France: Bank of France Capital Injection, 1805

After receiving the exclusive right to issue bank notes in Paris in 1803, the Bank of France became a significant source of funding for the French government in early 1805, as Napoleon prepared for a key battle of the Napoleonic Wars. In the first half of 1805, the French treasury paid back loans with notes with later maturities rather than metallic money, draining the metallic liquidity reserves of the Bank of France far below levels that bankers at the time considered prudent. After the circulation of an unfounded rumor that Napoleon himself had raided the metallic reserves for the war effort, a bank run occurred in fall 1805, and the Bank did not have enough metallic money to satisfy note redemptions. The Bank used a limit on redemptions, the sale of assets, and various other methods of procuring metallic money to navigate the panic. After stability returned, the government passed a law on April 22, 1806, that authorized the Bank to double its capital to 90 million French francs (FRF) by creating 45,000 new shares valued at FRF 1,000 each. The law also created the position of Bank governor and two deputy governors and changed the process of calculating dividends. On August 5, 1807, the government purchased 30,000 shares at a rate of FRF 1,200 each. The public showed little interest in the remaining 15,000 shares, forcing the Bank of France to secretly buy back 8,209 shares. In 1810, the outstanding shares of capital totaled 81,746, its highest point until further capital increases later in the 19th century.