Under these circumstances, what can the bank do? In the first place, it can utilise its powerful reserve which has been accumulated for this purpose. It can, in the next place, curb the action of the banks by competing with them when they appear to enter upon a dangerous course, and by showing them what steps to take.[171]
On the other hand, there is a whole series of operations which private banks do not undertake, or do not tend to develop as they deserve. Directed by self-interest toward the more profitable transactions, they somewhat neglect the others. The Bank of France finds no one engaged in these less remunerative operations, and is, moreover, the better able to undertake them itself, because they are not incompatible with the duties of a bank of issue.
Foremost, perhaps, among these operations is the popularising of credit by means of an ever increasing number of small loans, frequently accepting as pledge securities such as State rentes, bonds of the Crédit Foncier, of cities, railroads, and industrials. An enormous transfer business is also carried on for both banks and the public at very low cost. Moreover, the bank clears large sums, annually relieving the clearing house of this burden.
The small business man, much more than the small rentier, reaps continually greater benefit from the advantages offered to the public by the Bank of France. We shall here simply call to mind the dates of some innovations favorable to the democratisation of credit.
January 15, 1824.—Creation of transfer drafts.
April 29, 1824.—Creation of transferable certificates of deposit.
January 13, 1830.—Reduction of interest on loans against bars and coin from 4 per cent. to 1 per cent.
1834.—Loans against rentes and public securities.
1837.—Daily discounting of paper except on holidays.
Law of June 30, 1840, article 2.—Option of replacing the third signature, exacted for discount, by deposit of any French public securities.