In France, the Bank of France is the central institution. It is the oldest of the important French banks of the present day, having been established in 1800 by Napoleon the First. Its capital, amounting at the present time to 182,500,000 francs, or approximately $36,500,000, is supplied by about 30,000 private stockholders, about 10,000 of whom own only one share each.
The two hundred largest stockholders appoint a General Council, consisting of fifteen regents and three censors. Five regents and all the censors must be chosen from the commercial and industrial classes, and three of the remaining ten regents must be selected from the tresoriers payeurs généreaux, an important group of representatives of the public treasury scattered throughout the country. The General Council as well as the stockholders' assembly is presided over by a governor, who, together with two sub-governors, is appointed by the President of the Republic upon the nomination of the Minister of Finance. The governor is the chief executive officer of the bank and the final source of authority in most matters of vital importance. He is responsible to the government rather than to the stockholders, and is subject to removal only by the power which appointed him.
The Bank of France has about two hundred branches and sub-branches located in Paris and all the important cities and towns in the Republic, also over three hundred so-called agencies located in smaller places and transacting only a limited line of business. Each branch has a manager appointed in substantially the same manner as the governor, and the sub-branches and agencies are administered through the branches. Through this network of offices, every part of the country is brought into direct and easy access to the Bank.
The Bank of France is the only institution in the country privileged to issue circulating notes. The maximum allowed it is regulated by law and is increased from time to time. At present it amounts to 5,800,000,000 francs, or approximately $1,160,000,000. The bank is obliged to redeem these notes on demand in gold coin or silver five-franc pieces, but it is free to determine how much cash it shall keep on hand for that purpose, and when and under what conditions it shall issue them.
Its discount operations are limited by law to bills maturing in not more than three months, and bearing the signatures of at least three solvent persons, or two signatures and secured in addition by specified forms of collateral. It is also permitted to make loans or advances, as they are called, on securities of the French government maturing at fixed dates, gold and silver bullion, and the money of foreign countries, and obligations of the French railroads, French cities, and departments, the Crédit Foncier, and the Société Algerienne. It is also obliged to loan 180,000,000 francs ($36,000,000) to the government without interest.
One of the chief branches of the business of the Bank of France is the service of the public treasury and the performance of other financial duties imposed upon it by the government. It serves as the depository and disbursing agent for the government, and performs important functions connected with the public debt, the mints, the savings institutions, and publicly administered trusts of various kinds. It is also the depository for the banking reserves of the country. In France, as in England, it is not the custom of banking and other financial institutions to hoard money in their vaults, but to depend upon the Bank of France for supplies as needed. To this end they keep funds on deposit there, and regularly rediscount the paper of their customers when balances need to be replenished.
Through its network of branches and agencies spread over the entire country, the Bank of France is able economically and expeditiously to conduct the intermunicipal exchanges of the country. It participates in local clearings through membership in the clearing houses, at which balances are paid by checks drawn against credits on its books maintained for that purpose by all members, and it conducts so-called transfer accounts with other banks and financial institutions against which drafts can be drawn payable at any place where one of its offices is located. Such drafts constitute the chief means through which transfers of funds are made between different places.
The business of the Bank of France with private persons is limited by the requirement that all paper discounted must have three signatures, or two signatures and collateral security, and that advances can only be made on the security of the forms of collateral indicated above. Most business men find it either inconvenient or impossible to comply with these conditions, and consequently transact most of their business with other banking institutions. The third signature on paper discounted by the Bank is, therefore, usually supplied by these institutions, which thus act as an intermediary between the Bank and the commercial world.
Next to the Bank of France, the most important banking institutions of the country are the Crédit Foncier, the Crédit Lyonnais, the Comptoir d'Escompte de Paris, the Société Générale, and the Crédit Industrielle et Commercial. The Crédit Foncier is principally engaged in extending credit based on real estate security, but it also discounts large amounts of commercial paper. Its organization is modeled after that of the Bank of France, and, like that institution, it is controlled by the state. Since it is primarily an investment bank, a description of its principal operations will be deferred to the next chapter.
The four other banks mentioned are a product of the commercial life of modern France, all having been established since the revolution of 1848. They are all heavily capitalized, the smallest, the Crédit Industrielle et Commercial, having a capital of 100,000,000 francs ($20,000,000), and the largest, the Société Générale, having a capital of 400,000,000 francs ($80,000,000), and all extend their business by means of branches. The Crédit Lyonnais and the Comptoir d'Escompte have branches in France itself, the French colonies, and a number of foreign countries; the Société Générale, throughout France, in London, and San Sebastian, Spain; and the Crédit Industrielle et Commercial, in Paris and its suburbs. Taken together, these four institutions supply the French people in Paris and the Provinces with banking facilities for both their domestic and their foreign business. While in some of the larger provincial cities local banks with branches in surrounding towns and sometimes in Paris are to be found, branches of one or more of these four institutions are the chief reliance in nearly all places.