The true scope of the recent French monetary and fiscal reform has been little understood in Europe, still less in America. For Poincare, in 1928, all that mattered was to balance the budget, to stop monetization of the public debt, and to return to gold convertibility of the currency. (The budget was actually over-balanced for the four years, 1927-1931.) For De Gaulle, convertibility is a remote goal, genuine budget balancing perhaps even more so. Stabilizing the budget deficit and the external value of the franc are the prime agenda. At the same time they are means to an overriding objective. What is now a chief objective, was scarcely even problematic thirty-odd years ago: the restoration of the price mechanism.
By a myriad of devious techniques, the French price system and income distribution had been effectively distorted, until even the semblance of competitive markets had almost vanished.
The semi-autarchic Welfare State has nowhere been more fully, more "scientifically," and more disastrously, developed than in France before De Gaulle came into power. As a result, French prices had lost contact, more or less, with the world markets and with domestic costs.
--Melchior Palyi, A Lesson in French Inflation (New York: Economists' National Committee on Monetary Policy, 1959), 38.
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