228 THE ECONOMIC CONSEQUENCES OF THE PEACE ch.

There are therefore three separate obstacles tothe revival of trade: a maladjustment betweeninternal prices and international prices, a lack ofindividual credit abroad wherewith to buy the rawmaterials needed to secure the working capital andto re-start the circle of exchange, and a disorderedcurrency system which renders credit operationshazardous or impossible quite apart from the ordinaryrisks of commerce.

The note circulation of France is more than sixtimes its pre-war level. The exchange value of thefranc in terms of gold is a little less than two-thirdsits former value; that is to say, the value of the franchas not fallen in proportion to the increased volumeof the currency. 1 This apparently superior situation ofFrance is due to the fact that until recently a very greatpart of her imports have not been paid for, but havebeen covered by loans from the Governments of GreatBritain and the United States. This has allowed awant of equilibrium between exports and imports tobe established, which is becoming a very seriousfactor, now that the outside assistance is beinggradually discontinued. The internal economy ofFrance and its price level in relation to the note cir-culation and the foreign exchanges is at present basedon an excess of imports over exports which cannot

1 Allowing for the diminished value of gold, the exchange value of thefranc should be less than 40 per cent of its previous value, instead of theactual figure of about 60 per cent, if the fall were proportional to theincrease in the volume of the currency.