"I. To discount bills of exchange and drafts to order, bearing the signatures of at least three French citizens or foreign merchants of acknowledged reputation and solvency.

2. To undertake collections for the account of private citizens and public establishments and to make advances in cases of such collections as may appear to be secure.

3. To receive, on account, cash deposits and collections in behalf of private citizens and public establishments, and to honor checks and drafts drawn upon the bank against the amounts standing to the credit of account-holders.

4. To issue notes payable to bearer at sight, and notes to order payable within a certain number of days after sight. These notes, as issued by the bank, shall be so proportioned to the reserve cash in the vaults of the bank, and with such regard for the maturing of negotiable paper held by the bank, that the bank can at no time be exposed to danger of delaying payment of its obligations when presented.

5. To open a Department for Investments and Savings, wherein all sums offered in excess of fifty francs should be received for repayment at stated periods."

The administration of the Bank was entrusted to a Board of Regents of fifteen members and a Board of Censors of three members, both to be appointed by the two hundred chief stockholders, and a Central Committee of three members to be chosen by the Censors and the Regents, which together constituted what was called the General Council of the Bank. The Regents were to hold office for five years, one-fifth retiring each year subject, however, to reëlection, and the Censors for three years, one retiring each year, but eligible for reëlection. The capital was fixed at 30,000,000 francs divided into 30,000 shares of 1000 francs each.

During the Napoleonic regime these original statutes were several times modified notably in 1803, 1806 and 1808. The chief provisions of the act of 1803, dated April 14, gave the new bank the monopoly of note issues in Paris;

prohibited the establishment of banks of issue in the departments without the authorization of the state; increased the capital to 45,000,000 francs; and provided that seven of the fifteen regents and the three censors be chosen from those stockholders who were manufacturers or merchants, and that a council of twelve stockholders engaged in commerce in Paris be selected by the Censors to give counsel and advice regarding discounts.

The act of 1806 was the result of a crisis through which the bank passed in 1805. Through bad management it became the possessor of a large amount of the paper of a firm engaged in furnishing supplies to the government and the failure of this firm obliged it to apply to the state for the privilege of temporarily suspending the redemption of its notes in specie. This request was denied but it was permitted to limit for a time the amount to be redeemed each day. This experience convinced Napoleon of the desirability of closer supervision of the institution by the state. The act of April 22, 1806, accordingly abolished the Central Committee in whose hands the direct management of the bank's affairs had been placed and substituted for it a Governor and two Sub-governors to be appointed by the Emperor. It further provided that three of the Regents must be selected from the Receivers General. The Governor was made the presiding officer of the stockholders assembly, of the General Council, and of all committees; was given the exclusive right to appoint and dismiss the clerks and subordinate officers of the bank; and his approval of all the paper admitted to discount was required. Among other important provisions was the requirement that the so-called statutes of the bank, i.e., the detailed provisions for its administration to be drawn by the General Council, must be submitted to the Emperor for approval and that the capital be doubled by the issue of 45,000 new shares.

The statutes of the bank under the new organization, approved by the Emperor in a decree dated Jan. 16, 1808, contain among other regulations, one permitting the substitution for the third signature, previously required on all bills admitted to discount, of collateral in the form of bank stock or of five per cent. consolidated state funds, provided the bill originated in a sale of merchandise, and another permitting the bank with the authorization of the Government to establish branches in the provinces. In accordance with this latter provision branches were authorized in Rouen, Lyons and Lille by decrees dated June 24, 1808 and May 29, 1810.

During the period which intervened between 1808 and the downfall of Napoleon in 1815 the fortunes of the bank were closely connected with those of the Government. Serious crises occurred in the years 1810 and 1814, the former one caused by the interference with commerce occasioned by the blockades, and the second by the first defeat of Napoleon. During both of these periods the bank held large quantities of government paper and its reserves ran low. In 1814 it was obliged to resort to the expedient adopted in 1806, that of refusing to redeem more than a small portion of its notes per day. In 1818 the bank also passed through a crisis occasioned by the operations of the Government in connection with the public debt. The Government of the restoration was unable at first to secure the confidence of the investing public, and therefore turned over to the bank the management and security of the public debt, granting to it as security the returns of certain taxes and a considerable number of bonds which it was authorized to sell in case of need. The bank thus undertook the responsibility of paying the interest on the debt and of carrying through measures for its refunding.

The experience of the bank during the last years of the

Napoleonic regime convinced it that close connection with the Government was on the whole disadvantageous, and that it would gain from a reduction of its capital and the closing of its branches. It accordingly petitioned the new Government for permission to close its branches, to reduce its capital to 67,900,000 francs, and to make such modifications in its organization as would put its direct management in the hands of representatives of the stockholders, reserving to the Government simply the right of supervision. The first two of the bank's requests were granted, and accordingly the three branches were closed and a sufficient quantity of the Bank's stock purchased to reduce the capital to the desired figure.

2. Banking in the Provinces.-The closing up of the branches of the Bank was accompanied by the authorization of independent banks of issue in a number of the cities of France. In the year 1817 one such bank was opened in Rouen, in 1818 two were opened at Nantes and Bordeaux respectively. For many years, however, provincial banking remained chiefly in the hands of private bankers where it had been since the beginning of banking operations in the middle ages. It was these bankers who served as intermediaries between the lesser merchants and the Bank of France, supplying the third signature required on bills admitted to discount by that institution. Their unreliability in times of crisis, however, was illustrated during the revolution of 1830 when they temporarily withdrew from business and left the mercantile classes without the credit accommodations necessary for the conduct of commerce. On this occasion the government of Louis Philippe came to their aid by the establishment of local discount offices called Comptoirs de'Escompte, and this experience directed attention to the need for better banking accommodations in the provinces. In 1835 two additional local banks of issue

were established at Lyon and Marseilles, and in 1836 the Bank of France petitioned the Government for permission again to open branches and for the exclusive right to issue notes in all places in which such branches should be established. The Government acceded to the Bank's request, but continued also the policy of organizing independent banks. In 1836 branches of the Bank of France were opened at Rheims and Sainte Etienne, and in June of that year and August of the year following independent banks were organized at Lille and Havre. In Oct., 1837, and Jan., 1838, branches of the Bank of France were opened at Saint Quentin and Montpellier, and in June and November, 1838, independent banks were opened at Toulouse and Orleans. A tenth independent bank was authorized at Dijon Aug. 4, 1839, but it was never put into operation. Branches of the Bank of France were organized in 1840 at Grenoble and Angoulème, in 1841 at Besançon, in 1842 at Caen, Châteaureux and at Clermont-Ferrand, in 1844 at Mülhouse, and in 1846 at Strasburg and Le Mans.

3. Effects of the revolution of 1848.-At the time of the outbreak of the Revolution in 1848, there were in operation in the departments eleven branches of the Bank of France, and nine independent banks of issue. As a result of the Revolution the Bank was obliged to suspend specie payments, and by an ordinance of the Provincial Government its notes were made legal tender throughout the country, on condition that they should not exceed in magnitude 350,000,000 francs. The nine departmental banks were also permitted to suspend payments, and their notes were made legal tender in the departments in which they were located. During the period of enforced circulation of bank-notes which followed, the advantages of the monopolization of the issue function by a powerful central institution were revealed in an impressive manner. The issues of the local