THE FRANCO-GERMAN INDEMNITY OF 1871 269 
pleased ? And did specie flow into Germany; or securities; or 
goods? No certain analysis has been made, or indeed can be made 
(in view of the inadequate statistical data) of the concrete way in 
which the indemnity reached the German people, of the processes 
by which her economic status was affected. These fundamental 
aspects of the famous transactions have been singularly neglected 
in the literature of the subject; and it is possible only to piece 
together fragments of evidence and interpret them as best one can. 
Tho we have no complete or summary statement from German 
official sources,! some specific applications of the indemnity funds 
are known. For two purposes the Government took actual specie 
— gold. A moderate amount of gold (120 million marks, or 150 
million francs) was put in the war chest of the fortress of Spandau. 
There it was left intact for some forty years; in 1914, when the 
occasion finally arose to utilize it for military purposes, it proved a 
bagatelle, negligible for the exigencies of the Great War. It can 
hardly be said to have served a useful purpose at any time. Far 
more important, both as regards the amount of physical gold used 
and as regards the economic effects, was the establishment of the 
gold standard in Germany. The indemnity payments enabled 
Germany to get with ease an amount of gold ample for carrying out 
the transition from the silver standard to the gold. Ordinarily a 
country which thus remodels its monetary system has a serious 
financial problem on its hands. It must have in hand large funds, 
and must usually resort to taxation or loans in order to get them. 
Germany was spared this embarrassment and strain by the indem- 
nity. She got the gold easily, and was able to take her time in 
disposing of the old silver currency which the gold displaced. 
Apparently something like 750 million francs were applied in this 
way. For these two accumulations of physical gold, war chest 
and gold currency, nearly a billion of francs was utilized. 
The larger part of the indemnity funds still remains unaccounted 
for; nor is it important for our purpose to account for all, or to fol- 
! No full statement — indeed no general statement of any kind — was ever 
publicly made by the German Government explaining what it did with the indem- 
nity funds.