Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1892-07-26

the coin or money destined to pay for thii
commodity in his pocket In fact, q delay
Is necessary to accomplish these diverl
| operations, and here Is whore discoun,
| appears; for coin Is offered to the producer
before the consumer is ready to pay for the
thing produced, and discount consists IN
this and nothing more. A bank OF emission
can, however, only use its capital for dis.
| count business on q fiction sanctioned by
experience, and which fiction is born OF the
idea that holders of bank notes will not al
present themselves at the same moment to
demand the redemption of their bills 1t II
this probability that they will not all reclaim
at the same time which permits bank oi
emission to issue alongside of bills repre-
sented by the coin money on hand bills
represented by deposited values, on condi-
tion that such deposits are for short date
only. It is thus by prudent management
that bank of emission can do discounting
business which is permitted and which is
necessary.
The Bank a. Moderator.
Now the role of the Bank of France is
that of moderator, and consists in fixing
the rate of interest at the lowest price, but
of course in such way that capital will be
remunerated. Capital would not last long
without remuneration any more than did
the farmers horse when he was trying to
teach it to live without fodder. Other es-
tablishments have each their point Of view,
their particular direction according to the
variations of exchange or the fluctuations
of capital known to them by their own
private information, and they might have
to vary their discount But bank of
emission like the Bank of France, which
knows perfectly we'll the movements of ex-
change and of capital, not only in this
country but all over the world, bank of
issue such as it cannot permit itself to be
bothered by the first contraction of credit,
nor at its first rise; it must decide to pro-
claim variation in the rate of discount
only when the facts are certain, and when
it feels sure it will not have to 60 back on
its own decision the next day.
The Bank of France has thus contributed
largely to the stability of discount, and in
proof of this let me quote few facts. I
shall make a comparison with the Bank of
England, as it has served as a regulator for
a long time, and it is only few years since
the Bank OF France was emancipated from
it. Well, in $40 days the Bank of England
changed the rate of its discount no fewer
than 367 times, and meanwhile the Bank of
France changed it but 113 times, that is to-
say the rate of discount in England had an
average duration of one month and eight
days, while it had duration of five months
and day here in France. The movement
of one of these great banks has been toward
stability. the other toward instability.
From 1919 to 1869 the Bank of England
changed its discount every time one month
and "A davs passed, on the average, but the
Bank of France changed it only when three
months and % days had gone. From 1870
to 1881 the Bank of England changed its
rate of discount every one month and two
days, imposing thus its own instability, and
meanwhile the Bank of France did not
change its rate any oftener than once in
nine months and Is days on the average.
Where the Applause Comes In.
This shows, does it not, that the Bank of
France insured a more solid base to COM
mercial transactions then did the Bank of
England, and here's where the applause
comes in But let me show you now the
average of the rate of discount from 1885 to
1891 in six or seven of the principal places
of Europe. We will take that of France as
the basis, and here~it was francs .O3
centimes, while at Brussels it was 12
centimes higher; at London, Al centimes
higher; at Berlin, 60 centimes higher; at
Vienna, franc II centimes higher; at
st. Petersburg, 2 francs "a centimes higher,
than it was in Paris. This difference in
rates represents a big benefit for French
commerce; for as the portfolio of the Bank
Rrance is more than q seventh or eighth
part of the portfolio of the whole of France,
this benefit was felt all over the
country. And as the average of the banks
portfolio-by this I mean its deposits of
shares and stocks and other values-has
been 932, 600, 900 francs in these recent years
this shows that it really abandoned $780,
600 francs of profits, and as compared with
the Bank of England, the benefit to COM
merce was 25, 600, 900 francs more than in the
United Kingdom.
Some say that this great difference be-
tween Paris and London is because the
Bank of France insists on three signatures,
therefore commercial men generally address
themselves to discount brokers, hence the
banks rates are not really the actual tax
they are obliged to pay. They say that this
third signature is unnecessary, and that the
Bank of England does not call for it. Well,
it is quite true that the old lady of Tread
needle street has paper with only two sigma
lures in her portfolio, and there are two
kinds OF them. There is paper of the first
class, which does not have to paw the mini |
mum official rate, for the Bank of England
has certain liberties which are not enjoyed
It the Bank of France, and she can discount /
his kind of paper at ~, even at per cent,
f she so desires. But she also carries paper
with two signatures which is not frst-class |
oaper and on which, when the market rate
S per cent she can demand or or even
per cent, and she gets it, too.
What 1t Has to Draw Upon.
The Bank Of France possesses a cash box
such as no other country in the world can |
'how. have already told you how much |
t had on hand at the time of its last bal |
Ince sheet. There was more than the COM |
,ined accumulations of the banks of Eng
and, Germany and Italy and Austria Hun
.ary at that same period. Is it any wonder,
hen, that the people of this country have
confidence in the Bank of France, for 1t
presents this unheard of phenomena, and
which practically seems impossible, that no
natter what happens its metallic resources
annot be exhausted? Suppose that dur
ng 26 days there was run on the bank,
md that it threw open all its paying win
lows, and put all its tellers to handing out
he silver and gold which the public de-
handed, and that these clerks paid it out as
Witty as possible, in that time the cash
'oxes In the vaults would hardly miss what
lad been taken out. And when the public
lad got these millions of pounds of coin in
heir possession they would not know what
o do with them, and, submerged under the
metallic food. they would cry for mercy
nd beg the bank to take it all back once
nore. This is the estrength of the Bank of
france; this is what places it above all
isks and perils, and this is where the ap-
lause comes in again.
The Bank OF France is q private society,
ut under the guardianship of the State, q
oclety enjoying the management of its own
roper interests under its own shareholders.