I was told to step over to Paris and see a disordered budget, an increasing national deficit, bad investments in Mexico and South America, and disorganized finance.  I did and found it all true.  I also found that France was fully able to take care of herself without any outside help, and, but for the specter of outside interference, to delay her financing if she so elected.

It has been something of a mystery as to how there could be two Balkan wars and so little of public finance behind them.  Of course, Russia and France helped the Balkan States and Germany helped Turkey.  The money of France came from the French banks and was loaned to the treasuries of the Balkan States and to Greece—­to Bulgaria 350,000,000 francs; to Greece 250,000,000.

The French government said that this could not be financed by public issue after the war until the national budget itself had been arranged, although French bankers were permitted to float a $50,000,000 Servian loan.  With the increasing cost of labor and supplies the French railways had been steadily running behind, and France had to face a deficit in her budget of something like 1,000,000,000 francs, or $200,000,000, per annum.

It was proposed last January that the government should consolidate its indebtedness and put its financial house in order, by an issue of long-term securities; but Caillaux opposed the programme and defeated it for many months.  This postponed the issue of the Balkan States’ loans.

To-day Caillaux is about the most hated man in France.  Although he is financially well-to-do, the people believe that his connections and sympathy with Germany were too close.  The German press took his side in the famous Calmette shooting affair and the trial of Madame Caillaux, and all this record now stands forth most threateningly in the French blood.

I may perhaps be permitted to say that M. Caillaux has been under arrest, and that the police of Paris have declared they would not be responsible for his safety.  It has, therefore, been diplomatically arranged by the government that he should be now in Brazil upon a semi-diplomatic and trade mission.

The French loan just before the war was not a popular success.  The reason is now obvious.  It was sold short from other European capitals where it was better known that war was in the air.

When a famous “bear” operator reappeared upon the Paris Bourse after his return from Vienna, whence he had conducted his attack on the French loan, he was greeted with a storm of hisses.  The French Bourse is a government institution and must support the credit of France and her allies.  In Vienna they knew war was planned for the end of September, even before the assassination of the Austrian Crown Prince at Serajevo June 28.  This event hastened but did not make the war.

Nevertheless, instead of permitting the French banks to bring out the Balkan loans thereafter, the French authorities allowed Turkey to come into the French market with a loan for 25,000,000 pounds, or 625,000,000 francs.