The Sun.
London, England, 1857-01-30 00:00:00

THE BANK OF FRANCE.

The Moniteur of yesterday, alluding to remarks..
made by some of the Paris journals as to contenr-
plated changes in the organisation of the Bank of
France, and particularly on the increase of its capi-
tal, publishes a note, containing the views of the
Emperor Napoleon I. which was sent to the Bank,

of Prance in 1810 by order of his Majesty. The
is a summary of its contents. After
stating that the original capital of the bank, which
was fixed by the law of An 8 at 30 millions, had
been successively increased to 43 and to 90 millions,

it goes on to say :
"The capital was not intended to be used is
discount transactions, which should be entirely
carried on by means of its notes. Its capital ought
to remain entirely unconnected with discount opera..
tions. The formation of the capital of a bank is a pre"
liminary act as distinct from its activity as a privileges
discounting establishment as the deposit of a sum 4:4

caution-money by a person employed is from his manage-
ment, properly so called. The condition of furnishing a
capital is only imposed on those who found a bank a,l
security for those who take its notes against any error
or imprudent conduct on the part of its managers.
.94-
bank which only issues notes in exchange for good b
at two or •three months' date at the utmost ought
have constantly in band a sum in such securities at le as"
equal to the flutes it has issued, and thus be in a
situation to withdraw all its notes from circa& en
in three months, by the ,receipt of the amo,ant
of the bills it has in liat,d, without interfering', iri
the slightest way with its capital. The capital furnished
by the shareholders of a bank being, strictly speaki ing,
only a kind of caution money given to the publii ;,_ it
might be
,almost saidthat a bank which had acquire id
reputation for infallibility would not even require to
touch its capital for purposes of discount, its notes beiing
quite suficient for that purpose."
The note then alludes to the formation of the
Bank of England in 1692 with a capital of 24
millions, and states that although its first act
.i_
was to lead almost the whole of that capital T"
the Royal treasury of 'William 111., its founder,
yet it carried on with success its discount (110'
rations from the very first moment of its be ing
established by means of its notes. It 31 szt
alludes to the care and attention necessary in
carrying on discount operations, and the st riot
attention required in the investigation of the sol-
vency of the different parties whose names are
affixed to the bills presented for discount. 'The
document concludes as follows :

"The capital of a bank should, by the form of its in'
vestment, remain, so to speak, always immoveable, in
order that no suspicion should ever be felt of its having
been diminished ; it ought at the same time to remain 30
a state to be immediately available, so as to be ready to
cover any losses which might miss on bills. A part of
this capital should form a reserve in bullion, and flint
part can produce Ito interest. The best use that
could be made of the remainder appear& to be its in"
vestment in securities of the public debt of the couottly,
negotiable in the market; since such an ivestment unites
to the advantage of securing a favourable and regularlf
paid interest, that of being immediately available when
required by the bank ; and although this latter even-
tuality could never happen in a bank that has only
issued its notes in exchange for good discountable se'
entities, yet prudence always requires the case to be
provided for. A. bank ought to maintain itself in such
a state as to be able to wind up its affairs at any
moment ; in the first place, with respect to the holders
of its notes, by the realisation of the bills which it
has in hand ; and next, with respect to its shareholders
by the distribution to each of them of the amount of
capital which he has furnished. In order never to
expire it ought to be able to come to an end at sof
!moment."