Francis Wrigley Hirst.

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at 43, so that the unfortunate holder lost 20 per cent. At the
same time some savings bank deposits on current account were
"converted" to 5 per cents at 80, quoted on the Bourse at y2>^
or a loss of 10 per cent. In spite or because of these wretched



O' Public Finance, p. 646.
84



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Credit of N a t i



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expedients the Second Republic increased the debt charge in
three years by 53,000,000 francs, making the total charge, in
1852, 231,000,000 and the capital debt 4,620,000,000 francs.

(D) THE SECOND EMPIRE, 1852-1870.

In all, eight loans were issued under the Second Empire, most
of them at 3 per cent, which was much below par. In 1854-55
the investors in the Crimean war loan were given the option of
4^ percent at 92 and 3 per cent at 65, but only a very small
proportion of the former were applied for. All the loans were
issued by public subscription, and in the grandiose language of
the time Finance Ministers would speak of the "suffrage uni-
versal des capitaux." As a matter of fact the loans were gen-
erally much oversubscribed by speculators, and the policy
certainly had the effect of disseminating "rentes" among the
French people. In 1830 the number of rentiers was 125,000;
in 1869 it had risen to 1,254,000, and in 1881 to 4,000,000 —
these figures of course do not allow for duplicates. The extrava-
gance and borrowing propensities of the Second Empire in-
creased the debt charge by 129,000,000 francs, mainly owing to
the Crimean, Mexican, and Italian wars, to the undertaking of
huge public works, and the necessity of meeting budget deficits.
The total cost of the Crimean war to France was 1,650,000,000
francs, of which 1,538,000,000 was raised by loans — a proportion
which contrasts ver}^ unfavorably with British borrowing for
the same purpose.

On September 4, 1870, the account for the debt stood as fol-
lows:





[In million francs.]








Capital.


Interest.


Perpetual rentes ._ .


11,662

1.332

794


362
a 149




Unfunded debt








Total . .


13,788










Annual charge.
85







National Monetary Commission

The annual charge on redeemable rentes consisted of
55,127,034 francs in annuities and 94,168,631 francs in rentes
for terms and lives, amounting, as above, to 149,296,265 francs.

(E) THE WAR OF 1870.

From 1870 to 1872 France endured a period of war finance
unexampled in European history, and thenceforward till 1878
a period of repayment and reorganization of the vast obligations
then contracted. There were large borrowings during the war
with Germany; and at its conclusion two great loans were raised
to pay the indemnity. The follov.ing table gives a conspectus
of the amounts raised and the burden placed on the state.

[In million francs.]



Date of loan.



August, 1870. _
October, 1870 a

June, 187 1

July, 1872



Denomi-
nation.



Per cent.
3
6
5
S



Amount
received.



804

208

2. 293

3.498



6.803



Nominal
capital.



1.327

250

2,779

4. 140



8,496



Amount
of interest



39.8

15.0

139.0

207. o



400. 8



oThe so-called "Morgan"' loan.

To these must be added the debt incurred to the Bank of
France for its issue of inconvertible paper — 1,470,000,000
francs — and the indemnities by means of annuities to the East-
ern Railway Company and to towns and private individuals,
which raised the total amount of indebtedness incurred during
and as a result of the war to over 9,000,000,000 francs. The
enormous stored-up wealth of France and the recuperative
powers of the nation were then wonderfully displayed. The loan
of 1 87 1 was subscribed for twice over and that of 1872 thirteen
times over. But half of the second loan was taken up abroad, and
both these great issues drew forth the contents of many French
hoards and led to the sale of foreign securities by French invest-



86



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ors on such a scale that for the succeeding three years there was
very little French capital seeking investment.

The efifect of the war on credit, which was very marked, may
be gauged by the course of 3 per cent rentes. Their highest
price during the fifteen years before the war was 75.45 in 1856,
their lowest 60.50 in 1859. During the years 1869 to 1872
fluctuations were as follows:



i869«-

18706.
1871b.

1872 c



High.



73- 90
75- 10
58. 45
57-25



69.80

50.80
50- 35
5 2 . 40



» Before war. ^ During war.


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Online LibraryFrancis Wrigley HirstThe credit of nations → online text (page 7 of 16)