From this metallic base she increased her bills receivable by 3,000,000,000 francs, or about the same amount that the Bank of England discounted in pre-moratorium bills under the backing of the government. Each country took on $600,000,000 of mercantile credits, and both countries are now finding this item receding. In France the mercantile credits have been considerably reduced—the increase reduced nearly a half—because the men are at the front and business is not calling for the credits formerly in use.
The Bank of France also promptly advanced 8,000,000,000 francs or $400,000,000 to the government.
In the last few weeks of 1914 the finances of Russia, France, and Belgium became interlaced with those of England, and gold credits for the Allies' supplies were established around the world, shipments from North America going both east and west into the European war. Government credit with the Bank of France was then extended, but should not early in January have been more than $800,000,000.
This is the main financial assistance on which France for five months conducted a successful defensive warfare, with 1,500,000 men at the front and nearly 3,000,000 men behind them.
The next most remarkable financial feature in respect to France is that there has been no special financial legislation, in fact no financial legislation whatsoever, except the December budget vote to cover government expenses, including the war. A moratorium was set up by decree, but authorization for this already existed under the general laws. Under this moratorium payments were permitted at first of 5 per cent, then 25 per cent. Later depositors were permitted to draw from the banks 40 per cent, and 40 per cent payments became the rule. Then 50 per cent for December, and in January, 1915, full payment to bank-depositors, although legally the moratorium stands to March 1, 1915.
Among other temporary devices in French finance was the issue by French chambers of commerce in the south of France of small pieces of paper,—as low as 50 centimes or 10 cents,—used only for circulation and change locally.
Many banks closed their branches because they had not the clerks to man them. Many bankers lost three fourths of their staff when the mobilization orders were issued, and all over Paris the banks are closed from twelve to two because of the limitations of the staff. When the Crédit Lyonnais reopened its branch in the Champs Élysées a few weeks ago it was manned by women clerks.
The government loan issued in the summer of 1914 met less than half of the floating indebtedness and 1914 ordinary deficit. The balance as maturing has been merged into the national-defense loan, which is only short-term financing. On the 10th of December there were 1,000,000,000 francs of the new national-defense loan outstanding, but it was being subscribed for all over France daily. This national-defense loan consists of three, six, nine, and twelve months' government bills bearing 5 per cent interest. I figured that the amount issued December 10 was for the most part used to provide for the maturing floating indebtedness, and for the deficit on the government budget aside from the expense of the present war.
As the government is advancing money to Servia and to Belgium, the loan of 20,000,000 pounds, or $100,000,000, from England can be readily accounted for.
There were loans from the big banks of France for the government at the opening of the war, but these loans I was assured were all merged in the 5 per cent national-defense loans, which have not exceeding one year to run.