rising scale: 4 billions in 1931, 41/2 in 1934, 61/2 billions in 1936. He cited another illustration: in 1928, when France was prosperous, she spent 74 millions on rural roads; in 1938, after seven years of depression, this item had risen to 279 millions. Likewise, in 1928, 80 millions were spent for schoolhouses; in 1938, 544 millions. He cited the various forms of government aid for agriculture and industry which had been adopted. He was not unsympathetic; he frankly admitted that ‘ the reasons given for each one of these projects are quite respectable when considered by themselves. . . . But it is the entirety of these interests when taken together which is contrary to the public interest, because it is fatal for the finances of the nation.’ So out they went.
Another phase of fiscal difficulties was the increase in the number of permanent officials. In two years, he pointed out, the government had created 240,000 jobs. To cope with this situation, another decree law provided that no new officials would be recruited for the time being; a special committee was created to see where jobs vacated by retiring officials might be eliminated altogether. This technique has, as a matter of fact, been pursued in Switzerland with a considerable measure of success. The new committee was significantly called the Axe Committee: it was to slash where possible. Of course, it is clear that an expanding government service cannot avoid putting on more men to do the work, but there existed a widespread feeling in France that many more men had been put on than were necessary.
Much more difficult than the fiscal was the economic problem. The economic weakness had four major aspects, all of which were, in Paul Reynaud’s view, traceable to dubious interferences on the part of the government which should be rectified. This is not, of course, a difficulty peculiar to France. All reasonable persons in all the highly industrialized countries are agreed that governmental interference is well-nigh inescapable where frictions develop in the economy. But our insight into social processes is so limited that we often find upon making an experiment that the secondary and tertiary effects of a measure calculated to correct a certain evil bring in their train greater evils than the one originally causing the disturbance. Lazy and reactionary minds draw from this experience the conclusion that it is best to let well enough alone and do nothing, but the good sense of most men urges them on to new and more elaborate experiments.
The factor making for greatest weakness in the economy was, in Paul Reynaud’s view, the forty-hour week. The reason he so definitely rejected the fortyhour week was that it increased the cost of production throughout the economy. It also tended to introduce rigidities into the labor market, so that men would stay in a relatively less important industry rather than move where they were most needed. In his speech before the Senate, Reynaud specially referred to the fact that the railroads had absorbed 70,000 agricultural workers who were badly needed in the fields. But he did not at first make any frontal attack upon the forty-hour principle — in fact, he insisted repeatedly that the principle stood entirely unaltered. He attacked two features, however, which he called ‘vices of application.’ One was the practical impossibility of securing men to do overtime, even where it was urgently required in bottleneck industries; the other was the fact that ‘in the majority of cases it was not a question of forty hours of work, but of forty hours of presence.’ He cited an establishment under the Ministry of Finance where the actual work hours had fallen to thirty-two. The problem of overtime was very serious; it clearly had to be adjusted to the changing demands in industry. For instance, there was a shortage of labor in airplane factories, yet the thirty-fivehour week was sufficient to keep the railroads in operation. In order to cope with these difficulties, it was provided that men should work six days instead of five, and should work overtime without undue increase in the hourly rate of pay.
These measures of the decree laws were clearly directed against labor and against the trade-unions that had secured the forty-hour week. The unions sought to coerce the government into abandoning these plans by declaring a general strike. We all know today that this strike failed miserably. Why, then, was it declared? Did the trade-union leaders not know their own men? The prevailing opinion of well-informed men seems to be that the trade-union command, Jouhaux and his associates of the powerful C. G. T. (Confédération Générate de Travail), as well as the Socialist leaders, knew very well that it could not succeed, but unfortunately the trade-union secretaries throughout the length and breadth of the land did not realize the position they were in. They did not see why they should back down, instead of fighting such ruthless action against their most cherished achievements. It must also be remembered that the Communist-Marxist elements are a powerful group in the French trade-union movement, and they perceived here a golden opportunity for embarrassing the more conservative elements within the unions, first by forcing them to argue the weak line of surrender, and afterwards by attributing their failure to weakness and indecision. Hence there has recently been a marked increase in Communist strength throughout the industries in the ‘free sector’ of production. But Paul Reynaud did not propose to be daunted by such considerations; for him it was decided that France could not be put on a war footing with the forty-hour week, and that settled it.
The second great weakness of the French economy was the marked lack of capital and a corresponding rise in interest rates. This capital shortage, in the opinion of Reynaud and his advisers, was due to the flight of capital as well as to the government’s own capital requirements. Like a sponge, the government absorbed all available resources, and thus retarded the starting of new enterprises, as well as the modernization of old ones. In order to open up private credit and break this vicious circle, the government simply made a declaration in which it promised to float no more loans for six months. Some taxes were also reduced. The government could venture upon this promise because of the abandoning of public works.
The third troublesome aspect was the continuous rise in prices. This Reynaud believed to be due to increases in the cost of production, plus such special factors as the agricultural price-fixing arrangements. On the monetary side, it was reflected in the continuous printing of new money to cover the government’s deficits. In order to loosen up this price structure, control of wholesale prices was given up, and only that of retail prices retained. The idea was to benefit production, and allow producers the margin of profit. To the outsider, it is not very clear how appreciable advantages can be derived for any length of time from such a paradoxical arrangement, but then it was readily admitted by those concerned that very large unsolved difficulties were looming in this field of governmental planning.
Though it was generally acknowledged that the rigidities in the labor market were probably the most serious obstacle to the smooth running of the entire industrial machine, no very drastic steps were taken immediately to cope with these difficulties. Here again France is facing a situation which is common to all highly industrialized countries. The so-cclled bottlenecks of industrial production are looming large in Germany, England, even the United States, and professional economists everywhere are coming to insist that you may have large unemployment along with a serious shortage of skilled labor — indeed, paradoxically enough, the labor shortage may to a considerable extent be responsible for unemployment. The failure of one highly specialized factory manufacturing a particular gadget may hold up a great deal of industrial production which depends directly or indirectly upon that particular gadget. All that the November decrees did was to charge the Axe Committee with studying these bottlenecks and devising plans for a more effective distribution of labor.
IV
What has happened to France as a consequence of these decrees? An answer to this vital question is not easy to give, particularly since opinion in France is sharply divided. Leftist papers and magazines have been exceedingly critical, and have insisted right along that the Reynaud decrees are a pseudoFascist plan for benefiting the rich at the expense of the poor. They have cited the undeniable evidence of increased work as part of a general indictment. The actual evidence is somewhat contradictory. Workers in the armament industry and its auxiliaries are much better paid than, say, textile workers. But they also have to work harder.
Reynaud and his aides seem to be well pleased with the result of their measures. On the sixth of March, Reynaud drew a balance sheet of the first four months of his Three-Year Plan in a speech which was broadcast throughout the land. Proudly he contrasted the effect of his decrees with the effect of Poincaré’s twelve years earlier. He had brought about a decline in the interest rates, which his great predecessor had failed to do. At the same time, savings-bank deposits had increased over 3 billions, as contrasted with 200 millions. He noted an ever-increasing return of gold — in fact, he could point with pride to the fact that France, of all continental countries, was the only one gaining additional gold reserves. In keeping with this general picture he noted a marked improvement in the government’s credit, as indubitably expressed in markedly lower interest rates.
To show how speculation had been reduced, Reynaud gave the example of three brothers: one had bought pounds sterling in November, and had lost 275 francs and interest on 20,000 francs; another had put his 20,000 francs into a savings bank and had earned 200 francs interest; the third had put his confidence in the French Government and bought treasury notes, and this patriot had gained 4000 francs in addition to his 300 francs interest. I for one fail to see how this shows the end of speculation, though I can see how it does prove that the French Government’s credit has risen sharply. I fear that those who point with indignation to the large profits made on the stock exchange, particularly in stocks of the armament industry, have a good deal to support their position. It is another question whether such gains can, at the present time, be considered a very valid argument against the policy of Reynaud. The increase in production and the relative decline in unemployment were urged by Reynaud as further proofs of the efficacy of his measures. He did not dwell upon the fact that in some industries men must now work up to 55 and even 60 hours.
No sooner had Paul Reynaud drawn his rather encouraging balance sheet than Hitler administered another crushing blow to France and Britain by seizing Prague. Feeling apparently unprepared, the Daladier government neither declared war nor resigned. Instead, it asked on March 19 for another plein pouvoir. Parliament readily granted the new powers, because it felt utterly unable to cope with the tasks of further retrenchment in social reform, further armament, and war preparation. But, whatever Hitler may have gained in destroying Czechoslovakia, he certainly galvanized France and her government into making more comprehensive efforts. Thus the second step of Paul Reynaud’s ‘plan’ was reached on April 21, when a new batch of decree laws carried further the ideas initiated in November. It was now admittedly a matter of putting the French economy upon a war footing.
On the fiscal side, the drastic suppression of all public works in favor of armament was pushed further. At the same time, ruthless reforms in local finance were instituted in some of the big cities, and the government and administration of Paris and Marseille were completely overhauled. Bucking even the pressure of the formidable farmers’ organizations, the government limited its price guaranty for grain to such amounts as were needed for domestic consumption. Anyone who knows French politics must appreciate the revolution this step involved. Another radical measure touching the tenure of civil servants was pushed through when it was provided that government employees could be transferred to private enterprise or retired, either on half salary or upon the payment of a capital sum amounting to ten times the annual salary. Provision was made for coercing industries to take on such officials where the government considered it desirable. Finally, a heavy sales tax of one per cent on all sales was adopted to pay for the additional armaments. This tax, I was told, is expected to yield six billions. No wonder bankers like M. Istel are suggesting that France is deflating, in spite of all appearances to the contrary.
Although not intrinsically very important, it is amusing to learn of a rather ingenious device for tracking down income-tax evasions: a fixed scale of probable income has been established, according to which certain external signs, like the number of servants, automobiles, and the size of the home, are indicative of a certain amount of income, and if the declaration is less than that an explanation is required. More power to the miser!
Altogether, it is clear that M. Reynaud is not afraid of drastic steps involving a more radical departure from nineteenth-century individualism than the Socialists ever dared propose. It shows that the integrated totalitarian war machine in Germany is forcing France (as well as England) into adopting certain similar methods.
In the economic sphere, the ideas of the November decrees have likewise been enlarged and expanded. The forty-hour principle was openly discarded in the April decrees, and the forty-five-hour principle substituted for it. What is perhaps even more important, workers are obliged to do overtime at a rate only 5 per cent higher than the regular rate. This means that a worker doing 8 hours at 8 francs an hour, and hence receiving 64 francs for his ordinary workday, would, if asked to do two hours’ overtime, receive an additional 16.80 a day. And he is more or less obliged to work overtime if asked. The April decrees further provided that there should be no increases in wages, owing to rising prices, if the wages received for forty-live hours of work were sufficient to buy what the wages for forty bought before. Still, retail prices in Paris had not risen more than 1.76 per cent between November and March. In those industries where the armament boom has had no appreciable effect — like textiles, for instance — the workers continue to be badly off. This, I was told on excellent authority, is the main reason for the spread of Communism in the so-called free sector of the economy.
But the workers are not alone in feeling the rigor of the war economy in the making. A rather drastic measure was introduced to compel management to collaborate with the government in planning national production. The Ministry of Labor was given power to forbid an industry in a given department (administrative district) or field to hire additional labor without consulting the Minister. This big stick, called the droit de priorité, has so far been used, however, only as a threat to manipulate the distribution of labor. It is clear that the weak spot in this picture is the price system. Reynaud and his aides seem confident that they will be able to deal effectively with this difficulty. But in view of the insuperable difficulties which have been encountered elsewhere, even in totalitarian régimes, it is well to await developments. Paul Reynaud is confident of his strength. Smilingly he told me that he had, of course, been warned time and again, by friends and enemies alike, that where Blum, Flandin, and Marchandeau had failed, he would fail too. But, he added, ‘I shall not fail.’
Reynaud’s confidence in his program is a very important help in making it a success. Up to the time of his entry into the Ministry of Finance, France had been paralyzed by fear and disillusionment. Why, then, is he not Prime Minister? The answer can be found only in political and personal terms. As pointed out before, he is not a good politician in the ordinary sense. His support in the Chamber of Deputies is not nearly so great as that of the regular Radical Socialist Daladier. It is the emergency in which France finds herself that is giving Reynaud his chance. Without it the politicians would probably not bother with so inconvenient a man. In the Republic of Good Fellows (Camarades) which de Jouvenel has so sardonically described, he is an outsider.
But this does not mean that Paul Reynaud suffers from false modesty. Like any man with the will to do things, he has what the French call the taste for power. I doubt whether there is any love lost between Reynaud and Daladier or Sarraut. And as for Bonnet, I feel certain that Reynaud holds him in contempt for his weak-kneed foreign policy. Indeed, there were rumors abroad that Reynaud originally made it a condition of his staying with Daladier that Bonnet should go. But Daladier seems inexplicably attached to this dubious compromiser. Reynaud’s weakness in the Chamber of Deputies is enhanced by his electoral difficulties. Holding t he seat for the very centre of Paris, the first arrondissement, which stretches behind the Palais Royal, he almost lost the last election by his uncompromising stand in favor of devaluation. I talked with quite a few of the small shopkeepers in the district; his electoral support seemed greater than at the time of the last election. But, since the government has decreed the continued existence of the present parliament, it does not immediately matter.
Should we be justified in concluding that France, governed by the constitutional dictatorship of the DaladierReynaud Cabinet, is resembling the German Republic in the days of Dr. Heinrich Brüning? The analogy is tempting and often made. But there are several profound differences, apart from France’s much longer tradition of effective self-government. First, and perhaps most important, there is no large-scale Fascist movement in the country preparing to take over the government. There is no Treaty of Versailles to rail against. There is no president, supported by an army, who at bottom is hostile to the republican régime and under the influence of a clique of reactionaries seeking to hamper the actual government. And it is fortunate that a simple government decree can postpone elections rather than have them multiplied. All these considerations, and many less important ones, suggest that no rash analogies should be drawn between the two situations.
Probably the most decisive difference, however, is the great Jacobin tradition in France which merges progressive and conservative forces in time of national peril. As Paul Reynaud said, at the time of the general strike, ‘ Personne en France n’a de droit contre la Nation.’ Reynaud, the ardent nationalist, has never wavered in his patriotic fervor. Ever since Hitler came into power, Reynaud has felt that France must arm. He expressed himself as strongly in favor of France’s mobilization when Hitler went into the Rhineland. During the Ethiopian campaign of Mussolini, he wanted France to take decisive measures — close the frontier, persuade the U. S. S. R. not to send oil or gasoline. At the same time, he showed his superior statesmanship by urging France to back the League of Nations to the limit as long as the League was a functioning tool of international order.
What I have been trying to show is the powerful impact of the personality of one man, Paul Reynaud, upon the revival of France. I hope to have made it clear that he stepped into the breach at a moment when all seemed lost, and, whether we like it or not, we must acknowledge that developments thus far have justified him in proudly asserting:
The facts testify without a possible doubt that the road taken since November is a good one. These facts demand that we persevere with courage upon the path we have chosen, though unquestionably it is a hard one. It will lead us to a good issue if we pursue it with tenacity.
It is today not only a question of bringing back prosperity and wealth; it is a question also, and a supreme one at that, of putting the country into shape for resisting victoriously any external attempt at violence and hegemony.
These remarks concluded the balance sheet presented to the country at the end of the first period of the new policy, in April. They apply with even greater force today. Paul Reynaud may not be too democratic a democrat. But in times of storm the sails have to be trimmed. The French Minister of Finance today has no illusions on that score: —
It is a question of knowing what power of discipline, of energy, and of efficiency a threatened democracy is able to muster without ceasing to remain a democracy. . . . This is the meaning of our enterprise. If, through misfortune, we fail in it, all the defenders of democracy, without regard to party, are the losers.