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A Financial Phenomenon

A Financial Phenomenon image
Parent Issue
Day
10
Month
May
Year
1878
Copyright
Public Domain
OCR Text

No event of modern times has excited more wido and general surpriBe thnn the ease with which the French people paid ofl' the heavy -war indemnity of $1,000,000,000 to Germany. It has been a puzzle aliko to financiers, to statesmen, and to political economista, how a nation just emerged from a costly (though brief) military struggle could rnise so enormous a sum in cash in less than two years' time. National pride, it was widoly said, had much to do with it; but no amount of national pride could have raised a thousand millions of dollars in a nation where the conditions of great accumulnted wealth and general prosperity did not pre-exist. National pride had not availed to save French honor from condign and overwhelming defeat in war, nor to avert the humiliating aspect of her capital in the hands of a foreign foe, nor to redeem her from the reproach of ill-prepared and undisciplined forces and badly organized campaigns. Auother theory of this rapid payment of the stupendous fine of five milliards of francs was that France was the holder of about $2,000,000,000 of f oreign securities, which were soid, and the procceds invested in the new " rentes " or Government bonds issued at 5 per cent. intrest, to raise money for meeting the jrerman indemnity. For, be it j ioned, Bismarck had exacted not only cash payment, without credit, but also j payment in gold and silver. The whole i sum of $1,100,000,000 (including 200,000,000 francs levied on the city of Paris, and other war contributions levied durng the progresa of hostilities) was paid n specie, excepting only 100,000,000 rancs in notes oí the Bank of France, which the Prussians consented to take in ilace of an equal amount of gold. Inquiries into the current of exchanges actually developed the fact that France was exportiug securities and importing gold the whole time of the indemnity ayments; but the actual amount to which the flow of the preoious metala nto France extended on this account could not be accurately learnecl. Another explanation of the rapid liquidation by France of this prodigions evy was that the annual income of Franco is $3,600,000,000, aud that the :ayinents to Germany took only oneJiird of the gross annual earnings of the Trench people. Bnt there can be no ioubt that to the general eharacter for 'rugality and the accuniulated savings of the French people must be mainly redited the great financial on of the nineteenth century. The nonnous loans which the payment of lie indemnity compelled 'tho French Toverument to put upon the market were all promptly taken, and tho greater m$m of.thg jnjoney, carne fromjFrencji iO tho heavy BinoiiTit "f 4H,i'iQ,ooo,000. were all taken, at an average price of 83 Der cent. , thus making the interest to he invesiors average 6 per cent. Not nly so, but the second loan, of 1872, ■was so eagerly sought for that the subcriptions covered the amount callea for Jüïteen times over, compelling the Govrument to award the rentes aniong the ubscribers pro rata. All travelers in France unite in repreenting tho French people as great conomists. With them not only does very little money go a great way in upplying their wants, but the sums aved, even out of the elenderest inoomes, represent a haudsome surplus, n England there is one man in every ivo who spends all he gets, but in trance there is not one in forty who pends his income; the other thirty-nine ij somethmg by. Profusión and waste, wiiich characterize the use of the means of living in England, and more conpicuously still in the United States, are [uite un'known among the French )oople. Of what nine families out of jvery ten wonld here throw away, a french family would make a variety of appetizing dishes ; and it is literal ly rue that the Frenoh men and women would live, and live well, on the mere waste of American families. These ïabits of economy enable the people to ay up their little savings year by year, and it is weli known that the public unds are the most favorite means of investment with the peasantry. The french rentes can be had in denominaions of 100 francs ($20) and upwarda, and have always been highly pojralar with the masses. The principie of popüarizing the loans of the Government ïas worked admirably, and iias been jorrowed to advantage in the issue of Jnited otates bonds, which are now to be had in sums as low as $50. Here is a faot which speaks volumes n favor of the French system of public aws. So long ago as 1867 tho debt of Trance was held by 1,095,683 persons, who averaged $2,000 each. It is now till more widely distributed. In Enland, on the other hand, her great pubic debt of $3,850,000,000 is in the hands f only 126,381 persons, thus averaging more than $30,000 to each holder. It is, unfortunately, impossible to asceitain ïow many persons hoid the public debt of the TJuited States, because so large a jroportion of it is in the form of covipon )onds, which pass from hand to hand without registration. In France, all the entes are inscribed in the name of the lolder on the books of the treasury. ?o have their names in tho " Grand jivere" of the public debt is an honor agerly sought af ter by the masses of the eople. Dnring all the recent enormous drain iron her resources, which has noarly doubled her national debt, there has not jeen heard anywhere among the French eople the slightest hint of repudiation. Phe French look upon their public debt as an obligation sacredly due, and it is [ue in the largor part to themselves. Another striking feature of the proslerity of France, which aids in enabling ïer to beur the extraordinary fisoal burlens iraposed upon her, ?b thefact of the vide distribution of real estáte among he citizens. Statistics ehtablish the act that there are 6,000,000 of houses in france, and the majority of them are ïomcsteads belonging to their tenants. L'hree-fifths of the entire population ire iuhabitants of the rural tlistriets, vhilc in England the proportion is only one-fifth, four-üi'tlis being residente of owns. Finally, one conspicuous element in ihat national prosperity which has jrought the world to a wondering recognition of the vast resources of France is he recent development of her oommerce. Since 1855 the foreign commerce of France has been considerably more than doubled. Her magtery of the iner mechanio arts and tho pprieofcion to whicli procegses of manufacture have beencamed are well known the world ovor. The frugality oí hor people is oaly üithod, by their indiifjtry, fkt wliolo country teems with productiveness. French fabrica are found in almost endlesa profusión and variety in al] the markets of the globe. It istliis constantly growiug fertility of production, joined with the causes previously enumerated, which has enabled the French people to bear with such marvelous ease a burden whioli it was almost universally predicted would crush and overwbelm them.

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Subjects
Old News
Michigan Argus