The Washington herald., 1910-07-03


Bank of France has attained a dominat-
ing position in French finance and its
relation to the joint-stock banks has
just been made public by the National
Monetary Commission.
The monograph on the subject is en-.
titled Evolution OF credit and banks ii
France" ana Is written by Andre Liesse
professor at the National Conservatory
OF Arts and Trades and at the school OF
Political Sciences,
Prof Liesse takes up the evolution OF
banking in France in three periods, from
1850 70 1913, when the business OF the
Bank OF France was restricted largely
10 Paris; the period from 1S4S 10 1875
when the bank became truly a national
institution by the absorption OF the de
partmental banks Of issue. by its aid
in the extension OF the railway network
and by its mastery conduct OF the nego-
tiations for the payment of the great
war indemnity to Germany; and from
1S76 10 the present time.
More Than Historical sketch.
The narrative is very far from being
a mere historical summary OF the de-
velopment OF the Bank Of France itself
but traces the manner In which the big
credit companies grew up with the
growth of French capital and its dis
tributiOn at home and abroad, and the
manner in which they have leaned in
emergencies upon the central bank
The Bank of France appears as the
friendly guardian of the market IN tid-
L.
the failure OF the Union Generate in lSS2,
the collapse of the copper corner and
the liquidation of the Compton DIES
compile in 1888, the reaction OF the Bar
ing failure in England IN 1890, and the
crisis of 1867. In the crisis OF 1890 the
Bank of England borrowed of the Bank
OF France 100000 francs (Sl5O00.000 in
gold, with which TO relieve the stress In
the English market The Bank OF
France. II is declared by NJ. Liesse, was
not affected at all by this expectation
of coin.
The averagefreserve in fact in the year
1890 was about S500000.000, composed al
most equally of gold and silver. If the
Bank of England had been able 10 issue
notes for 100000 francs. in order to
meet the difficulties of the crisis, there
would not have been. NJ. Liesse declares.
the slightest need OF an appeal 10 the
credit of the Bank of France; and since
the latter was willing TO give credit TO
the Bank Of England. the citizens of
England would have done so equally by
accepting its notes.
Active in Year 1906.
The pressure in the money market in
the fan OF 1906 was met by the Bank of
France by the liberal discounting of
English paper. This policy. it is de-
clared. was much more economic, in the
high sense of the word, than the rather
archaic one practiced formerly of max
ing discreet loans of gold 10 The Bank
of England
the following year, 1907, the crisis
grew worse. Discount at the Bank OF
France went up again to 31s per cent, and
then 10 4 per cent. The Bank Of France
interviewed a second time discOunting
English paper. The report of the opera
lions OF the bank for 1907 states that
in this way a ready capital OF more than
S0,000,C00 francs In American gold was
furnished 10 the London market In
another direction, the Bank OF France
opposed no obstacle 10 the shipments Of
French gold to New York which were
furtheTed by the bank making its normal
commercial discounts
Finally, the discount rate remained g
. per cent lower in France than in Eng
land or Germany.
In this way the action OF the bank
made itself felt not only on the French
market, but also on the international.
and particularly the English market
Making discounts on foreign paper must
be considered to-day a very normal
means OF establishing useful relations be-
tween the different markets and of ap-
plying the law OF supply and demand of
capital in an intelligent and profitable
manner for the country which furnishes
It's capital
Not making foreign discounts is a
deficiency which the Bank of England
adds 10 its lack OF elasticity of issue.
The Reichsbank has foreign portfolio, +"
which has increased in Importance from
Year 10 year. The Bank OF France has
the right 10 discount foreign paper. and
has used It very ably, thanks TO the en-
hghtened direction of its governor, NJ.
Georges Pallain.
Needs No official Action.
Commenting upon this series Of events.
N Liesse declares that the alliance Of
all the banks Of issue Of Europe, which
was suggested after the panic of 1907
by an eminent Italian minister, does not
require to be consummated by any official
action. There is no need of official In
terventiOn, of contracts with binding
clauses. 10 create solidarity between
these establishments This solidarity is
established when necessary, either tli-
rectly, if the banks of issue have the
privilege of dlscOunting foreign COM
mereial paper. or indirectly, by the
credit companies or the Intermediary
banks.
The Intervention Of one or another of
the banks Of ISSUE in favor Of a foreign
market is therefore free, and SO rauch
the more useful on that account. he
cause this action is performed in re-
Spouse TO a solidarity dictated by the
positive interest that the bank has in
intervening, since IL derives profit from
so doing.
Summing up what has been accom-
plished by the big credit companies in
developing the Industries and financial re-
, sources OF France, supported IS they have
been by the central bank, III. Liesse
says:
They gradually extend their activity
IN France by means Of numerous branch
offices or agencies. The Bank of France
follows the same movement. either of
It's own aecord OF by reason of condi-
tons imposed by the government
Credit Concerns Take shape.
"The present organization OF credit he
gins to take shape; the role of the credit
companies grows in Importance; they
LOAN SOCIETIES