A RECORD WAR INDEMNITY.

Northland Age, Volume 2, Issue 46, 19 June 1906, Page 8

A RECORD WAR INDEMNITY.

HOW FRANCE WAS "BLED" BY; BISMARCK. * The war indemnity which stands out in history as the largest ever exacted from a vanquished nation is that imposed by Germany upon France in 1871—and duly paid. It is a story of Brobdingnagian finance, now re-told by the Paris correspondent of the "Pall Mall Gazette." The negotiations for peace between France and Germany lasted just over five weeks, and may be said to have had their beginning on January 23, 1871, when Count Bismarck, having determined to, as he said, "bleed France white," sent his own carriage to bring Jules Favre to Versailles and "talk it over."

Favre was the representative of the Government of Defence, and the National Assembly was sitting at Bordeaux under Grevy's presidency. It took five, or six days to arrange an armistice for three weeks. Bismarck chafed at the continual delays but ho consented to extend the truce on three occasions, although he made all preparations to continue the war in the event of the negotiations breaking down. Fifteen Commissioners were sent from Bordeaux to Paris to discuss the preliminaries of peace, and on February 26 those preliminaries were signed, and their ratification by* the Assembly at Bordeaux was awaited with feverish impatience by the victors at Versailles. The conditions imposed by Bismarck and Moltke were these—France to surrender to the newly-constituted German Empire one-fifth part of Lorraine, including Metz and Thionville and Alsace les Belfort. Franco to pay Germany an indemnity of five milliards of francs (£200,000,000,) one milliard (£40,000,000) to be paid during the first year (1871,) and the remaining four milliards by instalments extending over three years; with interest at 5 per cent, per annum on the amount remaining due from the date of the ratification of the Treaty ; the Treaty to be ratified by the National Assembly,

At half past four on a memorable Sunday afternoon, Thiers returned to Versailles to consult finally with tho fifteen Commissioners, and on March 2 the ratifications of the Treaty of Peace were exchanged at Versailles. The German troops had entered Paris on the previous day, and marched "out" two days later. The war was over ; it had lasted only seven months, and, but for the over-throw of the dynasty, it would liavo finished with Sedan, which was fought within seven weeks of the "declaration" in July,. The indemnity, unparalleled in magnitude Was originally fixed at six milliards of francs (£240,000,000,) but Moltke demurred, and the "Man of Blood and Iron" reluctantly consented to reduce the amount by £4O, 000,000. There was also a deduction of 325,000,000 francs in consideration of the taking over by Germany of the railways in Alsace and Lorraine. New taxes were imposed by the French Government to the amount of 460,000,000 francs (£lB, 500,000.) To meet the indemnity and other war expenses Thiers proposed a national loan, to carry 5 per cent, interest, and to be issued at 82 or 83. The amount of the loan was £80,000,000. The day after the opening of the list (July 27, 1871) money poured\in on all sides, Paris alone subscribed twenty-five hundred million francs ! The loan, of which about £10,000,000 fell due in London were taken by Germany in gold, and, while large purchases were made in the open market, it is on record that Germany took £5,000,000 in sovereigns from the Bank of England in sums varying from a quarter of a million to one million sterling at a time. •

France displayed the utmost anxiety to pay off the indemnity, and to get the "man in possession" out of the country. A fresh arrangement was entered into by Thiers and Count von Arnim, then German Minister at Paris, in 1872, and it was determined to negotiate for another loan —one which should be large enough to liquidate the amount owing to Germany within the shorter term mutually agreed upon. On July 15, the Government of the Republic was impowered to issue sufficient rentes at 5 per cent, to produce not less than three and a half milliards of francs. Including the cost of floating the loan the amount to bo obtained was about £140,000, 000, secured by the sinking fund of 200,000,000 francs voted by the Assembly. This huge 5 per cent, loan was issued at 84 £ on Sunday and Monday, July 28 and 29. People of all classes —even bloused workmen — rushed to participate in the "emission," with the result that on the 30th it was announced that nearly twelve times the amount asked for had been subscribed. The actual subscription was forty-three milliards of francs, or £1,720,000,000 ! The French themselves, with splendid patriotism, found the great bulk of the money, but English and Germans applied for large quantities of the stock, and it was said that the whole loan would have been subscribed in Germany if necessary. The success of the two loans provided Count Bismarck with a fresh argument that the indemnity ought to have been larger !