CREDIT FOR COI.ONIZATION 6l 



tion, linked without rigidit}' to the course of its business, therefore pro- 

 vides it with a precious instrument. Since gold does not circulate in the 

 colony, owing to the fact that the balance of trade with the mother-country 

 is against it and to native hoarding, the currency is exclusiveh' Algerian. 

 The notes are payable to the bearer at sight in silver. 



None the less there is exchange between Algeria and P'rance, the per- 

 fect equilibrium between the two monetary systems being due to a curious 

 mechanism created by an administrative convention. The Banque de 

 I' Alger ie has opened at the Treasury a current account into which agents 

 make payments and whence they make withdrawals. Owing to the costs 

 of military occupation public expenditure in Algeria has always exceeded 

 local resources. The Treasury would therefore have had frequently to 

 reinforce the credit it gianted, had not this been accomplished automatically 

 and simply b}- a utilization of sums placed at the Treasury's disposal by 

 Algerians for the payment of their foreign debts. The concentration of 

 these in the Banque de I'Algerie compelled this bank to become the inter- 

 mediary for pa^'ments in France, charging a moderate commission. In 

 virtue of this convention the bank must remit a bill on the home Treasury, 

 on demand, to anyone paying its amount, and such bill is covered by the 

 bank's credit account. As for Algerian debtors they receive for their own 

 bank notes a value which can be realized in France at par. In recent years 

 this system of direct remittances has been largely replaced by postal or- 

 ders which accrue to the Treasury's account bj^ the medium of post-office 

 receivers. Postal administration does no more than see that its receipts are 

 paid into the Treasury's current account at the Banque de I'Algerie, and 

 the latter is responsible for settling Algerian debts to the home country. 



From 1904 to 1913 the issues of the post-office exceeded the amount 

 of the payments in the form of postal orders by fifteen hundred million 

 francs, for which sum the bank became the Treasury's debtor. This debt 

 did not accumulate for the credit balance of the Treasury remained con- 

 stantly below a hundred million francs except in the crisis of 1912-1913. 



How was the bank able to free itself from the burden ? In the first place 

 the Treasury was obliged to ensure an average annual payment of one hun- 

 dred millions from the home budget, which represented in the period under 

 consideration relief to the extent of one thousand millions. 



For the other five hundred millions the bank was obliged, failing credit 

 in France, to utilize its debt in Algeria. This sum did not therefore leave 

 the colony but represents the new capital applied to its development. This 

 new capital has been transferred from France to Algeria by a stroke of the 

 pen , and has been obtained by drawing on the bank which is France's 

 chief debtor and which converts home funds into its notes. 



Thus the criterion according to which the Banque de I'Algerie regulates 

 the Algerian money market is perceived, the principle namely of avoiding 

 above all else the disproportionate growth of its debt to the Treasury. 



The Algerian banks are definitely neither agencies for managing de- 

 posits nor agencies for discounting paper. The}'' depend on colonization 

 and the amount of their business is proportionate to its progress. It is the 



