GIPE-PUNE-OIIOI2 - DSpace@GIPE

(>2 THE RE-MAKING OF THE REICHSBANK
1914. The Banque was placed under obligation to assure
the convertibility of its notes in gold bullion or coins.
The sum 6f 215,000 francs in notes was fixed as the
. minimum for which the public was empowered to obtain
from the Banque ~n equivalent gold exchange or gold
bullion.
All these provisions· have reference to the stabiliza..;
tion of tp.e currency and the re-establishment of the
standard which will appear to be quite in conformity with
the post-war restoration of currencies in different parts of
the world. But so far as France is concerned, the official
recognition of the fact that the old franc could not be
restored and that the depreciation had to be legally
accepted,-in one word,-" devaluation," marks a revolution
in the monetary history of France.
Equally revolutionary are the provisions of the law of
June 25, 1928, in regard to the note-legislation. For the
first time since 1806 has the Banque de France been compelled
to observe the principle of a minimum cover for the
note-issue. The gold cash (excluding the devises) must
not be less than 35 p.c. of the total notes in circulation
together with the current accounts of the creditors. The
time-honoured principle of the legal maximum of notecirculation
(e.g., 350 millions 'in 1848; 58,500 millions
in .. 1925) has therefore ·b~en abolished. The 35 p.c. gold
cover, it will be observed,. is higher than the . legal goldcover
provided for by the Reichsbank Act of 1924 which,
as we have seen, is not more than 30 p.c.
Altogether, then, thec~ntury-old "ban.king principle"
is abandoned by France in favour of the "currency
principle" of the Bank of England and the Reichsbank.
It IS evident, however. that the more elastic