82 FRANCE - CREDIT 



of their capital. In an eminently agricultural country like France, such 

 liberty would doubtless give a new impulse to agricultural credit. The 

 writings of Paul Leroy-Beaulieu on the subject of savings-banks are well 

 known. 



" Throughout the whole country they ask the lower middle and 

 labouring classes for their savings ; the high rate of interest they offer, too 

 high especially in France, prevents any local investment of the savings. 

 The savings banks thus suck up these infinitely small savings from the 

 whole country to convert them into Government stock, that is into idle 

 capital. They thus, to a certain extent, render all the hamlets, villages, 

 and small towns unproductive, taking all the germs of capital that may 

 be produced and carrying them off to be swallowed up in the capital, 

 to diminish the floating debt and the general liabilities of the Treasury. 

 Imagine the atmosphere absorbing all the moisture produced everywhere 

 and never returning it in fertilizing rain, and you will have a represent- 

 ation of the regime of the savings banks in France. " 



From a financial point of view, it is stated that the system of the invest- 

 ment of savings in Government stock affects the price of the public fimds. 

 In ordinary times the price of stock is raised above its real value, and when 

 a crisis occurs its depreciation is the more serious because the banks are 

 compelled to sell in order to satisfy their creditors. 



But these ideas are not shared by all. 



The State, certainly, obtains capital through the savings banks more 

 easil}' and at a cheaper rate than by resorting to the market, and this facil- 

 itates the issue of Government bonds. 



Is this a good or an evil ? To this question there is no general and 

 positive answer. The answer depends on the judgment passed on the 

 public expenditure. And this depends on the persons judging it, the 

 particular country and the special moment of its history. It must, 

 however, be observed that the facility with which the State proctures 

 capital from the savings banks is no more to be deplored than is, in 

 the field of private economy, the existence of credit banks supplying the 

 producers with capital, although they also thus facilitate the dissipation 

 of their patrimony by prodigals. In some comitries, for instance Eng- 

 land, the savings are used to pay off the public debt. In Russia the 

 savings banks are Government institutions, and they have, contributed 

 to promote rural credit through the Peasants' Jvand Bank and led to 

 the solution of the problem of the means of commimication, a matter of the 

 utmost importance for the elevation of the standard of living in Russia. 

 According to some, there is much exaggeration in laying upon the French 

 system of investing savings the blame of giving a false value to Govern- 

 ment stock, both in periods of prosperity and of depression. Are not 

 the depositors in the savings banks a special class of capitalists who en- 

 trust their money to those institutions which give the surest guarantees ? 

 And is not Govenrment stock one of the safest investments ? Nor can it be 

 maintained, many are of opinion, that such an investment is not in accord- 

 ance with the opinions and wishes of depositors seeking an investment. 



