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ESSAYS IN PERSUASION

PART

accompanied either by further Inflation or bya further fall in the exchange.

It is for you to decide in your own mind atwhat level of internal prices you can hope tobalance your budget. Your next step must beto bring about this rise in as orderly and scien-tific a way as you are able. Looking from out-side, it appears to me that an internal price levelbetween eight and nine times pre-war might behigh enough. In this case there is no justifi-cation for any considerable further Inflationor fall in the franc exchange. All you haveto do is to stabilise the note circulation andthe franc exchange at near their present leveland to allow time for internal prices to risecorrespondingly.

What are the explanations of the present lowlevel of franc prices? I think that they are: (i)the time element—internal prices move slowly,but will move as they should in time; (2) thehoarding of bank-notes on an even greater scalethan formerly, leading to a sluggish circulationof the available currency; (3) excessive foreigninvestment by Frenchmen, due to lack of con-fidence, which drives the exchange down belowthe figure appropriate to the trading position;and (4) the legal restrictions on rents, etc.

These influences should be remediable asregards (1) by the mere lapse of time, and asregards (2) and (3) by the restoration of internalconfidence. The right strategy, therefore, is torestore confidence and then just wait. And theway to restore confidence is, surely, not to heap