The morning call., 1890-05-12
THE CREDIT FoNcIEK SHAKING.

Once more the story comes from Paris
| that the Credit Foncier is in trouble. This
| time 1t is positively averred that the capital
has been impaired to the extent of ten
million francs That is quite likely to bs
the case. The Credit Foncier has been in
business for thirty years, and while it has
had Its ups aud downs the chances are that
Its average fortune has been that of every
institution which speculates with other
peoples money.
The principle on which 1t was started was
perfectly sound. 1t was to be great finan-
| cial institution, with ample capital; it was
to use its means in rediscounting bills and
notes and mortgages held by smaller insti-
buttons, and it was secured from loss first
by the bills and notes themselves, and sec
ondly by the resources of the institutions
with which it dealt. This on its face GER
tainly looks like a safe form of banking.
Unfortunately it no sooner opened its
doors than it became sGoiect TO the law
which provides thai men will not bestow
upon ouslnesS,0f which they are merely Di-
rectoGStne care and forethougnt and pru-
sence which they give to their own. The
Directors of the Credit Foncier many of
| whom were themselves bankers, voted to
| discount paper which they would not have
| touched at their own counter. Thus they
| had not been in business for five years be-
| fore they found themselves carrying a load
| OF suspended paper larger than their profits
| warranted. Then, again, they departed from
| sound principles of business in dealing with
these bad debts A wel-con Quoted bank
does not carry on its books paper which has
been overdue for any length of time. 1t
| writes 1t off to profit and loss, and curtails
dIvi6Qnhs in nrn rhn IT,.
cier had so large capital that it could
| afford to carry its insolvent customers, and
wait till at some time or other they were
able to pay up. 1t was bad policy to do so.
| But it takes more courage than the Direc-
tors had to write off a debt as bad. Thus,
| time has come at last when so large pro-
| portion of the capital of the concern is
| locked up in bad debts that it's credit is
| blown upon, and liquidation is talked of.
Corporate enterprise is foreign to the
| genius of the French people, and though in
| Paris new companies are constantly being
organized for all sorts of purposes, few Of
| them succeed, and hardly any of them
would be able to float their stock but for
| the gambling instinct which is inveterate
| among Frenchmen. Even the Bank of
| France, which is one of the soundest insti-
| tutions in the world, only maintains itself
| by carrying specie reserve far larger than
| similar bank would consider necessary in
this country or in Great Britain. An Amer
| lean or an Englishman puts his money into
| bank, where 1t is active, and constitutes a
basis for commercial and industrial enter
| priSes. A Frenchman locks his mohey in a
| drawer, or lodges 1t in stocking, where 1t
| is dead to all intents and purposes. Thus
| financial institutions in France cannot rely
upon regular flow of deposits from the
| public, as similar concerns do here and In
| England; and when losses occur, or a run
sets in, tile former have to rely on their
capital only.