The Sun.
London, England, 1864-12-09 00:00:00

THE BANK OF FRANCE.

(From the Paris Correspondent of the Times.)
M. Isaau Periere, of the Credit Mobilier, has un-
dertaken to enlighten the public at home and abroad
on the question of banks, or, more correctly !peak-
ing, of the Bank of France, and to warn them of
the consequences of the monopoly long enjoyed by
that great establishment. He has published a thick
pamphlet of 216 pages, sold at the trifling cost of
If., entitled " La Banque de France, et l'Organisa.
tion du Credit en France." Of the measure of his
attack on that establishment, which has survived
so many disasters, you may judge from this pas-
sage in the section headed " Monopoly of the Bank
of France":-k- -- •

" The question of the unity of paper covers a
question of monopoly, or rather, in this particular
instance, of the abuse of monopoly. The Bank of
France,delivered from all sort of competition by the
use of this great word ' avails itself of its
privileged position to free itself from every rule in
order to make heavy burdens press on commerce
and industry, and to deprive more and more the
funds of the State of all assistance and of all sup.
port. The business of the country has augmented
tenfold; the paper representing moveable wealth,
such es rentes, shares, and debentures, has increased
more than fivefold for the last ten years, and the
Bank of France, which should have proportioned
its resources to these new necessities, to this new
state of things, has, on the contrary, diminished
that which it ought to have devoted to them, by
withdrawing from the industry which it profits by
the totality of its capital, and placing it in divers
permanent investments, and particularly in rentes,
just as a private individual would do who had no
duty to discharge towards third parties. This corn•
plete absence of disposable capital produces the
gravest perturbations and the most abnormal phe-
nomena. The situation is pregnant with danger to
the public, but it is fruitful of advantage to the
Bank."

In a series of chapters 11. Pereire argues the
questions whether the increase of the rate of interest
is the forced and inevitable consequences of the
diminution of the reserve of the Bank of France,
and where there are not other means of keeping
up that reserve to the amount admitted to be neces•
sary—whether the rise in the rate of discount is
the consequence of the scarcity or the exportation
of the precious metals—and whether the rate of in-
terest represents the natural price of money—whe-
ther the Bank of France is really under the necessity
of raising the rate of interest whenever it is raised
in a neighbouring country. He has a few chapters
also on the Bank of England ; of the causes which
have led to its actual constitution, and on the diffe-
rence between it and the Bank of France; of the
rate of interest, and of the proper mission of banks
in general; of liberty and monopoly; and on the
necessity of an inquiry into the constitution of the
Bank of France.

In the concluding chapter, in which he sums up,
he puts fOrth :

" That, as has been seen in the preceding chapters
the unity of paper money, payable at sight, io no
other than that of metallic money, and therefore it
is of little importance whether paper is issued by
one or by many establishments, provided that its
convertibility into cash be constantly secured—
that this question of the unity of bank paper covers
a pretension to exclutive monopoly whiob is abused
in order to profit by commerce and industry, under
the pretence of reserving for the country its metallic
reserves—that the measures adopted for the rise in
the rate of discount adopted by the Bank when its
reserve diminishes might be avoided, if it were
obliged to use the means at its disposal to procure
for itself the gold and silver it wants—that these
means consist of the purchase of the precious
metals with its own capital—with the real capital
accruing either from the successive realisation of
its Rentes augmentation of its capital,
he
m o
f o n n o
tr fromf thewhich is not one-half that of the
Bank
England—that the rate of discount is abso-
t no
lutely independent of the abundance or the scarcity
of money; and that the rate of interest is by no
means the price of money,that price, which depends
on the cost of production of gold and silver and of
their relative quantity in the market, not being re.
presented otherwise than by an equivalent in mer-
chandise of any kind whatever; that the Bank of
France is not necessarily obliged to raise the rate of
interest,
supposed, when it is raised
in
other
countries,
particularly in England; that,
in point of fact, there exists between the constitu-
tion of the Bank of France and that of the Bank of
England
as is generally
a serious difference, which renders quite
illusory the danger of the outflow of money from
France to England in case of the rate of interest of
the Bank of England being higher than in France;
that in England interest is raised only because the
amount of notes which the Bank is authorised to
issue is too restricted ; that in France it is raised
only because the Bank has not sufficient cash in
relation to its wants ; that banks should be sub-
jected to a maximum of interest, successively de-
creasing as a compensation for the right accorded
to them of disposing, without interest, of a con-
siderable capital, and which constitutes in their
favour a rich subsidy, and procures for them ad-
vantages which they should share with the public
in the form of a reduction in the rate of interest;
that the mission of banks is to facilitate the circu-
lation of capital and to let it pass, on the best pos-
sible conditions, from the hands that hold it to those
who employ it ; that the Bank of France, being in
possession of a monopoly in fact, has totally lost
sight of its mission, and has come to regard the
capital it has been permitted to raise gratuitously
on circulation as a private property, which it may
use and abuse ; that it thereby procures for itself
enormous profits, to the prejudice of commerce and
industry; that in spite of the great profits it thus
realises it satisfies incompletely the requirements of
industry and totally neglects those of credit and
public works ; that there is no possibility of reduc-
ing these profits, of putting an end to the ruinous
crisis which occurs every year, and of responding to
the necessities of the country but by the competi-
tion of other capital, or by an organisation of credit
in which the privilege of the Bank of France shall
be revised and placed in harmony with modern in-
stitutions—and that in England, where reforms are
equally necessary, there exists the right of modify.
ing the privilege of the Bank on a year's notice;
but that in France one is completely disarmed un.
til 1897—that is to say, during a space of time which
represents a generation, unless the. Government,
unless the public authorities, hasten to take mea-
sures for putting an end to the deplorable state of
things witnessed since the law of 1857, and which,
particularly since the month of September last year,
has paralysed all the operations of commerce, in -
dustry, and credit throughout the whole of France.
Such are the principles, such is the situation,' says
M. Pereire."

M. Pereire naturally concludes that the only remedy for
such a state of things is the founding of a new establish-
ment capable of rivalling the Bank of France, unless the
Bank think proper to profoundly modify its privileges, and
above all, to renounce the benefit it derives from the law
of 1857 with respect to its power of raising the rate of in-
terest. This new establishment should possess a capital far
greater than that of the Bank of France. It is not merely
to 180,000,00ef such capital should be limited ; it should be
400,000,000 f or 500,000,000 f, in order to meet the immense
roggiromouto that aro to Po aatiafiod, 4. part of it might)