STEN-MKS2014

National Monetary CommissionEvolution of Credit and- - -.BanhsThis commercial progress, together with the investmentof French capital abroad (making France a creditor ofmany foreign countries for the interest on very largesums), explains how it was possible to meet the warindemnity of j,000,00o,Ooo francs without paying morethan a small balance in actual coin and without deprivingthe country of specie.The market at home was not less active than foreigntrade; the discounts of the Bank are an evidence of this.In spite of the terrible crisis the country had passedthrough credit was not affected a single instant. Anexample of this is in the Bank's almost complete collectionof the commercial bills, the time of payment onwhich had been extended, and which in the provinces,as well as in Paris, amounted to a total of nearly900,000,000 francs. The extending of the time of paymenthad been a necessity. When France was invadedby the enemy, when all able-bodied men were in thearmy, during the months when Paris was occupied, tradeand industries concentrated all their efforts in providingfor everybody in general and for the troops in particular.So payments had to be postponed, and laws and decreeswere made to extend the rights of creditors up to the1st of July, 1871. The Bank of France seemed destinedto be affected by these measures and to run therisk of heavy losses. The commercial bills, which werepart of its "portfolio," and payment of which was extendedfrom August I 3, I 870, to July I 2, I 871, amountedin Paris to 630,000,ooo and in the provinces to 238,760,000francs.Repayments made before the expiration of the last ex-tension -...-----...-----.---------------------.--361.000. ooo 234,673,500Remaining due with additions in 1872 ---- ----------.--273.3 12, oooRepayments in 1872 _-.__-----..................... ~66,520, oooRemaining to be collected .....................6,792. ooo4,272,0003.549.500722,500There were other additions in 1873 and in 1874, but inthe end the Bank lost not more than 7,000,000 of the868,000,000 francs of bills on which the time of paymenthad been extended. That represents a loss of about 0.8per cent which, under the circumstances, was very small.Assuredly it is well to note that the Bank of Francediscounts only first-class paper, with three signatures, ortwo signatures with collateral security. Many of itscommercial bills were bills rediscounted for bankers.Still, in view of the disasters France had then suffered, itis evident that the slight loss in discounts shows strictregard for meeting payments in commercial and industrialcircles. Discount, moreover, in France is always a verysafe banking operation, provided it is carefully watched.The material for discount is good; as a result of the qualitiesof prudence inherent in the character of the people,even the smallest shopkeepers are mindful of the bills theyhave to meet and honor them.The Bank of France-thanks to the successive extensionof its right of issue to 1,800,000,000 francs, then to2,4oo,m,m francs, soon after to 2,800,000,000, andfinally to 3,200,000,000 francs in July, 1872-was able tomeet the monetary situation and the needs of credit.