ciation a credit and facilities which they could not have procured by any other means. The example was soon followed. Some merchants of Paris established likewise a commercial bank to discount the bills of its share-holders. The manufacturers, impelled by the same motives of personal interest, opened a bank to procure cash in cases of need. Some speculators even established a land-bank to restore private credit, which had been entirely destroyed by a fatal paper-currency. These heterogeneous establishments, different in their object and views, which performed but imperfectly the functions of banks of circulation, being founded upon a system of exclusion and limitation, restored however to circulation the active and productive movement which it had been deprived of for a great length of time; they recalled the nation to labour, industry, and those commercial speculations, which render modern nations flourishing and prosperous, establish order and peace among individuals, and ground the splendour and power of empires: though devoted to private interest only, they forwarded the interests of all. Each of these banks experienced a different fate. A defective administration, and the infidelity of one of its principal agents, shut up the bank of running or current accounts ; ao resource was left to Commercial credit but in the commercial bank, and in the bank of the manufacturers, whose means were not very extensive. f In the eighth year of the French republic (1800–

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1801), a joint-stock company established, under the protection of the consular government, a bank called the Bank of France, which comprised in its speculations the totality of the commerce of Paris. The existence of a general bank and of two private banks guided by the same spirit and directed to the same end, was a singular and remarkable phenomenon in the system of banks of circulation. They first moved one by the side of the other without injuring and apparently without troubling each other: but it was not long ere the nature of things and the force of human passions triumphed over disinterestedness and the love of public good. Each bank experienced the torments of competition ; each saw with sorrow that the bank-notes of its rival were substituted for its own, and that its discounts were limited by those of its competitor; they discounted more readily, and sent each other, their notes to get them exchanged in specie. Hence, each bank was obliged to keep a more considerable stock of metallic currency at hand, that they might not be caught unprovided; hence originated mad speculations, and venturesome or badly devised undertakings, the bad success of which shook commercial credit and kept it in a precarious state. The unbounded extension of discounts afforded also to the share-holders of these different banking establishments dividends so considerable, that it was difficult, not to say impossible, for the nation to lower the rate of interest and to attain a secure and lasting prosperity. Considerations of this kind induced government to suppress these different banking establishments, and to erect in their stead a general bank interested in the rise of public stocks. I shall not enter upon the examination of these various measures; the digression would carry me too far from my object. I shall only cast a rapid glance upon the operations which the bank of France published in the public journals, and point out their conformity or disagreement with the regulating and fostering principles of banks of circulation. At that time, the bank of France had two kinds of capital stock; the one disposable, which amounted to forty-five millions of French livres, arising from the sums advanced by its share-holders; the other, vested in the public funds, and proceeding from successive reserves of its dividends, consisted of about six millions of French livres; consequently, the whole capital stock of the bank amounted to fifty-one millions of French livres. §With this capital, the bank of France, in the thirteenth year of the French republic (1805–1806), discounted commercial bills of exchange amounting to six hundred thirty-three millions of French livres. As the discount was for bills drawn at sixty days, it was repeated six times a year, and consequently each occasioned the issue of bank notes to the amount of one hundred and five millions of French livres: but as, at the end of sixty days, the payment of the discounted bills of exchange restored its own notes or specie to the bank, it follows that the six annual discounts put no more bank-notes into circulation, than to the amount of one hundred and five millious of French livres. This proportion of the circulating notes to the capital stock of the bank was not too considerable ; on the contrary, it was greatly inferior to what it might have been. But, as was justly observed by the censor of the bank in his report, the exact limits of discounts are those fixed by the wants of the place and the different public services. Consequently, the bank could neither be blamed for not having enlarged its discounts, nor applauded for not having circulated a larger amount of notes. It appears that the bank made no distinction between the private discounts of the trade of Paris and those required for the accommodation of foreigners, and the merchants of the several French departments or provinces; and yet the difference between such discounts is very material and of the utmost importance for the bank. Before I account for this difference, I shall attempt to state the extent of these various discounts. The commerce of Paris, before the revolution, might amount to about five-hundred and sixteen millions of French livres, of which two-hundred and fifty-eight millions were for its own consumption, and the same sum at least for its productions or the income of its inhabitants. It appears from the accounts of the president and the censor of the bank, that this commerce, either of consumption or of productions, and this income, did not at that time exceed 328,500,000 French livres: I ground my assertion on the following circumstances. The two reports state, that the daily exchange of bank-notes for specie amounted to 4 or 500,000 livres, the average of which sum is 450,000 liwres a day, and for three-hundred sixty-five days 163,250,000 livres. Now, it is certain that, in ordinary times, banknotes are exchanged for specie merely for wants of consumption, and rarely exceed their amount. Whence it may be inferred with some certainty, that the total amount of the consumption of Paris never was much above 163,250,000 livres : we will however rate it at 200 millions of livres, that we may not be accused of exaggeration. Admitting the consumption of Paris at 200 millions of livres, the income of its inhabitants must amount to the same sum, or else their expenditure would exceed their income, impair their capitals, and soon diminish the population of that great city. And supposing even that the expenditure had exceeded the income, and that the excess above it had been supplied by capitals, it would still follow that the expenditure, and the values destined to provide for it, constituted a total of four-hundred millions of French livres, and that this sum was or might have been the object and the result of the private trade of Paris. Supposing that the bank had discounted the whole of this sum, which is not probable ; the totality of its discounts relative to the private trade of Paris would not have exceeded four hundred millions of livres, or about sixteen millions sterling; and consequently, the

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