As to Russian government loans, the French investor is in a secure position, most of these issues having been endorsed by such powerful banks as the Bank of France, the Credit Lyonnais, the Comptoir d’Escompte, and the Société Génerale, and, indeed, it is to banks such as these and to the myriad smaller institutions throughout the country that investors of the peasantry and the middle classes are accustomed to turn for advice in financial matters. The large speculative clientele, as we know it in America, in England, and in Germany, is a decided minority in France, and those who indulge freely in speculation are canny and shrewd beyond their fellows in other lands. The foresight with which they diagnosed the events of the Boer War in 1899, and the celerity with which they disposed of their large speculative holdings of South African mining shares at top prices, is said by those who witnessed it to have been a prodigy of speculative skill.

Like all other careful observers French economists realize in a large sense that the creation of negotiable instruments and their distribution throughout all the countries of the world through the medium of the Stock Exchange is a very real cause of the wealth of nations; indeed, this point seems to be more thoroughly understood and appreciated by the mass of the French people than by the public elsewhere. When, in 1885, the government legalized transactions for future delivery and thus placed transactions in securities in the same category, under common law, with all other commercial transactions, it established a free market in France that has done wonders for the credit expansion of the Republic—an expansion likewise due, in no small measure, to the growth and development of the coulisse and to the consequent enlargement of a market that must have been restricted, of necessity, by a too rigorous strengthening of the stockbroker’s monopoly. In a word, the government, by France, of credit in its higher forms, clearly recognizes that as states, railways, and industrial enterprises have need to resort to credit through issues of securities, a wide market in constant contact with sources of wealth is required, and that nothing should be done by the government to interfere with the ebb and flow of these essential forces.

“The creating and successive issuing of this mass of securities,” to quote M. Neymarck, “always easy to purchase and to sell on the Bourse, have been the real cause of credit expansion. They were instrumental in accomplishing real marvels in France and abroad. As personal property has increased, endeavors have been made to render exchanges easy, and to make transfers as little expensive as possible; transferable securities, owing to their denomination, their form, their mode of maturity for the payment of interest, their conditions for redemption, and the ease with which they are negotiated, have been brought within the reach of all purses, and have thus developed the spirit of saving. The consolidation of capital, under the form of stock companies, issuing shares and bonds that everybody can obtain, encompasses on all sides the civilized nations of the world.

“We may say, with Paul Leroy-Beaulieu, that now, owing to capital being accumulated in the shape of negotiable instruments, it is the stock company which takes us on a journey; often it provides us with food and lodging, sells us coal and light, makes up our clothing, and even sells it to us; it procures news for us and inspires our newspapers. Further, it insures our lives and our dwellings; it feeds the unassuming Parisian in the ‘Bouillons’ (cheap cook-shops), and feasts the stylish Parisian in the fashionable wine taverns.

“The distribution of all these securities has materially contributed to the formation of small inheritances. It has influenced the development of savings institutions, mutual benefit societies, pension funds, and insurance; it has thus rendered invaluable service in the public rôle it has fulfilled. Thanks to it, these companies multiply and increase as the capitalization of their funds is made easier.

“It has also had another result. It has shown that there is no longer a plutocracy, but a veritable financial democracy; when these thousands of millions of certificates are minutely segregated, there are only found atoms of certificates of stocks and bonds, and atoms of income—so great is the number of capitalists and independent individuals who divide these securities and these incomes among themselves.”[129]

APPENDIX
REPORT
OF THE GOVERNOR’S COMMITTEE ON SPECULATION IN SECURITIES AND COMMODITIES
1909

New York, June 7, 1909

Hon. Charles E. Hughes,
Governor, Albany, N. Y.: