THRIFT IN FRANCE.

Star (Christchurch), Issue 10535, 9 August 1912, Page 2

THRIFT IN FRANCE.

HELPING THE SMALL INVESTOR

("Daily Mail.")

Tho French havo the investment! habit. It has been said that no Frenchman ever dies without leaving something to his heirs. Certain it is that the first thought of any Frenchman on coming into possession of any kind of regular wage, however small, is to put by, not necessarily against a rainy day, but in order to have the wherewithal to establish his sons in the world, to marry his daughters according to their station, and to leave his widow something to live on when death calls him 1 away. Wages are no better in France than in England, and the average Frenchman of the middle or lower classes lives quite as well as the Englishman in the same position. Yet practically every Frenchman manages to give his daughter the dowry which is absolutely necessary under the French marriage system, while in England, for want of dowries, the middle and lower classes aro faced with something like a marriage crisis. Saving is part of the scheme of tilings in a Frenchman's life. The housemaid, the little typewriter girl, the small dressmaker, who have to work for their living, all lay something aside to provide them with a dowry—if they cannot count on one at home —to help them to a trousseau on their marriage, or, if matrimony is not their ultimate ambition, to keep them In their old age. The habit of- thrift is thus deeply ingrained in tho race. The State has. done its part in nurturing this splendid national quality by encouraging tho small investor, who in France enjoys facilities undreamed of in England. Rentes in small parcels, municipal bearer bonds, issued below par with a percentage paid up in full every year and endowed with valuable bonuses, easily obtainable and easily negotiable, offer the small investor a safe and simple opportunity for laying out his savings to the best advantage. No one understands better than a Frenchman the importance of converting cash into paper. No one realises better that ready money may be spent, while if invested tho necessity of a trip to the bank b-efor© tho paper can be changed back into coin acts as a potent check on any sudden impulse of extravagance. By enabling the small French wage-earner to begin to acquire tho investment habit with as little as a five-pound note or less, the Stat© in France has done a great deal towards encouraging the national impulse to save. GOVERNMENT STOCK. Tho French are naturally predisposed in favour of Government stock for at least a part of their investments. The holding of Government stock gives a stabilising sensation, so to speak, to the small wage-earner, which has considerable effect in helping him through the struggle of lifo. One not infrequently meets with small investors, particularly elderly women, who would positively consider it a disgrace not to have at least part of their painfully acquired savings laid out in Rentes. When it is remembered'that by a decree of the Ministry of Finance of 1893 one can become a creditor of tho French Republic for as little as 66 francs (£2 13s 4d) —the equivalent cf two francs per cent interest-—it will be seen that this is an ambition within tho grasp of the man or woman of the humblest means.

Tli a most popular form of investment in France is indisputably. the great municipal loans issued periodically by one or' other of the large cities. These aro gilt-edged securities, for tho French municipalities are under State control. Every issue is subscribed for many times over, and the sight of the interminable files of people, the large majority belonging to tho poorer classes of tho population, waiting outside tho banks on the day of issue is an objectlesson in national thrift which ■ the foreigner witnessing it never forgets. The great advantage of these issues is precisely the opportunity they offer for the small investor. They are paid for by easy instalments, extending over a considerable period, aud the gambling element constituted by the very large prizes drawn for several times a year as bonuses on the bonds paid up in full is an undeniable attraction. Some of thesa issues carry prizes as high as £20.000, with intermediary prizes descending to £4OOO. and smaller bonuses ranging from £4O to £2OOO. Moreover. these bonds can be dealt in practically over the counter. In the windows of small banks all over Paris it ia usual to see bearer bonds in municipal issues offered for sale, tho announcement giving the price of the and its yield. Tho purchaser of a City of Paris or a City of Lyons bond knows that if he runs short of money he lias only to take his obligation out of its hiding-place in his wardrobe or sideboard and present it at the nearest bank, where he can get the market price, less a small commission.

OVER-SUBSCRIBED LOANS

The extent to which the investment habit, thus carefully nurtured, is general in France is shown by the extraordinary rush on the part of the public every time a Government issue is floated. Earlier in the year the Western State Railway "4 per cent loan, offered for public subscription at par, was subscribed for no fewer than 32$ times over. Instead of tho twelve million pounds required, tho Government was offered 390 millions, and an orderly crowd of more than 100,000 investors, their savings in bags, purses and portfolios, waited for hours outside the railway offices at the St. Lazare terminus for their subscriptions to be received. The State is not alone in looking after the interests of tlio small investor The investment habit in Franca is sedulously fostered by the banks. In France the bank manager is always ready with advice for the small depositor, and does not in any way regard it as incompatible with his position to draw the attention of his clients, on occasion, to the possibility of obtaining a better rate of interest than the one-and-three-quarters to two per cent paid on their deposits by the bank. It must be remembered that the great French banks do not content themselves merely with accepting subscriptions for new issues, home and foreign, municipal or railway loans, and the like, floated on tho Paris market. They actually take up a part of the issue, and it is naturally to the advantage of the banks to place the bonds. "VPhen the name of an English bank figures on a prospectus it sinrply means that the bank accepts subscriptions for the issue and nothing further. In France, however, it signifies that "the issue is practically guaranteed by the bank.

THE UNSCRUPULOUS FINANCIER. It is estimated that _ about 120 million pounds sterling is invested annually in France,.half this amount being sunk in Government loans and French stocks, the remainder being put into foreign securities. With the investment habit dov-elop-ed to this extent it is not unnatural that unscrupulous financiers should actively seek to profit by the inexperience of the small investor. But hero, too, the State is on the watch. A financial section of the criminal prosecutions department was opened in March to deal with the complaints received by hoodwinked investors, and eince its_ establishment in March tho new section has taken proceedings in 450 cases of the 1500 brought to its attention. Tlie section is perpetually' concerned in supervising tlio affairs of doubtful financiers, and more than one worthless issue of stock has been suppressed,_ the "banker" being forced to call in his securities. The "State in Franco is fully cognisant of the value of the small investor as a factor in national strength and is unceasingly concerned to defend his interests.