SAVINGS BANKS AND THE INVESTMENT OF THEIR CAPITAL 83 



It is stated also that though in 1848 and 1870 the State was in serious dif- 

 ficulty and compelled to resort to exceptional measures to satisfy its cred- 

 itors, yet for the future the so-called saving clausa, contained in the law of 

 1881 will obviate any danger to the financial position of the State that might 

 arise from the demands of creditors in times of poHtical and economic 

 crisis. And if the State be secure financially, so also are the depositors, who 

 are sure of receivimg the whole of their capital, although in exceptional times 

 payment may be delayed. And in times like those of 1S48 and 1870 in 

 France, depositors would be exposed to the risk of loss or suspension of 

 pajmient even if their savings were invested as in other countries, in mort- 

 gages, bonds or other investments. 



Prof. Jean Lescure has recently repUed to the severe criticisms of I,eroy- 

 Beauheu and other partisans of economic liberty in regard to the economic 

 damage resulting from the investments made by savings banks in France 

 and in general from the concentration of capital in the hands of the State. 

 He observes that the State does not impoverish the money market by 

 investing savings in Government stock. One of two things must occur '. 

 either the funds of the savings banks will be invested in a Government loan 

 or, as more frequently happens, the savings banks will purchase Government 

 Bonds on the Exchange. In the former case, if the savings banks do not 

 subscribe to the loan, private individuals will. These persons will then 

 hold a sum equivalent to the amount of the subscription, and may invest 

 it in commerce and manufactures. But in the case of the purchase of 

 French stock on the Exchange by the savings banks, it may be said, 

 according to Lescure, "that the available capital of the savings banks 

 wiU pass into the hands of the bankers or capitalists from whom they 

 have purchased the stock." Th^s available capital must necessarily be in- 

 vested in manufactures or in bank securities, otherwise it will remain unpro- 

 ductive. It will then not be withdrawn from commerce and manufactures, 

 but will simply be conveited into Government stock before being invested 

 in commerce or manufactures. 



It must not, however, be asserted, Lescure adds, that this obUgation 

 on the banks is without consequences. These are seen in the direction 

 given to the savings. The amount of savings remains the same, hut its di- 

 rection is changed. In the proportion in which these savings would have 

 been absorbed by local requirements it may be admitted that the oblig- 

 ation to invest savings in Government stock changes the direction of 

 the savings. The seller of Government stock to the Deposit and Con- 

 signment Bank may in such a case invest the capital obtained, for 

 example, in the purchase of foreign .securities. 



Now it must be observed that this possibility of the deviation of cap- 

 ital is the fundamental point in the question of the investments of the 

 savings banks. Even without altering the system of Fremch savings banks, 

 it is clear that the State may in another way reconcile the interests of 

 the Treasury with those of the national production. 



The State, even more than any private organisation, may perform a 

 work of great social and economic titihty, by acting as intermediary between 



