(9 of 10)
The one factor that still remains out of balance—and has significantly contributed to the fiscal problems of Britain and France—is the foreign-trade account. As in 1967, the Germans will record a trade surplus of more than $4 billion this year. Increased domestic consumption hardly makes up for that, and Schiller's solution has been the encouragement of investment abroad—some $2.5 billion so far in 1968.
Whatever Bonn's economic planning achievements, however, there are other, less tangible factors that have aided the German recovery. As the Bild Zeitung somewhat pompously observed last week in comparing the Federal Republic to France and Britain: "If we went on strikes and took breaks as often as the others, we too would have to go out and borrow, the only question being: From whom? If we had so suicidal a trade union system as the British, our mark would be just as tuberculous as the pound. If we had as many unsolved social problems as the French, then we would have as much unrest and —as in May in Paris—a ruinous rebellion."
Sanctity and Stability
In spurning devaluation as a way out of the franc crisis, De Gaulle was being faithful to his genuine, almost mystical belief that the sanctity of France depends on the stability of the franc. As he put it in 1963: "Neither Italy nor Belgium has a government. The United Kingdom and Germany are on the eve of not having one. We are the only country that is stable and sound; this I have brought, and it will last after me."
Whether it will or not remains to be demonstrated, for the consequences of the general's decision last week are difficult to foresee. There is always the possibility that the measures he is taking in lieu of devaluation may somehow succeed in stopping the run on the franc. France, after all, is in a far stronger position than Britain was when it devalued last year. Britain's gold and foreign-currency reserves had dwindled to a dangerously low level. France, despite the recent heavy losses, still has $4.1 billion in gold and reserves, and in addition to that the $2 billion credits made available in Bonn by the Ten and nearly another $1 billion open to it in Basel's Bank of International Settlements. Taken together, those are potent resources to throw into a speculative battle.
Moreover, the French economy is essentially sound. In food and industrial resources, France is largely self-sufficient. It is not yet in real balance of payments difficulties. The crisis of the franc was primarily created by the lure of volatile capital funds into the mark by speculators who believed it was about to be revalued. In strict and narrow economic terms, France does not need a devaluation.