France's new Socialist government, acting to halt speculation, suspended all stock market trading for firms on its nationalization list today and nearly doubled the size of its first bond issue launched to help pay for leftist changes.
The measures, accompanied by an order loosening credit terms, underlined the Socialists' determination to make swift, major changes in France and provided a preview of the waves that President Francois Mitterrand has vowed to stir up in an effort to revamp the economy, defeat inflation and reduce unemployment.
They came as the government of Prime Minister Pierre Mauroy announced new details of its much-disputed nationalization bill and after the chief opposition group celebrated the opening of the legislature's fall session with a censure motion charging that Mauroy lacks "any coherent, credible program" for running the country.
With Mitterrand's Socialists holding 265 seats in the 491-member National Assembly, the censure motion introduced yesterday has no chance of succeeding. Taken with the economic measures announced today, however, it signals the beginning of what analysts expect to be a frenetic political season as Mitterrand pushes his leftist reforms and the defeated right raises the volume of its warnings that his program will only increase France's economic woes.
Even some of Mitterrand's supporters acknowledge that his plans for nationalizing 12 key industrial groups and the major private banks, coupled with steps to cut unemployment by stimulating the economy, could further accelerate inflation, already more than 13 percent annually. As a result, they say, the broad general support enjoyed by Mitterrand and his government during the first three months in office may decline as economic conditions tighten through the winter.
Much of France's industry already is state-owned, including railroads, shipping and most banks. Mitterrand's plans would raise from about 12 percent to 17 percent the output attributable to nationalized companies, according to Socialist estimates. But his doctrinal belief in nationalization as a way to make the economy serve the people better and his determination to proceed even at the cost of some disruption have disgruntled some Frenchmen who still see hard work and private property as the best means to create wealth.
"It's sad, what's happening in France," said Jeanine Lebon, who with her husband runs a Paris cafe catering to working people. "People think you can get along without working. What is it they want? A 39-hour work week? I work 16 hours a day. You have to work to get ahead."
Some of Mitterrand's aides, particularly Finance Minister Jacques Delors and Planning Minister Michel Rocard, are reported to have urged a slower pace, to give businessmen and financiers more time to get used to the changes and the economy more time to absorb them. But the president has put the emphasis on speed, as indicated by the measures announced today.
"There are reasons for that," he told a British Broadcasting Corp. interviewer asking about his wish for swift nationalizations. "If we do not do it now, it will never be done."
Similarly, Legislative Affairs Minister Andre Labarrere called the concern for speed an effort to "profit from the state of grace," as Mitterrand's postelection summer honeymoon has been called here.
Nationalizations--the point where Socialist dogma clashes most directly with French big business and the conservative opposition--are the centerpiece of Mitterrand's plan.
Pierre Beregovoy, secretary general at the presidency, announced that under the proposal five major industrial groups and 36 large private banks are subject to state control as soon as the bill is passed, probably this fall. He said negotiations are under way or will begin shortly for state control of three other groups considered to be special cases: the Dassault aviation empire, the space and arms division of Matra and a pair of steel companies, some of whose shares already are held by the state. In addition, three firms with substantial American or West German ownership--ITT France, CII-Honeywell-Bull and Roussel-UCLAF--are negotiating special takeover terms.
The suspension of trading in shares of the groups to be nationalized followed unexpected stock market rallies over the last two weeks among these very firms and banks. Analysts explained the miniboom as the result of a record 16.75 percent interest rate announced by the government for its first bond issue. Investors guessed that bonds to be offered by the government as compensation for nationalized company stocks will carry similarly high rates, they said, making the doomed stocks suddenly attractive.
To halt the speculation, the government suspended all trading in the affected stocks until the nationalization bill is reported in final form, expected to be late this month. The ban, which an industry analyst said hits one-third of the Paris market's capitalization, also affects stock markets in Lyons, Bordeaux, Lille, Nancy and Nantes, the Finance Ministry said.
The bond issue--to meet what the government admits will be nearly a $17 billion budget deficit--was announced Aug. 25 at $1.4 billion. It was raised today to $2.6 billion because of what the ministry described as an unusual public response, particularly among individual private investors.
This was attributed to the high interest rate and a desire for safe investment in what many Frenchmen expect to be troubled economic times.