Private Banks and Savings Banks in France during the War
In earlier sections we have described in detail the character and operations of the great French private banks. We have seen that to a large extent their deposits represent actual savings by their depositors instead of being the consequence of loans made by the banks, and that in very considerable measure their business has consisted of selling foreign securities of their depositors, instead of promoting the industry and commerce of France . We have seen the poor quality of many of these securities and have seen the disastrous results that came from this policy, both in the period immediately preceding the war and in the period that followed its outbreak. Overwhelmed by a disastrous break in the prices of the securities in which they had been dealing and of which they probably held large amounts, the great private banks felt themselves helpless when the war broke out, largely ceased lending operations, rediscounted heavily with the Banque de France and hoarded the proceeds of their rediscounting operations. The first reports of virtually all the private banks after the outbreak of the war showed large declines in their balance sheets. It was still possible for most of them to show nominal profits and to pay dividends, but this is probably to be explained by the fact that in the period preceding the war they had accumulated large reserves of one kind or another which did not always figure in their balance sheets. The Comptoir d'Escompte, which had had a profit of 18,000,000 francs on its 1913 operations, showed profit of 11,000,000 francs on its 1914 operations. The Crédit Lyonnais had had profits in 1913 of 41,050,000 francs. Its 1914 profits were 14,000,000 francs. Its 1913 dividend was sixty-five francs. Its 1914 dividend was twenty-five francs.
At the outbreak of the war virtually all the private banks took advantage of the moratorium on deposits. On January 1, 1915,