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Royall Tyler to Mildred Barnes Bliss, September 28, 1926

Ministry of Finance
28 Sept. 1926Tuesday.

Dearest Mildred.

Your telegram had a hopeful sound about it, as if you might possibly be coming this way.See telegram of September 27, 1926. I wish I could have given you more allurement in the shape of the Byz. Congress. Unfortunately, it has been put off till next year. As Prof. AnastassiévitchD. Anastassiévitch, a professor in Belgrade, Serbia. put it: “les crédits ont bien été votés, mais les inondations ont empêché de les toucher.”“Appropriations have been approved, but the floods have prevented touching them.” All the same, I live in hope of hearing that you are coming.

I’ve just returned here from Geneva, where I had two affairs, separated by a fortnight’s interval which I put in very usefully at Antigny. Sometime in October, probably about the middle of the month, I’ve got a meeting in Paris, and after that I may have other business to keep me away from here until just in time to prepare for the Financial CommitteeThe League of Nations Financial Committee consisted of officials approved by the British, French, and Belgian finance ministries, central bankers, prominent businessmen, and private bankers from Switzerland and Holland. meeting in Geneva early in December. There you have my plans, as far as I know them myself.

I have been asked to stay here to represent the Trustees of the Reconstruction Loan and the Financial Committee for another 2 years. I hope I shall not be kept here anything like as much as I have been in the past, on which condition the job suits me very well, as I’m very glad to keep up my association with the Fin. Committee, and also to be able to watch the further progress of Hungarian affairs. And I shall know what to do with any leisure that comes my way, for the last 2 ½ years have left me very little time to do anything outside my work here, and I want to catch up with a lot of things.

If you do come this way, you must arrange to stop at Vienna and see, among so many marvels, the pick of the old Imperial carpets that are on show at the Kunstgewerbe Museum,“Decorative arts museum.” Stubenring 5.The exhibition was at the Österreichisches Museum für angewandte Kunst, Vienna. See also letter of April 5, 1926. The exhibition was the basis for Friedrich Sarre and Hermann Trenkwald, Alt-orientalische Teppiche, herausgegeben vom Österreichischen Museum für Kunst und Industrie (Vienna: A. Schroll, 1926), vol. 1. There are no Spanish carpets there, and of course no Chinese, but as for Persian, Anatolian, Indo-Persian, Damascus, Armenian and, for those who like them, “Polish”,So-called Polonaise or Polish carpets were imperial Persian carpets of the seventeenth century. The misnomer arose in the nineteenth century due to their concentration in Polish collections. it’s the collection of the highest quality I know.

Carpets are, probably, the only things that one might occasionaly [sic] get a chance to pick up here. I’ve seen one or two good ones, and am trying to steer the difficult course that will persuade the local Hebrew that I am at once worth while showing the good ones to, and not worth while asking fabulous prices. Generally speaking, there is hardly anything here one would want to buy. The Nat. Museum has so carefully formed the local authorities, school-masters, parish-priests, etc., that anything dug up by private persons is brought to it, and anyone who attempts otherwise to dispose of treasure-trove runs the risk of getting it hot. So whatever does get through the meshes of the Museum’s net is smuggled out of the country.

It’s a pretty sad time in France. There’s something that feels like fatality in the circumstance that PoincaréRaymond Poincaré (1860–1934), a French statesman who served five times as prime minister and as president (1913–1920) of France. He was conservative and primarily committed to political and social stability. is apparently the only man able to command the country’s confidence and reassure it, coupled with the other circumstance that Poincaré appears to be incapable of dealing with the essential problem, which is the financial one. Never have I seen a more overwhelming demonstration of the inability of man to learn from the experience of others. Here, within the last couple of years, have a whole string of countries gone through currency depreciation and have succeeded in stabilising. It might be thought that their experiences might be valuable to France. No, Poincaré repeats that France is not like other countries, and goes on behaving as if he thought it were possible to turn the tide in the franc’s favour and greatly to improve its value by other means than by stabilising, so as to be able to stabilise at a much higher level than the present one. The mot d’ordre“Watchword.” is “it would be a great mistake to stabilise now; the exchange must be improved first.” Hardly anyone ventures to suggest that unless the franc is stabilised at once what will happen is not that its exchange value will improve, but that it will depreciate still further, in all likelihood; and the fact that France is not like other countries, while it will doubtless retard the process, will not stop it.For Poincaré’s handling of the French inflationary crisis and its stabilization in 1926, see Rudiger Dornbusch, “Inflation, Exchange Rates, and Stabilization,” Essays in International Finance 165 (October 1986): 1–24. Poincaré pursued an extreme deflationary policy, balancing the budget and securing the stabilization of the franc at one-fifth of its prewar value. In this crisis, a fear of a capital levy made the French public unwilling to buy government bonds, and as a result, the government had to repay bonds coming to maturity with monetary financing. Only when Poincaré introduced a bill to shift the tax burden from bondholders did the demand for government bonds recover and inflation stop. Consequently, contrary to Royall Tyler’s fear in this and the following paragraphs, Poincaré is credited with solving France’s financial crisis by stabilizing the franc and thus enabling a period of new prosperity. See Alessandro Prati, “Poincaré’s Stabilization: Stopping a Run on Government Debt,” Journal of Monetary Economics 27, no. 2 (April 1991): 213–39.

The measures that are being adopted in the meantime by the Cabinet under the blanket authority it has obtained are very likely good in themselves, but they deal with unessential problems, for one thing, and are so unpopular that they may very likely result in the coalition breaking up and being defeated, for another.

It is very tragic. The depreciation of the franc to 1/7 of its pre-war gold value has taken place very gradually over the last 7 years, so gradually as to have inflicted a minimum of suffering. While it has taken a heavy toll on many private fortunes, many others have been able to re-adapt themselves to the changed conditions. The State has greatly profited, in that its internal debt, in gold value, is only 1/7 of what it would be if the franc returned to par a fabulous dream which still seems to haunt many minds, at any rate to the extent of suggesting such an improvement in the rate as would leave the franc at a much higher level than now.

The French budget before the war was about 4.3 milliard francs, and at present rates that is the equivalent of about 30 milliard. At present the budget probably balances at 45 milliard, an increase of 50%. Without suggesting that an absolute comparison between the two cases is possible, it is not irrelevant to remember that in the same period the British budget has increased, from £200 million to £800 – an increase, of 400%. No one is likely to maintain that France’s income is not larger now (in gold) than it was before the war, and though to increase her budget by 1/2 is certainly a serious matter, she is likely to be able to stand it if Gt. Britain can stand having her budget multiplied by 4.

The effective burden of French internal debt might of course be reduced still further by more depreciation, but in view of the social, and political dangers that would follow, and the difficulty of arresting the process, the relief to be gained would doubtless be paid too dear. As it is, France has a budget which is not beyond her resources, and her middle-class, though it has suffered, has not been wiped out. If she stabilises now the future should be fairly bright, and above all things, the re-adaptation to sound currency conditions should not cause anything like as much difficulty as it did in countries where depreciation went into 5 decimal places and over.

And there is no reason why France shouldn’t stabilise at once, provided her Government understands the position and gives French credit a sound basis by ratifying the war debt settlements. That done, banking credits might be arranged for – and would probably not have to be now. The very announcement of the intention to stabilise would make the franc improve, and without artificial support it would move to the level justified by prices. Beyond that point it would be wrong to attempt to improve it, for the result could only be to kill French export trade.

Instead of all this, the present Govt. appears to be proceeding on the assumptions (a) that prices can be considerably affected by measures bedevilling the producer and retailer, and (b) that, by reforms which won’t begin to have financial effect for years, coupled with the persecution of persons who deal in exchange, the rate of the franc can be improved even more rapidly so as to rejoin prices at some level, far more favourable than the present.

All experience the world over goes to show that both (a) and (b) are absurdities. The trouble with French prices is not that they are too high, but that they’re too low (in gold), and the trouble with Poincaré appears to be that he insists on considering the franc a stable unit, and behaving as if world prices would adapt themselves to the movements of the franc, whilst the truth is that the franc will always tend to adapt itself to world prices. Defective sense of proportion.

I didn’t intend, on taking up my pen, to write you all this stuff, which you have probably heard and read in other forms many times already. However, now I’ve done it, I’ll send it off in case you find it of any interest.

I do hope you are coming down here. I’ll let you know as soon as I know myself when I’ll have to leave for my Paris meeting.

Much love to you both, dearest Mildred.

Yours ever
R. T.

Gioia has had a little daughter. Both well. Elisina has gone over to England to congratulate, but will soon be back at Antigny, for we’ve got the workmen of the Monuments Historiques at it on the Tower and chapel.See letter of September 5, 1923. We’re doing it half and half with the M. H., and though they’re very expensive they do work well. We had Koechlin with us for a week at Antigny.