THE MILD REPERCUSSIONS OF A DEFT DEVALUATION

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Last week French Finance Minister Valery Giscard D'Estaing announced an immediate freeze in all retail and-most wholesale prices until Sept. 15. By that time, the Pompidou government expects to come up with a long-range program to contain inflation. Giscard also promised to cut government spending enough to bring the budget into balance next year, following a $2.5 billion deficit expected for this year. He predicted that price increases caused by devaluation could be confined to 1% this year and 2% in 1970. Whether France achieves that goal will depend chiefly on how strongly it resists the demands of French unions, which want more big wage increases. It was the 15% wage increase won by the unions after the general strike of May 1968 that touched off the inflation that eventually made this month's devaluation necessary.

The Crowbar Pact. Hasty negotiation among France's five partners in the European Common Market last week prevented broader inflationary consequences from the devaluation. The Six agreed to exempt France from the market's system of uniform farm-support prices. The detailed rules of that system have been described as the most complicated ever devised by the mind of man, but its guiding principle is simple: prices in each country are pegged to a standard "unit of account," which is the gold equivalent of a U.S. dollar. Since the unit of account was worth 12.5% more francs after devaluation than before, the system would have operated to push French food prices up 12.5%.

The devaluation caught Common Market headquarters in Brussels with the documents containing the 5,600 detailed rules governing the system crated in packing cases for shipment to a new building. Bureaucrats pried open the cases with crowbars. Then, at an 18-hour session, ministers of the Common Market countries bent EEC rules to let France for the next year support farm prices at the same level as before. A new set of border taxes and subsidies will prevent price changes on French food exports and imports. Such special treatment is a step away from economic integration of the Six, but fears that it will deal a sharp blow to Market unity seem exaggerated. Politically, the Market countries have demonstrated that they can cooperate to help a member in trouble. The "crowbar pact" could even speed an overdue revision of farm-price subsidies, which have caused bulging surpluses of butter, sugar, wheat and other farm products.