2 The annual reports of the Bank show that the average of bills discounted are for sums under 700 francs, and their average time of maturity about twenty-seven days. The policy of favoring the small trade of Paris was established by Napoleon in the statutes of the Bank in 1808, where it is provided that "il sera pris des mesures pour que les avantages resultant de l'établisse-ment de la banque se fassent sentir au petit commerce de Paris. ..." Some of the paper discounted by the Bank in masses for bankers and others is extraordinarily minute. In 1897 the minimum denomination of paper acceptable for discount was reduced by law from 10 to 5 francs. Over four million pieces under 10 francs were discounted in 1913.

That the small borrowers should be absolutely secured against a rising money market, even by such a system as this, is not to be expected. The intermediary who obtains his own loans from the Bank at a rate lower than that generally prevailing must still feel a strong inducement to raise the rate which he charges to his own customers. The tendency of such a network of established relation is, however, to moderate this temporary inducement and to secure for the small borrower a part at least of the relief afforded by the flow of loans at a steady rate from the great bank.

The term for which the law of 1857 continued the exclusive privileges of the Bank of France - or, to use the customary phrase, "extended the charter" - ended with the year 1897. A bill providing for a further extension was presented by the government in 1889 and reported by a committee in the Chamber of Deputies in 1891. The complete change which thirty years had wrought in the political, social, and financial conditions of the question caused the debate to take a wide range, and the project was still before the Chamber at its dissolution in 1893. The measure returned with some modification in 1896, and finally became a law, November 17, 1897, extending the charter to the close of 1920, but reserving to the legislature the power to terminate it with the year 1912 by a law to that effect adopted in 1911. The changes of 1897 and also those of 1911 were mainly designed to secure for the government a larger share in the profits of the Bank, and the wider diffusion of its branches and agencies throughout the country. No important alteration was made in the general structure of the Bank or in its administrative organization, It continues to be a bank of the primitive type, with no special provisions by law for the limitation of its liabilities, except the maximum arranged for its issue of notes, and with no provision as to any reserve to be maintained or for the special protection of any particular class of liabilities. In its government it is still where Napoleon placed it, under the immediate direction of a governor and two sub-governors, appointed and removable by the chief of the state, but aided by a board of fifteen regerits, who are elected by the two hundred largest shareholders, and whose action is subject to a veto by the governor.

Easily as the authority of the governor might seem to lead to the absorption of the Bank as a part of the political machinery of the state, the

Bank has for a large part of its life maintained a considerable degree of independence. Material changes in legislation and important financial operations for the benefit of the government have generally been the subject of treaty and agreement. Even at the crisis of the war of 1870-71, the aid given by the Bank was for the most part wisely measured with careful reference to the maintenance of the credit of the Bank as an independent institution. The law has from the first recognized the importance of guarding the Bank in this respect, by requiring that the governor shall at all times hold at least one hundred shares of its stock, and each sub-governor fifty shares. But the private interests of these officers, so far identified with the interests of the Bank, could not have protected it if the government of the day had not generally used great discretion and forbearance in their relations with it. The governorship of the Bank appears to have been treated but rarely as a political office, and has remained unchanged even by revolution. Whatever takes place in the political world, the Bank has been regarded and has acted as the supporter rather of government than of an administration, and has thus maintained an unquestioned credit, which is among the most valuable of the national resources for a great emergency.

In the repeated discussions which ended in the passage of the law of 1897, the plan of state ownership of the Bank was urged with great ability by a minority of the Chamber of Deputies.1 The arguments for and against the proposition turned for the most part upon the financial considerations bearing upon the absorption of functions by the state, and upon the expediency of altering arrangements found to work well in practice. It is interesting to observe that it was pointed out more than once by those who supported the bill as it was passed, that in case of invasion, a public bank, like any other public establishment, would be subject to seizure by a hostile army, and that a bank under private ownership would be exempted like other private property by the laws of war, and in support of this view the decision of the German government recognizing the immunity of the Strasburg branch of the Bank in the war of 1870 was cited with great confidence. The same arguments were used, mutatis mutandis, in the debates in the German Reichstag a year later, when the bill for extending the charter of the Reichsbank was on its passage and there also the question of absorption by the state had come up. Attention was called to the credit which the Bank enjoys by reason of its independent existence and it was stated by the ministry that provision had been made, by an agreement between the government and the Bank defining the kind and amount of support to be given by the latter in a case of public extremity, and affording what was described as "précieuses garanties." The terms and even the nature of this support were declared to be a state secret, no more to be made public than the contents of the arsenals, but the arrangement was vouched for by the ministry as sufficient.1 By a vote of 298 to 236 the Chamber refused to press for further information, and by nearly the same vote it rejected a proposition for placing the cash of the Bank and its right of issue at the command of the government to be used in the national defense in the event of a general mobilization.

1 The vote finally stood 114 for and 405 against ownership by the state. - Journal Officiel, June 10, 1897, p. 1451.

1 Since the outbreak of the European War, it has become known that the Bank had agreed to advance the State 3,000,000,-000 francs at one per cent, during the war and one year thereafter. In September, 1914, the amount of this advance was doubled.