i9i r.] 



Credit Banks in France. 



847 



to cover the expenses of the local bank, and to enable it, if 

 possible, to accumulate a reserve. 



On granting a loan, the borrower is required to sign a bill 

 .in a negotiable form for the sum lent, and the bank generally 

 requires in addition either the guarantee of a second person, 

 who also signs the bill and makes himself responsible for 

 the payment, or, alternatively, the deposit of some definite 

 security. The duration of the loan varies according to the 

 nature of the object to which the money is to be applied. Thus 

 loans for the purchase of manures to be applied in the autumn 

 would be for one year, in order to allow the crop to be 

 gathered, while for manures applied in the spring as top- 

 dressings they would only be for six months; loans to enable 

 crops to be held over, instead of being sold at once, would be 

 granted for three months. The principle which is recom- 

 mended for adoption is that the loan should always be for 

 a specific purpose, and that payment should be made as soon 

 as the purpose is fulfilled. Loans should not be renewed or 

 extended beyond the time fixed, but this in no way excludes 

 a subsequent application for a fresh loan for some other 

 purpose. 



Regional or District Banks. — The district bank, of which 

 there is usually one to each Department, acts as banker to 

 the local banks within its area, discounts their bills, and 

 advances them money. The local banks are usually the prin- 

 cipal share-holders, and a substantial portion of their capital 

 is applied to this purpose. When the district bank has been 

 formed, it applies to the State for an advance, the amount 

 of which is limited to four times the amount of the paid-up 

 capital, but which may be any less sum. The district bank 

 would then be required to deposit a portion of this sum in 

 the form of Government securities, etc., with the Bank of 

 France to serve as a guarantee. The balance would be placed 

 in a current account. The regional bank would then be 

 in a position to commence operations by discounting the 

 bills of the local banks, and supplying them in this way 

 with the funds to advance to their borrowers. As far as 

 possible, this would be done from its own funds, but when 

 these were exhausted, the bills received would be discounted 

 at the Bank of France. The district bank naturally takes 



