The Washington herald., 1914-09-20

in the Germany treasury of the bonds of the
British government; bearing interest, say, at
per cent, and, therefore, affording an income Of
$400O00,000 annually. The burden woald fall
upon the English people of raising this $400,-'
1000 annually by taxation, without any of
the compensating benefits of spending it at home
for docks, harbor improvements, old age pen,
sions, or even for casting guns or building
Dreadnoughts in English shipyards, This is
substantially the manner in which China is pay
ing the indemnity for the Boxer outrages-by
annual installments, which include principal, in
terst, and sinking fund. 1t is serious burden
upon China, but it has yet to be learned that
the remttances have done grave financial harm
to the countries receiving them.
1t was by the transfer of titles to property
that large part of the French indemnity TO
Germany was paid In the case of France, how
ever the principal of the indemnity was paid
over before the close of the summer of 1873,
while the task which would be imposed upon
Interchange market in providing for the trans
fer of the income only would be much easier.
A part of the French indemnity was taken
in gold, for the special reason that Germany
wished thereby to constitute her gold standard
and to get rid of the fluctuating silver currency
with which her states had begun the war. The
transfer OF the principal sum, however, was car
ried out by the French government through the
purchase Of bills of e,schange-not wholly bills
created for the purpose of this transaction, but
commercial bills drawn by Pfenchmen upon
credits in London, Berlin, and elsewhere The
French government bought these bills with the
proceeds Of two big loans for approximately
$430OOO,0OO. raised in the summer of 1871,
and $675,OO0,0O0 in the summer of 1873 The
French people were enabled to purchase the
securities of the new loan by selling foreign
securities which they held, issued by Italy and
other foreign governments and enterprises By
making such sales on foreign bourses they re-
leased their money for the purchase of the new
securities and threw upon the Paris market
bills of exchange drawn upon the buyers of the
old securities in Rome, London, and other
financial centers, which the government was
able to buy for remittance to Germany. The
transaction was, in effect, transfer to GERMANY
of the title to 5,OOOOOO,OOO francs, for which
France was compelled to call upon her own
people by burdening the treasury with the in
terest payable upon the new loans.
If Mr.. Angel and his followers could have
sat in the Office of Leon Say. or of the gov
ernor of the Bank of France, or of any foreign
exchange houses in Paris in 1872 and 1873, they
would have learned that it did not take an econ
omist, but only working banker, to find way
OF transferring titles to wealth without ship
ping carloads of commodities to Germany free
OF duty and breaking down the German protec-
Fve system, and without the physical shipment
of gold. The payment of the indemnity i'm
posed heavy burdens upon France, but to Ger
many it afforded means which enabled her,
without taxation at home, to add to her fortif-
cations, support her army, and establish the gold
standard.