236 



BANK. 



Edirl* lence. At this period, the public credit of France 

 was at its height j but it soon experienced a reverse, 

 that involved thousands in misery and distress. 



Cardinal du Bois, and Other* of the ministry, who 

 envied or detested Mr Law, represented to the re- 

 gent that it was necessary, to equalize the value of 

 the paper currency and the coin, by either raising the 

 denomination of the latter to 180 livres the marc, or 

 reducing the former to one half. This absurd no- 

 tion prevailed in the council, and it was resolved to 

 diminish the value of the bank notes, and the India 

 Company's actions, that a just proportion between 

 them and the coin might be maintained. For that 

 purpose, an edict was issued on the 21st May 1720, 

 ordering that shares in the company should be imme- 

 diately reduced to 8000 livres ; on the 1 st July to 

 7500 livres ; on the 1st August to 7000 livres ; and so 

 on by 500 livres a month till the 1 st December, when 

 they were to remain fixed at 5000 livres. It ordered 

 also that bank notes should be reduced in the proportion 

 as 10 is to 8; but that on the 1st of July they should 

 be farther reduced ; those of 10,000 livres to 7500, 

 and so on monthly, at the rate of 500 livres, until 

 the 1st December, when they should remain fixed. 



This impolitic and disgraceful measure was ac- 

 companied with corresponding consequences. The 

 notes lost all credit, and the whole paper fabric, in a 

 moment, fell to the ground. Mr Law's system was 

 overthrown, and in its ruin, involved thousands who 

 had converted their property into bank currency, on 

 the faith of the declarations of government, which 

 had solemnly engaged, that whatever alterations 

 should take place on the coin, the bank notes should 

 always remain invariable, and be paid in full. 



At this time, the amount of notes in circulation 

 were not less than 2,235,085,590 livres, and as they 

 would not pass for any fixed value, the distress of the 

 public became extreme; so much so, that the people 

 were driven almost to despair, and threatened the 

 v.:y existence of the government. To alleviate, in 

 some degree, the calamities, which the regent and his 

 council had so imprudently brought upon the coun- 

 try, the bank, which had been shut on the 27th May, 

 under pretence of examining the accounts, was again 

 opened on the 10th June for the payment of notes 

 of 10 livres ; and notes of 100 livres were to be 

 changed into small notes, but only one to be brought 

 by each person coming for that purpose. The 17th 

 Julv was appointed for the payment of notes of 100 

 livres ; but the concourse of people who wished to 

 exchange notes was so great, and so many obstruc- 

 tions were thrown in their way, that a scene of riot and 

 confusion took place, which was only suppressed by 

 a military force. 



To absorb, however, the immense quantity of pa- 

 per with which France was deluged, government had 

 recourse to the plan of granting annuities to the hol- 

 ders of bank currency. Accordingly, 25,000,000 of 

 perpetual annuities at the rate of forty years pur- 

 chase, and 4,000,000 on livres, at twenty-five years 

 purchase, were constituted. Books of accounts cur- 

 rent, and transfers of 600,000,000 were opened at 

 the bank, and in August, 8,000,000 more of perpe- 

 tual annuities, at the rate of fifty years purchase, 

 were issued. By these methods, it was expected that 



2000 millions of notes would be retired; but not- Bank.- 

 withstanding the discredit of the paper currency, the ' > ' 

 unfavourable nature of the terms made several people 

 hesitate. It was therefore thought necessary to pub- 

 lish an edict on the 15th August, that note* of 

 10,000 and 1000 livres should have no currency ex- 

 cept for the purchase of annuities and bank accou; 

 or for the supplemental payments directed to be 

 made on the actions ; and by a subsequent edict, all 

 payments in notes were prohibited on the 1st of No- 

 vember 1720. 



Thus terminated Mr Law's celebrated banking 

 system, which, though founded on principles calcu- 

 lated to ensure its stability, could not resist the 

 folly or perfidy of a despotic government. But 

 France had reaped 3ome advantage from its establish- 

 ment, in her agriculture, her manufactures, and com- 

 merce; and the people had in general become more 

 industrious and better acquainted with the principle* 

 of trade, in consequence of the abundance of the cir- 

 culating medium, which this establishment had af- 

 forded. 



It is unnecessary to pursue our inquiries, as to the Bank of 

 banking establishments of the French, through the France, 

 period of the revolution; as a new and important in- A.D. 180 

 stitution for that purpose, under the sanction of the 

 Imperial Republic, has superseded all others in 

 France. 



The regulations of this bank were decreed by tl^e 

 law of the 24th Germinal, year XII. (1801),' and 

 are as follows : 



1. The association formed in Paris under the title 

 of the Bank of France, shall have the exclusive pri- 

 vilege of issuing cash notes upon the conditions men- 

 tioned hereafter- 



2. The capital of the bank shall consist of 45,000 

 shares, at 1000 franks per share, ( 1,800,000 ster- 

 ling, at 25 franks for 20s. English) as primitive ca- 

 pital, subject to increase through the medium of re- 

 served funds. 



3. The bank shares shall be filled up with the 

 name of the holder, and not be made payable to 

 the bearer. 



4. The amount of each share shall not be less than, 

 500 franks. 



5. The bank shall discount bills of exchange* 

 notes, or bonds. The bank, however, shall not carry 

 on any kind of commerce except in money matters ; 

 neither shall it discount any but such bills, Sic. as it 

 shall dtem good, or conceive real value to have been 

 given for. 



6. Discount shall be charged in proportion to the 

 number of days the bills, &c. shall have to run. 



7. The being a stockholder shall not be consider- 

 ed as bestowing any particular right to, or exemption 

 from, discount. 



8. The annual dividend, computing from the 1st 

 Veudemiaire, 13th year, shall not exceed 6 per cent., 

 and shall be paid half yearly. The benefits over and 

 above the annual dividend shall be converted into 

 funds of reserve in the 5 per cents, consolidated. 

 The dividends of the last six months of the year XI. 

 shall be regulated according to ancient usages of the 

 bank. The dividend for the year XII. shall not ex- 

 ceed 8 per cent. 



