The Price of Napoleons

The Price of Napoleon

As they have for generations, Frenchmen hedge their bets on the future by buying up and hoarding "napoleons"*--golden 20-franc pieces. Napoleons are thus the truest reflection of a small Frenchman's faith, or lack of faith, in his government's financial stability. Last week, after a climb of 30% in the past ten months, the price of the gold napoleon stood at 3,310 francs (about $9.45), the highest since the nervous last days of the war in Indo-China. In bullion terms, this made the napoleons worth $50 per oz., v. the U.S. price of $35 for world gold transactions.

The reason for the rise in napoleons is not hard to find, even though France is enjoying good times and has even hung on to the same Premier (Socialist Guy Mollet) for six months now. Two weeks ago the Mollet government gave France the bad tax news to accompany the increase in old-age pensions that the Assembly recently approved. This will add $400 million to the tax bill, to be met by surtaxes on salaries, by an added six francs on the price of every aperitif, and by a special tax on automobiles, rigged to discriminate against U.S. cars. (Cars with less than 16 h.p. will be taxed $9 to $23 a year; cars above 16 h.p.--none are mass-produced in France--will be taxed a whopping $285 a year.)

This week France got yet another financial jolt: a new tax on French cigarettes, raising their price by 4-c- a pack. The cigarette tax (estimated annual return: $63 million) is only the first of a series of new levies by which the Mollet government hopes to raise $285 million to pay the costs of the Algerian war.

Hopefully, the government described the Algerian war taxes as "temporary and extraordinary." Last week, however, as Moslem residents of Algiers marked the 126th anniversary of French conquest of the city with a one-day general strike, there seemed little likelihood that France would soon be able to withdraw the enormous (half a million men) and expensive ($2.9 million a day) force it currently maintains in Algeria. And, temporary or not, the new taxes clearly point to a continuation of the steady price rise, which since January has increased the minimum budget on which a Parisian family of four can live from $188 to $209 a month.

So far, by artful manipulation of the price of the 213 commodities (sausages, vin rouge, coal, linoleum) that make up the official cost-of-living index, the Mollet government has succeeded in holding the index itself relatively steady while most other prices are shooting up. Should the index jump two more points (to 149.1), minimum wages for 20 million workers would automatically increase 5%, setting another inflationary spiral. Said one French economist last week: "The sea is lapping at the dike."

*The coins were first minted under Louis XIII, but take their name from Napoleon I, who put his own portrait on them when he was consul. For most of the past century they have displayed a republican rooster, but "napoleons" they remain.

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