The French Provincial Banks, the Banque de France, and Bill Finance, 1890-1913

In common with many of the economies of continental Europe, France experienced a surge of expansion during the quarter century before the First World War, with real GNP per caput rising from Ff. 635 in i890 to Ff. 920 in I9I3 2 This material progress was accompanied by the application of new technology, the growth of industries, and the emergence of new industrial regions. Such developments, which have been considered to be the basis for secular change running until the mid-twentieth century,3 raise many questions. One concerns how these new initiatives were financed, and this article examines aspects of this issue. It finds that a significant contribution was made by the use of accommodation bills discounted by numerous provincial banks, both private and joint stock. These are normally financial characteristics of the earliest stages of industrialization, rather than of an economy approaching maturity. Furthermore, the provincial banks were aided in this aspect of their business by the assistance of the 'central bank'. The Banque de France, certainly from the first decade of this century and as a matter of deliberate policy, attempted to expand the amount of discounting engaged in by its provincial branches for private undertakings. The Banque de France was restricted by statute to discounting bills of exchange and promissory notes with maturities not exceeding three months (Article 9), and bearing at least three 'good' names (Article ii). These constraints meant that, from its foundation in i 8oo, the Banque was confined to re-discounting for other banks. To conclude from that fact that the Banque merely provided short-term finance, as the Bank of England did, would be misleading. In practice the conduct of the Banque de France's