618 TRANSACTIONS OP SECTION F. 



In the coin-se of the Discussion the following Paper was read : — 



The Effect of the War on Finance and Currency. By Yves Guyot. 



War represents an excess of consumption ; the belligerents consume capital 

 under every form ; nothing remains of it. No doubt the men who are at the 

 Front would have been obliged to consume in time of peace. But they would 

 certainly have made more economical consumption ; moreover, most of them 

 would have been busy supplying agricultural or industrial goods, or by trans- 

 port, by trade, or by banking operations they would have been useful to the 

 jconomical repartition of those products. 



The said products do not exist. The saving power has therefore been 

 almost entirely destroyed. Onlj' those who have been producing for the large 

 consumers — namely, the belligerent nations — have been able to put aside a part 

 of their profits, a much smaller part than is supposed, at any rate in France 

 and the United Kingdom; those are the only amounts of capital constituted 

 since the War. 



No doubt the subscribers to Loans will receive higher interest than they 

 would have received if the War had not given rise to the enormous needs of 

 the States ; but as the States will be obliged to saddle the mass of taxpayers 

 with further burdens in order to pay interests and clear off the Loans, "the 

 result will be an extra charge on the general expenses of each inhabitant of 

 the land. 



Thus, on the morrow of the War : destruction of an enormous mass of 

 fixed capital which will have to be reconstituted ; railroads, working plant worn 

 out, not kept in order or not renewed, houses to reconstruct, and lack of 

 available moneys. The needs will be great, but the purchasing power will be 

 small, and the cost price will be increased by the higher rate of capital, the 

 difficulties of procuring working plant and instruments, the scarcity of labour 

 and fiscal surcharges. 



The only means of repairing losses and increasing the economic power of a 

 nation is the increase of the intensity of production. 



It may be obtained by new inventions or discoveries, by a better division 

 of labour ; hut any measure having for consequence a decrease of the efficiency 

 of labour annihilates entirely or partially the technical progresses and increases 

 cost prices. 



If legislative or fiscal measures interfere with capital, they merely cause 

 it to steer away from industrial enterprise and to abandon economic activity. 



If, under pretext of protection, Customs duties increase the price of articles 

 which the progress of industry, of banking, and of means of transport strive 

 to lower, they increase the necessary effort for the acquisition of such articles, 

 and consequently they lower the efficaciousness of technical improvements. 



Many employees have been persuaded that by means of controlling measures 

 exercised by State, by restrictions due to the "trade unions, they could obtain 

 higher salaries in return for a minimum of their productive capacity. It is 

 necessary to look for means of giving the maximum of productive strength to 

 labour on the following bases : harmony for tlie workman between his interests 

 and professional morality. 



Much has been said about private and public economy. Let the administra- 

 tions set the example ; we hope they will do so, though we confess that we 

 have little faith to back such a hope. All the plans and projects laid down 

 and discussed in the French Parliament concerning the economic future of 

 France lead merely to an increase of expenditure. None aim at making im- 

 portant savings in the Budget previous to the War. 



As for private economy, all is relative : no doubt there is a deal of useless 

 waste, which it will be wise to diminish or to suppress ; but economy is only a 

 negative virtue, the intensity of production is a positive virtue, aiid it is on 

 that virtue that we must build in order to ensure economic progress. 



