From 1793 to the latter part of 1796, banking can hardly be said to have existed in France. The government tolerated no issue of paper except its own; the Caisse d'Escompte, which for many years before had been the only public bank, had been suppressed, and the times were too disturbed for private banking to flourish. With the disappearance from circulation of the assignats, and of their successors, the mandats territoriaux, the issue of notes appears to have become a matter of common right, to be undertaken by anybody who could gain the confidence of the public; and accordingly a bank of issue called the Caisse des Comptes Courants was organized in Paris in the last half of 1796, and began its operations with fair success. Two others of some importance were established by the year 1800, besides some smaller ones of which little is now known; and in Rouen a bank of discount and issue was in active business as early as 1798. It is clear that, with the return of orderly government and the revival of credit, the need of banks began to press.

Under these circumstances the Bank of France was also established in Paris in 1800, with the encouragement of the government and even with the First Consul as one of its stockholders, but still upon a footing not essentially different from that of its neighbors. Its capital of 30,000,000 francs was the largest yet proposed, and the difficulty for raising it led to a fusion with the Caisse des Comptes Courants, but no monopoly was created. One public bureau, holding a large amount of funds, was required to invest them in shares of the new bank, and large deposits were made in it by the government; still, although favored, the Bank of France stood legally upon an equality with the rest and nothing more.1 So far it might be said that the field was open in France for a wide and free diffusion of banking facilities, and that by the new establishment the government pointed out the way for its citizens.

In 1803, however, Napoleon announced a complete change of policy, and the Bank of France was endowed with the exclusive privilege of issue in Paris2 until September 24, 1818, and its capital was raised to 45,000,000 francs.1 All other issues of notes were at once withdrawn, one of the rival banks in Paris was absorbed by the rising monopoly, and another assumed for a time the humble place of intermediary between the great bank and its less important customers. No provincial bank could thereafter be established except by authority of the government. Under this arrangement, and notwithstanding the provision that no notes should be issued in Paris for less than 500 francs, the circulation of the Bank rapidly increased with its expanding discounts. It is plain in fact that the strong preference of the public for bankcredit in the form of notes left but a narrow field for those banks which could only open deposit accounts, and justified the government in its opinion of the importance then to be attached to the right of emission. And the fact that in the existing state of things, with the existing habits of business, credit in the form of notes was so strongly preferred gave to the monopoly of the Bank an influence on the future history of banking in France far beyond that which a similar monopoly could have exercised in the same years in England.

1 Courtois, Histoire des Banques en France, pp. 108-112. The articles of association, containing the statutes of the Bank, adopted by the shareholders at the start, are in the Moniteur, 5 Pluv. VIII. (25 January, 1800).

2 Banks of issue could be formed outside Paris with the consent of the government, but none were established until after the Restoration. For evidence of the active hostility of Napoleon towards. other banks of issue, see Courcelle-Seneuil, Traite des Operations de Banque, p. 216.

Although the Bank of France still chose its own officers and enjoyed a nominal independence, it was now becoming involved in the bold operations of the French Treasury. Complications thus arising reduced the cash in the Bank, in the latter part of 1805, so far that it was found necessary to limit the redemption of notes to 600,000 francs daily, until such time as specie could be collected in sufficient quantity for complete resumption. The result of this crisis, however, was not to separate the Bank from the government, but to connect them still more closely; and in the spring of 1806 a measure was therefore adopted which definitely settled the character of the Bank as a public institution, but without any alteration in the essential principles of its organization as a bank. By the doubling of its capital and the extension of its privilege to 1843,1 not only its preeminence in the financial affairs of France, but its absolute importance in the European world, was assured, so far as depended on legislation. At the same time the direction of the Bank, hitherto confided to a board of regents chosen by the stockholders, was transferred to a governor and two sub-governors, to be nominated by the chief of the state. Under a government not inclined to use power for its own ends, this species of control might easily have become a mere trusteeship on the part of the state; under an emperor like Napoleon it made the bank an engine of the state, - a private corporation, indeed, as regards the legal ownership of its property, but a public office as regards the actual employment of the property. Successive governments in France have used this opportunity in different ways as the case has seemed to require; but such as Napoleon made the Bank, in pursuance of the law of 1806, it has remained ever since, - an institution subject to the control, and often available for the needs, of the government of the day.1

1 The law of 24 Germinal XI. (14 April, 1803) is in the Bulletin des Lois, and, with most of the subsequent legislation concerning the Bank down to 1857, is also given in Wolowski, La Question des Banques, p. 425. The statutes of the Bank of 1803 are in the Moniteur, 15 Brumaire, XII. (7 November, 1803).