The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1910-05-30

AoeHCI LNdn seeking
pronts FOR Its shareholders. BY in
creasing Its gold reserve the bank, it
is declared by Mr.. Patron, is work.
ing against the interests of it's share
holders and consequently against it's
own interests. There are two reasons
Ior this: First, the expense Of MAIN
taining an additional reserve and the
cost OF issuing notes against it rem
resent clear loss to the sharehold-
ers. II the holdings of gold were
smaller. the amounts of assets and
liabilities would decrease without in
terfering with the profit and loss ac-
count. In the second place, smaller
holdings Of metal would lead to fre-
quent rises in the rate of discount
which are the main source of nrof1t
for bank of issue.
In spite Of these obvious adyant-
ages TO the bank in getting rid of a
part OF It's great stock of the yellow
metal, the gold reserve has been al
lowed to Increase until it amounts to
about $7OO,000.000, and is the largest
STOCK held In any bank in the world.
Even the advance in the rate of dis
count which is occasionally made. it
ls pointed out, is not for the purpose
OF safeguarding the reserve, but to
avoid the decrease Of the money in
circulation which would have result
ed from the tempting and persistent
oners from abroad where discount
rates ruled much higher. With these
great resources at its command. the
oank OF France has, in the opinion of
NJ. Patron, become practically the re.
serve reservoir of gold for the finan-
cfal world. AS far back as 1899. the
oank lent to the Bank of England
2,ooo.OoO pounds in gold and again in
1890, at the time of the Barring failure,
S,0OO,OOO pounds. The Bank of France
mad just endured without f1inching
the downfall of the compoir d'escomp-
tie one of the Oldest of the joint-stock
banks Of Paris, but the Bank of
England, confronted by like condi-
tfons, found it necessary not only to
raise its discount rate to six per cent,
but to ask for foreign help. The
Bank OF France was severely CRITICS.
ed In the chamber of deputies for
making this loan, but this criticism
did not deter it from extending SIM
liar aid In the autumn of 1906 and
in the crisis of 1907 to the amount
OF SO.O00.000 francs, which We're for
warded to London in American gold
eagles In answer to a mere telegram.
The bearing of this course upon the
crisis in the United States gives spe-
cial interest to the narrative of NJ.
Patron of these events, which he
sums up thus:
American Crisis.
1T was at the time of this devel-
oping crisis that the Bank of France
was unreasonably reproached with
Its Indifference to the monetary situa-
tton in the United States and with its
refusal to give aid. The critics for
got 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 Lon
don. Certain negotiations took place
at that time between the American
government and the Bank of France
with view Of dealing directly with
out the Intervention of the London
market. 1t is only because that gov
ernment would not or could not offer
such guarantees as the Bank of
France considered adequate that it
made use of the London market,
which has much greater interest
than ours in the prosperity of the
United States.
"The occasions which we have Just
mentioned are not the only ones in
which the Bank of France has had to
intervene. In the first days of May,
1906. 1t loaned 40.000.000 francs Of the
Bank Of England in order that the
latter might avoid raising the dis
count rate. In September, 1906, it
sold several millions in American
eagles, with the knowledge that they
would at once make their way to
New York. More recently, in the
very midst Of the crisis. the bank re-
leased many millions Of eagles and
sovereigns under similar conditions.
II would therefore appear that this
policy of relief has been definitely
adopted by the Bank of France"
In view Of the many occasions on
which the Bank Of France has thus
proved the refuge Of the great banks
Of other countries in averting disast-
er, interest is given to the sugges-
tons of Signor Luzzatti. formerly
Italian minister Of finance, in regard
to an International agreement be-
tween banks of issue and government
treasures for mutual support. AS
thus outlined, NJ. Patron contends
that the Bank of France would be
forced to adopt, as an obligatory rule
Of conduct. measure which after all
is employed only as an exception and
at such times as 1t deems opportune.
1t is easy to foresee, he declares. what
would happen under such system.
France, financially the strongest
country. would have very little to ex-
pect from abroad. while it would find
its aid urgently solicited at the least
alarm among its neighbors. Its po-
sition as moderator, from being vol
UNFAIRLY assumed as it is now, would
become obligatory and subordinate.
and this would be evidently unaccept-
able In summing up the present po-
sition Of the Bank Of France. with
its reserve towering above that of any
other great bank. NJ. Patron concludes
that this reserve. admirably managed