THE FRANCO-GERMAN INDEMNITY OF 1871 267
the foreign securities of the French investors furnished the where-
withal. Italian, Austrian, Spanish, Turkish, American (South and
North) securities were sold by French holders; sold not only in
Paris but in London, Brussels, Amsterdam, in Germany itself.
The proceeds were used in buying their own country’s rentes. The
oreign holdings of the French were converted pro tanto into
domestic holdings. The proceeds of the sales of rentes were in turn
used by the French Government in buying bills such as Germany
accepted under the treaty stipulations — bills on Paris, London,
Brussels, Amsterdam, and in some part on Frankfurt Hamburg,
Berlin.
The French side of the story thus is clear and comparatively
simple. It has been put on record in Say’s Report with a lucidit
and fulness unusual for operations of the kind. How much France
paid and in what way she paid, is well known.
So far as concerns the theory of international trade and inter-
national payments, this (the French) side of the operation is in some
ays instructive, in other ways little so. It is instructive in show-
ing how important may be the part played by securities, especially
when there is pressure for large remittances in a short space of time.
hen occasion arises for sending great sums from one country to
another, it may be expected that specie (if available at all) will
move first of all; securities next; goods last of all. A compar-
atively slight movement of specie may lead to a considerable
movement of securities; whereas the next stage, that of the transfer
of goods, may not set in on a large scale without a heavy preceding
transmission of specie. Something of this sort might be foreseen in
the case of ordinary commercial transactions. The French indem-
nity payment, however, was not at all an ordinary commercial
transaction. It differed not so much because the remittance had to
be made by the Government — for, after all, the French Treasury
had to effect payments to Germany by the same mechanism which
would have been used by private persons — but in the circumstance
that France was able to take advantage of the exceptional position
of her investors. The French Treasury needed great sums at once
and was able to get them with surprising quickness by floating its
