On the 10th of December there were 1,000,000,000 francs of the new national-defense loan outstanding, but it was being subscribed for all over France daily.

This national-defense loan consists of three, six, nine, and twelve months' government bills bearing 5 per cent interest.

I figured that the amount issued December 10 was for the most part used to provide for the maturing floating indebtedness, and for the deficit on the government budget aside from the expense of the present war.
As the government is advancing money to Servia and to Belgium, the loan of 20,000,000 pounds, or $100,000,000, from England can be readily accounted for.
There were loans from the big banks of France for the government at the opening of the war, but these loans I was assured were all merged in the 5 per cent national-defense loans, which have not exceeding one year to run.
On these national-defense loans the cautious Bank of France will advance in limited amounts 80 per cent of the face value, but only where the government loan matures within three months.
The great principle of the Bank of France is to keep liquid.

Its assets must always be mobile.
There is only one point at which French finance should be criticized, and as we cannot know all the details of the stress of the military position when Paris was abandoned, her mobilizing of the reserves still in disorganization, and her transportation awry, we may not be in a position to level any just criticism.
But it must be set down in the interest of true report that the French credit was at one time endangered by the way the treasury, or the military authorities, handled the government credit in payment for war-supplies.
Instead of going to the bankers and making its financial arrangements, paying the war-supply contractors, the French government made many contracts under which it paid contractors, and purveyors, with the 6 per cent national-defense notes of the government, running three, six, nine, and twelve months.
As the contractors were making 15 per cent and 20 per cent on their mercantile overturn, they could afford to discount 5 per cent and more in the sale of the government notes, and while the government was passing out these notes at par to the patriotic subscribers, the contractors were negotiating liberal discounts to bankers and others.
Nevertheless, the stupendous fact remains that France, caught in a European war most unaware, with impaired budget and a floating indebtedness, has carried the greatest war of her history for six months without a long-term national loan and by the issue of less than $200,000,000 5 per cent short-term notes for not exceeding one year, and credits for less than $800,000,000 from the Bank of France; has maintained her gold basis unimpaired; and has kept the international exchanges steadily in her favor; and all this without any special financial legislation.
Nor could I find any evidence of a French disposition to sell the American copper shares, railroad bonds, or industrial shares into which the French have been putting some money of late years.

But I did learn that short-term American railroad notes may this year be renewed abroad only in part..