GIPE-PUNE-OIIOI2 - DSpace@GIPE

58 THE RE-MAKING OF THE RElCHSBANK
The Banque de France may be said to have been
very moderate in the issue of notes. It is doubtful if it hds
really rende,red, except on rare occasions (1871-73), the
services of a circulating bank, i,e., a note-bank. Its
functions have mainly ~en, as it were, those of a simple
deposit-bank. The Great War (1914-18) and the postwar
developments have of course been extraordinary.
It may be remarked en passant that French authorities
on money and finance have, therefore, as a rule been
rather indifferent to the classical controversy in regard to
the ""theory" of note-banks. To them the problem,
currency principle (on which the Bank of England's Issue
Department is founded by Peel, 1844-46) os. banking
principle (as based on the teachings of Adam Smith and
Ricardo) is essentially an academic one.
In reality, however, they do not believe that banknotes
are identical with money, as Peel does. Like Adam
Smith and Ricardo the French economists, as a rule, are
of opinion t.hat the notes are "substitutes for money".
According to them all that the note-banks need attend to
is that the notes issued by them are immediately convertible
into coin on demand of the possessors. And for
this the banks have but to take the ordinary precautions
of banking in regard to reserve, cash, securities, etc ..
Whatever the banks do in order to assure the cashing of
cheques, bills of exchange and other instruments of
credit has to be done in the case of notes also. The
French professors are, in other words, the adherents of
the ""banking principle." •
In theory and legislation, then, the Banque de France
waS governed according to the ""banking principle" while
the Bank of England and the Reichsbank have been