GERMAN FUNDS SEEKING FOREIGN INVESTMENTS.

Westport Times, Volume V, Issue 813, 16 May 1871, Page 3

GERMAN FUNDS SEEKING FOREIGN INVESTMENTS.

(From the " London Economist.") The indemnity to be paid by France to Germany is so large that it is taken completely out of the range of ordinary transactions. No equal sum has probably ever been in the hands of any Government to use as it liked. During a war, no doubt, greater sums than we hope the indemnity to be have been often borrowed. But the destination of these funds was fixed. The indemnity will affect us in two ways—first, by causing an export of bullion ; and next, by causing an export of capital. We may be sure that the first effect of the indemnity will be a great bullion movement, which will cause a temporary rise in the value of money in Lombard-street. How far, then, will that rise be permanent P To -answer thia fully, we must know what the Prussian Government is- going to do with the money, and that is exactly what we do not know.. If the bullion bo obtained be placed in German banks, and they are

free to use it it yill gradually flow back again. The rate of interest will be much lower at Berlin than ph-e----where, and the Berlin capilali ts w ; ll seek foreign investment for their money. As the rate of iiittre-»t has been suddenly raised in England, these capitalists will probably chooFe English investments, and so we shall soon get our bullion back again. But we do not feel sure that the Prussian Government will thus act. Beuiemberiner how essentially military is the Berlin Government, and how little enamoured it is likely to be of abstract economical principle, we must suspect that a 'arge sum in bullion may by some means or other be retained. It may be locked up in the Treasury, as in the United States, or the banks with which it is lodged may be fettered fu some way, and obliged to keep some of it; and in either case our own bullion will not quickly return to us, and the augmented value of money will continue here longer than it otherwise would.