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year 1917, £6,022,227; in the fiscal year 1918, £7,386,908 and for the period, April 1, 1918 to December 31, 1918, £7,454,522. At times during 1917, the rise in expenditures was very marked and caused considerable concern when the liberal estimates of the Chancellor of the Exchequer were being continually outdistanced. From April 1, 1917 to May 5, 1917, the daily average was £7,971,000 and from May 6, 1917 to June 9, 1917, it was £7,532,000. A period of recession then set in until expenditures fell to £6,414,000 during the sixtythree days between June 9, 1917 and September 29, 1917. From September 30 to December 1, 1917 a rising tendency was again observable, the average being £6,774,000, and from the latter date to January 19, 1918, the daily expenditures rose to £7,517,000.1

For years prior to the outbreak of the war the Treasury showed a surplus of receipts over expenditures. This state of affairs was not maintained during the war but a serious attempt was made to defray a comparatively large proportion of expenses out of revenue. The rates of the income tax were raised in 1915 and again in 1916. Excise and customs duties were increased considerably and a munitions levy was imposed. Finally, in 1916 an excess profits duty was enacted, the fiscal effects of which were not materially felt until 1917.

The first year of the war saw a reduction in the ratio of net receipts from taxation to total expenditures, from 82.6 of the year preceding to 33.9. The following year witnessed a still further decline to 18.7, owing to the enormous increase in expenditures and slow adjustment of revenue. In 1917, the excess profits duty became an important factor in bringing about a rise of 4.8 in the ratio.

1 Parliamentary Debates, June 25, July 24, December 12, 1917, and January 23,

The outstanding feature is that from August 1, 1914 to February 8, 1919, Great Britain has defrayed 23.0 per cent of her expenditures by taxation and 26.5 per cent by general revenue receipts (including posts, telegraphs, etc.). Were advances to Allies and Dominions deducted (which are classified as expenditures), it would be found that the ratio of tax receipts to disbursements is 28.1 and the ratio of general revenue to disbursements, 32.4. Details for the last seven years follow:

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In December, 1917, M. Klotz, Minister of Finance, stated that a deficit of 1,266,500,000 francs was impending in the ordinary budget for 1918, and to meet this exigency, he made five suggestions: (1) a supple

1 Compiled from Statesman's Yearbook, 1918; Sixtieth Report of His Majesty's Inland Revenue, 1917; and London Economist, February 15, 1919.

* Exchequer receipts from taxation.

• Includes eight-twelfths of the 1915 figure. Inasmuch as the fiscal changes during the first eight months of the war were comparatively unimportant, this method of computation was used.

mentary tax on excess profits, the rate to be 25 per cent if the profits remaining after payment of the original tax ranges from one to five million francs, and 50 per cent if the remainder exceeds five millions; (2) upward revision of the tax on inheritances and gifts; (3) new taxes on luxuries and expenditures; (4) revision of the tax on the shares of corporations; and (5) changes in administrative methods with a view of preventing fiscal frauds. These proposals were designed to yield 1,266,500,000 francs as additional revenue for 1918 and 1,774,000,000 francs annually thereafter.1

The recommendations of M. Klotz were not, however, followed out in full detail, altho the principle that the impending deficit should not be covered by credit operations was upheld. January 1, 1918 marked the introduction of the new measures as finally decided upon. First, the war profits tax was made applicable to sums of 100,000 francs or less, at the rate of 50 per cent. Progression was provided for when profits subject to the tax exceeded 100,000 francs, the maximum rate being 80 per cent. Second, a tax of 10 per cent ad valorem was levied on articles of luxury, and on expenditures in such establishments as hotels, restaurants, etc., which the departmental committee considered de luxe, effective April 1, 1918. Third, every payment of a sum exceeding 150 francs representing the retail sale price or the consumption of a commodity became subject to a tax of 20 centimes for every 100 francs or fraction thereof. Fourth, sundry changes were adopted relative to the tax on inheritances and gifts."

The revenue receipts for 1916 were 5,018,343,700 francs; in 1917 they rose to 6,190,533,400 francs; and in

1 M. Klotz, "Exposé des Motifs," Bulletin de Statistique et de Législation Comparée, December, 1917. The actual results for 1918 were, however, disappointing. The yield of the tax on payments was only 210 million francs as compared with the estimate of 781 millions. Cf. L'Economiste Européen, January 17, 1919, p. 40.

Journel Officiel de la République Française, January 30, 1918.

1918, the total yield was 6,632,639,800 francs, inclusive of the new taxes above mentioned. Revenue for nor

mal years, as computed by the Minister of Finance, produced a total of only 4,159,122,759 francs; therefore, in 1917 the receipts were about one-half larger than those of an average year and about three-fifths larger in 1918.

Remarkable as this attempt may seem when it is recalled that during the last five months of 1914 the treasury receipts declined 38.6 per cent as compared with a normal year; in 1915, 19 per cent; and in 1916, 3.46 per cent,2 the state of the French finances is by no means satisfactory. M. Ribot recently stated that the civil budget for 1919 involved an expenditure of 8.9 billion francs, exclusive of 1.1 billion francs for interest on the new loan (fourth), plus payments for damages, advances, etc., which will bring the total to about 17 billion francs. With no new lucrative sources of revenue in sight and open dissatisfaction expressed with the luxury and income taxes, the situation is considered by some as being but short of alarming.

M. Klotz stated that in 1914, the average monthly expenditure was 1,318 million francs; in 1915, 1,900 million francs; in 1916, 2,743 million francs; and during the first nine months of 1917, 3,360 million francs-a total of 92,546 million francs for the whole period. During the same interval the total receipts were 13,816 million francs, or 14.9 per cent of the expenditures. In the revenue figures, however, there are included the income from monopolies and domains, and if the latter is ex

1 Taken from various numbers of the Journel Officiel de la République Française, and L'Economiste Européen, January 17, 1919, p. 40 (figures for 1918 incomplete). 2 "Exposé des Motifs," op. cit.

• London Economist, December 28, 1918. Recently M. Klotz announced the total of the 1920 budget as 18.5 billion francs as compared with 5.3 billion francs for a normal year. Ibid., February 22, 1919, pp. 327, 328.

cluded, the ratio of taxes to expenditure is approximately 12 per cent for the first 38 months of the war.

In a more recent statement before the Chamber of Deputies, M. Klotz asserted that from August 1, 1914 to March 31, 1919, the expenditures for all purposes will have reached 192 billion francs, including 50 billion francs of exceptional expenses such as payments for war damages, pensions, etc.1 The resources to that date were estimated at 158 billion francs, leaving a deficit of 34 billion francs. Of the resources only 18 billion francs represent the receipts from taxation. The ratio of receipts from taxation to total expenditures from the beginning of the war to March 31, 1919 is, therefore, only 9.4.

The results of the four internal loans are as follows: 2

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On July 1, 1914, the national debt of France was 34,188,147,969 francs, and the annual interest charges, 1,037,614,906 francs. On December 31, 1917, the former stood at 124,338,457,479 francs, and the latter at 5,216,617,058 francs. Of the total outstanding December 31, 1917, 20,441,545,000 francs were held outside of France and 44,822,153,800 francs, or approximately one-third of the total debt, had not been funded as yet.3

1 London Economist, February 22, 1919, pp. 327-328.

Ibid., December 7, 1918. A fifth loan, called Loan of National Restoration," to be issued at 95 and bearing interest at 5 per cent was announced in the Journal Officiel, March 23, 1919. The amount of the loan has not been fixed as yet. Cf. also Le Monde Economique, December 7, 1918, p. 779.

Bulletin de Statistique et de Législation Comparée, October, 1918, p. 602.

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