Effects of the War on Money, Credit and Banking in France and the United States

By Benjamin M. Anderson | Go to book overview
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CHAPTER X
The Moratorium in France

In an earlier chapter dealing with the outbreak of the war we have seen how rigorous a moratorium was established in France and have seen something of the difficulties occasioned thereby. A distinguished French financial authority expresses the opinion that in the' absence of a moratorium on the bourse the general moratorium would have been unnecessary. Tying up the bourse made the position of the banks very difficult in view of the large amount of loans they had on stock exchange securities. This compelled the banks in his opinion to have recourse to a moratorium. on deposits and thus made it necessary for the general public to have a relief from the pressure of creditors. The weakness of the bourse was thus the crux of the whole matter.

The magnitude of the loans involved in the bourse settlement immediately preceding the outbreak of the war was about as follows:

On the ParquetFr. 600,000,000
On the Coulisse (curb) 150,000,000 to 200,000,000

with an additional 800,000,000 francs on exfra-bourse collateral loans confined to the banks and credit houses, presumably also "reports" or "contangoes" supposed to be liquidated at the same time that the bourse settlement was made. The Parquet was in even worse position than the Coulisse, since many of the Coulisse securities were still negotiable at London and Petrograd.1

It is interesting to contrast the position of Paris and London, where the fortnightly stock exchange settlement prevails, with that of New York, where daily settlements are made. The daily settlement in New York gives rise to a much greater volume of

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1
London Economist, November 14, 1914, page 883; November 21, 1914, page 921; Laughlin, op. cit., pages 157-158.

-122-

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