"Who surely knows what he is doing."
"Perhaps I myself do not believe that Germany has reason to seek Russian security, even though there be certain limits even for friendly services; which limits have long been passed, to the detriment of the dignity of the German empire."
"I am also willing to believe all that you have told me about the influence of the high finance, the Russian noble, and German diplomacy. Yet I cannot conceive how the mass of investors—and after all it is they who are to be considered—will permanently pay a much higher price for securities than corresponds to their intrinsic value, as is the case with the Russian securities, according to the information given me by Russian statesmen."
"Permanently? Some day it will stop. But when? Even the autocracy or the social structure will not maintain itself permanently. But meanwhile there is no power on earth to prevent the great banking institutions from earning thirty million rubles or more, when there is a chance. There will be a great bargaining, especially since the French government will exert itself strenuously to prevent future issue of Russian bonds; for every new issue depresses the value of former issues, and in these a great portion of the French national wealth is invested. In the end, however, German influence will prevail. Germany will advance us the new funds, because Germany wishes to render us a service; for Germany feels itself from day to day more and more isolated in Europe, and we are still not to be despised, either as friends or enemies, in spite of Port Arthur. Hence the German investor must help out; and, after all, he is not making a bad transaction when he buys a four-per-cent. bond at let us say ninety."
"How so?"
"Well, the bank interest is now three per cent. When four rubles are paid on an investment of ninety rubles having a par value of one hundred rubles, then the valuation of Russian government securities is not quite seventy. And that may continue for a long time."
"Do you consider that the real, intrinsic value?"
"The stock exchange knows no intrinsic value. It only knows tendencies. One hundred rubles' worth of Russian government securities can always be disposed of at seventy, if all the strings do not break."
"You are evading me. I asked for your personal opinion on the intrinsic value of the Russian bonds."
"I will give you an answer. As long as our Russian peasant is able to starve and to sell his grain, as long as there are gendarmes to aid the tax-collector, and people who are willing to make further loans to us, so long is the payment of coupons assured. Beyond that the foreign bondholder has no right to inquire."