1 In 1840 the privilege was extended to 1867, in 1857 to 1897, and in 1897 to the end of 1920.

In the closing years of the Empire this subjection of the Bank to the government caused a great increase of transactions with the Treasury, which became more and more compromising and finally far exceeded in amount the advances made to the commercial public. When, therefore, France was invaded by the allies in the winter of 1813-14, a run by the note-holders began, caused, it is probable, chiefly by the fact that the Bank appeared to have no independent existence of its own, and it again became necessary for three months to limit the amount of the daily redemption of notes to 500,000 francs. Full payment was resumed in April, 1814, but the settlement of the affairs of the Bank was pushed on both sides, until its loans were reduced to less than 3,000,000 francs and its circulation had fallen from 95,000,000 francs to 15,700,000.1 The enlarged capital of the Bank had been found, even in the latter years of Napoleon's reign, to be greater than could be used with profit, and the Bank had therefore, as early as 1812, made large purchases of its own stock. These were continued in 1816, until the capital was reduced to 67,900,000 francs, at which point it remained until 1848.

1 The statutes of the Bank, under the law of April 22, 1806, were established by the Emperor, January 16, 1808. See Wolow-ski as above, Bulletin des Lois, and Moniteur, January 18, 1808. In Block's Dictionnaire de l'Administration is a detailed account of the organization of the Bank. See also Say, Dictionnaire des Finances.

By the decree of 1808 the Bank had been authorized to establish branches comptoirs d'escompte, subject to approval by the government, plainly with the design of centralizing the banking interests of the Empire under the lead of the great Bank in Paris. Under this decree the establishment of branches in Lyons and Lille was undertaken, although with little success, and one was set in operation at Rouen. The Bourbon government in 1817 and 1818 closed these branches and established independent banks at Rouen, Nantes, and Bordeaux, giving to them the right of emission, and thus reversing the policy of Napoleon. The government of July, following a similar course for a time, established independent banks at Lyons, Marseilles, Lille, Havre, Toulouse, and Orleans, and also authorized the Bank of France to open branches in fifteen other provincial towns and cities, with the monopoly of issue for every place in which a branch was established. Vigorously pursued, this mixed system of branches and of independent banks might easily have been made the means of introducing banking facilities throughout the kingdom, to the great advantage of the country. But no strong policy was adopted; the government established new banks for a time with reluctance and under hard conditions, and after 1838 withheld its encouragement altogether; and the Bank of France, opening its branches fitfully and with little regard for public needs, seemed to prefer that affairs should drift.

1The Moniteur for January 31, 1815, contains a report by Lafitte, then provisional governor of the Bank, giving in some detail the operations for the year 1814. For tables giving the leading figures of the accounts of the Bank from 1800 to 1879, see Courtois, Histoire, pp. 344, 360.

The revolution of 1848 found in existence, then, the Bank of France, with its fifteen branches, and also nine independent banks of issue. No system of exchanges or of redemption at a common center had been adopted by the latter; even the branches of the great Bank redeemed each other's notes only at pleasure; so that France felt all the inconveniences of having many issues of notes with but local credit. The suspension of specie payment and the legal-tender power given to the notes of the Bank of France, and to those of the independent banks alike, added to the confusion, and in the spring of 1848 the provisional government finally cut the knot, by making all the independent banks branches of the Bank of France. Their shareholders, in exchange for their old stock, received shares in the Bank, and the capital of the latter was thus raised to 91,250,000 francs. At the same time the issue of notes of 100 francs was authorized and the total issue of the Bank was limited to 452,000,000 francs. Political and socialist agitation had destroyed all commercial confidence and a rapid liquidation went on; the discounts of the Bank fell off, specie flowed in, and in June specie payment was practically resumed, and the legal-tender provision might perhaps have been abrogated with safety, had the Bank been left to itself. The Treasury, however, was embarrassed, the Bank saw few opportunities of using its resources profitably, and advances to a considerable amount were therefore made by it to the government. Partly as a consequence of these advances the limit of the note circulation was raised in December, 1849, to 525,000,000 francs; and the suspension of specie payment was not ended and the legal-tender power of the notes destroyed, until August 6, 1850. By these means, aided by its own great prudence, the Bank not only passed through the gloomy years from 1848 to 1852 without serious loss, but continued when affairs were at their worst to earn a modest profit for its stockholders. Moreover, its monopoly of note issue had been reestablished in practically the form in which it had been projected by Napoleon, and all subsequent legislation has tended to strengthen the existing system.

A great expansion of the business of the Bank began in 1852. The coup d'état, which opened the way for a restoration of imperial government, at all events removed political uncertainty. Commercial confidence there upon revived, and the discounts and advances made by the Bank rapidly increased, and in 1853 touched a higher point than was ever before known. In view of the general expansion it is not surprising that in 1857 the government determined to double the capital of the Bank, raising it to 182,500,000 francs, at which it now stands. In return for the extension of its charter to 1897 the Bank was required to make a permanent three per cent, loan of 100,000,000 francs to the government, the entire amount derived from the issue of new stock which was taken by the shareholders at a premium. Perhaps the most important of the new features of the charter was the provision made as to the rate of discount. For the greater part of its existence the Bank had striven to maintain the uniform rate of four per cent. The statutes of 1808 had fixed at three months the maximum length of the paper to be admitted to discount, but in periods of difficulty the Bank had sometimes lowered this limit to seventy-five, sixty, and even forty-five days. In 1854, however, and for some years after, it tried at variable rate of discount, but then found itself hampered by a law passed in 1807, which made six per cent. the limit of legally chargeable interest. 'The charter of 1857 freed the Bank by special exemption from this restriction, allowing it to charge such rate as it might find advisable, with the provision, however, that the profits earned by charging a rate above six per cent. should not be divided but carried to a permanent surplus.