The Bank of France is not only a national institution by the exclusive location in France of its chief offices and branches, but it will not discount any bills unless the latter are created in France or, at least, endorsed by two French signatures; all collateral loans must be guaran teed by French securities which are themselves guaranteedr the state; its bank notes are circulate only within French territory (not in the French colonies). Finally all the members who make up the general assembly of the shareholders as well as the governor, the two sub-governors and all the employees, who number more than 7,000, must be of French nationality. If, for in stance, a French young lady in the service of the bank marries a foreigner, whatever may' be his nationality, she acquires the nationality of her husband and therefore cannot continue in the service of the bank. For all its national characteristics the Bank of France is a private joint-stock company and not an establishment of the state; that is the reason why it had been able during the Franco-German War of 1870 71 to keep entirely safe its real property, its metallic reserve and all its securities as being strictly private. "According to its statutory articles? writes Frederick William in one doc ument, "the Bank of France is a private institu tion whose only purpose is to further commerce and industry. Consequently the funds kept in that establishment are not liable to any dis traint nor any execution so far as they are not intended for the use of the army? It must be added, however, that at the end of August 1914 when the Germans were marching on Paris, all the gold of the Bank of France as well as its securities were being fast removed from the capital to other centres. France could not afford to run any risks about its gold reserve which amounted to 4,100,000,000 francs.
Regulation of Note It is an inter esting point to know how the state has regu lated the issue of banknotes. First of all it must be said that there is no necessary relation between the amount of metallic reserve and the circulation of banknotes. The emission of the latter is regulated by what has been termed the Thanking principle? The bank can issue its notes freely and create, for its own use, a new capital; but the latter can be used only for two banking operations, viz., dis counting commercial bills and advancing money upon approved securities, whence the term of "banking principle? Of course, there is a limit fixed by the state to the issuing of notes; but whenever it becomes necessary, that is to say, whenever the discounts and loans are in increased demand, owing to expansion in trade, the state modifies the maximum of emission and allows a new margin. The value of the banknotes is therefore always fully represented first by commercial bills discounted, of very short maturity (at most 91 days), second, by loans upon approved securities, with a consider able margin, and last, not least, by its metallic reserve of gold and silver.
Although the bank is not required to keep a minimum gold reserve, its policy has always been to accumulate as much yellow metal as possible. It is true that the bank has also the right to pay its notes in silver coin; for practi cal purposes, however, gold is the only metallic reserve that really counts and the bank has never made any great effort to increase its silver reserve. In 1916 the bank held 5,076,600,000 francs in gold and 299,100,000 francs in silver in reserve, and had in circulation notes to the value of 16,500,700,000 francs.
Relations with the The state is en titled to a portion of the net profits of the bank over and above stamp duties and ordinary taxes which the Bank of France is bound to pay just as any other joint-stock institution of the same kind. First of all there is a special stamp duty on all bank notes; in the year 1908 the amount of money paid to the state on that account was no less than 1,400,000 francs for an average circulation of 4,800,000,000 francs. In 1897 when the privilege was renewed the state stipulated from the bank that it should pay to the treasury an annual royalty consist ing of the eighth part of the average rate of and industrial or agricultural activity, whilst this is not always necessarily the case with loans upon securities. The following table shows the average amounts of the bank collateral loans from 1897 to 1915: The bank receives deposits of money which may be withdrawn by cheques or transfers, but no interest whatever is paid on these moneys. The deposits, however, are always very import ant for two reasons. The first is an absolute confidence of the depositors, the second is that the bank is the clearing-house of France. All the persons who have a deposit or current ac count at the bank can transfer credits or liqui date their balances by virements, that is to say, by an order of transfer of credit from ac count given to the bank and at the same time by giving notice to the payee that his own ac count has been credited. Such transfers are made free of charge from any banking place to any other (there are 583 banking places). It is a method of settlement which is very much of the same character as that of a central clearing-house.
Finally the bank undertakes many opera tions of minor importance from which no great profit is derived, and for the main reason that they are of great convenience for its customers; the bank, for instance, takes orders for sales or purchases of securities on the stock exchange, that is to say, it transmits such orders to the Agents de Change (stockbrokers) who have a monopoly as regards all transactions at the Bourse.
It keeps securities on deposit, and lets safes in its vaults, not only in Paris, but in 156 branches (succursales) and sub-offices (bureaux auxiliaires) as well. The preceding table shows the dividends of the Bank of France from 1898 to 1915.