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The Outbreak of the War in France This long discussion of French banking before FREE BANKING BOOKS the war has been necessary for an .understanding of the course of events since the war began. And it has been particularly necessary since much of what has been written in America about French banking has been based on an uncritical acceptance of the encomiums which much of French financial literature has for decades been pronouncing upon the French system.{GOOGLEADS} As regards the Banque de Fran~e, these encomiums have been deserved. But serious reservations must be made for not a few of the great credit houses. For two years before the war France had been suffering from depression,t growing in no small part out of the general policies which we have been discussing.FREE BANKING BOOKS PDF French industry was languish­ ing. The bourse was sagging and breaking under the discovery that many of the foreign loans were precarious. The Balkan wars had weakened the market in ,Balkan securities and had led to further apprehensions of war. The state too had had its share in FREE BANKING STUDY MATERIALS bringing about the depression. FREE BANKING BOOKS DOWNLOAD PDF The French Government, under the influence of radical parties, had been increasing its budget rapidly, and the public debt was very heavy-well over thirty billion francs-five times that of. Germany and twice that of England. '(This comparison is unduly favorable to Germany, since German municipalities, especially the smaller cities, had much heavier debt burdens than French municipalities.) BANKING BOOKS 2017-2018 3 Fur­ ther, there was great political instability throughout the first hal f of 1914. Ministries were dissolving frequently. The passage of the, budget was delayed long beyond the normal time. The radical 2 1 London Econo'l11iist, August 15, 1914, page 321; ibid., Supplement, Decem­ ber 19, 1914; ibid., June 13, 1914, page 1444; ibid., July 18, 1914, page 125. Die Bank, June, 1914, page 703. Laughlin, J. L.: Credit of the Nations, New York, 1918, page 156. 2 Laughlin, Ope cit., p. 155.

 EFFECTS OF THE WAR ON MONEY, CREDIT AND BANKING parties were insisting BANKING STUDY MATERAILS on bringing in the dreaded income tax, and additional ta~es on securities, as a: means of financing new social legislation wi thout further reliance on public loans. It is not easy for an American or English student to understand how dreadful this proposal appeared to the more conservative elements in France. But one who will run through the editorials of Paul Leroy-Beaulieu in the Economiste Fran(ais for the first hal f of 1914 may well get the impression that the end of the world was at hand. At all events, fear of taxes was clearly a great factor in the depression, and it is well to understand this attitude in evaluating French financial policies during the war EXAM PREPARATION & TUTORING period which follows. On July 1, 1914, there were only 116 blast furnaces in opera­ tion in France,. Fifty furnaces were shut down.! Manufacturing output in many lines was curtailed. The weather in July was causing serious ~pprehensions regarding the crops. The Balkan state securities had fallen on the bourse. The March, 1914, option in coffee in New York fell to a low of $.0579 per pound, while similar prices prevailed at Havre (as against a range of FREE DOWNLOAD FOR PDF from 8~ to 14 cents in lD13). This, with other difficulties, precipitated a crisis in Brazil, withgreat.weakness in Brazilians on the Paris bourse, and there was weakness in Argentine securi­ ties as well. Mexican investments were ~eld largely in France,{GOOGLEADS} and Mexico was in chaos. Late in May and early in June, largely as a consequence of the weakness of these securities, those banking houses which had been most responsible for them were in serious troubles. Runs were started. The Societe Generale was hardest hit, though some other houses were also affected. Wild rumors were going about. In this situation, the Societe Generale took the unprecedented step of asking the Banque de France to send its accountants to go over the portfolio of the Societe Generate. This was done, and a reassuring statement was made by the Banque de France, \vhic