The Vinita daily chieftain. [volume] (Vinita, Indian Territory [Okla.]) 1902-1913, 1910-05-28
BANK OF FRANCE
NO PROFIT SEEKER
The Bank of France in Its Relation to
National And international
Credit.
By Associated press.

BY Associated Press.
Washington, May 2S. = A striking
study of the part which the Bank of
France plays in the international
money market has just been made pub
lie by the National Monetary Commits
sion. in the form of translation of
the work of Maurice Patron on the
Bank of France in its relation to Ma
tional and international credit. 1t
is pointed out that the bank acts es-
sentially as a public institution, pur-
suing the essential objects of build
ing up and protecting the national
gold reserve rather than seeking pro-
fits for its shareholders. BY increas-
ing it's gold reserve the bank, it is
declared by M. Patron, is working
against the interests of its sharehold-
ers and consequently against its own
interests. There are two reasons for
this: First, the expense of maintain
ing an additional reserve and the cost
of issuing notes against it represent
a clear loss to the shareholders. II
the holdings of gold were smaller, the
amounts of assets and liabilities
would decrease without interfering
with the profit and loss account. In
the second place, smaller holdings Of
metal would lead to frequent rises
in the rate of discount, which are the
main sourse of profit for a bank of
issue.
In spite of these obvious advantages
to the bank in getting rid of a part
or its great stock of yellow metal, the
gold reserve has been allowed to in
crease until it amounts to about $780,
100000, and is the largest stock held
in any bank in the world. Even the
advance in the rate of discount which
is occasionally made, it is pointed
out, is not for the purpose of safe
guarding the reserve, but to avoid the
decrease of the money and persistent
offers from abroad where discount
rates ruled much higher. With these
great resources at its command, the
Bank of France has, in the opinion
of M. Patron, become practically the
reserve reservoir of gold for the finan-
cial world. AS far back as 1889, the
bank lent to the Bank of England
100000 in gold and again in 1890,
at the time of the Barring failure,
$4,000. 1000. The Bank of France had
Just endured without flinching the
downfall of the Compton D'Escompte,
one of the Oldest of the joint-stock
banks of Paris, but the Bank of Eng
land, confronted by like conditions,
found it necessary not only to raise
its discount rate to per cent, but
to ask for foreign help. The Bank of
France was severely criticised in the
chamber of deputies for making this
loan. but this criticism did not deter
it from extending similar aid in the
autumn of 1906 and in the crisis of
1907 to the amount of S0,000,0O0
francs, which were forwarded to Lon
don in American gold eagles, in an
swer to a mere telegram. The bear
ing of this course upon the crisis in
the United States gives special in
terest to the narrative of NJ. Patron
of these events, which he sums up
thus:
1T was at the time of this develop
ing crisis that the Bank of France
was unreasonably reproached with its
Indifference to the monetary situa-
tion in the United States and with Its
refusal to give aid The critics forgot
that the bank was prevented by its
statutes from the direct shipment OF
sums for which the federal govern
ment refused to become responsible
and that, nevertheless, it forwarded
S0.O00,000 francs in American coin
which merely passed through London
Certain negotiations took place at
that time between the American gov
ernment and the Bank Of France with
view to dealing directly without the
Intervention of the London market