Le New Deal
Pierre Mendes-France, son of a clothing manufacturer, is economist first, politician and statesman second. The argument which did most to convince him that the Indo-China war must be stopped was that France could not afford it. His chief ambition in North Africa is to stabilize the area, so that France can concentrate on what he calls the "real battlefront": eco nomic reform.
Mendes-France believes that the limping French economy needs more reform than it did in 1789. In his investiture speech, he promised to submit "a coherent program of recovery and expansion" by July 20. Last week, a few days late, Mendes kept his promise by laying before the National Assembly a dramatic blueprint for peaceful economic revolution.
Under the Oaks. Mendes-France calls his program le New Deal null He worked most of it out himself. Back from Geneva, Mendes set up shop outside Paris in a hunting lodge in the forest of Marly. Outdoors, under the oaks, Mendes met his two economic brain-trusters: Georges Boris, 66, and young Simon Nora, 33. He looked over blueprints proposed by Finance Minister Edgar Faure, and reworded by Boris and Nora. "I seem to find nothing but old projects," he grumbled. "They are neither original nor daring." He wanted a program of "total economic conversion," to give a "psychological shock to the country."
Our Main Error. "We have really only one problem, at home and abroad," Mendes-France says. "France is the one nation in the West whose production has not increased in a generation. It is the same now as it was in 1929 . . .*
"This explains a great deal the fear of the bourgeoisie, the social pressures, the lack of armament production, the low living standard. And our needs now are far greater than in 1929. We have 2,000,000 more to be fed. Our export needs have increased . . . Our equipment is oldfashioned. We need new homes. It is now 40 years since any housing of consequence was built in France."
Why is this? Mendes has an economist's answer. "Our main error lies in spending for unproductive uses. First, spending for luxury goods by individuals and the state. Second, operating our nationalized industries at a deficit--coal, gas, railroads. Third, the exaggeration of [France's] social laws--some of them tend to cut back production, not increase it."
Sweeping Powers. Under the oaks at Marly, Mendes-France rewrote Faure's program to give expression to his own ideas. It took him 48 hours, practically nonstop. As presented to the National Assembly, last week Mendes-France's New Deal consisted of two documents: a one-page legislative bill, asking sweeping powers to run the. French economy by decree until March 31, 1955, accompanied by a 30-page "Exposition of Motives." Main features:
P: Liberalization of trade at home and abroad, to strip away masses of protectionist tariffs, duties and subsidies which have made French industry the most coddled in Western Europe. P: Agricultural reforms aimed at forcing the peasants to cut back production of uneconomic crops (e.g., wine, sugar beets for alcohol), and farm more efficiently. P: Overhaul of the maladministered cradle-to-grave social security program.
Foreign economists cheered. But to many a French businessman raised in the hothouse atmosphere of protectionism and subsidy, Mendes' program seemed more like an invitation to pneumonia.
To the Premier's office Mendes called politicians, union men and bankers, explaining to them that "there will be things you don't like." Then he and Edgar Faure marched into the National Assembly.
Hand of Poker. More than 100 amend ments to the New Deal had already been submitted by special interests. The wine lobby, the distillers, the civil servants, the farmers--all had their champions popping up to defend their privileges. Wartime Premier Paul Reynaud, an old-fashioned financier, was alarmed. The plan, he said, is "as vague as it is irreproachable." "If I understand you correctly," Reynaud said, "your scenario is like this: you open the frontiers, and there is a massive invasion of foreign goods. There is a terrible shock, and you pick up the wounded at the expense of the state."
Reynaud's biggest worry was that the New Deal might cut military expenses to win economic gains. "For eight years you have been in opposition," he told Mendes-France, "and often you have made it plain that you would save money by reducing military expenditure. Are you betting the peace of the world on the good will of the Kremlin or on the defensive alliance of the Atlantic? I am among those who will not agree to gamble the survival of France on a hand of poker."
Question of Confidence. Stung, Mendes-France leaped up to reply. In the 1955 budget, cuts would have to be made in both military and civilian expenses, he said. But he promised "a rigorous defense" of the currency; to mollify the workers and peasants, he promised to lower the barriers to foreign competition "with the utmost prudence." But in the main lines of his program, and in his demand for full power, Mendes-France would not yield a centimeter. "The vote will be a question of confidence," he told the National Assembly, and in the prevailing atmosphere he was all but sure of getting his economic blank check.
In-a-hurry Mendes-France also made known his timetable on EDC: P: Aug. 19, meet in Brussels with the five other EDC Foreign Ministers, to propose French amendments to EDC and seek their consent.
P: Aug. 24, submit the EDC treaty to the French Assembly.
* Actually, it is up a meager 7%. Italy's is up 81%, West Germany's 130%.
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