securities that the general public, in the uncertainty of the ini- tial days, was in no hurry to purchase. This, combined with the strong fears sparked by the outbreak of war, understandably led banks to endorse the implementa- tion of a moratorium (i.e. the suspension of debt repayments), even though the perils of such a measure had been observed during the Franco-Prussian war of 1870-1871.

War, the rise of banks and the decline of the financial markets

French banks were among the world s largest, strongest and above all most liquid ones. The leading institution, Banque de France, served as the general gold reserve (used to make inter- national payments at the time), the supplier of banknotes and a vigorous competitor. This position allowed it to influence the entire banking system, thereby contributing to moving the sec- tor towards short-term and cash funding. Thus, the long-term funding of companies as well as governments used a different circuit: the Paris financial market. Second worldwide in terms of volume and business, right behind the City in London, it ran- ked first for loans to governments, ie the bonds that made up private wealth in 1914. In simpler terms, bank loans sustained trade and the working capital of companies, while the financial market supplied long-term public and private capital. This financial market, centred on Paris, was especially dynamic in 1914 due to the mass of loans issued, the volume of capi- tal available (via the structural surplus of the balance of pay- ments) and the level of transactions, which gave the market both its liquidity and depth. Banks, in effect, gave these tran- sactions their substance , as short-term and inexpensive loans: the famous reports, or deferrals. Thus, the distribution of roles between banks and the markets was tied in two ways. On the one hand, to guarantee their short-term lending activity, banks took out long-term loans from the markets, either for themsel- ves or for their customers. On the other hand, the same finan- cial markets funded their business through sizeable short-term loans provided by the banks