The Bank of France During the Great In November 1911 the bank agreed to lend to the government in case of mobilization 2,900,000,000 francs. This amount was raised to 6,000,000,000 francs in September 1914, to 9,000,000,000 in May 1915 and to 12,000,000,000 in 1917. Such advances are granted to the state at a rate of interest of ?A of 1 per cent. The limit of 9,000,000,000 would have been exceeded in 1916 if the government had not repaid part of its debt to the bank (about 4,000,000,000 francs), out of the proceeds of the two first national loans. Besides these advances granted direct to the French government, the bank, with out being obliged to do so, had lent up to Feb ruary 1917, over 2,000,000,000 francs in discount ing French treasury bills the proceeds of which have been lent mainly to the Russian govern ment. When the French National Loans were issued the bank received the applications of sub scribers throughout France without charging any commission to the government : For the first War Loan the bank received, from 300,798 subscribers, nearly 3,000,000,000 francs. For the second War Loan the bank received from 828, 652 subscribers nearly 4,000,000,000 francs. Be sides these long-term loans, the bank sells daily over its counters French treasury bills in de nominations which may suit any investor since the lowest of them is 100 francs. Whenever such bills come to maturity within three months, they may be discounted at the bank; and when they have .more than three months to run be fore maturity, they are accepted by the bank to the extent of 80 per cent as collateral for loans. In 1915 the sales of these Bons du Tresor through the Bank of France and its branches reached the amount of 1,902,000,000 francs; in 1916 3,575,000,000 francs. From the beginning of the war to the end of December 1916, 1,057, 483,000 francs in gold were sent abroad by the bank in order to maintain the foreign exchanges. Nearly the whole of that tinge quantity of gold (about 900,000,000 francs) was sent to the Bank of England as a consequence of agreements signed by the British and French governments. In exchange of gold, France obtained in London a certain amount of credit which exceeded of course the amount of the shipments of gold. In spite of these exports of the precious metal the reserve at the Central Bank has always been very large. A great nuantity of gold in circulation (2,000,000,000 francs up to February 1917) was in fact brought by the French people to the central reserve where it was exchanged for notes always at par, the notes of the Bank of France having never lost any portion of their full face value. In 1915, a credit of $20,
000,000 was obtained, under the auspices of the Bank of France, from a group of banks and trust companies of New York (headed by Messrs. Brown Brothers) ; these credits were renewed in 1916; arrangements were also made with the National City Bank of New York for the establishment of dollar credits in that city where French payments have always been exten sive during the war. From 27 July to 1 Aug. 1914, the discounts of the Bank of France were raised from 1,500,000,000 francs to 3,041,000,000; two months later the discounts reached nearly 4,500,003,000 francs. The private banks had to unload their own discounts to the Central Bank, just as we understand here that the mem ber banks of any Federal reserve bank in the United States would rediscount their commercial paper at their own reserve bank, if they wanted to liquidate their assets in case of a run of their depositors. In fact that possibility of re discount, thanks to the elasticity of the issuing system of banknotes for commercial purposes, saved France from a financial catastrophe. Not one private bank failed in spite of the rapidity with which the war was declared. These dis counts at the bank had been reduced gradually and steadily, week after week, to 1,838,000,000 francs at the end of 1915, and to 1,341,000,000 at the end of 1916 in spite of the moratorium. It is an unmistakable sign of the vitality of France, of its economic and staying power and of the soundness of its finances.
The Bank of France is a living organism, very much respectful of the traditions of the past, but always alive to the economic changes of the present and the possibilities of the future. The great European War is bound to create new developments and great changes; conse quently dangers, such as an inflation of notes. But the bank, since its foundation, has weathered many storms, witnessed many changes, political, social, economical, a great national reverse in 1871; now it may be compared to an old lady who has got much experience and deserved the confidence of the world for more than 100 years, and there is no Frenchman doubting that she will weather the greatest storm which might well have swept away not only a very respect able institution but civilization as well.