Among the great results of this policy were an abundance of gold and silver coming from abroad, until $1,200,000,000 was found to be in the country.
Lest some may doubt the statement about the Germans only getting a little gold for that indemnity, an extract is here given from “Our Money Wars,” p. 152.
“Ivan C. Michels says: ‘The indemnity from France to Germany, after the war of 1870-71, including interest at five per cent. per annum, amounted to $1,060,209,015. After crediting France with the value of certain railroads in Alsace and Lorraine, the amount of indemnity[indemnity] due Germany was $998,172,069, or 4,990,860,349 francs, which was paid by the French government through the Bank of France. At my request the Bank of France furnished to me several years ago the following statement as to the mode of having paid said indemnity:
| Francs. | |
| In bank notes of the Bank of France | 125,000,000 |
| In French gold coins | 273,003,050 |
| In French silver coins | 239,291,875 |
| In German bank notes | 105,039,045 |
| Bills of exchange drawn in thalers | 2,485,513,729 |
| Bills drawn on Frankfurt in florins | 235,128,152 |
| Bills drawn on Hamburg in marksbancs | 265,216,990 |
| Bills drawn on Berlin in reichsmarks | 79,072,309 |
| Bills drawn on Amsterdam in florins | 250,540,821 |
| Bills drawn on Antwerp and Brussels in francs | 295,704,546 |
| Bills drawn on London in pounds sterling | 637,349,832 |
| ——————- | |
| Total francs | 4,990,860,349 |
“‘The patriotic people of France raised the vast sum by a loan in less than six months from the time the government appealed to them. Germany expected to receive for years to come five per cent. per annum on the indemnity bonds; but the Bank of France, through the French bankers, drew on Germany, England, Scotland and Belgium, and in four months’ time the whole indemnity was paid. Never in the history of the world has this financial transaction been equaled, and I doubt that any other banking institution could have succeeded so well as the Bank of France. Germany expected the payment in gold coin or bullion, having previously and purposely demonetized silver. But the fact remains that actually in gold only 273,003,050 francs, equal to $54,600,610, was paid by the Bank of France, and that sum only left France, was remelted in Germany and coined into reichsmarks. England, with her gold standard, had to part with her gold to the amount of 637,348,832 francs, equal to $127,469,964. Bills of exchange on the German bankers throughout the German empire, especially on Hamburg, Berlin and Frankfurt, came to 3,064,901,180 francs, equal to $612,986,236, nigh on two-thirds of the whole amount of the indemnity. This magnificent stroke of finance on the part of the Bank of France and the French bankers came near ruining the leading German bankers; and forty-one banking houses throughout the German empire had to suspend temporarily, not being able to honor the drafts made upon them. The extravagance of the German people during the war of 1870-71 brought them into debt to France for luxuries, wines, etc., to an enormous extent; and when the Bank of France purchased bills of exchange from the French bankers, who drew on their German correspondents, a panic ensued, and the Germans suffered more than is generally supposed.’”
The above from Michels shows that he saw but dimly what Phillips saw so plainly, that government paper money, nourishing all industries, gave France that victory. Michels catches a glimpse of the truth when he speaks of luxuries, wines, etc.
To get a clear view of the French financial genius we have to go back to 1848, when Louis Philippe abdicated and the republic was founded amid great confusion. The French have an instinct for finance far superior to anything yet shown—by our rulers at least—in England and America. “Paris,” says Victor Hugo, “is the city of the initiative.” It is not afraid to start things. It is not, like Washington and New York, always asking what London would do or think. Taking Louis Blanc’s advice in 1848, it started national work-shops to insure the employment of surplus labor. Those did good for a time, but they were soon perverted and destroyed by a treacherous Jew who got hold of them.
Another new departure was more successful. “Besides its regular financial operations,” says the London Times of February 16, 1849, “the Bank of France made vast advances to the city of Paris, to Marseilles, to the Department of the Seine, and to the hospitals, amounting in all to 260,000,000 francs. But even this was not all. To enable the manufacturing interests to weather the storm, at a moment when all sales were interrupted, a decree of the National Assembly had directed warehouses to be opened for the reception of all kinds of goods, and provided that the registered invoices of these goods so deposited should be made negotiable by indorsement. The Bank of France discounted these receipts. In Havre alone 18,000,000 francs was thus advanced upon colonial products, and in Paris 14,000,000 on merchandise. In all 60,000,000 francs was thus made available for all the purposes of trade. Thus the great institution had placed itself, as it were, in direct contact with every interest of the community, from the Minister of the Treasury down to the trader in a distant part. Like a huge hydraulic machine, it employed its colossal powers to pump a fresh stream into the exhausted arteries of trade, to sustain credit and preserve the circulation from complete collapse.”
How like “a grimacing dance of apes” our American way of handling financial crises looks, in comparison with the above.