Reminiscences of Prince Talleyrand, Volume 2 (of 2)

by active 19th century M. Colmache

“But, it may be said, the bank would in that case make no profit. To this I reply, that the chief object of the protection which the government or the nation may grant to a Banque de Secours, is not to enable those holding an interest in the bank to make, under all possible circumstances, considerable and uninterrupted profits. Undoubtedly the nation should desire to see the bank prosper, because it is by profit alone that the interested parties can be induced to maintain an establishment of the sort, and because the existence of such an establishment is useful in a state; but the nation has no interest in desiring more than that the shareholders should make such profits as are sufficient to induce them to carry on the bank.”

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“At periods when confidence is shaken, it is necessary for a public bank to restrict its operations. The directors of such an establishment would be very imprudent, or even culpable, if, instead of resigning themselves to bear their portion of the misfortunes of the times, they were to persist, contrary to the natural course of things, in giving always an equal extension to their operations, at the risk of being at length compelled to come to a stop.

“The Caisse d’Escompte seems to have fallen into some of these difficulties, and to have failed to recognise the fundamental principle of all banks, which consists in never failing to meet engagements.”

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“The Caisse d’Escompte has undoubtedly transgressed the rules prescribed to it; and yet it is, perhaps, allowable not to weigh its conduct in an ordinary balance. It had furnished money which, doubtless, it had not the right to furnish, because it did not belong to it; but it has given that assistance in a crisis which has baffled all human foresight, and out of deference to a minister in whom the nation has so justly placed confidence. It is not necessary that the Assembly should convert the Caisse d’Escompte into a national bank, but it is unquestionably necessary that it should keep account of its advances with the Caisse.”

“M. Necker’s suggestion on this point does not, I must confess, appear to me to attain the object desired. I can recognise no real payment in paper-money, or, if there is a real payment, I see in it a preference accorded to the Caisse d’Escompte, which may have the appearance of an injustice to the other creditors of the state. Why create a paper-money specially in favour of the Caisse d’Escompte, and leave other parties to suffer whose claims upon the nation are at least as sacred?”

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“The claims of the Caisse d’Escompte are not less sacred than those of others, I grant, but neither are they more so. I will not, therefore, recommend you to create paper-money for the other creditors, as well as for the Caisse, but I would conjure you not to create it at all. The inevitable effect of all paper-money is, as you know, the rapid disappearance of cash. The fictitious currency drives away the real; and as the former can never be a perfectly exact representation of the latter, it happens that it drives away far more than it replaces. From that moment the paper no longer maintains an equality with cash; it falls below par, and hence the most fatal consequences. All the creditors who receive payment in notes lose the difference, while, on the other hand, all the debtors to whom cash had been advanced, gain the difference, and hence arise a destruction of property and a general want of faith in payments—a want of faith the more odious as it has the sanction of legality. Moreover, as soon as one set of engagements between individuals is settled, fresh ones will be formed, or there would be an end of all business transactions; and here recommences, in an opposite direction, an operation no less fatal, no less convulsive, by which the creditors, in their turn, will ruin the debtors. Fearing a repayment in notes, and adding by anticipation the present loss upon those notes to the still greater loss which they expect may afterwards be incurred, they swell out their claims to an unreasonable extent. Thus they entail the ruin of their debtors when the time arrives at which there shall be no more notes, or when confidence shall have brought them to an equality with cash. It is evident that this is not a reparation of the injustice first alluded to, but an entirely new species of injustice, inasmuch as there is neither the same proportion, nor the same contracting parties, nor the same engagements.”

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