From the internal point of view also, the argument against an increase of the French Bank rate is overwhelm ming. It is difficult to see why the French Treasury should deliberately ner ease the cost of its borrowing for national defence. Nor is there any reason why the deflationary effect of he inevitable setback in trades unconnected with national defence should be accentuated by deliberate action. "Civilian" trades must suffer n any case as a result of the fall n the demand for non-essential goods luring the early phases of the war. There seems to be no justification for increasing their difficulties by raising he cost of their borrowing to a level which, in existing circumstances, might well prove to be prohibitive in a large number of borderline cases. rate of 10s. per cent. per annum.
Now the incidence of this tax—for its incidence is that of a tax rather than an insurance premium—falls hardly on businesses which have to keep large stocks in comparison with their annual turnover. The premium is the same (6 per cent. per annum) whether the stocks are turned over in a week, in three months or in two years. In the case of certain types of business where turnover is necessarily slow, the premium payable for war risk insurance tends to absorb a normal year's profit. It is understood that the Board of Trade is considering measures to mitigate undue hardships of this kind. Possibly the right solution would be to base the payment on the ratio of stocks to annual turnover.
Text read from the printed page and cleaned; old type leaves the occasional error.