Like most of the foreign issues made during the war it follows the highly intelligent European practice of putting out loans in small denominations so as to be within the reach of the great mass of the people.  These bonds may be had in multiples of $100 and upward.  The Government of France has agreed to permit the exportation of sufficient gold to permit the payment of principal and interest in the yellow metal in New York.  The loan—­the only external one of the City of Paris—­was brought out at 983/4 and interest, which would make an investment of 6.30 per cent.  In addition to this yield as an investment there is the possibility of profit in exchange in view of the option to collect principal and interest at the rate of 5.50 francs per dollar instead of the normal rate of exchange before the war.

This statement of possible exchange profits leads us to one of the conspicuous features of the latest National French Loan, which although internal in form has been put within the ken of the American investor.

Fully to comprehend it you must know that in ordinary times a dollar in American money is worth 5.18 francs.  On account of the dislocation in foreign exchange the value of a dollar in French money has risen to approximately 5.85 francs.  Therefore when you buy a French security in terms of francs for American dollars you get a great deal more for your money than you would have received before the war.  Hence the possibility of profit when francs return to normal is large.

The National French Loan was sold to American investors at an exchange rate of 5.90, which means that every dollar you employ gives you a principal of 5.90 francs.  On this basis the price for the security issued at a par of 100 would be 871/2, which would make the direct yield over 5.70 per cent.  Should exchange return to normal, the subscription price would be equivalent to 751/2, which would make the direct yield over 6-5/8 per cent.

Translating this loan into terms of money, you find that for every $14.83 you invest you get 100 francs capital:  for every $148.30 you get 1000 francs capital:  for $741.52 you receive 5000 francs capital.  If French exchange should return to normal and the securities sell at the issue price—­871/2—­the investor would receive $16.89 for every 100 francs of capital:  $168.88 for every 1000 francs:  $844.39 for every 5000 francs.  On this basis without regard to income return the holder of 5000 francs capital would receive a profit of $103.94 or over 13.75 per cent on his investment.

Should the market price of the issue advance to 100 and exchange return to normal the investor would get $19.30 for every 100 francs capital; $193.00 for every 1000 francs capital; $965.00 for every 5000 francs capital.  In this case and again without regard to income return, the holder of 5000 francs capital would receive a net profit of $223.50 or approximately 30 per cent.

This loan is issued in Rentes and in denominations of 100 francs and multiples. Rentes is the form in which all French Government issues are brought out at home.  The word means interest or income.  The French always refer to their Government Bonds in terms of interest without any mention of principal.  This is because rentes are supposed to be perpetual.  The new French loan just explained is not redeemable or convertible before 1931.