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, A History of Banking in all the Leading Nations, vol. 4 (Germany, Austria-Hungary, Netherlands, Scandinavian Nations, Japan, China) [1896]

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A History of Banking in all the Leading Nations; comprising the United States; Great Britain; Germany; Austro-Hungary; France; Italy; Belgium; Spain; Switzerland; Portugal; Roumania; Russia; Holland; The Scandinavian Nations; Canada; China; Japan; compiled by thirteen authors. Edited by the Editor of the Journal of Commerce and Commercial Bulletin. In Four Volumes. (New York: The Journal of Commerce and Commercial Bulletin, 1896). Vol. 4 A History of Banking in all the Leading Nations, (Germany, Austria-Hungary, Netherlands, Scandinavian Nations, Japan, China).

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About this Title:

A four volume set edited by the by the “Editor of the Journal of Commerce and Commercial Bulletin” in New York city. It consists of: Vol. 1: “The United States,” by W.G. Sumner. Vol. 2: “Great Britain,” by H.D. Macleod; “The Russian Empire,” by A.E. Horn; “Savings Banks in the United States,” by J.P. Townsend. Vol. 3: “The Latin Nations,” by P. Des Essars; “The Banks of Alsace-Lorraine after the Annexation,” by A. Raffalovich; “Canada,” by B.E. Walker. Vol. 4: “Germany and Austria-Hungary,” by M. Wirth; “The Netherlands,” by R. van der Borght; “The Scandinavian Nations,” by A. Jensen; “Japan,” by J. Soyeda; “China,” by T.R. Jernigan.

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Table of Contents:

Edition: current; Page: [v]
A HISTORY OF BANKING in all the Leading Nations.
Edition: current; Page: [vi] Edition: current; Page: [vii]
edited by the editor of the journal of commerce and commercial bulletin.
19 Beaver Street, New York.
london agents. effingham wilson,
11 Royal Exchange, E. C., and
john jones,
11 Tokenhouse Yard, E. C.
Edition: current; Page: [viii]

copyright, 1896,


the journal of commerce and commercial bulletin,

new york.

Edition: current; Page: [ix]


















new york.


Edition: current; Page: [x] Edition: current; Page: [xi]


      • Origins of Banking—The First Bank of Issue—Land Credit Associations—Joint-Stock Mortgage Banks—Credit Mobilier Institutions—Prussian Maritime Association . . . . . . . . . . . . . . . . . . . 1-12
      • SECTION I. The Bank of Prussia.
        • The Act of October, 1846—Regulation of the Bank’s Note Issues—The Bank’s Profits, Management, and Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-22
      • SECTION II.
        • Banking Under the Several States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-27
      • SECTION III. Currency Reforms.
        • Imperial Bank Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-31
      • SECTION IV. The German Imperial Bank. (Die Deutsche Reichsbank.)
        • Working Regulations of the Imperial Bank—Discount Business—Collections—Loans—Available Paper Securities—Cheques—Negotiation of Commercial Paper—Custody of Valuable Securities—Sealed Deposits—Amount of the Bank’s Transactions—Coin Reserve—The Reichsbank Clearing-House—Periodical Statements of the Reichsbank—Coin Reserve—Fate of Private Banks of Issue under Act of 1875 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-57
        Edition: current; Page: [xii]
      • SECTION V. The Prussian Maritime Association.
        • Business Results—Private Non-Issuing Banks in the Latter Part of the Nineteenth Century—German Mortgage Banks—German Co-operative Financial Societies . . . . . . . . . . . . . . . . . . . . . 58-66
      • SECTION I. Origin of the Bank.
        • Renewals of the Bank’s Charter—The Austrian Silver Standard—Suspension of Specie Payments in 1859 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69-73
      • SECTION II. Working Arrangements Between the Bank and the State.
        • The State’s Debt to the Bank—Financing Between Bank and State—Consolidation of the State Debt—Status of the State Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74-77
      • SECTION III. The Bank and Financial Events, 1850 to 1876.
        • Troubles Following the Revolution of February, 1848—Institution of a Mortgage Department—Branch Banks and Loan Offices—Resumption of Specie Payments Fails—A New State Loan of 200,000,000 Florins—Reduction of Share Liabilities and Speculative Transactions—The Crisis of 1873—Increase of Discounts—Mortgage Bonds—Suspension of the Bank Act—The New Gold Reserve—Remarkable Sales of Silver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78-85
      • SECTION IV. Reorganization of the Bank.
        • Attitude of the Hungarians—Unmerited Removal of Von Lucam—Branch Banks—The Bank’s Rate of Interest—The Silver Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86-91
      • SECTION V. The Consolidation Act of 1878.
        • Union of the Austrian and Hungarian Banks—Business Operations—Accessory Branches—Correspondents—The Bank Directory—Principles Observed in Granting Credit—Loans—Appropriations of Working Resources—Discounts—Loans—Kinds of Security Accepted—Minor Items of Business—The Mortgage Department—The Bank’s Working Capital . . . . . . . . . . . . . . 92-104
        Edition: current; Page: [xiii]
      • SECTION VI. Constitutional Provisions Governing the Austro-Hungarian Bank.
        • Regulations of the Mortgage Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105-110
      • SECTION VII. Steps Toward Resumption of Specie Payments.
        • Currency Reforms—Coinage Changes—The Procurement of Gold for Resumption—Rise in Austrian Securities—The Speculative Reaction—Suspension of the India Coinage—Relations of the Bank to the State—Proposed Restoration of Bank of Hungary’s Independence—The Bank’s Profits in 1895 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111-121
      • The Vienna Clearing-House—The Giro und Cassen-Verein—Austrian Credit Bank for Trade and Industry—Lower Austrian Discount Company—Anglo-Austrian Bank—Austrian Territorial Bank—General Austrian Mortgage Bank—The Union Bank—Vienna Banking Association—General Survey of Other Austrian Banks—Austrian Associations or Co-operative Societies—Savings-Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122-138
      • The Era of Private Banking—Hungarian Mortgage Banks—Hungarian Credit Organizations in 1892—Hungarian General Credit Bank—Hungarian Co-operative Societies—Hungarian Savings-Banks—The Post Savings-Bank—Austro-Hungarian Insurance Companies . . . . . . . . . . . 139-148
      • Non-Issuing Banks—Comparison of Private Banks with the Reichsbank—Banks of Deposit—Mortgage or Land Banks—Reports of German Non-Issuing Banks for 1895 . . . . . . . . . . . . . . 149-168
      • The Austro-Hungarian Bank—The Austrian Credit Bank—The Austrian Credit Bank for Trade and Industry—The Vienna Union Bank—The Austrian Territorial Bank—The Vienna Banking Association—The General Austrian Mortgage Bank—The Anglo-Austrian Bank—The Lower Austrian Discount Company—Vienna Giro und Cassen-Verein—Imperial and Royal Austrian Post Savings-Bank—The First Austrian Savings-Bank—The Savings-Banks of Austria—Hungarian General Credit Bank—Hungarian Commercial Bank—Hungarian Mortgage Bank—Hungarian Mortgage Credit Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169-187
    Edition: current; Page: [xiv]
    • Introduction—Money-Changers Licensed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191-195


      Period 1609-1814.

      • SECTION I. Their First Organization.
        • Creation of the Amsterdam Wisselbank—Modifying the Bank Monopoly—Extension of the Wisselbank System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196-202
      • SECTION II. Exchange Banks in the Seventeenth and Eighteenth Centuries.
        • The Regulating Influence of “Bank Money”—The Coin Premium and the Needs of Commerce—“Bank Money” and the Currency—The Development of a Loan and Currency System—The City of Amsterdam and the Bank—The Rotterdam Bank—The Middelburg Wisselbank Failure—Development of the Receipt System—Valuation of Coin and Bullion . . . . . . . . . . . . 203-214
      • SECTION III. Decadence and End of the Exchange Banks
        • The Antecedents of a Crisis—Difficulties of the East India Company—The Evils of Secret Management—The Beginning of the End—Bank Money Below Par—The End of the Amsterdam Bank—Fate of the Rotterdam Bank—The Middelburg Bank—A Novel System of Control—A Late Survival but Final Collapse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215-223
      • The Bank Note System—Early Substitutes for Bank Notes—Founding of the Bank of the Netherlands—The Java Bank—The Surinam Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224-228
      Edition: current; Page: [xv]
    • CHAPTER III. Period 1814-1863. THE NETHERLANDS BANK.
      • SECTION I. Its Legal Position, Organization, and Objects.
        • The Method of Management—The Bank’s Monopoly of Note Issues—The Bank’s Functions, Privileges, and Restrictions—Increased Publicity of Operations—The Bank and the Government—Limits of the Bank’s Independence—The Amount of Note Issues—Expanding the Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229-239
      • SECTION II. Working Arrangements of the Bank.
        • How the Rate of Interest Varied—The Bank as a Regulator—International Monetary Conditions—The Loan and the Discount Rate—Accounts Current Operations—Note Circulation—Decline in the Paper Circulation—Changes in the Coinage—Difficulties of Recoinage—A New Opening for the Bank’s Notes—Expansion of the Note Circulation—The Bank’s Metallic Reserve—The Bank’s Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240-259
      • SECTION I.
        • New Legal Status of the Bank—The Government’s Relation to the Bank—Extension of the Bank’s Sphere—The Bank’s Capital and Reserve—Rules of Management—Compounding for Treasury Service—The Latest Extension of the Charter—An Enlarged Sphere of Operations—Modified Methods of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260-269
      • SECTION II.
        • Its Operations—Increased Use of Bank Remittances—Deposit Account Balances—Charges on Private Deposits—The Volume of Note Issues—The Question of a Monetary Standard—Coin for Circulation and Export—The Note Circulation—Dealings in Bullion—Silver Purchases and Coinage—The Safe Deposit Business—The Discount Business—Loans on Securities—Loans on Merchandise—Loans on Specie and Bullion—The Discount Business—Decline in Volume of Discounts—Fluctuation of the Rate of Discount—The Crisis of 1866—A Transition Period—Ten Years of Changeful Conditions—The Crisis of 1890—The Difficulties of 1893—Reserve, Earnings, and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270-324
      Edition: current; Page: [xvi]
      • SECTION I. The Java Bank.
        • The Bank’s Sphere of Action—Dutch Colonial Currency—Conflict Between the Government and the Bank—Inadequate Coin Reserve—The Process of Recovery—New Banking Regulations—Reforming the Currency—The Bank’s Development—The Question of a Maximum Note Issue—A New Plan of Bank Management—Increasing Business and Note Issues—The Bank Under Pressure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325-342
      • SECTION II. The Surinam Bank.
        • Early Reorganization and Renewal of the Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343-348
      • SECTION I.
        • Evolution of the “Cashier” Business—Private Banks—Joint-Stock Banks—Scope of Business—Stock Capital and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349-360
      • SECTION II. Special Groups of Banks.
        • Credit Associations—Mortgage Banks—Other Agricultural Credit Institutions—Savings Institutions—Finance Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361-371
    Edition: current; Page: [xvii]
        • The Courantbank—Attempts at Currency Reform—A New Bank and War Finance—New Royal Bank and Repudiation—New National Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375-379
        • Readjustment of the Note Circulation—Funding of the Bank’s Notes—The Bank Put on the Gold Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380-383
        • Survey of Banking Since 1850—Private Banks—Banks Outside Copenhagen—Banking Activity During the Latter Half of the Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384-392
      Edition: current; Page: [xviii]
      • State and Private Banks, Seventeenth to Nineteenth Centuries—Palmstruch’s Bank—Regulations of the First Bank of Issue—Difficulties of the Bank; Relief Sought in Note Issues—The Notes Become Unredeemable—Creation of the Royal Swedish Bank (1668)—Loans to the Government Lead to Uncovered Issues of Notes—Disastrous Depreciation of Paper Money—After the “Realization Scheme”—Reorganization of the Currency—Capitalization of the Bank—Vicissitudes of the Bank Circulation—Administration of the Royal Bank—Private Banks—Private Banks of Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393-402
      • Origin of the Royal Bank—Norway Bank Act of 1819—New Conditions of Redemption—Private Non-Issuing Banks—Savings-Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403-406
    Edition: current; Page: [xix]
        • SECTION I. Early Methods.
          • Usury Laws—Blind Men as Lenders—The Germs of Real Banking . . . . . . . . . . . . . . . . . . . . . 409-414
        • SECTION II. The Present.
          • Institution of Banking Proper—Government Supervision—The Bank Act of 1890—The Savings Bank Act—Tendency Towards Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415-423
        • SECTION I. Their Origin and Organization.
          • The Old Bank Act—The Revision of the Act—The Final Revision of the Act—The Rise and Fall—Restrictive Regulations—The Existing Condition—Exceptional Cases—Dollar Certificates and the Second National Bank—The Government as a Borrower from the Fifteenth National Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424-438
          Edition: current; Page: [xx]
        • SECTION II. The Future of National Banks.
          • Their Prolongation and Transformation—Expectation—Realization—First Failure—Second Failure—The Prospect—Clearing-House and Bankers’ League . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439-451


        • Its History—The Bank’s Field of Action Abroad—Government Control and Aid—Foreign Banks in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452-461

        (Nippon Ginko).

        • Its Origin—The Bank Founded by Act of 1882—Prosperity of the Branch at Osaka—Relations of the Bank with the Government—The Power to Issue Convertible Notes—Redemption in Silver—Government Control of the Bank—The Bank’s Obligations in the Future . . . . . 462-475
        • Ancient Mortgage Laws—The First Land Credit Association—A Mortgage Law Enacted in 1873—Followed by Mortgage Banks—Comparisons of Borrowers by Occupations—Agricultural Credit Institutions as a Solution of Japan’s Land Tenure System—Suggested Scheme for Land Banks—The Special Functions of Agricultural Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476-487
        • The Earliest Forms of Currency—Confusion and Debasement of Coins—The Kobang Period—Creation of Mints—Value of Coins—Scarcity of Coin and Measures to Conserve it—Fresh Debasements of the Coin—Vicissitudes of the Coinage from 1715 to 1884—Coinage under the New Commercial Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488-496
        Edition: current; Page: [xxi]
        • Readjustment of Coins and New Mint, 1868-1891—The Gold Standard Adopted 1871—Further Revisions of Coins—Sizes and Other Definitions of Coins Now in Use—The Virtual Disuse of Gold—Circulation of Coins—Counterfeiting of Coins . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497-515
        • A Chaotic Period—Issues of Inconvertible Paper by the Government and Daimios—The Treasury Assumes Redemption of the Daimio Notes—Over-Issues Produce Depreciation of Paper and a Rise in Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516-521
        • Retirement of Circulating Notes—Minister Matsuka’s Intervention—Growth of the Metallic Reserve—Creation of the Bank of Japan—Consummation of the Note-Conversion Scheme—The Notes Now in Use—Chart Showing Increase of the Currency . . . . . . . . . . . . . . . . . . . . . . 522-531
        • Looking to the Gold Basis—The Imperial Standard Commission—The Commission’s Summing Up—Reasons for the Gold Standard—Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532-538
        • A. Exports and Imports of Merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539
        • B. Exports and Imports of Specie . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540
        • C. Prices of Government Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541
        • D. National Debt in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541-544
    Edition: current; Page: [xxii]
      • Cash Money—Paper Currency—“Flying Money”—Paper Money in the Thirteenth Century—Abolition of Paper for Silver—The Three Belts of Circulation—Currency of the Present—Sycee Silver—The Standard of Sycee—The Status of Gold in China . . . . . . . . . . . . . . . . . . . . . 547-556
      • The Absence of Government Regulation—Methods of Banking—Corporeal Punishment for Default—Bills of Exchange—The Banks and the Government—Bankers’ Clearings—Pawnbrokers as Bankers—Money-Lending Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557-562
      • Two Kinds of Tenure—The Transfer of Land—Land Mortgages—The Law of Succession . 563-567
Edition: current; Page: [xxiii]

A History of Banking







editor on the neue freie presse, vienna; honorary member of the royal statistical society of london; late director of the bureau of statistics of switzerland.



yale university.



Edition: current; Page: [xxiv] Edition: current; Page: [1]




GERMAN banking traces its origin to the Hamburg Giro Bank, which was founded in 1619 on the model of the Bank of Amsterdam, and slightly survived the creation of the German Imperial Bank in 1874. The Hamburg Bank was a kind of State institution, on which the entire commercial community of the great maritime city was dependent. The citizens made their payments exclusively through drafts drawn on the Bank, the drafts being secured by deposits of silver bullion, whose value was not intrinsically expressed in stamped mint certifications, but as so many “marks banco.” The mark banco represented a value of about forty cents in present American money. Every local firm had its folio in the books of the Bank; and each day the payments on account of exchanges made on the Bourse or on other business transactions were charged to the buyers and credited to the sellers. Metallic money existed only in the form of small coin for the purposes of retail dealings, and much Prussian silver was also current. It is quite remarkable that this very simple mechanism endured for two hundred and fifty-five years; in the course of which Hamburg was visited with seven great commercial crises. In the crisis of 1857, there occurred an incident unique in financial history. The Austrian National Bank, an institution whose currency was obligatory legal tender, managed to rescue the merchants of Hamburg from impending calamity—and that without risk of sacrifice on their part—by withdrawing ten million florins from its silver reserve and advancing the amount to the Giro Bank. Immediately upon the acquisition of so much silver—which was all in bullion—confidence Edition: current; Page: [2] returned as if by magic. The crisis was dispelled, and within six months the Hamburg Bank was enabled to repay the loan.


The first bank of issue in Germany was the Prussian Bank, founded in 1765 and patterned after the Bank of England, which dates back to 1694. It is noteworthy that the reign of Frederick the Great not only brought into being the bank note system, but also laid the foundation of the whole modern fabric of banking as it exists on the European continent. Soon after the inauguration of the Prussian Bank, a so-called “Hofbank,” or Court bank, was started in the Margraviate of Bayreuth-Anspach, which operated as a dependency of the Prussian Bank during the brief period of Prussian sovereignty after the line of margraves had become extinct. The new head-quarters were at Fürth, with branch houses at Bayreuth and Anspach. In 1806, this bank of issue was removed to Nuremberg. In 1834, the Bavarian Exchange and Mortgage Bank was instituted at Munich, for the Kingdom of Bavaria; it emitted notes, and in conjunction with the German Imperial Bank it still transacts the chief exchange business of the Bavarian Kingdom.

The mortgage department of the Bavarian Bank was an adaptation from the Austrian National Bank, founded in 1816. In fact, the entire mortgage banking system originated in the time of Frederick the Great, and was gradually imitated in the other States of Europe in the next century. During the terrible distress of the Seven Years’ War, when all the genius of Frederick was taxed to provide means of defence against the armies of the Continent and the landed proprietors found their credit equally strained, an intelligent merchant conceived the idea of strengthening land credit through the instrumentality of provincial associations. In consequence of the necessities of the war, and of the low price of grain, the rate of interest for mortgages on landed estates had risen to ten per cent., and commission fees for the procuring of capital to two and three per cent. Frederick II. was compelled to grant the land-owners of the eastern provinces a respite of three years for the payment of their obligations.


In this condition of things, a Berlin merchant named Büring proposed to improve land credits by organizing joint responsibility associations of landed proprietors, on the theory that individual responsibility could be better secured through the collective pledges of a society of owners bound together by a mortgage contract. In 1767, Büring laid his plan before the Ministry, which rejected it. Thereupon, he addressed a memorial to the King direct, and the scheme now found favor. It was Büring’s expectation thus to strengthen credit through the agency of jointly responsible mortgage debtors, so that proprietors, instead of receiving at most one-half the value of their Edition: current; Page: [3] property, might obtain two-thirds of it in the form of mortgage bonds negotiable among capitalists. He designed also to extend his system to dwellings, in order that the advantages of similarly improved credit—enhanced by greater security, better guaranty of interest payments, and the feature of marketable bonds—might be enjoyed by tradesmen. Joined to this highly original proposition was a suggestion of the mercantile spirit; the author of the plan expressing the singular hope that “there should be no exportation of the bonds outside the country, so that interest need not be lost, nor the country become dependent on foreigners.”

The first land mortgage association was organized in 1780, in the Mark of Brandenburg; and the second, during the same year, in Pomerania. Others were established in West Prussia, 1787; East Prussia, 1788; and Posen, 1821. The new institutions were promptly imitated in the neighboring German States; and similar associations were formed at Hamburg in 1782; in the principality of Lüneburg, 1791; Esthonia and Livonia, 1803; Schleswig-Holstein, 1811; Mecklenburg, 1818, etc.

As complaints about the deterioration of land credits are of constant recurrence, it is interesting to learn from an eye-witness, Chancellor of the Exchequer Von Struensee, the depth of misery which prevailed in the eastern provinces of Prussia before the institution of the mortgage associations: “After the Peace of 1763,” says Von Struensee, in treating upon important questions of political economy, “conditions of credit for the eastern landlords—notably in Silesia—were sore perplexed. In regions where the armies had long been quartered, estates were laid waste, farm buildings burned, cattle driven away or starved, fields left untilled for years, and agricultural implements were in wretched ruin. The price of real estate fell to two-thirds or even one-third of its normal value; and many whose lands bore debts to the same amount had become insolvent. During the war, to be sure, and a short time after it, these conditions were veiled over, so to speak; nor did they declare themselves openly till some years from the Peace of 1763. While the war was raging, the land-owners had received high prices for their produce; they had paid taxes and interest with depreciated money, and, misled by this unstable, abnormal course of affairs, they had lived somewhat lavishly. Frederick regulated the currency immediately following the war, and creditors at once demanded their interest in sound money (in which taxes must also be paid), though the prices for crops were falling. Nobody cared to hoard ready money while the currency was depreciated by the war, and land-owners could easily effect small loans; but as soon as peace was assured, the smaller trades-people were eager to advance their business, and they generally called in the loans. Proprietors quite commonly borrowed capital during the war by giving legal promissory notes—indeed, they were glad to borrow in this way, so as to avoid furnishing mortgaged security, whenever possible. Upon every fresh acceptance they could congratulate themselves on holding estates unencumbered by mortgages. But now the creditors everywhere demanded either payment or Edition: current; Page: [4] mortgaged security; and the fact was patent that estates would be heavily indebted in comparison with their depreciated value—perhaps even hopelessly so. Without credit, the larger proprietors could not maintain themselves. He who owns an estate of fifty thousand dollars is badly off if it be cumbered with a debt of forty thousand; whereas the value of land quickly declines under poor harvests and sorry prices. Heavy damage may be also caused by cattle disease and hailstorms. In these circumstances, nobody was willing to make further loans to the Silesian land-owners. Surrender of effects became a common practice and threatened to be the general fate. Just then the mortgage associations were created, and the larger proprietors were again enabled to procure credit, through letters of mortgage.”

When these credit companies were first started, the matter of membership was optional in most provinces, though obligatory whenever a loan was concluded. In East Prussia, however, membership was required of every land-owner—entitling him, of course, to borrow capital if he so desired. The society bound itself by this twofold pledge in every district: on the one hand, to furnish every proprietor with an amount of capital equal to half the value of his estate; and on the other hand, to pay every creditor who held a bond ratified by the society not only the promised interest cash down and in punctual semi-annual installments, but also the principal itself on demand within six months’ notice. The process of raising a loan was as follows: The applicant addressed to the directors of the company a statement of the mortgage capital represented by his real property; then a valuation of his land was taken, and to make this as impartial as possible, certain fundamental rules were drawn up for every district, as terms of procedure, which might vary according to local conditions. From this valuation small cattle and agricultural implements were excluded. There were fewer loans on buildings than on land. When the estimated value of the property was fixed, the company’s agent delivered to the borrower an amount which, in most societies, represented one-half, in others three-fourths, of the assessed value, in the form of letters of mortgage, signed by him in the company’s name. These were not usually transferable, and were not exempted from accelerated final process. In these times, the nominal value of such letters of mortgage varies from 6,000 to 60,000 marks. Many bear the cautionary indorsement, “Not in circulation,” or “Inalienable”—as a protection against perverted use. These documents suffer less from political events than other commercial paper, and although handled at the stock exchange, they allow no play for jobbing. The manner of realization varies in the different provinces. In some places, the society delivers the desired letter to the borrower, and he may negotiate it as best he can; in others, a more expeditious method has been devised, costing him less time and expense—to wit, the society undertakes the sale of the letter of mortgage at the exchange, thus at once becoming the immediate creditor of the applicant and the debtor of the capitalist. It pays the interest when due, and is reimbursed by the borrower. Nearly all the modern mortgage credit institutions have adopted the Edition: current; Page: [5] latter plan. Some companies allow the debtor to clear himself by gradual redemption. Payments are made in annual installments, including interest, clearance fees, and administration charges; and these installments are proportioned to the full time of redemption, varying in the article of clearance rates from one and one-half to two per cent. For instance, this amounts to one per cent. in case of a respite term of forty years. More considerable partial payments are also accepted, and should one-fourth of the debt be covered, a corresponding reduction of the mortgage may be demanded.

Letters of mortgage are not to be recalled by the creditors; but they are marketed at the exchange, and in ordinary times are quoted from two to seven per cent. above par. Originally, the point that the bonds should not be recalled was not made statutory with respect to the bondholders; it became so, however, as the danger was gradually recognized, which might arise from a sudden accumulation of such advertisements. Creditors in want of money are referred to the exchange sales, which do them better service. Here, as a rule, they command more certain prices and receive prompter payment than the holders of private mortgage bonds. On the part of the credit companies, the letters of mortgage are generally redeemed in proportion to the partial payments made to them by their debtors. The bonds are secured by the mortgaged real estate, by the joint responsibility of the associated members, and in many places by the further guaranty of the State or province. The latter security is never employed, inasmuch as the sentiment of honor inspired by belonging to such trust companies proves effectual without it. Still, it serves to facilitate the sale of the bonds. The holder of a mortgage bond need not apply to the debtor for payment of interest, since that is paid by the society. As long as a mortgage debtor punctually pays his interest, the company has no right to give warning; but in case he delays, the managers are at liberty to resort to the following measures: “Whenever the appointed term has expired, and repeated warning has not been heeded, the mortgaged property or possessions may be attached, and held subject to the company’s control until principal, interest, and all the costs are covered.”

Other statutory provisions exist: for instance, an order may be issued for the sale of the mortgage, or the land-owner may be authorized to help himself by means of a lease. Again, the company has the right of raising a loan on the mortgaged land in the debtor’s name, until dispossession ensue or the debt be paid. The directors, nevertheless, hold the power to grant letters of respite in times of unforeseen distress, and thereby prevent the deterioration of the mortgage bond. In order to guard against vicissitudes, every mortgage association has a reserve fund, which is applied whenever there is occasion to purchase salable effects. All these institutions enjoy legal rights of exemption, prompt execution, freedom from stamp taxes and circumscription fees, as well as the privilege of obtaining capital from mortmain, communities, corporations, savings-banks, and minors’ trusts. Many of them, too, are endowed by the State. Frederick Edition: current; Page: [6] the Great thus furnished the province of Silesia 300,000 thalers at two per cent., which principal yielded interest at five per cent. to the province. The governing board of the mortgage associations is appointed by the members, though there is an associate State commissioner. The administrative expenses never amount to more than ¼ per cent. Interest on the bonds is by this amount lower than the interest paid by the mortgage debtors. Dietrici, sometime director of the Prussian Bureau of Statistics, mentions in praise of the system, that the value of mortgaged properties was most accurately and justly assessed, and the granting of loans was supervised with the utmost prudence.

The letters of mortgage even safely withstood the terrible times of the French invasion at the beginning of the nineteenth century. Letters of respite were indeed necessary in case of the interest payments, and there was a decline in prices, but after peace was restored they soon rose again to par value. Notwithstanding the competition of the mortgage banks, which were later organized side by side with the land credit associations, the total amount of mortgage bonds issued in the East Prussian provinces increased in round numbers from 160,000,000 thalers in 1805 to 250,000,000 thalers in 1848.


Joint-stock mortgage banks were the second form of landed credit institutions. They have attained a large growth in the course of this century. First founded in Germany, they were next adopted in Switzerland; and now in the latter half-century they have become common in France—le crédit foncier—and other European countries. They differ from the mortgage associations in the matter of joint responsibility, which is replaced by the feature of joint stock. And yet they draw the greater part of their trading capital from letters of mortgage, which they are enabled to put into wider circulation by virtue of their handsome capital and constant lending at the stock exchange and in the money market. These banks usually grant loans only on security supposed to represent a value double the amount of the loan, and only as first mortgage. The value of real estate to be mortgaged is ascertained by the bank attorneys themselves, the costs of valuation being borne by the borrower. The condition is often imposed, that any property destructible by fire must be insured. Some banks—for instance, the Bavarian Exchange and Mortgage Bank (Wechsel und Hypothekenbank)—pay out the loans in cash; others, like the German Mortgage Bank of Meiningen, agree to deliver the loan in letters of mortgage; being prepared, however, to effect the sale of the same on commission. Latterly, the plan of paying in ready money has prevailed, for the reason that most borrowers lose too much time and incur too much expense by individual sales.

No speculation by the joint-stock mortgage banks is allowed, though their unemployed funds may be put out at interest. They do a large business Edition: current; Page: [7] in the way of discounting bills and handling safe commercial paper, and especially in mortgage deeds. In almost all the German mortgage banks, the mortgage loans are irredeemable; they must be paid back by process of amortization, the same as in the case of the land credit societies. The partial payments are semi-annual; at the same time, the debtor has the right to pay more than the stipulated pro rata amount. To this irredeemable nature of the mortgage loans there are the following exceptions in favor of the banks: (1) In case the stipulated partial payments are not made. Ordinarily, several respites are appointed before the recall is enforced, and contingent, stricter measures are not applied until the lapse of the last period of grace. Then all the mortgage banks enjoy rights of prompt and simple execution. (2) Where the mortgage falls subject to sequestration or public sale; or any such procedure be instituted. (3) When the debtor becomes insolvent or even extrajudicially suspends payments. (4) When, by any accident or heavy indebtedness, the value of the mortgaged real estate so declines as to imperil the loan. (5) When the undivided mortgage comes into the hands of other owners, who do not immediately furnish proof that they have entered upon all the rights and obligations of their predecessors. (6) When a mortgage is partly transferred, and on account of the regulation of the mortgage claims no settlement has been reached. Such recalls are generally qualified by a respite of three months.

The nominal value of the letters of mortgage varies from 300 to 3000 marks. They are made out either to the bearer or to specified persons. On the conclusion of a loan, all the mortgage banks charge a commission fee, which never exceeds two per cent. The minimum amount of a mortgage loan at the Bavarian Wechsel und Hypothekenbank is 500 marks. The average interest on letters of mortgage is four per cent., and that on the loans four and one-half to five per cent. To the interest is added, in case of nearly all the mortgage banks, a partial amortization payment, which has already been mentioned, and which usually amounts to one per cent., sometimes even less. In practice, such properties are excluded from mortgage loans as, by reason of their dangerous uses, are not accepted for fire insurance; also those whose returns are uncertain or hazardous. Examples are: Powder mills, theatres, mines, quarries, and in some regions also vineyards.

The following statistical statements will illustrate the progress of the classes of institutions to which reference has been made in the foregoing pages:

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Letters of Mortgage made out in the Years 1805 to 1848, by the Land Credit Institutions of the subjoined Provinces.
PROVINCES. 1805. 1815. 1825. 1835. 1845. 1848.
Silesia 24,162,238 30,662,673 37,974,640 40,526,365 36,985,440 35,675,855
Kur & Neumark. 3,689,050 4,221,800 8,162,650 11,461,300 12,740,200 12,805,500
Pomerania 6,830,200 7,778,550 12,872,225 14,841,075 14,951,725 15,040,925
West Prussia 9,897,600 10,040,875 10,839,425 10,216,883 10,351,678 10,727,878
East Prussia 9,231,950 9,974,000 11,035,525 11,249,475 10,959,475 11,041,550
Total 53,811,038 62,677,898 80,884,465 88,295,098 85,988,518 85,291,708

From 1805 to 1815, 1825, 1835, 1845, and 1848, respectively, the debts charged in the land credit institutions of the above specified provinces rose in amount as per the following percentages:

PROVINCES. 1815. Per Cent. 1825. Per Cent. 1835. Per Cent. 1845. Per Cent. 1848. Per Cent.
Silesia 26.90 57.17 67.73 53.07 47.65
Kur and Neumark 14.44 121.27 210.68 245.35 247.12
Pomerania 13.83 88.46 117.29 118.91 120.21
West Prussia 1.45 9.52 3.23 4.59 8.39
East Prussia 8.04 19.54 21.85 18.71 19.00
For the five institutions. 16.48 50.31 64.08 59.80 58.50
Mortgage Letters of the German Mortgage Banks and Companies.
COUNTRIES. Population. Year. Issue of Mortgage Letters.
Province of Silesia (Provincial Company) 3,005,809 1839 133,232,218
Province of Silesia (Royal Bank)} 1838 3,337,500
Province of Silesia Brandenburg (Provincial Company) 2,066,993 1837 44,557,338
Province of Silesia Pomerania (Provincial Company) 1,165,073 1837 55,602,844
Province of Silesia West Prussia (Provincial Company) 1,019,105 1837 38,836,530
Province of Silesia East Prussia (Provincial Company) 1,480,318 1837 42,164,250
Province of Silesia Posen (Provincial Company) 1,364,399 1844 50,802,500
Hanover (all companies) 1,758,847 1844
Lüneburg (1844), all companies 5,625,000 Francs.
Calenberg (1844), all companies 5,625,000 Francs.
Bremen and Verden 3,750,000 Francs.
Mortgage Bank 15,000,000 Francs.
Mecklenburg (all companies) 624,477 1846 15,034,680
Saxony (all companies) 1,836,433 1846 3,750,188
Bavaria (Mortgage Bank) 4,504,874 1849 30,000,000
Würtemberg (all institutions) 1,725,167 1846 11,930,930
Electorate of Hesse (all companies) 754,590 1841 37,988,254
Baden (all companies) 1,335,200 1840 1,342,910
Nassau, Landesbank (national bank) 424,817 1840 6,420,000
Galicia, Austria, Landesbank 4,702,388 1843 11,414,016
Total 27,827,990 540,423,158
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Balance of the Bavarian Wechsel und Hypothekenbank for 1868.
Mortgage capital. Total mortgage debt of 20,930 debtors amounts to the nominal sum of 68,724,640 florins, of which the following items remain outstanding:
I. Annuity loans in cash at 4 per cent 12,742,101.01
II. Cash loans on demand at 5 per cent 8,081,427.55
III. Annuity loans in bonds at 4½ and 5 per cent 42,036,690.16
Mortgage proceeds: Discounted interests { I. 173,075.53
{ II. 180,054.00
{ III. 926,006,58
Discount capital account: Sum of discounted bills 2,123,694.53
Loans on securities 4,430,149.30
Income from loans: Discounted interests, including amount brought over to first half of 1869 19,260.01
Sum of reserve securities and value of the Bank property 2,257,402.36
Income of the reserve fund: Discounted interests 47,554.58
Foreign bills and securities: In Bank at Munich and at the branch office, Kempten. 4,439,219.15
Bills account at Munich: Local bills not yet due 903,139.52
Augsburg remittance account: Sum of bills at the Augsburg branch 904,496.05
Current account of sundry debtors 217,878.58
Cash account, including currency on hand at the branch banks 7,296,833.50
Amount of discounted bills 1,445,777.06
Loans on securities 1,168,155.00
Sundry accounts current 84,795.29
Total 89,477,713.00
Joint-stock capital established by paid subscriptions 20,000,000.00
Bank notes in circulation 12,000,000.00
Statutory reserve 1,500,000.00
Circulation of mortgage bonds 42,077,650.00
Special bond reserve account 338,156.14
Discount proceeds: Brought over to the first half of 1869 14,047.55
Deposits payable on demand, including uncalled-for allotted bonds 622,221.00
Deposits payable within three to six months’ notice 494,304.37
Bank obligations unredeemable within five years 4,518,300.00
Interest due on acceptances 23,317.09
Sundry accounts current and balances in favor of sundry creditors 1,664,949.39
Current account deposits 444,943.08
Life insurance account 1,022,941.11
Annuity or life rent insurance account 282,721.00
Annuity bank account 1,307,463.24
Savings-bank tontine account 155,953.34
Movables fire insurance account (or account of fire insurance for movables) 893,014.57
This year’s retentions, including interest 218,837.08
Interest on bank obligations 93,372.00
Interest on mortgage bonds 893,190.00
Discount proceeds brought over to first half of 1869 3,114.00
Loan proceeds brought over to first half of 1869 3,572.50
Dividends account 893,079.00
Profit and loss account, balance 12,564.50
Total 89,477,713.36


When the plan of organizing the Crédit Mobilier was adopted at Paris in 1852, and so many like concerns were introduced in almost all the States of Europe, the stock-jobbers, who were at that time quite immoderately captivated by the French organization, had never a thought that an essentially similar establishment had been in existence for eighty years; namely, the Prussian Maritime Association, founded under Frederick II. in 1772. The Maritime Association, which must be regarded as the mother society of the crédit mobilier institutions in Europe to-day, was founded with a capital of 3,600,000 marks; and in 1810 it passed under State control. The association mainly busied itself with sundry State transactions; such as the acceptation and investment of State loans, the management of other Government business at home and abroad, purchase of transmarine salt, and even with such enterprises as contracting for public buildings. It furthermore engaged in the shipping trade; acquired real estate, mills, factories, etc., and managed all the business of discount and loan banking. Until 1836, the Maritime Association issued Treasury bills of 300 to 3000 marks, payable in cash to the bearer. Its exchange transactions in 1850, the period of the great increase of German banks of issue, still amounted to 25,000,000 marks. Down to our time, the Maritime Association has been charged by the State to negotiate loans; and it also serves to market Government effects in the shape of State bills, railway shares, and priority bonds—in a word, it does all the general mercantile and financial business of the Prussian Government. So this institution has continued its operations down to this day. During the long period of its activity, the old Prussian conservatism has proved highly advantageous.

Some fifty years after its inauguration, a Bavarian statesman, who subsequently became famous, addressed a memorial to the Prussian Government, wherein he proposed to found a credit institution little else than a duplicate of the Maritime Association. The valiant and worthy jurist had not so much as learned of the Prussian Maritime Association’s existence, half a century after it was founded. Thirty years later, when the brothers Péreire obtained a license from the French Government to organize the Crédit Mobilier and Crédit Foncier, and thereby made a great stir throughout Europe, nobody thought of the fact—perhaps not even the institutors themselves—that the new enterprise, in its statutory provisions, exactly Edition: current; Page: [11] resembled the Maritime Association. Times and circumstances, as well as the high-pitched speculations at the Bourse and the general stock-jobbing, which in turn influenced the press, brought about conditions the very opposite of those which attended the inauguration of the Maritime Association; for, in the course of a few years, crédit mobilier houses were started in all the Continental countries.

Our own survey, however, is limited to the German and Austro-Hungarian institutions. The most influential credit establishments of the German Empire at present are the Berlin Discount Company (Discontogesellschaft), the Bank of Trade and Industry at Darmstadt, the German Credit Company (Creditanstalt) in Leipzig, and the Middle German Creditanstalt of Meiningen. These companies are prohibited from issuing notes; on the other hand, they may discount bills of exchange, and carry on the business of encashment, custody of moneys, effects, and deposits, together with giving out exchequer bills in accounts current, payable on maturity, with days of grace or on call; they also buy and sell papers of value, as well as articles for which funds are deposited or security furnished. These banks make advances upon pledges of good paper, or of articles not classed as perishable. They are authorized to issue joint-stock bonds and priority bonds of anonymous companies, to purchase and sell the same again, and also to effect the reorganization of industrial enterprises into joint-stock companies. A considerable business has been done and is still being done by the foregoing credit concerns in the way of taking up and investing State and railway loans. With their comprehensive business facilities, the largest credit concerns of Germany and Austro-Hungary have contrived to play a leading rôle at the Bourse. At the head of the list in Germany stands the Berlin Discount Company (Limited) (Discontocommandite). This was founded by the former Prussian Minister Hausemann; not, indeed, as a joint-stock company, but as a limited partnership, the latter form being locally preferred. The legal status of the present joint-stock and limited liability companies in the German Empire was readjusted by a law passed on July 18, 1884. The advantage of the limited partnerships consists in the fact that the shareholding capitalists are not so much at the mercy of arbitrary directors. In the Discount Company, the shareholders group themselves as passive participants about one responsible director, who, by virtue of his large personal investments, his practical experience, acute insight, gift of organization, and respected character no less than his wealth, inspires unsolicited, effectual confidence. The credit institutions of this kind, in addition to their mercantile purpose, had the general and particular economic advantage of opposing potent competition against the power of the great banking houses, and thus breaking the monopoly which the latter—most notably the world-renowned Rothschilds—had gradually conquered and exercised in the money markets of Europe, especially in the matter of State loans, from the times of the Napoleonic wars. This competition of the credit companies suffered an abatement upon the funding of the heavy State loans Edition: current; Page: [12] and in consequence of similar financial operations; which were of large general advantage, and compelled the great European houses to serve public interests on cheaper terms. Thus a gradual neutralization of the competitive forces came about; and their effect to-day is chiefly seen in the creation of great trusts and syndicates, which have helped to accomplish the large conversions of debt and reductions of interest, and to lower the price of capital to a constant minimum level.

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THE great public need of a bank of issue was first satisfied in Germany by the Kingdom of Prussia. Through distress of war and the incredible fluctuations of German standards of money, this State was, more than others, obliged to adopt financial reforms. Though planned in imitation of the Bank of England, the Prussian Bank originated in the same creative age which called forth the new mortgage banks and crédit mobilier organizations. It was founded in 1765 by Frederick II., first as a State institution. In 1846, the Bank was closed by liquidation, and then reorganized with the admission of private shareholders. The new Bank Act went into force on January 1, 1847, after ten million thalers—a sum equal to thirty million marks—had been subscribed in shares of a thousand thalers. To this amount was added 1,260,000 thalers of State capital, which had increased to 1,559,000 thalers in 1852; and from that year to January 1, 1856, the amount rose to 1,809,000 thalers.

At the settlement of the Bank’s books those investments were thrown out as an offset against securities about which any doubt existed. The resulting surplus constituted the State’s contribution to the capital, to which also belonged the assets which were carried over in the books of the Prussian Bank on January 1, 1847: to wit, (1) bills and loan claims; (2) the State and municipal paper on hand, and letters of mortgage according to the new standard of money; (3) mortgage, ledger, and other claims, including advances for the manufacture of bank notes; (4) grounds and fixtures; (5) sums of ready money, stamped currency, exchequer bills, drafts, and bank notes. The liabilities comprised: (1) Deposits and the interest accruing thereon; (2) Edition: current; Page: [14] six million thalers of exchequer bills received upon deposit of State bonds; (3) bank notes issued to date, and costs of making the same, as yet unsettled; (4) advances and moneys received from the Exchequer, and subject to prior settlement, and (5) balances in favor of private persons, including indorsements.


The new Bank Act, as published on October 5, 1846, decreed as follows: “The Bank is designed to promote the money circulation of the whole community; to utilize capital, encourage trade and industry, and obviate an excessive rise in the rates of interest. Toward the achievement of these ends, the Bank is empowered to discount bills and money orders, as well as Home Government paper, and provincial, municipal, or other public notes made payable to the bearer; to buy and sell the same in its own behalf, or in behalf of public firms and institutions; to supply credit and loans upon sufficient security; to issue bills and cheques, or to receive the same and collect on others’ account; to take in cash capital both upon documented pledges and in current accounts, either with or without interest; to buy and sell all metallic bullion and coins; whereas other mercantile business, and expressly transactions in goods, is hereby forbidden. The Bank is further authorized to accept the custody of gold and silver, coined or uncoined, of precious stones or jewelry, State papers and documents of every sort, as well as sealed packages, without requiring identification of the bearer, upon giving receipt for such deposits, with the right of charging a commission fee.”

In the traffic of bills, the Bank discounted only such paper as was payable at sight and within a maximum term of three months; and, usually, three recognized indorsements were expected. The Bank might also buy and sell good foreign bills or currency, especially to facilitate exchanges of the precious metals. The Bank granted interest-bearing loans within a customary limit of three months, and in sums not lower than 500 thalers. Even articles of commerce might serve as movable dead pledges for such loans, provided they were of domestic ownership and represented a value equal to one-half or, in exceptional cases, two-thirds of the loan, according to the nature of the articles or their marketable qualities. In the way of paper pledges, none but native public certificates were valid. For the like loans, the Bank was entitled to take a maximum of six per cent. interest. Where the precious metals were pledged, a lower rate of interest might be charged. The Bank must publish its interest rates at stated and regular times. In addition to the business of encashment, the Bank was expected to encourage circulation. Besides the stock capital and the advance furnished by the State, the Bank had a working resource derived from legally conveyed deposits protected by the State; namely, those of guardianship and court trusts, church schools, charitable foundations, and other public institutions. Deposits of this kind bore interest at the rate of two to two and one-half per cent. Such dispositions, however, involved an injustice to widows and orphans, in that Edition: current; Page: [15] the Bank dividends amounted to twice or thrice the said rates, and, finally, even to twenty per cent. The Government reserved the prerogative of doubling the capital stock, in conjunction with the shareholders. Bank shares might, at one time, be accepted as collateral in case of loans on the same. Dividends on the State stock were added to the capital account. The reserve fund, constituted by one-fourth of the clear profits, was not to accumulate above fifty per cent. of the capital stock. Upon the contingency of a disorganization of the Bank, the State fund should serve toward covering the debts. After all obligations are discharged through the resources of the Bank itself, the reserve fund is to be divided between the State and the shareholders.


The Bank was empowered to issue notes, the form of which and the exchange of damaged notes for new ones were under State supervision. The lowest denomination of the notes equaled twenty-five thalers in Prussian silver currency. At the same time, the existing standard value of silver was actually transformed into a kind of double value, by the regulation that the Public Exchequer must accept all the coins of Frederick at a certain fixed price. The total issue of notes should not exceed 15,000,000 thalers. Against the whole amount of notes in circulation, one-third of the sum must be kept on hand in coin or silver bullion, one-half in discounted bills, and the remaining 16.66 per cent. in collaterals against loans, valued according to the rules of the Bank. The Bank was obliged to accept its notes in payments, at all its counters; and in the main Bank at Berlin, whenever the payee demanded. But in the provincial banks, it was customary to retire the notes exclusively in coin, providing the hard cash resources of the paying bank made such payment convenient. The entire resources of the Bank stood pledged for the payment of the notes. The circulation of the notes met with general acceptance throughout the State; and they were made a legal tender, in lieu of coin, at all the public offices, as in place of State paper. The notes, however, were not a legal tender in private transactions. Supplementary to the bank notes, there circulated other paper money of State sanction, to provide an element of elasticity for the convenience of trade, and as a resource for meeting extraordinary needs. But there was no provision for the retirement of these supplemental notes. They were issued sparingly, at a value nominally the same as that of the regular bank notes. In consequence of their limited issue, the solid security of the Prussian Bank, and the circumstance that they were legal tender to the same effect as coin at all the marts of trade, it happened on occasion of the derangement of money values in the other German States (some of which from time to time deliberately depreciated their currency), that the Prussian notes and exchequer bills not only circulated in every part of Germany, at their full nominal value, but were also freely accepted in the neighboring countries—particularly in Switzerland—and often at par. Such was the universal Edition: current; Page: [16] confidence in this State paper money, that it withstood the most violent shocks; and, even in the panic attending the revolution of March, 1848, public confidence was lost for a few days only. In international trade, the Prussian bank notes represented all Germany, and when the money values of Prussia chanced to be disturbed, these notes were no less respected than those of England and France.


Concerning the profits of the Bank, the following regulations were observed: (1) First of all, the shareholders were to receive three and one-half per cent. interest on their stock; (2) a similar yearly interest should accrue to the State; (3) one-fourth of the remainder must go toward the accumulation of the reserve fund, and the residue be divided equally between the shareholders and the State as dividends. In case the clear profits were under three and one-half per cent., the deficit should be supplied by the reserve fund.

The Bank was placed under the general control of the State, which especially reserved to itself the right of decision in questions of the erection of branch houses.

The governor of the Bank was appointed by the Government, and he then appointed the usual officers, who should serve during his incumbency. There was this exception, that the Government also appointed the Superior Board of Directors, comprising five members and a president. Two members had the special charge of signing the Bank’s obligations. The general annual meeting of shareholders occurred in January or February, when they would elect a Central Committee of fifteen members, who co-operated with the directors to determine rates of interest, expiration of bills, acceptation of the collaterals offered in sundry sorts of effects, personal credit, and so forth. Where differences of opinion arose between the Central Committee and the Superior Board of Directors, the Bank governor decided. The aggrandizement of Prussia in consequence of the German War of 1866 occasioned an increase in the capital stock of five million thalers (September 24, 1866), and an extension of the branch establishments to the number of one hundred and thirty. The institution was constantly acquiring a larger development. The State, whose contributed fund had now grown to be more than two million thalers, received not only the three and one-half per cent. interest, amounting to 66,423 thalers, but also a dividend of 968,166 thalers. The shares now yielded eleven per cent. The branch houses gained in importance year by year. By their instrumentality every Prussian town of any business activity enjoyed banking facilities; and now that the Prussian Bank has been incorporated into the Imperial Bank, the same is true of every considerable business town in the German Empire. Bills may be negotiated even upon the smaller towns at the prevailing discount rates; or if overdue they may be redeemed on payment of a moderate fee. As Edition: current; Page: [17] much as a decade before the amalgamation of the Prussian with the Imperial Bank, the former had bought such remittances to the amount of over three million thalers, or nine million marks, in Prussian localities, and reaped a profit of four to five per cent.—equivalent, for those times, to the discount rates of modern bourses. But for the interposition of the Bank, trades-people must have paid much dearer for their needs of credit. Not even in England are there such favorable facilities for disposing of bills on the smaller towns. Upon the increase of the capital stock in 1866, the amount of the coin reserve against notes was raised to one-third of the outstanding circulation. The Bank was further restricted in the issue of notes, by requiring that two-thirds of the note circulation must be constantly covered by unimpeachable bills of exchange. With the growth of the Bank, through its branches in other German emporiums and principal towns, and especially through its relations with Hamburg, Frankfort, and Leipzig, there arose a new problem, how to provide for the actual clearing-house business, which had been previously neglected both in Germany and Austro-Hungary. This new phase of activity on the part of the greatly enlarged Bank grew so rapidly that, in ten years after the clearing-houses were inaugurated, the total transactions had reached the high figure of 18,500,000,000 marks.

The following tables furnish data which will substantiate our preceding survey. The balance-sheets go to prove that the law of 1850 marked the beginning of a new era in the banking system.

From 1847 to 1855 the business development of the Bank of Prussia ran the following course:

YEARS. Local Bills Discounted. Provincial Bills Discounted. Foreign Bills Bought Lombard Loans.
1847 70,904,845 28,627,577 3,157,555 48,083,525
1848 55,913,285 21,046,928 3,496,859 32,469,770
1849 38,455,440 22,612,004 3,555,912 28,614,985
1850 38,747,105 39,923,399 3,047,351 38,646,296
1851 33,338,055 40,687,085 3,903,717 35,675,787
1852 42,007,159 53,927,137 6,710,699 44,594,960
1853 61,898,772 85,671,495 5,240,740 68,164,424
1854 65,444,537 101,899,439 5,182,326 41,937,682
1855 91,931,618 140,023,867 4,706,721 57,907,242
Balance-sheet of the Prussian Bank, December 31, 1856.
Thalers. Gro. Pf.
State paper to the nominal value of 15,193,300 00 0
(Including 9,750,000 thalers offsetting the like sum of exchequer bills not retired.)
Real estate 739,348 22 6
Bills accounts:
(a) Spot bills at the main Bank 6,157,928 29 6
Spot bills at the branch bureaus 19,981,503 06 0
26,139,432 05 6
(b) Remittance bills, domestic, at the main Bank 7,743,932 00 0
Remittance bills at the branch bureaus 10,032,203 24 6
17,776,135 24 6
(c) Foreign bills 276,251 21 0
44,191,819 21 0
Deducting bills of doubtful realization 77,300 00 0
44,114,519 21 0
Claims against loans on securities 13,348,154 18 0
Deducting loans legally defective 1,400 00 0
13,346,754 18 0
Private claims 1,779,285 10 0
Deducting incidental Bank charges not yet settled 23,000 00 0
1,756,825 10 0
Back interests and proceeds 85,561 18 0
First effects used in trade and discounted in allotments 41,584 27 6
Cash accounts, Treasury 20,719,000 00 0
Cash accounts of the main Bank 7,287,805 10 6
Cash status of the branch bureaus 20,920,759 02 6
48,927,564 13 0
Including Treasury bills 1,462,800 00 0
Drafts and bank notes 28,629,100 00 0
Sum of gold and silver, both bullion and specie 5,787,925 05 0
54,715,489 18 0
Total assets 129,992,844 15 0
Bank notes 71,388,000 00 0
Deposits—principals bearing interest 20,757,950 00 0
Deposits—non-interest-bearing 2,304 11 0
20,760,254 11 0
Due deposit interests 268,682 12 6
Bank shares account 10,000,000 00 0
State shares or fund 1,823,000 00 0
Reserve account 131,333 09 6
State’s profit account 400,501 10 6
Treasury bills still to be retired 9,750,000 00 0
Balance in favor of royal institutions; received surpluses, and receipts for placing the same 1,317,812 22 0
Bank account with patrons:
(a) Acceptances 10,512,800 00 0
(b) Amount reserved for acceptances overdue 55,300 00 0
Balance in favor of patrons 368,263 02 6
10,936,363 02 6
Unpaid money orders 556,610 15 6
Old Bank account 59 18 0
Private claims 815,936 14 6
Dividends account:
For 2d half-year, 1853 40 00 0
For 1st half-year, 1854 20 00 0
For 2d half-year, 1854 541 20 0
For 1st half-year, 1855 340 00 0
For 2d half-year, 1855 1,125 00 0
For 1st half-year, 1856 3,580 00 0
For 2d half-year, 1856 250,000 00 0
255,646 20 0
Unapportioned extra dividend for 1856 400,501 11 0
Added the balance from 1855 4,142 18 0
404,643 29 0
Total liabilities 129,992,844 15 0
Note Circulation of the Bank of Prussia, 1856 to 1864.
YEARS. Maximum Note Circulation. Date. Minimum Note Circulation. Date. Average of Note Circulation. DEPOSIT RESOURCES.
Beginning of Year. Average of Year.
1856 47,134,900 Dec. 31 19,343,700 Feb. 23 31,863,800 24,027,146 22,915,840
1857 73,704,000 Oct. 7 43,523,000 Feb. 23 60,091,600 20,760,254 20,177,500
1858 76,762,000 Oct. 7 58,546,000 Mar. 15 67,729,400 18,947,722 20,464,210
1859 89,412,000 July 7 66,081,000 Mar. 7 75,268,000 19,947,722 18,978,600
1860 93,029,000 June 30 69,768,000 Mar. 15 81,394,000 19,689,571 20,651,800
1861 103,846,000 June 30 85,242,000 Mar. 15 95,069,000 19,112,913 24,003,320
1862 119,026,000 Oct. 7 96,902,000 Mar. 7 166,514,000 21,858,378 24,929,880
1863 126,493,000 June 30 103,469,000 Mar. 23 112,825,000 25,561,045 26,286,770
1864 131,036,000 June 30 106,067,000 Dec. 7 116,121,000 25,876,385 24,206,350
Transactions in Bills of Exchange by Bank of Prussia, 1856 to 1864.
YEARS. Spot Bills Discounted in Year. Average Outlay for Discount Spot Bills. BOUGHT BILLS. AVERAGE OUTLAY FOR REMITTANCE BILLS.
Domestic. Foreign. Domestic. Foreign.
1856 134,997,859 22,285,700 190,196,211 3,517,262 16,961,000 398,000
1857 177,339,754 30,672,000 245,702,026 4,328,965 24,340,000 473,000
1858 172,948,316 32,798,845 202,118,841 4,059,278 20,069,300 532,000
1859 171,079,906 33,880,000 198,613,819 5,748,500 19,647,600 692,000
1860 144,001,073 27,394,600 205,806,947 4,451,393 17,072,000 648,000
1861 145,097,106 25,901,600 216,805,824 6,863,142 16,787,900 1,077,000
1862 165,265,500 28,650,900 255,306,018 4,843,681 21,314,100 688,000
1863 212,519,809 36,133,500 301,858,231 5,526,381 27,836,700 802,000
1864 218,951,629 38,555,100 305,624,764 13,356,150 28,317,600 1,966,900
Edition: current; Page: [20]
Balance-sheet of the Prussian Bank, December 31, 1865.
Thalers. Gro. Pf.
Amount in effects at the purchase value 12,270,463 00 6
Real estate 1,045,500 00 0
At the main Bank (inc. Brandenburg) 5,140,966 21 6
At the branch bureaus 42,621,135 02 0
47,762,101 23 6
Remittance bills, domestic, main Bank 9,124,023 03 0
At the branch bureaus 23,866,328 06 0
32,990,351 09 0
Bills, foreign 2,041,250 15 0
82,793,703 17 6
Deducting bills of doubtful realization 131,000 00 0
82,662,603 17 6
Loan claims 18,199,803 06 0
Deducting loans not pledged in strict accordance with the Bank regulations 630 00 0
18,109,173 06 0
Sundry claims, including balances in favor of correspondents. 740,156 26 6
Bank notes unfit for circulation 1,867,740 00 0
2,607,896 26 6
Sundry effects 35,978 15 0
At the main Bank, including Brandenburg 65,618,294 00 0
At the branches 44,846,665 05 0
110,464,959 05 0
Gold and silver bullion and specie 20,986,480 17 0
131,451,439 22 0
Under this head are included 59,817,000 thalers in gold.
67,820,000 thalers in bank notes.
1,967,000 thalers in Treasury bills and private bank notes.
1,143,800 thalers in acceptances of patrons.
703,600 thalers in advances to be reckoned.
131,451,400 thalers.
Total Assets 248,273,054 27 6
Bank notes in circulation 125,252,542 15 0
In the Bank vaults 67,820,000 00 0
Unfit for circulation 11,867,740 00 0
194,890,282 15 0
Deposits—on interest 20,045,750 00 0
Deposits—not on interest 58,042 16 6
20,103,792 16 6
Interest due on deposits 260,798 04 0
Bank shares account 15,000,000 00 0
State subscription 1,897,800 00 0
Reserve account 4,232,310 28 6
State profits 964,936 01 0
Balance in favor of royal institutions from their actual proceeds 4,098,416 02 0
Bank accounts:
Acceptances in circulation 3,042,000 00 0
In the Bank vaults 1,143,800 00 0
4,185,800 00 0
Reserved amount for accepted indorsements overdue 10,400 00 0
Balance in favor of patrons 148,514 08 6
4,344,717 08 6
Unpaid money orders 541,020 08 6
Sundry claims 562,209 28 0
Uncollected interest and proceeds 268,475 19 6
Dividend account (dividends due and not yet collected) 142,101 20 0
Unapportioned extra dividend for 1865 994,936 01 6
Added the balance from 1864 1,260 24 6
966,196 26 0
Total liabilities 248,273,054 27 6
Balance-sheet of the Prussian Bank, December 31, 1872.
Thalers. Gro. Pf.
Real estate 1,057,820 00 0
Purchase of real estate for the building of a new head bank 638,105 20 0
Spot bills at the main Bank, including Brandenburg 11,218,801 27 0
Spot bills at the bureaus 69,004,505 07 6
80,223,307 04 6
Domestic remittance bills, main Bank 23,958,092 19 0
Domestic remittance bills, bureaus 76,412,628 08 6
100,370,720 27 6
Foreign bills 3,120,179 14 0
183,714,257 16 0
Deducting those of doubtful realization 200,180 00 0
183,514,027 16 0
Loan claims 31,669,770 00 0
Sundry claims 2,109,594 24 0
Deducting for the building and furnishing of the new Bank building 100,000 00 0
2,009,594 24 0
Bank notes unfit for circulation 1,086,392 15 0
3,095,987 09 0
Sundry effects: discounted allotted effects 331,588 04 0
Effects on ’change December 31, 1872 11,574 07 0
343,162 11 0
Cash—balance of the main bank, including Brandenburg 67,104,777 26 6
Cash bureaus 210,126,641 26 6
277,231,419 23 0
Silver bullion and specie 8,128,653 00 0
Gold bullion and specie 38,204,875 09 0
323,564,948 00 0
Total assets 543,883,820 28 0
Under this head are included 184,341,000 thalers in gold and silver.
135,351,000 thalers in bank notes.
3,529,000 thalers in Treasury bills and private bank notes.
344,000 thalers in advances to be reckoned in.
323,565,000 thalers.
Thalers. Gro. Pf.
Bank notes in circulation 311,531,020 00 0
Bank notes on hand 135,351,000 00 0
Bank notes unfit for circulation 1,086,392 00 0
447,968,412 15 0
Deposits—on interest 27,703,560 00 0
Deposits—not on interest 3,490 12 6
27,707,050 12 6
Interest due on deposits 312,342 23 0
Bank shares account 20,000,000 00 0
State subscription 1,906,800 00 0
Reserve account 6,000,000 00 0
State profits account 1,772,697 11 6
Balance in favor of royal treasuries from actual surpluses 724,193 00 0
Balance in favor of the Imperial Treasury 1,753,966 20 0
Bank accounts—balance in favor of patrons 31,504,284 09 0
Bank accounts—unpaid money orders 841,764 07 6
Bank accounts—sundry claims 593,546 16 6
Dividend account (dividends to be paid) 231,990 25 0
Unapportioned extra dividend for 1872 1,772,697 11 0
Added balance from 1871 1,755 09 0
1,774,452 20 0
Uncollected interests and proceeds 792,319 18 0
Total liabilities 543,883,820 28 0

However, we are anticipating our delineation; and before we pass on to the period of the great monetary and banking systems of our own times, we must consider the other German banks.

Edition: current; Page: [23]


WITH the exception of the Prussian Bank, the Maritime Association, the Nuremberg Bank, and the East Prussian mortgage companies, all the German issuing, discount, and mortgage banks, as well as the loan and deposit institutions, have originated in this century. Discount and loan banks were first organized in Bremen and Lubeck, in 1817 and 1819. Then came the Bavarian Wechsel und Hypothekenbank, in 1834, which was started as a bank of issue on the model of the Austrian Nationalbank. This was followed by the Leipzig Bank, with a branch in Dresden. The national life was roused to a new activity by the momentous events of 1848; and in the course of the subsequent Crimean War, an extraordinary season of speculation set in, which was fostered by stock-jobbing, and which brought into existence a large number of circulating banks in all parts of Germany, together with some crédit mobilier establishments in the principal towns. This movement was not a little accelerated by the extremely conservative, and in itself most praiseworthy attitude of the solid Prussian Bank, and the moderation of the Prussian Government in regard to the issue of bank notes. In that stormy period of speculation, exaggerated still further by the notorious Tartar embassy concerning the premature fall of Sebastopol, there were universal complaints that the bank note circulation in Prussia was insufficient for the requirements of existing trade. Speculators and stock-jobbers, instigated by the example of Paris, had prompt remedies to propose toward relieving this want. Upon the institution of the Crédit Mobilier and the Crédit Foncier in that city, the speculators succeeded within the short space of two years in obtaining concessions for the creation of banks of issue in all those German States where such banks had not yet been established; more especially in the States adjacent to Prussia, or in those which used standard thalers. First there came a bank of issue that was a veritable necessity to the importance of the place; namely, the Bank of Frankfort. The observer of the money transactions in that city prior to 1854 (as even in those days Frankfort had a wealthy and Edition: current; Page: [24] powerful exchange and a heavy domestic trade) must have been astonished that the citizens had managed to do without a bank for so many years, under the prevailing silver tender. In all hours of the forenoon, the time when cash payments were made, innumerable carts and carriers might be seen thronging the streets with bags and barrels of silver, at a great waste of time and expense. Nowadays, of course, payments are made in drafts, cheques, and bank notes, the latter generally serving merely to balance unequal accounts. Banks also effect the cashing of most kinds of commercial paper; and a single carrier, with a big portfolio under his arm, now does the work of a multitude of porters and carters.

This prosperous inauguration of a bank in one of the most substantial and wealthy cities of Germany was soon followed by the creation of nine private banks in Prussia, and fifteen banks of issue in various German States. Those in Prussia were at Berlin, Breslau, Dantzig, Cologne, Königsberg, Magdeburg, Posen, Stettin, and Görlitz, with a nominal capital of a million thalers each, save that the Stettin bank had a capital of 1,899,000 thalers. The fifteen banks in other States were at Bautzen, Brunswick, Bremen, Bückeburg, Darmstadt, Dessau, Gera, Gotha, Hanover, Hamburg, Lubeck, Meiningen, Sondershausen, Weimar, and Wiesbaden, with a collective capital (including that of the Frankfort Bank) of 81,000,000 thalers, in round numbers. The capital stock of the Frankfort Bank was ten million florins, and that of the Nassau provincial bank at Wiesbaden three and a half million florins; half of which sums were furnished by private subscription, and half by the State. Leaving out these two instances of the use of florins instead of thalers, we find that the total thaler capital of the German private banks outside of Prussia was not far from seventy million thalers. In 1866, the clear proceeds in interest and dividends reached a total of nearly four million thalers upon a capital stock of 16,897,000 thalers, and a reserve fund of 4,723,000 thalers. The aggregate dividends of the nine Prussian banks of issue amounted to six and a half million thalers; and the net proceeds of nineteen other German banks of issue gave an average of four and three-tenths per cent. We shall subjoin a few balance-sheets of these banks for the year 1862. It may be observed that the ordinances governing most of these banks followed the statutes of the Prussian Bank, with this distinction, that certain of the smaller, country banks would sometimes widely deviate from the Prussian standard, with the result of a far-reaching decline in their solidity. We must also bear in mind that the institution of banks of issue in the smaller German States, numbering at that time above thirty, was authorized only by State concession; and no more than one bank of issue could be allowed in each province. The banks were mostly founded by stock-jobbers and speculators, who gave themselves little trouble in the responsible task of manning, at short notice, so great a number of new enterprises with experienced, intelligent, and honest directors. The truth is, that the results outside the great trade marts and principal towns were far short of the successful achievements of the Prussian Bank, whose administration Edition: current; Page: [25] had prided itself for more than a century in the appointment of sterling officers and the maintenance of approved traditions. The smaller German banks of issue cannot therefore count on an extensive future; and although they were spared, on occasion of the monetary and banking reforms which put an end to the confusion of German financial operations, the subsequent development of the Imperial Bank is sufficient evidence that their days are numbered.

We subjoin some statistics of the condition of prominent German banks of issue for the year 1862.

Edition: current; Page: [26]
Balance-sheet of German Banks of Issue for the Year 1862, expressed in Millions of Francs.
CASH. Portfolio of Remaining Effective Assets. Total. Capital Paid in. Deposits. CIRCULATING NOTES.
Specie. Own B’k Notes. In Circulation. In the Safes.
1 Prussian Bank 1862 277.43 194.16 339.08 810.67 63.37 95.85 457.29 194.16 810.67
2 Union of Berlin 1862 1.47 1.26 4.77 7.50 3.75 2.49 1.26 7.50
3 Bank of Stettin 1862 1.40 16.57 17.97 7.12 7.10 3.75 17.97
4 Bank of Breslau 1862 1.36 6.31 7.67 3.75 17 3.75 7.76
5 Bank of Posen 1862 1.26 7.16 8.42 3.75 92 3.75 8.43
6 Bank of Magdeburg 1862 1.07 7.41 8.48 3.75 98 3.75 8.48
7 Bank of Dantzig 1862 1.44 9.32 10.76 3.75 3.26 3.75 10.76
8 Bank of Cologne 1862 1.28 9.75 11.03 3.75 3.53 3.75 11.03
9 Bank of Königsberg 1862 1.18 7.27 8.45 3.75 1.01 3.69 8.45
Total of the Prussian Banks 1862 287.90 195.42 407.64 890.95 96.74 112.82 485.97 195.42 891.05
10 Bank of Leipzig 1862 14.71 21.69 19.85 56.25 11.25 23.31 21.69 56.25
11 Bank of Bautzen 1862 2.39 14.07 16.46 2.06 10.65 3.75 16.46
12 Bank of Dessau 1862 12 11.48 11.60 11.25 16 19 11.60
13 Bank of Lubeck 1862 49 3.49 3.98 1.50 8 2.40 3.98
14 Bank of Rostock 1862 1.52 11.09 12.61 4.74 4.12 3.75 12.61
15 Bank of Bremen 1862 3.29 33.02 36.31 16.50 12.39 7.42 36.31
16 Bank of Thuringia at Sondershausen 1862 41 8.67 9.08 7.50 31 1.27 9.08
17 Bank of Gera 1862 2.32 13.62 15.94 9.37 6 6.51 15.94
18 Bank of Weimar 1862 5.55 29.33 34.88 18.75 3.49 11.64 34.88
19 Bank of Gotha 1862 2.71 10.70 13.41 5.25 1.26 6.90 13.41
20 Bank of Meiningen 1862 3.05 18.06 21.11 15.00 6.11 21.11
21 Bank of Luxemburg 1862 15 4.83 9.95 14.63 10.00 10 4.53 14.63
22 Bank of Brunswick 1862 1.97 4.38 16.15 22.50 13.12 5.00 4.38 22.50
23 Bank of Hanover 1862 2.45 23.76 26.21 20.32 45 5.44 26.21
24 Bank of Munich 1862 9.63 63.81 73.44 42.86 13.44 17.14 73.44
25 Bank of Frankfort 1862 29.21 2.89 46.98 79.08 21.43 1 54.75 2.89 79.08
26 Bank of Darmstadt 1862 1.39 7.07 8.46 4.57 3.89 8.46
27 Bank of Hamburg 1862 8 2.49 2.57 2.14 28 15 2.57
28 Bank of Nassau 1862 1.87 38.75 40.62 30.46 4.80 5.36 40.62
29 Bank of Bückeburg 1862 8 44 2.24 2.76 1.88 14 44 2.76
Total of the Zollverein Banks 1862 83.39 34.23 384.58 501.90 249.95 51.50 165.32 33.93 501.90
Total German banks, excluding the Austrian Nat’l 1862 371.29 229.65 792.22 1,392.85 346.69 164.32 651.29 229.35 1,392.95
Bank of Austria 1862 262.68 263.46 1,067.19 1,340.65
Edition: current; Page: [27]
Balance of the Bank of Frankfort, December 31, 1867.
1. Cash account: { Ready hard money, florins 16,977,594.39 } 21,153,764.39
{ Bank notes, florins 4,176,170.00 }
2. Discount bills account: Discounted bills on Frankfort-on-the-Main 5,030,750.31
3. Account current for bills: Bills of Frankfort-on-the-Main, from transactions with correspondents abroad 4,966,621.13
4. Loan account: Advanced on pledges 3,155,530.53
5. Loaned to the city of Frankfort-on-the-Main: Extraordinary loan to the Government of the city of Frankfort and its dependencies 5,747,008.45
6. Loan interest account: Interest due on pledged advances to December 31st 69,720.27
7. Foreign exchange account: Foreign exchanges 4,777,703.35
8. Accounts current: Balance against foreign bankers 357,129.57
9. Sometime Free City of Frankfort-on-the-Main: Interest-bearing loan (Statute Art. 79) 1,000,000.00
10. Effects account: Our own ready effects, including current interest to Dec. 31st. 744,893.46
11. Effects account of the reserve fund: Ready effects, including current interest to December 31st 1,343,972.37
12. Effects account of the Pension fund: Ready effects, including current interest to December 31st 21,541.12
13. Bank real-estate account: Cost price of the Bank building 64,000.00
Total 48,432,637.35
1. Capital stock account: 20,000 paid shares at 500 florins 10,000,000.00
2. Bank notes account: To the Treasury for issue of proffered bank notes 30,000,000.00
3. Indorsement account: Balance in favor of indorsement creditors 6,397,430.00
4. Discount account: Carried over in back interests to 1868 13,332.42
5. Interest account of accounts current exchanges: Back interests carried over to 1868 16,643.42
6. General expenses account: Sum of sundry expenses from 1867, to be paid in 1868 18,901.21
7. Dividends account for the years 1862-66—uncollected dividends:
For 1862 on 4 shares at 27½ florins 110.00 } 7,300.30
For 1863 on 2 shares at 30 florins 60.00 }
For 1864 on 9 shares at 37½ florins 337.30 }
For 1865 on 3 shares at 35 florins 105.00 }
For 1866 on 176 shares at 38 florins 6,688.00 }
8. Dividends account for 1867: Dividends to be apportioned for 1867 at 28 florins per share, on 20,000 shares 560,000.00
9. Reserve fund account: Balance of the same December 31st 1,377,924.09
10. Pension fund account: Balance of the same December 31st 21,567.49
11. Profit and loss account: Unapportioned dividends carried over to 1868 19,497.22
Total 48,432,637.35
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WE have been describing a state of affairs prior to the reorganization of the German Empire, shortly after the momentous military events of 1870. The Government authorities now promptly saw the necessity of readjusting the currency, as well as of instituting political changes. The antiquated silver coinages had become inextricably confused, and caused serious inconvenience in the transaction of business. It was therefore purposed to centralize the banking system, following the plans of the Banks of England and France. Nor did the proposed currency reforms encounter any serious objection—so palpable were the inconveniences of the unsettled money standards to every household and purse. The Austro-German money league was dissolved, and a universal gold standard was proclaimed. The third part of the old silver thaler was made the unit of value, under the denomination of Reichsmark, or Imperial mark; and these marks were coined for general circulation. Gold and silver coins of the old values were called in, and Imperial gold pieces were coined, with values of ten and twenty marks. The new monetary ordinance was first expressed by the law of December 4, 1871, concerning Imperial gold pieces; and its completed enactment followed in the currency law of 1873. The rate of alloy for gold coins was fixed at nine hundred thousand parts of gold to one hundred thousand parts of copper; whereas the proportion for British and Russian gold coins is eleven to one. Although the silver thalers had not yet been withdrawn, the Imperial Diet, without waiting for advice from the Government, decreed an act for the stamping of five-mark “thalers,” which step proved rather too hasty, since the old three-mark thalers are circulating to-day, and in greater numbers than is desirable. The other old coins are to be cleared off irrevocably, at the expiration of a provisional period of transition.

Part and parcel of the new currency regulations was the recall of the former State and provincial bank notes. The Imperial Government, however, had committed the mistake of setting the new gold pieces in circulation Edition: current; Page: [29] before withdrawing an equivalent amount of the previous coins—the fate of the latter being finally decreed by the currency law of 1873. In view of this obvious imprudence, we are not surprised at the admission of the Imperial Minister Delbrück, that by the late autumn of 1874 the hard money circulation of the German Empire had increased by 762,000,000 marks. This circumstance had contributed not a little to exaggerate the over-speculations of 1872, through repeated offers of the French gold—a result already produced in case of the Maritime Association, to which the Government had from time to time intrusted the French “billions” for productive investment. Certainly one sequel to such speculations was the great commercial crisis which broke out in the spring of 1873. In the money exchanges and bourses the mistake passed unobserved as long as the payments of the French war debt of five billion francs kept coming in. But when France had completed these payments—much sooner than was anticipated—and the course of exchange veered about and favored the French, gold immediately began to flow out again, because the German currency supply was in excess of the home demand. When, in the second half of the year 1874, this outflow of gold into France, by way of the Brussels mint, had reached an amount between 300,000,000 and 500,000,000 marks, the German governments adopted prompt measures to stem the tide. First of all, the State paper currency of the various German provinces was redeemed and withdrawn from circulation, and was partly supplanted by the newly created Imperial bank notes.


The Imperial bank notes were to be issued to the amount of 120,000,000 marks, with the design of giving representative circulation to the war treasure of the same magnitude, which was received from Prussia and preserved in the Julian Tower at Spandau, for secret preparations of war, in times of peril. There was a further, provisional augmentation of these notes by a sum of about forty million marks, in order to ease the German governments in the matter of withdrawing their old paper currency. To-day, this whole item is duly and constitutionally settled. The next step was to retire and melt over the small silver denominations and also the silver thalers. This operation continued in orderly process until the Imperial Chancellor, Prince Bismarck, influenced by silver partisans, obtained ratification for the silver purchases of 1878. Later, there was a considerable export of coined silver to fill a contract with the Egyptian Government, though a large amount is still on hand in the cellars of the Imperial Bank. All this experience had a powerful effect in the discussion of bank reforms which occupied the Imperial Diet in the second half of 1874; and the subsequent Bank Act shows an unmistakable tendency to restrict the circulation of notes. Expert financiers had long been shy of a redundant issue of paper currency, and esteemed it their first duty to surround the privilege of emitting bank notes Edition: current; Page: [30] with the utmost possible safeguards. The abuses of paper money had been too glaring; not only in the eighteenth century, but also in the first half of the present century, both in England, the United States, various parts of Germany, and in France and Austria. Still more recent instances occur in the case of Russia and certain transatlantic republics. Hence it was that an extreme reactionary movement set in, which involved even the Bank of England in serious trouble, through the restrictive Bank Act of 1844. At the very time when the Bank should have been a propelling instrument, its machinery stood stock-still, and had to suspend payments no less than three times. The limitation clauses, with respect to the issue of notes, had worked in a manner quite contrary to the anticipations of the framer of the law. So, too, if the German Government and the Imperial Diet in 1874 could have foreseen the present situation in England, where for some years past the Bank has had more gold in its vaults than notes in circulation—which surplus has risen from ten to twenty millions sterling within a single year—or could they likewise have anticipated the present condition of the German Imperial Bank, which frequently has a greater supply of hard money than of notes—they would not have bound the issue of Imperial bank notes nor of the old provincial notes that were still of legal validity by such narrow limitations. Neither would they have put an Imperial tax on notes which may be issued beyond the prescribed contingent—a device also followed by the reorganized Bank of Austro-Hungary. These were steps in a retrograde direction, and not in the spirit of the old Prussian Bank, whose constitution imposed no other restriction than that which was prudently exercised by merchants of stability; nor did any bank ever maintain a more solid conservatism in practice. By good fortune, however, and in spite of the great commercial crises of 1873 and 1890, the international money market took such a trend as not to occasion disaster by reason of the possibly excessive narrowing of the contingent notes. The whole course of affairs was eminently favorable toward a centralizing of the entire system of the banks of issue.

The various boards of directors had not failed to advocate their respective doctrines while the Bank Act was under discussion. Some were still in favor of many banks of issue; and this opinion implied a disposition to support the old system. Owing to the many German sovereign princes who enjoyed the rights of State concessions, there were perhaps more banks of issue than there would have been in case of unrestricted freedom to all. Be this as it may, the German Bank Act of 1872 confirmed thirty-two banks of issue in their full rights, which enabled them to operate side by side with the Imperial Bank, as reconstituted on the actual foundations of the Prussian Bank. We shall recur later to the matter of their contingent issue. Suffice it to say here that the wonderfully rapid and flourishing growth of the Imperial Bank quite eclipsed the advocates of multiplied banks of issue, and would even appear to justify the radical adherents of the opposite contention that there be but one State bank. Of the total number of thirty-three German Edition: current; Page: [31] banks of issue—including the Imperial Bank—which were opened for business, according to the new Imperial monetary standards, in 1875, only seven, besides the Imperial Bank, are in operation to-day; and even these might be easily and advantageously replaced by branch institutions attached directly to the Imperial Bank.

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UNDER this title, the German Bank Act of 1875 creates a bank subject to Imperial supervision and direction; or, more strictly, the Prussian Bank is reconstituted on changed conditions, and is vested with juridical personality. Its function is to regulate the money circulation within the jurisdiction of the German Empire, to facilitate settlements, and utilize available capital. The main clauses of the Bank Act of 1875 are as follows:

(1) Authorization for the issue of bank notes may be obtained only under Imperial law; and there shall be no emitting of bank notes above the amount allowed by the present decree.

(2) There shall be no obligation to accept bank notes in case of those payments which are to be legally discharged in coin; and neither shall such obligation be created by provincial laws, in behalf of provincial exchequers.

[This restriction has nowise hindered the circulation of the Imperial bank notes to a degree surpassing that of compulsory legal tender in the form of State notes; and the Imperial notes are also more freely accepted abroad.]

(3) Bank notes may be issued only in the denominations of one hundred, two hundred, five hundred, and one thousand marks; and the maximum value of a bank note shall be one thousand marks.

[It may be stated here that no smaller denomination has yet been issued than one hundred marks. Denominations less than this are available in Imperial Treasury bills.]

(4) Every bank is obliged to redeem its notes immediately upon presentation of the same, and at their full value as determined by the new law; as well as to accept them in payment at all times, according to their full value as before mentioned, and not only at the main bank but at all branches thereof. Damaged notes must be made good by the bank, in so far as the bearer shall either present a part of a note greater than one-half, or else furnish proof that the remainder of a note of which he presents but one-half or less than a half, has been destroyed. The bank is not obliged to indemnify for notes which are totally destroyed or lost.

(5) Bank notes which return to the coffers in a damaged or soiled condition may not be reissued.

(6) The calling in or withdrawal of the notes of a bank, or of any description of bank notes, is allowable only by the direction or approval of the Federal Council. Such dispositions are made in case the greater part of the notes of a bank are damaged or soiled; or where the right of issuing Edition: current; Page: [33] bank notes has been suspended. The latter measure is applied when proof is produced that the notes to be withdrawn have been counterfeited by other notes in circulation.

(7) Banks which issue notes are not allowed (a) to accept bills, nor (b) to buy or sell merchandise or current commercial paper on credit, whether on their own account or on account of outside parties, nor to take security for the discharge of such business.

(8) Banks issuing notes are required (a) to publish reports of their assets and liabilities on the 7th, 15th, 23d, and on the last day of each month, and the utmost limit of delayed reports must not exceed five days from the appointed term; (b) within three months at the latest, from the close of each business year, to publish an exact balance of their assets and liabilities, together with yearly statements of their profits and losses—the said reports to be published in the “Reichsanzeiger,”* at the bank’s expense.

The weekly reports must specify (a) on the side of liabilities: The stock of the reserve fund, the amount of notes in circulation, obligations both daily and of longer maturity, deposits, and all other liabilities; (b) on the side of assets, coin and bullion, the sum of German currency on hand, gold in bullion or in foreign coin to be reckoned at 1392 marks per pound refined, the amount of Imperial Treasury bills, notes of other banks, bills of exchange, loan claims (dead pledge loans), effects, and all other assets.

The Federal Council determines which classes of assets and liabilities are to be separately indicated in the yearly balances. Moreover, in both the yearly and the weekly reports there must be evidence of such contingent obligations as may have arisen from the negotiation of countless additional domestic bills of exchange.

(9) On and after January 1, 1876, banks whose note circulation shall have exceeded their coin reserve and the amount of notes prescribed in proportion to their capital must pay into the Imperial Exchequer a tax on the surplus issue, at the rate of five per cent. per annum. This tax is payable either in such German currency as the bank may have on hand—Imperial Treasury bills, notes of other banks, etc.—or in gold bullion and foreign gold coin, valued at 1392 marks per pound fine. Where the right of issuing notes expires, the resultant gain of effective uncovered notes, exclusively of those appropriated for taxes, accrues to the Imperial Bank.

(10) For the purpose of setting the tax, the bank administration shall determine the amount of ready currency on hand, on the 7th, 15th, 23d, and last day of each month, and turn it over to the supervising authorities. At the close of each year, and on the basis of these indications, the tax payable by the bank is fixed in such way that five-fourths of eight per cent. of every taxable surplus of notes issued, as evidenced by these indications, is calculated to be tax toll. The sum of the taxable amounts derived from the several assessments constitutes the tax payable by the bank to the Imperial Exchequer, in no case later than January 31st of the following year.

(11) Foreign bank notes or other non-interest-bearing obligations made payable to bearer and proceeding from foreign corporations, companies, or private individuals, may not be used for payments within the Imperial jurisdiction, whether offered alone or together with other mediums of settlement, in Imperial or national tenders of value.

(12) The headquarters of the Imperial Bank are in Berlin; but it may have branches in every part of the Empire, and the Federal Council is empowered to institute such branches in specified places.

(13) The Imperial Bank is authorized to pursue the following kinds of business: (a) To buy and sell gold and silver in bullion or coined. (b) To discount, buy, and sell bills of exchange whose maturity shall be three months at the longest, and for which usually three—and in no case less than two—accredited vouchers shall stand good. Furthermore, to discount, buy, and sell bonds of the Empire or of any German State, or domestic municipal corporations, provided such bonds mature within three months at the longest, and conform to the new standards of value. (c) To grant interest-bearing loans for terms no longer than three months, upon movable security (lombard, or deposit loan business), such as: Gold and silver, coined or uncoined; interest-bearing or non-transferable bonds maturing within a maximum term of three months, whether of the Empire, a German State, or of domestic municipal corporations; also, interest-bearing non-transferable Edition: current; Page: [34] bonds on which the interest is guaranteed by the Empire or by any one of the German States; upon capital stock and stock priority shares, fully paid up, of German railway companies in actual operation; and on mortgage bonds of provincial, municipal, or other land credit institutions of Germany that are subject to State control—including shares of German mortgage banks—to an amount never exceeding three-fourths of their market value. Upon interest-bearing non-transferable bonds of foreign States, and foreign railway priority bonds covered by State security; in amounts not exceeding fifty per cent. of their market value. Upon bills of exchange produced by recognized, substantial vouchers, after deducting at least five per cent. of their market value. On pledges of native merchandise, in amounts within two-thirds of their value. (d) With reference to buying and selling bonds under the provisions of the preceding articie, the existing status of the Bank’s resources, as reported by the Board of Directors, will determine how far the means of the Bank may be applied to such purchases [vide 26].* (e) To negotiate collections (encashments) for the account of individuals, institutions, and governing boards; and upon security, as before mentioned, to furnish payments, and make orders or conveyances on the branch banks or on correspondents. (f) Upon prior security, to buy in behalf of outside parties effects of all kinds, including the precious metals; and after delivery, to sell the same. (g) To receive moneys in circulation or on deposit, with or without interest. But the sum of interest-yielding deposits must not exceed that of the capital stock and reserve fund. (h) To accept the custody or other management of objects of value.

(14) The Imperial Bank is obliged to exchange its notes for gold bullion at the fixed rate of 1392 marks per pound fine. The Bank is authorized to appoint experts to test and cut such gold, at the expense of the seller.

(15) The Imperial Bank must publish its existing rates of discount, and of interest on loans. The statements contained in its weekly reports are based upon the books of the Imperial Board of Bank Directors, and on those of the branch institutions, which are immediate dependencies of the head institution.

(16) The Imperial Bank is empowered to issue bank notes in proportion to its business needs. The manufacture and the cancellation of the same are subject to the control of the Imperial Debit Commissioners, or Court of Accounts; and a special associate commissioner is appointed by the Emperor for this particular business.

(17) The Imperial Bank is required at all times to maintain a money and bullion reserve, amounting to at least one-third of its notes in circulation. This first reserve may include German currency, Imperial Treasury bills, and gold in bullion or foreign coin, reckoned at 1392 marks per pound fine. The remainder may be covered by discounted bills maturing no later than three months from date, and protected usually by three—never less than two—solid and accredited vouchers.

[With respect to prudent and efficient management of its exchange portfolio, the old Prussian Bank had long enjoyed extraordinary confidence; and even during the great Napoleonic wars, at the beginning of this century, the matured bills of the Bank were more promptly paid than the interest due from mortgage debtors came in; and although the Bank statutes then allowed a freer course of action than those governing the Imperial Bank, the former institution never succumbed to calamity, nor even felt embarrassment.]

(18) The Imperial Bank is obliged to redeem its notes to the bearer in current German money; either (a) immediately upon presentation at its headquarters in Berlin, or (b) at the branch banks, in so far as their cash resources and their financial needs may warrant.

(19) The Imperial Bank in Berlin, its branches in towns of more than eighty thousand inhabitants, as also any branch bank issuing notes of which this article shall treat, are obliged to accept notes in payment at their full newly prescribed value, whenever such notes shall have been issued by the banks designated by the Imperial Chancellor, according to Section 45 of the Bank Act, and as long as the given bank or banks of issue punctually perform their obligations of redemption. The bank notes received in this way may be either presented exclusively for payment, or else applied to payments at the bank which shall have issued them, or to payments at the place where the Edition: current; Page: [35] issuing bank has its headquarters. The Imperial Bank is authorized to cancel agreements with other German banks of issue, whensoever they shall have renounced the right of issuing notes.

(20) The Imperial Bank is authorized to sell the pledges of loan debtors, in case the value thereof should so decline as to be less than the amount loaned.

(21) The Imperial Bank and its branches are free, throughout the Imperial dominions, from State revenue and trade taxes.

(22) The Imperial Bank is obliged to receive payments for the account of the Empire, without compensation, and also to make such payments, to the extent of the Imperial credit. The Bank is under the like obligations toward all the Federal States.

(23) The capital stock of the Imperial Bank is constituted by 40,000 personal shares of 3000 marks each, amounting to a total of 120,000,000 marks. The shareholders are not personally responsible for the obligations of the Imperial Bank.

(24) The clear profits of the Imperial Bank, as determined by the annual settlement of accounts, are disposed of as follows: (1) First of all, a regular dividend of four and one-half per cent. is calculated upon the basis of the capital stock, and apportioned to the shareholders; (2) then a quota of twenty per cent. of the surplus, if any, is applied to the reserve fund, as long as the latter falls short of one-fourth the capital stock; (3) the remaining surplus is equally divided between the shareholders and the Imperial Exchequer, in so far as the total dividend of the shareholders shall not exceed eight per cent. Any ultimate residue is divided in the proportion of one-fourth to the shareholders and three-fourths to the Imperial Exchequer. Should the clear profits come short of full four and one-half per cent. of the capital stock, the deficit shall be supplied from the reserve fund. Any premium procurable by the negotiation of shares shall flow into the reserve fund. Arrears of dividends become superannuated (i. e., are canceled) at the expiration of four years from the date when they were due; the proceeds then accruing to the Bank.

(25) The Imperial supervision of the Reichsbank is exercised by a Board of Inspectors, comprising the Chancellor of the Empire as president, and four other members. One of the latter is appointed by the Emperor; the other three by the Federal Council. This Board of Inspectors holds its meetings quarterly, and takes cognizance of all the operations and business arrangements of the Bank.

(26) The Imperial direction of the Bank is exercised by the Chancellor of the Empire, and subject to him, the Imperial Board of Directors. The Chancellor, or his representative as appointed by the Emperor, directs the entire administration of the Bank, both issuing orders for its business operations to the Imperial Board of Directors and the branch institutions, and also fixing the rules and working instructions which govern the Bank officials. The Board of Directors, thus subject to the Imperial Chancellor, is the administrative and executive corps of the Bank, as viewed from outside, or as representing the Bank in public.

(27) The board consists of a president and the requisite number of members, and passes its resolutions by majority of votes; but its whole proceedings are subject to the prescription and instructions of the Imperial Chancellor. The president and members of the board are appointed by the Kaiser for life, upon recommendation of the Federal Council.

(28) The officers of the Imperial Bank have the same rights, and are bound by the same obligations, as other Imperial officials. Their salaries, pensions, and other official dues, as likewise those of their survivors, are paid by the Imperial Bank. No officer of the Imperial Bank may hold shares of the same.

(29) The accounts of the Imperial Bank are subject to revision by the Imperial Court of Accounts.

(30) The shareholders exercise their part in the affairs of the Imperial Bank through their General Assembly and a Central Committee elected from the same and consisting of fifteen members or their substitutes. Only such members are chosen from the General Assembly of shareholders as hold at least three shares. All the members and their substitutes must have their residence within the Imperial dominions; and at least nine members and nine deputy members must reside in Berlin.

(31) A third of the members go out of office annually; but members whose term has expired are eligible for a new term. The Central Committee assembles at least once a month, with the Edition: current; Page: [36] president of the Imperial Board of Directors as chairman. The presence of at least seven members constitutes a quorum.

(32) The Central Committee makes monthly examination of the weekly reports concerning discounts and loans, note circulation, coin reserve, deposits, the buying and selling of gold, bills of exchange, and commercial effects, and the distribution of funds in the branch banks. The results are then promptly communicated to the auditors of accounts, along with the opinions and propositions of the Imperial Board of Directors in respect to the course of business, and any requisite measures thereto pertaining. In particular, the views of the Central Committee are to be heard in case of balance reports, profits account, changes in the budget of salaries and pensions, vacancies in the Imperial Board of Directors, needing to be referred to the advice of the Federal Council, and also matters respecting the maximum amount to which the Bank funds may be put out in pledged loans. The purchase of effects is subject to the consent of the Central Committee. The Central Committee is further heard concerning the maximum rate of discount and interest on loans, as also in the matter of changes in fundamental rules, terms of delay in the Bank statements, and agreements or contracts with other German banks

(33) Members of the Central Committee receive no salary. The General Assembly is authorized to vote the exclusion of a member who shall have violated the secrecy of the Bank, misused his office in connection with secrets thus betrayed, or otherwise lost the public confidence. In fine, any member may be excluded through whom the weal of the Bank shall appear to have been imperiled. A member who becomes insolvent, or who has been absent from the meetings for half a year, or is ineligible for reasons already stated, shall be regarded as a non-member.

(34) The continuous and special oversight of the administration of the Imperial Bank is vested in three members of the Central Committee, chosen as deputies for one year, or their substitutes eligible at the same time. These deputies are authorized to attend all the sessions of the Imperial Board of Directors, with advisory votes. They are authorized and obliged, in the usual business hours and in presence of a Bank director, to take knowledge of the course of business, to inspect the bank books and portfolios, and attend the sittings for auditing of the cash accounts. They report upon their proceedings to the Central Committee.

(35) Business with the financial departments of the Empire or of the Federal States is under the control of these deputies, and their veto suspends or cancels it—unless the Central Committee rule otherwise.

(36) In addition to the main headquarters of the Bank, certain local headquarters of the Imperial Bank may be created in places of importance designated by the Federal Council; and these shall be under the direction of a board of at least two members, and under the supervision of a bank commissioner appointed by the Emperor. At all headquarters of the Imperial Bank, where a sufficient number of qualified shareholders may be found, a district committee shall be organized, with its members elected by the Imperial Chancellor from prior lists furnished by the Bank Commissioner and the Central Committee. This district committee has the same functions in its locality as the Central Committee at the main headquarters. A continuous and special control of the course of business at the several district headquarters is exercised by two or three delegates from the district committee; and where no district committee exists, these delegates are appointed by the Imperial Chancellor.

(37) The institution of other branches may be authorized by the Imperial Chancellor, provided they are immediately subordinated to the Imperial Board of Directors; or such institution may be authorized by the latter board itself, in so far as the proposed branch or branches shall be directly attached to another branch bank.

(38) The Imperial Bank is bound by the signature of the Imperial Board of Directors; namely, by that of two members of the same. The business regulations determine how far the Imperial Bank is bound by signatures of the district headquarters. Complaints addressed either to the chief directory or the district boards, with reference to business operations, may be lodged in the local courts, where the bank in question is located.

(39) All persons belonging to the administration of the Bank must solemnly promise the strictest secrecy in every matter of bank business.

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The Imperial Bank statute decreed by the Emperor in conjunction with the Federal State contains dispositions in regard to the form of shares, coupons, and talons; forms to be observed in case of the transfer or pawning of untransferable shares; the annulment of lost shares; rules for the arrangement of the annual balance; the shape in which business communications shall be presented; specification of the public journals in which they shall appear; and lastly, the manner of liquidation to be pursued in the event of the dissolution of the Imperial Bank. The latter right was first reserved by the Empire in 1891, and may be renewed every ten years.

The closing articles of the Bank Act pertain to the settlement of affairs at the Prussian Bank, on its incorporation into the Imperial Bank. Prussia withdrew her stock subscription, which had amounted to 1,906,800 thalers, and her half of the reserve fund; and then represented the Bank in all its rights and obligations, now transferred by the Empire to the Imperial Bank, with the following provisions: Prussia receives for her cession of the Bank an indemnity of fifteen million marks, to be furnished from the resources of the Imperial Bank. The former shareholders of the Prussian Bank, upon renouncing all their vested rights in favor of the Imperial Bank, are authorized to request an exchange of their titled holdings for an equal amount in the Imperial Bank shares. If shareholders decline this exchange, the Bank must refund their full portions of the capital stock and reserve fund. The Imperial Bank is required to assume the obligations of the Prussian Bank, as accepted in 1856 with respect to State loans of 16,589,000 thalers, and pay the same from 1876 to 1925, inclusive, in semi-annual installments of 621,910 thalers. Should the concessions extended to the Imperial Bank be abridged, the Empire will see to it that, so long as no other bank is charged with this obligation, the said installments shall be paid into the Prussian Treasury to the full limit of the specified term of years. The adjustment of a certain difference between Prussia and the Empire on account of the real estate of the Prussian Bank was postponed. The Imperial Chancellor is empowered to dispose of all those shares of the Imperial Bank which are not exchanged for shares of the Prussian Bank; and also to issue Treasury bills due, with interest, on March 1, 1876, for the amount of shares left unsubscribed. The manufacture of these bills shall be referred to the Prussian Court of Accounts.


In more or less direct connection with the Imperial Bank, there are at present two hundred and sixty-three branch banks in the German Empire, which are embraced under four classes:

1. Branches in localities where bills of exchange are bought and sold, and where circulation is active.

2. Branches dealing only in loan business and negotiating bills on banking centres.

3. Branches with an exclusive business of loaning on collateral security.

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4. Branches which receive in payment the notes of provincial and issuing banks of contingent circulation, still extant.

Every business man in good standing may enter into business relations with the Imperial Bank, under the following conditions: He must first give the requisite information as to his commercial status to the bank in whose district he resides, and if his firm is reported in the mercantile directory, he shall produce an authenticated extract from the same.

Where the business is to be managed by confidential clerks, or agents, powers are to be issued for dealings with the Imperial Bank, after a strictly prescribed form; and such warrant shall be deposited at the Bank. In case the said persons are to receive payments, they must be introduced, or personally identified by the signer of the commission.


A. Domestic Bills. Bills of exchange must conform to the statutory requirements; and when issued abroad, to the laws there prevailing. They must be of at least three months’ maturity, and bear the signatures of usually three, or at least two, substantial and accredited individuals or firms. They must be indorsed at the bank of the locality where they are payable. Local and addressed bills must bear mark of acceptance before purchase of the same. Bills which are qualified by the terms, “or equivalent,” “or value,” or which are accepted for a different date from the express date of their maturity, or those which contain erasures or corrections, may not be bought by the Imperial Bank. In case of bills of blank indorsement, the proper indorsement must be furnished to the seller, and supplied by him to the Bank. Bills must bear date of maturity, be presented along with an account, and settled upon these terms.

Special statements must accompany (1) local bills (payable at the purchasing bank or one of its branches) to the amount of one hundred marks or less, which are subject to an interest of thirty pfennigs; (2) all other local bills; (3) bills of remittance (payable in other German banking localities) to the amount of one hundred marks or less, with an interest charge of thirty pfennigs; (4) all other bills of remittance.

Calculations are made according to the rules of the respective banks. There must be particular statement of the amount due, the date of maturity, place where the bill was issued and where payable, and the exact interest to be discounted. Addressed bills must bear the name and residence of the acceptor. In reckoning interest, thirty days are counted to every month, save that for notes maturing on the last of February, only twenty-eight or twenty-nine days, as the case may be, are counted for that month. Bills bought on February 15th and maturing on March 5th bear interest for twenty days; thirteen days from February 15th to February 28th; fourteen days to February 29th; seven days, if bought on February 28th, and maturing on March 5th.

The minimum term of interest is (a) four days for bills payable at the place where purchased; (b) five days for those payable elsewhere, to be delivered in parcels of ten thousand marks or over, or installments (posten) of at least twenty thousand marks, in parcels not under five thousand marks; (c) ten days for all other bills; and for every bill amounting to one hundred marks or less there is an interest charge of thirty pfennigs. For every bill above one hundred marks, the interest is at least fifty pfennigs.

B. Foreign bills. The Imperial Bank, through the instrumentality of cheques, buys bills of exchange on foreign countries; especially France, Holland, Italy, Denmark, England, Sweden and Norway, and Switzerland. Such transactions are always based on the latest official reports of foreign exchanges, as furnished by the Berlin or the Frankfort bourse. The Bank deducts a commission of one-tenth of one per cent. from the amounts purchased. For a term of fourteen days or less, “short” rates are allowed; for longer terms, rates are according to the long dates. Interest running over time is calculated by rules that govern the locality in question. Where payment of interest devolves upon the Imperial Bank, the rate is three and a half to four per cent. In respect of England, not only bills of exchange are bought, but also sole bills, post-office notes, and cheques of or on the Bank of England, its branches, and English banking houses generally: (1) Bills on London in amounts of one hundred to three thousand pounds sterling are subject to an exchange Edition: current; Page: [39] abatement of two pfennigs, at the latest rates on London per hundred pounds sterling. Addressed bills on London are at a discount of one pfennig, provided the drawee lives abroad. (2) Bills on Birmingham, Glasgow, and other provincial places are discounted at an exchange rate of five pfennigs. (3) Cheques on London in amounts of one hundred to three thousand pounds sterling bear an additional charge of six days’ interest, at a rate one per cent. lower than the discount rate of the Bank of England; but amounts less than one hundred pounds bear no such additional charge.


Money orders, cheques on domestic banking houses not connected with a clearing-house, and any paper payable in marks and at a banking locality, are collected by the Imperial Bank for a commission of one-tenth of one per cent., and a minimum commission of fifty pfennigs per single collection, with postage charged to the payee. The commission is slightly augmented in case of collections outside the district in which the bank is located; and the minimum charge per single collection is fifty pfennigs. Coupons of every sort are collected at a charge of one-fourth of one per cent., or a minimum of fifty pfennigs per single transaction. In case of paper which returns uncollected by default of payment, the Bank makes charges for protest and postage, besides an invariable charge of fifty pfennigs per single paper, without regard to the amount at stake. These collections must not exceed a term of two weeks. The indorsed papers are forwarded to the bank nearest the place of payment, and if they have a shorter term than five days to run, they bear the qualification, “Not responsible for presentation at the stated time, in the event of protest.”


The Imperial Bank and its branches grant short-dated loans at a published rate of interest, upon security in the form of the precious metals, native merchandise, and certain specified commercial paper. The main Bank requires the actual deposit of the latter, under the category of papers of value. Loans are not usually furnished in amounts for less than five hundred marks. A loan may be repaid from day to day, and also be recalled at any time, without notice or term of grace. If the debtor falls into arrear, or the interest be delayed, the Imperial Bank is authorized to sell his pledge. Interest is payable quarterly. Partial payments are allowed by installments of at least ten per cent. of the sum due, though never in amounts under five hundred marks. Should the security fail to satisfy the Bank, it reserves the right of personal claims against the pledgor. Where pledged commercial paper is subject to notice of warning, disposal by lot, collection, or other vicissitudes, the pledgor must effect or institute the necessary measures for securing the Bank, and shifting the prejudicial contingencies upon himself alone. When rates decline, he must supply the resulting deficiency. Pledged securities must be covered by fire insurance. Edition: current; Page: [40] The Imperial Bank is not responsible for damages unless they be caused by gross carelessness on the part of the Bank.


The Imperial Bank accepts two classes of commercial paper as security; the first is taken for three-fourths of its quoted value; the second for only fifty per cent. of the same. The former class includes loans and money orders issued by the Empire or the several German States; letters of mortgage from the mortgage credit companies or the joint-stock mortgage banks; obligations of the principal credit and savings banks, and priority railway bonds. The second class includes bonds of the United States, Italian rentes, Austro-Hungarian four per cent. gold rentes, bonds of the Swiss Republic, Norwegian and Swedish Government bonds, and three per cent. guaranteed priority bonds of Italian railway companies.


In order to open a bank account and facilitate the negotiation of cheques, applicants must address themselves to the bank in proximity to which they live. Should their overtures be favored, they receive certain formulated instructions, together with an account-book, in which all debit and credit transactions, whether cash or on account, are duly entered. Further dispositions in this matter are not provided by the Imperial Bank. Cash deposits, cheques, and bills of exchange payable at the Imperial Bank, likewise bills purchased and loans furnished, are at once entered in the Bank account. Cheques, bills, money orders, accounts, and other paper must be receipted and regulated in a prescribed form, for which the Bank supplies full directions. Collections are also promptly entered in the Bank account. Full receipt is withheld until payments are quite complete. Unpaid paper is charged to the account-holder, for him to settle no later than the forenoon of the day following the date when the obligation matured. The Bank has nothing to do with protesting unpaid bills. Commercial paper must be delivered to the Bank under a special mark and seal. Cash is paid out for white cheques drawn on a specified person or firm, and having the alternative designation “or bearer.” Bank accounts are managed free of charges by the Bank, but the moneys thus handled yield no interest. Account-books must be returned as often as possible, and at least once a month, for the itemized entries. The Bank prohibits the use of these accounts by third persons.


The main Bank and its branches buy and sell commercial paper for a commission of one-eighth of one per cent.

Edition: current; Page: [41]


The main Bank in Berlin accepts the custody of valuable securities and documents of every description. The transfer may take place either through an authorized agent or by post. The Bank officials are bound to observe the utmost possible secrecy with reference to such trusts. Moreover, as many as three persons in any single instance may deposit ordinary papers on making the following declaration: “We are all and severally qualified to dispose of the papers and moneys herewith conveyed, or to take receipts therefor in full.” The Imperial Bank accepts the safe and inviolate custody of such trusts both under the letter of the law and with these added obligations: (1) To draw in the appertaining coupons on days when they are due, and sell the same at the Bourse; and (2) to keep a constant watch of the lists of allotment, etc. For this manifold responsibility and the attendant risks, there is an annual fee of one-twentieth of one per cent., or three-fortieths of one per cent. in case of foreign securities.


The Imperial Bank also undertakes the custody of sealed deposits in so far as the storage facilities of the Bank admit; and no questions are asked concerning the contents of such parcels. These deposits must be accompanied with the Christian name and surname of the depositor, or the name of a firm, as the case may be; and they must be so sealed that none of the contents can escape without fracture of the seal. The maximum value thus insured is five thousand marks; though special contracts are also accepted for higher values, on consideration of a proportionately higher fee. The Bank is not responsible for losses inflicted by “act of God,” nor for internal decay of the parcels themselves. The latter provision is particularly important; as, for instance, where a great fire breaks out, and certain papers become so damaged by water as to be no longer decipherable, in such cases the depositor must bear the loss. In fact, there is no absolutely safe place in the German Empire for the custody of valuable papers, though such safety is offered in case of the Julian Tower at Spandau, where the war treasure of 120,000,000 marks in gold is preserved; and also by the “stronghold” of the Vienna Giro und Cassenverein. The storage fee for parcels thirty centimetres or less in width and height by forty centimetres in length and ten kilogrammes in weight, is ten marks per annum; and for double these dimensions twenty marks. Packages of still greater bulk are not received. The insurance fee for every thousand marks, or additional part of a thousand, is twenty-five pfennigs per annum.

Edition: current; Page: [42]


To illustrate the important reforms in the German banks of issue, we subjoin the balance-sheets of the Prussian Bank upon its transition into the Imperial Bank for December 31, 1875, and those of the Imperial Bank for 1876 and 1894, together with a comparative review of the business results achieved by the Imperial Bank from its first creation to the end of 1894. Lastly, we shall give some recent monthly reports in evidence of the significant increase in gold coin and bullion:

Balance-sheet of the Prussian Bank, December 31, 1875.
Marks. Pf.
Real estate 12,751,012 85
Bills Account:
(a) Local bills, main Bank, including
Brandenburg 26,353,407 50
Branch banks 162,958,407 78
189,311,815 28
(b) Domestic bills o remittance—
Main Bank 40,850,957 07
Branch banks 231,682,739 13
272,533,696 20
(c) Foreign bills 5,640,925 19
467,486,436 67
Deducting those of doubtful realization 636,385 66
466,850,051 01
Loans on securities 68,397,850 00
Deducting for securities not meeting Bank requirements 76,600 00
68,321,250 00
Sundry claims, including silver in bullion and specie 23,161,892 67
Bank notes unfit for circulation 6,323,127 50
29,485,020 17
Discounted allotted effects 172,472 15
Cash Account:
Main Bank, including Brandenburg 794,067,458 71
Branch banks 963,726,556 28
1,757,794,014 99
Gold, in bullion and specie 106,486,028 09
1,864,280,043 08
Total assets 2,441,859,849 26
Bank notes in circulation 735,721,000 00
Bank notes on hand 1,410,842,330 00
Bank notes unfit for circulation 6,323,127 50
2,152,886,457 50
On interest 101,095,430 00
Not on interest 208,399 00
101,303,829 62
Interest due on deposits 1,240,116 66
Bank shares account 60,000,000 00
State bonds 5,720,400 00
Reserve account 18,000,000 00
Profit account for the State 6,654,413 24
Profit for account of the Imperial Bank 62,632,841 75
Balance in favor of royal treasuries from advances made 1,744,560 00
Balance in favor of banks in account with the Bank 18,990,252 73
Unpaid money orders 148,673 24
Certificates of deposit 1,891,462 15
2,040,135 39
Sundry claims 1,586,497 74
Dividend Account:
Dividends still due 466,127 00
Unapportioned extra dividend 6,654,413 25
Brought over from 1874 7,386 75
6,661,800 00
Uncollected interest and proceeds 1,932,417 63
Total liabilities 2,441,859,849 26
Balance-sheet of the Imperial Bank on December 31, 1876.
Marks. Pf.
1. Gold in bullion or foreign coin, reckoned at 1392 marks per pound fine. 42,883,404 21
2. Cash account:
(a) Current German stamped money 457,716,306 78
(b) Imperial Treasury bills 44,702,455 00
(c-d) Our own bank notes, 500 thalers 216,249,000
100 thalers 664,257,000
50 thalers 17,250
25 thalers 43,950
10 thalers 29,820
1000 marks 171,808,000
500 marks 168,970,000
100 marks 109,566,500
1,330,941,520 00
(e) Notes of other banks 16,478,300 00
1,849,838,581 78
3. Silver in bullion and coin
4. Bills account, excluding class 8:
(a) Local bills due within the next fifteen days 66,418,510 00
At longer sight 131,310,630 06
197,729,140 06
(b) Bills of remittance for Germany 129,200,270 00
At longer sight 117,924,163 23
247,124,433 23
(c) Foreign bills on Amsterdam 64,335 49
Foreign bills on Belgium 147,503 73
Foreign bills on London 1,955,302 90
Foreign bills on Paris 72,286 38
1,479,428 5
446,333,001 79
5. Amount of loans on securities, excluding class 8:
(a) On gold or silver 39,300 00
(b) On effects (including bills) as per Sec. 13, Art. 3, clauses b, c, d, of the Bank Act } 51,374,060 00
(c) On other effects }
(d) On merchandise 9,035,750 00
60,449,110 00
6. Effects { (a) Discounted paper } 725,000 70
{ (b) Our own effects }
{ (c) Effects of the reserve fund }
7. Balance of accounts current:
(a) Foreign correspondents 806,615 49
(b) Domestic correspondents 288,704 06
1,095,319 55
8. Amount of due but unpaid bills and loan claims 2,143,350 61
9. Value of the Bank’s real estate 13,278,012 85
10. Sundry assets:
(a) Advances for the discount of accepted bills 1,007,000 00
(b) Advanced salaries 215,607 68
(c) Building advances 3,799,773 04
(d) Bank notes unfit for further circulation 188,245,402 50
(e) Bills and other claims unpaid on December 31st, but realized a few days later 928,792 71
194,196,575 93
Total 2,610,942,357 42
1. Capital stock 120,000,000 00
2. Reserve fund:
Transferred from the Prussian Bank 18,000,000 00
Plus thirty per cent. premium on 60,000,000 Imperial Bank shares 18,000,000 00
36,000,000 00
Of this was paid:
1. In agreement with Sec. 1 of the contract between Prussia and the German Empire, dated May 17 and 18, 1875: Prussia’s portion of the reserve fund of the Prussian Bank. . . . . 9,000,000 marks. 2. In agreement with Sec. 3 of the same contract: indemnity to Prussia for cession of the Prussian Bank 15,000,000 marks.
24,000,000 00
Remainder: 12,000,000 00
Added to the reserve fund in 1876 the profits from sale of eighty-one unexchanged shares of the Prussian Bank 94,491 00
Added to this, according to Sec. 24, Art. 2, of the Imperial Bank Act, twenty per cent. of certain profits of 1876, amounting to 4,885,234 03 marks, i. e., the profits were 4,885,234 03 marks, twenty per cent.: 977,046 80 977,046 80
13,071,537 80
3. Reserve fund for doubtful claims 710,932 87
4. Total amount of bank notes issued (and put in circulation) 500 thalers 397,776,000 00
100 thalers 667,095,150 00
50 thalers 960,525 00
25 thalers 913,312 50
10 thalers 349,185 00
1000 marks 401,200,000 00
500 marks 350,000,000 00
100 marks 467,000,000 00
2,285,294,172 50
5. Balance in favor of patrons and creditors in account current 140,544,464 47
6. Amount of deposits:
(a) On interest at 3 per cent., maturing in eight days 16,915,490 00
On interest at 3 per cent., maturing in three mos. 1,170,450 00
On interest at 2½ per cent., maturing in eight days 9,339,920 00
On interest at 2 per cent., maturing in eight days 5,715,780 00
On interest at 2 1-10 per cent., maturing in eight days 3,770,000 00
On interest at 2 per cent., maturing in three mos. 3,994,470 00
40,906,110 00
(b) Without interest 1,164,171 77
42,070,281 77
7. Interest due on deposits } 606,429 14
8. Tax on notes, according to Secs. 9 and 10 of the Bank Act, payable into the Imperial Treasury }
8a. Sundry liabilities:
(a) Uncollected money orders 1,394,127 86
(b) Unpaid remittances 112,127 04
(c) Interest, exchange proceeds, loan and real-estate claims running over to 1877 1,448,779 46
(d) Uncollected dividends for last year 1,116,436 55
(e) Sundry recorded debts 664,880 73
4,736,351 64
9. Net profits for 1876:
(a) For the Empire 1,954,093 61
(b) For shareholders 1,954,093 62
3,908,187 23
2,610,942,357 42
Edition: current; Page: [46]
Balance-sheet of the Imperial Bank, December 31, 1894.
Marks. Pf.
1. Gold in bullion or foreign coin, at 1392 marks per pound fine 422,454,793 49
2. Cash account:
(a) German stamped currency 591,786.692 10
(b) Imperial Treasury bills 18,690,160 00
(c-d) Our own bank notes:
500 thalers
100 thalers 300 00
50 thalers
25 thalers 600 00
10 thalers 120 00
1000 marks 376,400,000 00
500 marks 877,000 00
100 marks 206,517,500 00
583,795,520 00
(e) Notes of other banks 8,442,200 00
1,202,714,572 10
3. Silver in bullion and specie
4. Bills account, excluding class 8:
(a) Local bills due in the next 15 days 88,510,500 00
At longer sight 234,040,006 14
322,550,506 14
(b) Bills domestic due in the next 15 days 103,864,600 00
At longer sight 173,925,640 30
277,790,240 30
(c) Bills on Belgium 141,716 25
Bills on England 1,736,110 90
Bills on France 338,003 30
Bills on Holland 168,551 90
Bills on Italy 6,522 75
Bills on Copenhagen 32,762 95
Bills on Switzerland 36,007 00
Bills on Scandinavia 49,090 15
2,508,765 20 602,849,511 64
5. Loan security claims:
(a) On gold and silver 8,600 00
(b) On effects (including bills), according to Sec. 13, Art. 3, clauses b, c, d, of the Bank Act 95,721,400 00
(c) Other effects
(d) Merchandise 4,651,350 00
100,381,350 00
6. Effects account:
(a) Purchased Treasury bills and other papers of value 4,453,096 90
(b) Our own effects
(c) Effects of the reserve fund
4,453,096 90
7. Bank balance against correspondents 5,315,436 93
8. Amount of due but still unpaid claims on bills 232,963 90
9. Value of real estate owned by the Bank 24,293,500 00
10. Sundry assets:
(a) Advances on bills accepted for discount
(b) Advanced salaries 386,812 75
(c) Building advances 7,168,253 06
(d) Bank notes unfit for circulation 40,518,540 00
(e) Sundry claims 23,176,076 39
71,249,682 20
2,433,944,907 16
1. Capital stock 120,000,000 00
2. Reserve fund 30,000,000 00
3. Reserve fund for doubtful claims amounted, on December 30, 1893, to 635,800 00
Canceled in 1894 89,874 75
545,925 25
No longer needed for said claims 384,725 25
Residue reserved 161,200 00
4. Total amount of bank notes put in circulation 500 thalers 106,500 00
100 thalers 559,500 00
50 thalers 237,825 00
25 thalers 594,150 00
10 thalers 252,645 00
1000 marks, 801,751,000 00
500 marks, 2,644,500 00
100 marks, 1,029,399,700 00
1,835,545,820 00
5. Balance in favor of patrons and creditors in account current 434,742,297 44
6. Deposits not on interest 556,669 70
7. Tax on notes, due to the Imperial Treasury by Secs. 9 and 10 of the Bank Act.
8. Sundry liabilities—(a) Money orders yet unpaid 754,732 56
(b) Exchange consignments not yet delivered 151,174 74
(c) Interest and exchange proceeds, loan security claims, and real-estate accounts running over to 1895 1,308,177 12
(d) Uncollected dividends 878,876 40
(e) Sundry items, including 250,000 marks reserve for annex and equipment of Bank building in Berlin 2,630,101 15
5,723,061 97
9. Net profits for 1894—(a) For the Empire 3,903,320 19
(b) For the shareholders 3,301,106 73
Including, from 1893, a residue of 11,431 13
3,312,537 86
7,215,858 05
2,433,944,907 16
Edition: current; Page: [48]
Annual Transactions of the Reichsbank Since its Foundation.
*Only for December, 1883
YEARS. Total Transactions. PURCHASE OF BILLS OF EXCHANGE. Loans on Securities. Purchase of Gold. Handled in Bank Accounts with Patrons. Account with the Empire and the Federal States Nominal Amount of Valuable Securities Committed to Care of Bank. Administrative Expenses. Added to the Reserve Fund. Percentage of Dividends Paid Up. Clearing-House Reports. Annual Number of Imperial Bank Officials.
Local Bills Consignment, or Commission Bills. Foreign Bills.
1876 36,684,830,600 1,107,181,862 14 3,015,650,331 49 17,633,076 56 467,207,210 46,389,264 38 16,711,245,213 53 2,070,624,341 47 424,120,420 5,399,300 83 977,046 80 6⅛ 1,094
1877 47,541,619,800 1,128,359,148 74 2,695,224,998 08 18,724,954 87 492,828,770 177,164,232 19 27,022,029,088 21 2,149,265,577 77 555,406,414 5,648,997 82 1,074,046 00 6.29 1,127
1878 44,254,713,700 1,066,456,703 88 2,289,350,274 99 40,334,279 03 525,750,700 97,708,405 27 27,291,913,192 30 1,964,678,045 24 688,504,505 5,438,830 18 1,078,125 38 6.30 1,143
1879 47,458,751,900 1,054,653,122 01 2,314,773,341 57 39,276,153 18 628,402,980 83,967,741 09 30,410,202,836 07 1,552,976,635 28 785,908,186 5,328,259 93 304,823 73 5 1,141
1880 52,193,508,000 1,034,102,745 18 2,450,086,927 67 57,351,629 76 839,701,650 46,210,357 71 35,234,255,341 22 1,372,195,389 82 866,470,238 5,399,798 08 890,253 00 6 1,155
1881 56,336,057,800 1,082,125,229 50 2,579,704,151 05 56,630,100 35 1,046,570,550 47,115,564 42 37,458,776,454 20 1,824,525,840 54 975,054,750 5,437,107 31 1,299,295 10 6⅔ 1,161
1882 56,005,689,200 1,164,780,203 90 2,835,866,720 93 42,809,593 55 900,870,500 110,885,993 18 36,190,142,131 35 1,818,157,340 22 1,107,424,387 5,511,177 99 1,532,153 74 7.05 1,181
1883 62,619,705,900 1,101,906,106 54 2,698,269,124 04 45,845,096 79 704,201,800 55,910,235 49 43,793,609,269 72 1,889,898,701 83 1,236,923,145 5,796,146 95 1,052,099 62 6.25 *887,546,700 1,219
1884 71,590,793,700 1,194,926,501 82 2,584,969,613 25 43,630,899 02 765,203,490 13,484,891 05 52,637,790,380 31 2,256,201,376 33 1,384,672,752 5,917,257 68 1,048,170 95 6.25 12,130,196,100 1,248
1885 73,199,039,000 1,146,604,291 61 2,412,657,425 27 77,281,820 04 739,999,860 129,745,818 06 53,847,522,095 20 2,806,747,353 17 1,522,389,618 6,034,479 76 1,041,435 86 6.24 12,554,444,300 1,269
1886 76,565,423,200 1,176,982,883 01 2,382,156,699 95 105,220,082 04 775,842,450 130,262,536 98 57,229,843,053 01 2,668,939,389 71 1,622,979,813 6,107,812 72 474,214 42 5.29 13,356,482,500 1,307
1887 79,839,097,500 1,252,170,238 82 2,701,171,710 12 66,616,380 22 690,341,710 172,291,926 18 58,843,133,481 75 2,943,850,455 38 1,747,441,692 6,277,425 70 1,021,616 72 6.20 14,207,193,600 1,337
1888 84,337,564,300 1,268,910,590 30 2,649,165,859 69 54,834,730 30 709,576,800 235,944,921 53 63,824,976,889 37 3,079,401,868 32 1,900,526,691 6,492,142 32 540,933 76 5.40 15,514,563,100 1,392
1889 99,708,891,300 1,605,003,917 59 3,031,296,339 21 61,564,604 88 1,045,460,800 12,088,452 47 75,676,319,016 83 3,349,787,941 81 2,042,261,892 6,798,244 53 1,500,048 77 7 18,048,962,400 1,445
1890 108,595,412,900 1,847,461,770 71 3,578,027,033 69 63,970,955 40 1,315,176,150 87,968,973 66 79,749,501,623 72 4,054,542,889 34 2,198,090,713 7,431,279 34 3,008,154 59 8.81 17,991,301,100 1,507
1891 109,933,249,000 1,837,049,975 57 3,576,842,444 52 78,303,434 06 1,208,140,100 176,472,162 99 81,012,777,470 15 4,210,533,196 27 2,356,612,539 7,805,772 59 997,090 56 7.55 17,663,274,500 1,373
1892 104,489,335,000 1,768,012,053 70 3,057,501,733 67 68,524,858 67 907,015,550 61,539,914 54 78,215,087,186 47 4,395,580,832 51 2,472,929,680 8,306,654 52 6.38 16,762,790,900 1,635
1893 110,942,348,400 1,992,702,754 75 3,367,065,052 30 67,244,868 26 1,054,387,590 137,008,628 21 82,363,270,297 83 4,420,969,445 28 2,604,654,800 8,651,188 39 7.53 18,272,935,600 1,690
1894 110,783,951,000 1,790,637,169 83 2,439,612,075 00 52,702,039 81 825,030,050 241,130,576 51 84,449,559,098 55 4,144,300,913 49 2,636,594,955 9,069,375 34 6.26 18,398,039,600 1,745
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In 1894, the total transactions of the Imperial Bank and its two hundred and sixty-three branches amounted to 110,783,951,000 marks (33,647,542,000 for the main Bank, 77,136,409,000 for the branches), against a total of 110,942,348,400 marks for 1893, showing a decrease of 158,397,400 marks for 1894.

The rates of discount for bills varied between five and three per cent.; and rates of interest on loans were one per cent. higher. The circulation of bank notes reached its lowest figure on February 23d (892,870,000 marks), its highest on December 31st (1,211,232,000 marks). The average was 1,000,384,000 marks. This makes an average circulation of 15,557,000 marks in excess of that for 1893; which was 984,827,000 marks. The limit of uncovered circulation provided by Section 9 of the Bank Act was not overstepped in 1894. Bank accounts with patrons amounted, for 1894, to 13,796,000,000 marks. The number of patrons was 10,794; and of these, 9725 were in account with the branch banks. Imperial and State Treasury accounts reached a total of 4,260,000,000, in round numbers. This would raise the total Bank account business to some 88,643,000,000 marks for 1894, as against 86,784,000,000 marks for 1893; both reports including receipts and outlays for the Empire and the Federal States.

Deposits not on interest were received to the sum of about 14,000,000 marks; and the same were paid out to the extent of 13,500,000 marks. Money orders were delivered by the main Bank and its branches to the amount of about 96,000,000 marks, free of commission; and the number of separate orders was 4146. Orders with commission fees numbered 7923, to the amount of about 34,000,000 marks. Total money orders, 130,104,777 marks. The incidental fees amounted to 7525 marks.

The cash account, in German currency and gold in bullion or foreign coin, at 1392 marks per pound fine, stood lowest on January 7th—808,807,000 marks—and highest on November 23d—1,075,587,000 marks. Average, 934,327,000 marks, as against 841,723,000 marks for the preceding year, or an increase of 92,604,000 marks. The total cash balance for December 31, 1894, was distributed as follows:

Gold bullion and foreign coin 422,437,000
German gold coin 291,999,000
Silver thalers 214,294,000
Small coin 85,490,000
Total 1,014,220,000


On an average during the year, ninety-three and four-tenths per cent. of the note circulation for 1894 was covered by coin, as against eighty-five and forty-seven hundredths per cent. for 1893. Bank notes and all other daily Edition: current; Page: [51] obligations for 1894 were covered in the proportion of sixty-two and fifty-nine hundredths per cent., as against fifty-eight and fifty-six hundredths per cent. for 1893. The amount of gold on hand, both bullion and foreign coin, was M.338,233,035.42 pf. on January 1, 1894; and gold was bought to the amount of M.241,130,576.51 pf. Total gold, M.579,363,611.93 pf. Of this total, M.156,926,579.37 pf. were either coined or sold again, leaving a gold reserve of M.422,437,032.56 pf. There was also an attendant profit amounting to M.17,760,93 pf., the actual value of the gold reserve being M.422,454,793.49 pf. These revelations are of much interest, as they furnish our first authentic information in regard to the status of the Imperial Exchequer in silver thalers, which are stored in the Bank cellars to the amount of only some 214,000,000 marks—not at all so much as was generally believed, and less than one-fourth of the total coin reserve. The truth is, the question of a redundancy of old silver thalers would never have been agitated but for the proposal of the Imperial Diet to coin new silver thalers with a value of five marks. From January 1, 1896, forward, the Imperial Bank could quite safely include the item of silver thalers in the weekly reports; that is, without the slightest danger of injuring the Bank’s credit.


One of the most indispensable departments of the Imperial Bank is the clearing-house business, first organized twelve years ago, in the great commercial centres of the German Empire. The results have been so prompt, and even magnificent, that we may fairly reckon the clearing-house as a new national institution, for the want of which Germany had long been behind Great Britain and the United States.

The first German clearing-house was opened in Berlin on April 2, 1883, and there followed nine others, in the subjoined chronological order: Frankfort, April 23, 1883; Stuttgart, May 15, 1883; Cologne, May 22, 1883; Leipzig, June 25, 1883; Dresden, July 10, 1883; Hamburg, July 24, 1883; Breslau, March 1, 1884; Bremen, April 7, 1884; Elberfeld, March, 1893. These establishments incalculably augment the practical value and utility of the Imperial Bank, and their development has been so comprehensive that they turned over the round sum of nineteen billion marks in the single year of 1895. We owe the following data to the courtesy of Dr. Koch, president of the Board of Imperial Bank Directors:

Edition: current; Page: [52]
Transactions of Clearing-Houses Connected with the Imperial Bank.
YEARS. RECEIPTS. Average Value per Piece. CREDITED IN BANK ACCOUNTS. Percentage of Values Received.
Number of Pieces. Amount in Marks. Amount in Marks.
1884 1,979,012 12,130,196,100 6,129 3,121,842,800 25.7
1885 2,085,449 12,554,444,300 6,020 3,269,911,700 26.1
1886 2,205,563 13,356,482,500 6,056 3,516,517,700 26.3
1887 2,334,307 14,207,193,600 6,086 3,430,353,500 24.1
1888 2,500,183 15,514,563,100 6,205 3,676,869,300 23.8
1889 2,709,770 18,048,962,400 6,661 4,351,340,300 24.1
1890 2,825,314 17,991,301,100 6,368 4,162,441,600 23.1
1891 2,895,245 17,663,274,500 6,101 4,323,731,500 24.5
1892 2,989,835 16,762,790,900 5,607 4,148,967,800 24.8
1893 3,205,546 18,272,935,600 5,700 4,386,865,500 24.0
1894 3,379,730 18,398,039,600 5,444 4,403,472,700 24.0


Until a few decades ago, political economists were accustomed to urge strenuous measures toward the statutory limitation of bank notes; and banks of issue were narrowly watched for fear they might overleap their available resources. The English Bank Act of 1844 was framed on those suspicions, and Germany and Austria were influenced by like apprehensions. Since the middle of this century, however, events have occurred which are likely to relegate such anxious oversight into the limbo of borrowed troubles. A new era has arrived in the history of the precious metals; comparable only to the discovery of America. In 1850, there began an annually increasing production of gold, which had risen in 1894 to the vast amount of 850,000,000 marks; and from 1870 forward, the yield of silver also assumed huge proportions, amounting in these times to an annual sum of 165,000,000 ounces fine. Indeed it is not impossible that this immense yield of silver may have prevented a decline in the price of gold. The latter is maintained firm, not only by this particular circumstance, but also by the statutes of the Bank of England and of the German Imperial Bank. These institutions, in other words, are authorized to buy gold bullion at a fixed price with their bank notes; and we consequently face the remarkable and novel spectacle in commercial history of a gold reserve sometimes in actual excess of the note circulation. The Bank of England, for several years past, has had more gold in its vaults than notes in circulation; so that occasionally the gold surplus over the notes has been more than fifteen million pounds sterling. The German Imperial Bank follows this example, though on a more modest scale. In Germany the coin reserve at least somewhat exceeds the note circulation from time to time. The Bank of France is far from displaying the like pride of gold, and still clings to the depreciating “double standard”; though its gold reserve, which twenty years ago was very much below the silver reserve, has now risen much above it. The Austro-Hungarian Edition: current; Page: [53] Bank is still paying in compulsory legal-tender paper, and is not required to redeem its notes in coin; but with a view toward ultimate specie payments, it has materially increased its gold supply. Its stock of gold was eighty million florins at the middle of August, 1892, and two hundred and orty-seven million florins on the 23d of December, 1895. It is interesting to trace the development of this unusual reinforcement of gold reserves by consulting the reports of the great banks; and we therefore submit an extract from the official statements of the Imperial Bank, which will be found to furnish abundant material for reflection.

Monthly Statements of the German Reichsbank, 1887 to 1895 (in Millions and Thousands of Marks).
DATES. Coin Reserve. Notes Outstanding. Bills of Exchange. Imperial Treasury Bills. Notes of Other Banks Deposits and Loans to Bank on Call. Loans.
1887 —May 23 801.194 802.433 397.561 255.280 106.550 373.947
June 1 804.953 801.014 385.961 25.084 11.941 386.956
August 23 817.552 808.241 420.034 24.912 9.840 417.214
September 15 790.973 828.941 427.169 24.509 10.555 358.691
October 15 735.027 907.347 480.022 21.474 10.198
November 23 787.729 865.698 482.902 23.222 10.568 378.857
December 15 794.035 868.630 491.134 22.748 11.243 393.395
1888 —January 26 814.096 887.760 489.038 20.598 10.953 384.646
February 7 831.888 849.232 457.515 21.960 10.690 411.587
March 15 868.075 827.318 411.009 20.826 12.269 426.083
April 15 878.769 896.337 438.454 18.710 10.596 394.095
May 3 911.984 931.848 429.856 19.971 14.552 392.496
June 3 989.439 880.891 409.806 22.822 12.013 504.057
July 23 997.579 935.087 402.892 21.941 8.815 446.427
August 26 974.661 917.846 384.264 22.609 9.704 420.433
September 10 953.856 925.693 382.680 21.983 7.854 374.789
October 1 882.465 1,070.199 476.878 18.052 6.690 290.680
November 15 860.894 965.629 428.832 19.447 10.412 223.769
December 3 866.162 971.789 443.359 19.585 10.283 316.198
1889 —January 7 860.328 1,054.896 481.667 16.644 9.692 290.524
February 15 925.767 902.897 429.675 18.737 11.724 413.497
March 18 939.568 879.483 409.646 21.290 10.202 435.709
April 23 936.109 943.323 432.930 20.645 8.825 399.291
May 30 939.937 996.605 451.754 20.598 10.928 379.806
June 3 959.946 955.687 448.926 23.089 10.893 441.428
July 18 900.231 1,018.119 508.860 20.760 10.702 390.590
August 10 891.265 975.600 530.887 20.754 8.845 437.133
September 7 844.453 989.850 577.878 20.084 8.645 399.098
November 26 776.010 977.505 570.846 19.753 9.483 351.511
December 14 776.092 985.666 559.799 20.482 8.294 343.166
1890 —January 7 741.967 1,108.053 605.018 17.261 11.841 317.292 142.939
February 28 821.288 886.052 434.149 20.388 8.987 362.766 76.446
March 7 826.246 904.086 481.854 20.905 9.041 416.314 93.560
April 15 820.701 970.558 535.093 20.579 12.080 390.336 89.477
May 23 869.036 920.138 471.848 23.221 9.938 410.214 75.945
July 15 846.983 989.514 486.151 21.826 12.070 348.332 90.085
August 7 828.911 954.415 485.059 21.659 10.650 348.359 79.920
September 15 781.565 976.304 529.512 20.025 10.884 340.072 68.470
October 23 716.791 1,015.942 616.708 17.285 9.562 330.842 79.358
November 15 753.760 997.873 570.299 17.904 12.560 335.054 77.120
December 23 781.505 993.272 579.144 18.180 10.218 391.303 98.556
1891 —January 23 817.264 958.804 496.251 19.407 11.935 364.926 76.132
February 14 849.990 895.755 454.080 19.041 10.624 402.092 70.636
March 14 879.277 904.602 482.479 21.289 8.918 463.032 77.929
April 15 873.056 964.556 538.291 21.233 12.088 474.900 92.196
May 15 892.494 945.846 624.987 23.296 12.086 577.900 83.680
June 23 926.112 938.601 551.169 27.577 10.487 561.791 103.989
July 15 904.470 974.056 548.859 21.359 10.597 519.384 125.164
August 22 948.968 914.922 478.704 23.055 9.929 521.335 89.589
September 15 933.404 987.960 475.470 23.592 8.852 470.742 95.677
October 15 897.089 1,020.867 527.268 20.718 11.810 415.701 106.670
November 14 915.341 1,009.623 543.101 20.652 8.409 451.088 103.840
December 15 934.469 974.172 514.476 21.535 11.694 484.116 105.974
1892 —January 15 935.578 1,033.605 493.443 18.890 11.888 405.373 105.106
February 23 978.687 878.727 529.142 24.352 15.249 628.822 91.790
March 23 986.657 894.275 530.679 26.371 11.085 637.695 93.608
April 14 935.879 969.686 568.931 24.853 10.297 551.723 98.323
1892 —May 23 993.252 909.738 512.153 28.447 9.820 612.180 95.930
June 23 1,007.942 965.200 534.314 28.862 8.263 607.459 98.910
July 15 988.187 993.858 535.787 26.103 10.044 552.133 98.695
August 23 982.476 943.696 502.274 27.105 8.474 547.275 90.840
September 23 945.176 963.726 518.280 25.383 7.692 497.129 88.726
October 15 868.240 1,058.709 566.445 21.638 9.835 382.550 97.731
November 30 871.609 1,005.824 565.677 22.083 10.578 429.879 87.158
December 7 866.142 993.135 544.931 22.422 8.510 419.011 85.017
1893 —January 14 878.218 1,036.020 523.043 19.103 10.151 386.458 93.798
February 15 913.772 923.567 475.385 23.468 11.271 466.155 80.380
March 15 928.335 917.650 473.484 25.968 11.788 476.278 80.738
March 30 868.955 1,070.481 586.339 23.010 8.110 399.654 97.173
April 15 858.399 1,012.542 550.145 24.041 11.962 403.118 79.784
May 23 884.344 931.618 638.892 26.768 10.379 593.150 84.280
June 15 882.346 928.899 638.887 27.748 11.760 599.602 87.330
July 22 813.721 1,099.976 721.565 34.338 9.128 499.142 145.813
August 23 816.582 925.023 598.551 25.559 9.105 478.271 75.228
September 23 792.384 943.503 596.468 25.622 11.440 447.769 81.111
October 23 772.067 997.341 586.655 23.981 9.084 368.228 94.684
November 23 819.186 954.662 544.117 24.762 9.816 419.763 92.737
December 15 839.519 948.817 514.180 24.819 8.986 431.750 99.677
1894 —January 6 808.807 1,072.655 332.757 19.903 10.831 331.400 129.320
February 15 904.445 920.152 498.943 25.587 11.944 468.372 72.677
March 15 917.464 910.350 517.905 27.636 10.850 519.453 73.555
April 14 862.529 995.506 585.768 25.516 10.119 448.047 75.952
May 31 935.428 932.898 566.820 28.895 12.188 589.078 82.786
June 15 983.149 917.720 551.248 29.327 9.751 597.970 80.114
July 23 933.833 977.989 560.609 26.761 10.051 528.721 76.293
August 15 943.852 966.406 527.948 26.418 11.327 516.600 76.386
October 26 952.889 1,030.901 556.682 24.154 9.676 481.840 74.692
November 15 1,040.825 1,052.787 544.824 24.030 10.343 538.379 73.084
December 7 1,071.196 1,040.868 522.876 23.747 8.471 538.320 70.739
1895 —January 15 1,061.834 1,101.472 524.791 20.566 12.665 479.818 72.556
February 15 1,112.093 998.450 474.303 24.826 10.804 571.736 66.662
March 15 1,091.159 978.571 455.765 27.192 11.028 549.383 66.837
April 21 1,074.315 1,041.938 494.373 26.164 12.525 525.379 69.184
May 7 1,065.453 1,054.301 503.334 26.309 10.390 494.230 72.335
July 15 1,014.790 1,126.670 588.894 24.020 10.882 487.159 79.210
August 15 1,019.899 1,057.639 540.731 24.814 10.559 504.391 74.604
September 15 978.455 1,059.992 583.349 23.833 7.970 499.405 71.522
Dividents of the Prussian and Imperial Banks, 1870-1893.
1870 11.750 per cent.
1871 12.300 per cent.
1872 13.333 per cent.
1873 20.000 per cent.
1874 12.750 per cent.
1875 15.603 per cent.
1876 6.125 per cent.
1877 6.290 per cent.
1878 6.300 per cent.
1879 5.000 per cent.
1880 6.000 per cent.
1881 6.667 per cent.
1882 7.050 per cent.
1883 6.250 per cent.
1884 6.250 per cent.
1885 6.240 per cent.
1886 5.290 per cent.
1887 6.200 per cent.
1888 5.400 per cent.
1889 7.000 per cent.
1890 8.810 per cent.
1891 7.550 per cent.
1892 6.380 per cent.
1893 7.530 per cent.


By the terms of the German Bank Act of 1875 (Sec. 42), banks which were then authorized to issue notes are not allowed to carry on banking business Edition: current; Page: [55] through branch houses, nor through agents, nor to organize themselves as companies attached to other banks outside the State from which they have obtained their issuing rights; and neither are the notes of a bank in possession of the right of issue to be used in payments outside the State from which the bank has derived its powers. These prohibitions, however, do not include the optional exchange of such notes for other bank notes, paper money, or coin. Again, these limitations do not apply to those banks which, to date of January 1, 1876, had fulfilled certain conditions (Sec. 44 of act) relating on one side to the statutes of the Imperial Bank and on the other to the surety that the notes of small banks might be duly exchanged for notes of the Imperial Bank. Such banks were then obliged, except when located in Berlin or Frankfort, to select a place of redemption for their notes, and receive notes of other banks in payments.

The right of issuing bank notes becomes void: (1) when the time expires over which the right was granted; (2) upon recession, or renunciation, thereof; (3) in case of bankruptcy, or the institution of legal proceedings against the bank; (4) upon deprivation thereof by power of law; and (5) by dispensation of the Federal Government in accordance with the statutes or prerogatives of the same.

The limitations and penalties prescribed by the law are so burdensome that most of the banks have since then abjured their rights of issue. On promulgation of the German Bank Act, thirty-two banks of issue had then declared themselves ready to conform to its requirements. A contingent of 135,000,000 uncovered notes had been adjudicated for their circulation. Including the Imperial Bank, the total amount of the lawful, uncovered note circulation was 385,000,000 marks, distributed as follows:

1. Imperial Bank 250,000,000
2. Manorial Private Bank in Pomerania (Stettin) 1,222,000
3. City Bank of Breslau 1,283,000
4. Bank of the Berlin Kassenvereins 963,000
5. Bank of Cologne 1,251,000
6. Private Bank of Magdeburg 1,173,000
7. Private Joint-Stock Bank of Dantzig 1,272,000
8. Provincial Joint-Stock Bank of the Grand Duchy of Posen 1,206,000
9. Municipal Bank of Prussian Upper Lusatia (Görlitz) 1,307,000
10. Bank of Hanover 6,000,000
11. Provincial Bank of the Landgraviate Grant of Hesse 159,000
12. Bank of Frankfort 10,000,000
13. Bavarian banks 32,000,000
14. Saxon Bank of Dresden 16,771,000
15. Bank of Leipzig 5,348,000
16. Leipzig Kassenverein 1,440,000
17. City Bank of Chemnitz 441,000
18. Wurtemberg Bank of Issue 10,000,000
19. Bank of Baden 10,000,000
20. Bank for South Germany 10,000,000
21. Bank of Rostock 1,155,000
22. Bank of Weimar 1,971,000
23. Provincial Bank of Oldenburg 1,881,000
24. Bank of Brunswick 2,829,000
25. Middle German Credit Bank of Meiningen 3,187,000
26. Private Bank of Gotha 1,344,000
27. Provincial Bank of Anhalt-Dessau 935,000
28. Bank of Thuringia (Sondershausen) 1,658,000
29. Bank of Gera 1,651,000
30. Lower Saxon Bank (Bückeburg) 594,000
31. Private Bank of Lubeck 500,000
32. Commercial Bank of Lubeck 959,000
33. Bank of Bremen 4,500,000
Total 385,000,000

Official information, which we owe to the courtesy of the president of the Imperial Bank Directors, shows that, by November, 1895, provincial banks, as per statement below, had abjured the right of issue, their note contingent thereby accruing to the Imperial Bank.

Edition: current; Page: [57]
Banks whose right of issue has either been abjured or has expired by lapse of their concession, and whose untaxed note contingent has accrued to that of the Imperial Bank, according to the Bank Act of March 14, 1875, Section 9½, dating from 1876.
DESIGNATION OF BANK. Date of Concession as Bank of Issue. Authorized Untaxed Circulation of Notes. (Law of March 14, 1875, Sec. 9.) Stock. The Right of Issue Expired on— Term of Final Redemption of the Notes.
1. Manorial Private Bank in Pomerania (Stettin) { 1824 and Aug. 24, 1849. 1,222,000 Dec. 1, 1875. Oct. 11, 1877.
2. Bank of Gera July 17, 1854. 1,651,000 Jan. 1, 1876. June 30, 1878.
3. Municipal Bank of Prussian Upper Lusatia, at Görlitz Mar. 31, 1866. 1,307,000 Jan. 1, 1876. Sept. 30, 1877.
4. Private Bank of Lubeck Dec. 6, 1856. 500,000 Jan. 1, 1876. { Sept. 30 and Dec. 30, 1878.
5. Provincial Bank of Anhalt-Dessau, at Dessau Sept. 20, 1847. 935,000 Jan. 1, 1876. Dec. 31, 1878.
6. Private Bank of Gotha June 24, 1856. 1,344,000 Jan. 1, 1876. Dec. 31, 1878.
7. Thuringian Bank, at Sondershausen Sept 21, 1855. 1,658,000 Jan. 1, 1876. Dec. 31, 1878.
8. Bank of Leipzig Mar. 12, 1839. 5,348,000 Jan. 1, 1876.
9. Bank of Weimar Sept. 26, 1853. 1,971,000 Jan. 1, 1876. Dec. 31, 1878.
10. Middle German Credit Bank of Meiningen Feb. 29, 1856. 3,187,000 Jan. 1, 1876. April 16, 1878.
11. Lower Saxon Bank, at Bückeburg Oct. 18, 1856. 594,000 Jan. 1, 1876. April 29, 1878.
12. Provincial Bank of Oldenburg June 10, 1868. 1,881,000 Jan. 1, 1876.
13. Bank of the Berlin Kassenvereins April 15, 1850. 963,000 Jan. 31, 1876. Dec. 31, 1878.
14. Provincial Bank of the Landgraviate Grant of Hesse, at Homburg 1855. 159,000 April 24, 1876. Sept. 15, 1878.
15. Bank of Rostock July 25, 1850. 1,155,000 Oct. 13, 1877. Dec. 31, 1880.
16. Commercial Bank of Lubeck 1856. 959,000 Aug. 8, 1886. Dec. 31, 1889.
17. Private Bank of Cologne Dec. 10, 1855. 1,251,000 Mar. 15, 1887. Dec. 31, 1888.
18. Bank of Hanover July 22, 1856. 6,000,000 July 23, 1889. Dec. 31, 1891.
19. Bank of Bremen Jan. 20, 1857. 4,500,000 Oct. 7, 1889. Dec. 31, 1891.
20. Leipzig Kassenverein Mar. 19, 1867. 1,440,000 May 9, 1890. Dec. 31, 1891.
21. Private Joint-Stock Bank of Dantzig Mar. 16, 1857. 1,272,000 Jan. 1, 1891. Jan. 31, 1892.
22. Provincial Joint-Stock Bank of the Grand Duchy of Posen Mar. 16, 1857 1,206,000 Jan. 1, 1891. Jan. 31, 1893.
23. Private Bank of Magdeburg June 26, 1856. 1,173,000 Jan. 1, 1891. Dec. 31, 1893.
24. City Bank of Chemnitz May 20, 1848. 441,000 Jan. 1, 1891. Dec. 31, 1893.
25. City Bank of Breslau June 10, 1848. 1,283,000 Jan. 1, 1894. Dec. 31, 1895.

The following banks of issue are still in operation:

Amount of Untaxed Note Contingent. MARKS.
Imperial Bank 293,400,000
Bank of Frankfort 10,000,000
Bavarian Bank of Issue 32,000,000
Saxon Bank 16,771,000
Wurtemberg Bank of Issue 10,000,000
Bank of Baden 10,000,000
South German Bank 10,000,000
Bank of Brunswick 2,829,000
Total 385,000,000
Edition: current; Page: [58]


THE Prussian Maritime Association, founded about one hundred and thirty years ago by Frederick the Great, quietly raised itself to the dignity of a very important institution. We have already remarked that it is the prototype of all crédit mobilier foundations; even the very ground pattern of that extravagantly admired Parisian crédit mobilier, devised a century later, and soon imitated in almost every country of Continental Europe. In financial operations, the Seehandlung, or Maritime Association, was the Prussian Government’s right hand for more than five-score years, and thereby enjoyed such full confidence as to be intrusted with the chief part of the French war indemnity of five billion francs for profitable investment, in the earlier years of the decade 1870-1880. It was not the fault of the Maritime Association that this instrument of wealth proved a two-edged sword; that the huge, heroic, Nibelungen treasure was parsimoniously mismanaged, with a design of saving interest, and so stinted that speculation at last exceeded rational bounds, and precipitated the crash of 1873. The Seehandlung itself passed through this crisis unscathed, and since then has continued so highly prosperous that its assets for the business year closing with March, 1894, reached the round sum of 520,500,000 marks, and showed a clear profit of over two million marks. Because of the honorable historical character of this influential institution and its great though silent service to the Prussian commonwealth for so many years, we addressed ourselves to the Association’s headquarters in hopes of obtaining materials for our present relation; but we were answered: “The Royal Maritime Association, in view of its official constitution as a State organization, may not warrantably discover or publish its business, except by provision or edict of supreme orders or upon behest of regulations immediately subserving the Royal advantage and interests. The Association’s business reports are not communicated to the public, but are appended as a supplement to the draft or projection of the Government budget. We therefore lament our inability to comply with your desires and request.” This information, however, enabled us to fulfill our desire through another channel; for we straightway addressed the Edition: current; Page: [59] State revenue department, which promptly furnished budget statements for the past two years, including a separate report of the Seehandlung. We shall produce some interesting data from the documents in the course of this description. The range and nature of the business undertaken by the Maritime Association are not only identical with the business operations of crédit mobilier institutions throughout Europe to-day, but the Maritime Association even outstrips them in favoring the interests of the humbler classes. The Association engages in the ordinary financial transactions of a bank, and negotiates various kinds of loans, both on paper securities and on other dead pledges, for the administration of which a special State loan office has been created. In this, a regular and careful account is kept of the status of needy applicants. A list of the first three thousand borrowers, for October, 1893, included twenty-three pawnbrokers and consignees; 1648 artisans, tradesmen, and journeymen; 395 day laborers and factory hands; forty-one actors, painters, and other artists; twenty-three students; three military officers and surgeons; forty-nine professors and other scholars; 133 State, municipal, and railway officials; and 665 widows and spinsters. The three thousand loans amounted to only 81,750 marks; and the individual sums ranged from two to a thousand marks. It is obvious that a loan office of this kind, fostered by so old an established institution, more carefully guards the interests of the poorer classes than the ordinary pawnbrokers are wont to do.

The Maritime Association, furthermore, grants small loans on merchandise to manufacturers, trades-people, and mechanics. In 1893-94, 1203 such loans were effected, to a total of 125,752 marks; 841 of which, with a loan value of 75,390 marks, were still charged at the close of the year. Dead pledge loans at six per cent. and on paper securities for persons of moderate means are a less active business. The securities accepted are bonds of the German Empire, of the city of Berlin, other State and municipal bonds, and Prussian consols. The Maritime Association also grants loans for the improvement of real property. Thus, for the business year 1893-94, full five million marks were loaned to lease-holders of domains, for the purpose of drainage. Only half this amount was still in arrear at the end of March, 1894. It is paid in annual installments, with interest at eight per cent., until the extinction be complete. Another class of loans is to forestry officials, for the drainage of forest lands. In 1893-94 such loans amounted to 56,500 marks, two-thirds of which remained on the books at the end of March, 1894. These are likewise gradually extinguished in annual installments, with interest at eight per cent. Interest received on loans for drainage in 1893-94 reached the sum of 125,982 marks. Ordinary bank loans on commercial securities for 1893-94 amounted to 282,296,000 marks, of which only 66,437,747 marks, interest included, were outstanding at the close of March, 1894. These loans for the preceding year had been much smaller; namely, 176,247,000 marks. Interest received on loans for 1893-94 amounted to 2,425,094 marks, as against 1,127,141 marks for 1892-93.

The Maritime Association was also an effectual contributor to the foundation Edition: current; Page: [60] of estates yielding annuities, toward which it advanced 953,668 marks in 1893-94; also issuing bonds for 452,875 marks, and giving annuity certificates to the amount of 1,615,665 marks. A tabulation of the dead pledges preserved in the loan office under date of January 20, 1894, shows the following results: 150,615 articles were on hand, consisting of 105 papers of value, with an average loan value of 193 marks; 4897 ornaments, such as jewelry, with an average value of 109 marks; 70,193 articles of gold and silver, averaging 24 marks apiece; 27,090 watches, at 19 marks each; and 48,330 articles of linen, dress goods, pieces of clothing, and utensils of the baser metals, with a general average of 9 marks 48 pfennings per item. Loan interest received for the whole year amounted to 2,425,094 marks.

The Maritime Association receives three kinds of deposits: (1) Money on interest; (2) money without interest; and (3) deposits for custody and administration. The amount of deposits on interest, with the interest included, was 19,896,532 marks at the end of March, 1893. For 1893-94, the principals and interest amounted to 52,473,946 marks. Adding the previous 19,896,532 marks, we have a total of 72,370,478 marks, of which 46,770,777 marks are withdrawn; leaving a residue of 25,599,701 marks in favor of the depositors, at the end of March, 1894. Interest for 1893-94 amounted to 330,128 marks, as against 233,535 marks for 1892-93. The total transactions in deposits with interest increase from year to year, and for 1893-94 they represented a sum of nearly one hundred million marks. Deposits in the way of current bank accounts rose to some forty-six million marks in 1893-94. Payments assumed for the next year amounted to 4,250,000 marks. Deposits by sundry parties made a round sum of 842,000,000 marks, of which about 420,000,000 marks remained in bank at the end of March, 1894. The equivalent of 81,000,000 marks was committed to the Association for custody and administration.

Besides these usual phases of bank business, the Maritime Association also controls and manages industrial enterprises; such as flour-mills at Bromberg, and linen-thread works at Landshut in Silesia. The amounts turned over by the former were two and a half million marks, and by the latter, one and one-third million marks, by the last annual reports. The mills yielded a net profit of three per cent., and the thread-works net proceeds of 55,817 marks, or five and one-third per cent. of the invested capital.

Associate Business.—The Maritime Association also largely concerns itself with associate and syndicate business, both on its own account and in account with outside parties. This was first occasioned by the Prussian Government, which continually needed the society’s co-operation in the raising of State loans. In 1893-94 the Association, in conjunction with its fellow societies, effected the following twelve loans and credit transactions: On own account—(1) The three and a half per cent. State loan of Wurtemberg, in 1893. (2) Four and a half per cent. partial-bonds of Siemens and Halske. (3) Three and a half per cent. Hessian State loan. (4) Three and a half per cent. loan of the Free City of Bremen. (5) Three and a half per cent. State Edition: current; Page: [61] loan of Wurtemberg for 1894. (6) Kiel municipal loan of 1889, at three and a half per cent. In account with outside parties—(7) For the Prussian Exchequer, Prussian consolidated State bonds in amounts of 140,000,000 marks at three per cent.; (8) and 3,613,100 marks at three and a half per cent.; (9) also sundry three and a half per cent. annuity certificates, to the amount of 731,070 marks. (10) Bills of exchange on Berlin and other banking centres were bought to the amount of 12,188,367 marks and 87 pfennigs. (11) Loans on securities were issued to the amount of 294,778,577 marks and 5 pfennigs. (12) The Bank further bought and sold for outside parties effects and bills of exchange amounting to 177,500,000 marks.


The Association’s net profits for 1893-94 were 2,045,388 marks, as against 2,111,036 marks for the preceding year; which gains were conveyed to the general exchequer. The funded property yields about six per cent. on some thirty-four million marks, which were first subscribed through two and a half per cent. bonds, guaranteed by the State. The assets and liabilities at the end of March, 1893, made a balance of 33,885,173 marks, increased by 1149 marks representing interest due to the Association and equivalent obligations against it. So the resulting balance was 33,886,322 marks. The main results of the balance for 1893-94 are embraced in the following totals:

Assets 520,475,624 marks.
Liabilities, including net profits for 1893-94, 520,475,624 marks.

Transactions in gold, bills of exchange, and marketable effects amounted to a round sum of 1,810,000,000 marks for 1893-94. The round sum for 1892-93 was 1,136,000,000 marks. Of the total for 1893-94, 905,000,000 marks were taken in, and somewhat over this amount was paid out.

We are especially struck with the extraordinary economy of administration. The total administrative expenses for 1893-94, pensions included, were only 286,600 marks; and the advance estimate for 1895-96 puts them at 290,500 marks. These modest figures are explained by the very moderate salaries of officials. The president of this great institution, which is worthy of comparison with the greatest banks, receives an annual salary of only fifteen thousand marks, whereas bank presidents in other countries receive fifty thousand marks, or even more. The associate directors draw from 7500 to 9900 marks. Cashiers, bookkeepers, clerks, etc., are salaried from 3000 to 5400 marks. The structure and organization of so venerable an institution are altogether typical of Prussian administrative thrift and honesty, whereby a country naturally poor has achieved such great results.

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Statement of the Maritime Association’s Profits, 1893-94.
1. Cash interest received 1,936,323 49
2. Commissions from sundry State foundations, private persons, and foreign correspondents for transactions abroad, after deduction of incidental loss through exchange of foreign currency 525,129 78
3. Proceeds of industrial concerns at Bromberg and Landshut. 93,327 10
4. Sundry receipts 24,353 53
Total receipts 2,579,133 90
1. Salaries, pensions, aid funds, administrative expenses, brokerage, sundry stamp taxes, postage, etc 301,493 67
2. Losses and effects to be subtracted from profits thereon 232,156 53
3. Sundry expenses 95 44
Total expenses 533,745 64
Balance: { Receipts 2,579,133 90
{ Expenses 533,745 64
Resulting profits 2,045,388 26
Summarized Balance-sheet of the Maritime Association at Close of March, 1894.
Marks. Pf.
1. Real estate 1,751,444 92
2. Working capital of loan office and industrial establishments 1,456,102 24
3. Cash account 7,467,653 36
4. Effects 9,229,949 15
5. { Bills of exchange 3,409,133 70
{ Treasury bills 2,028,888 90
5,438,022 60
6. Loans on securities 66,437,747 80
7. Domestic and foreign debtors:
(a) Interest-bearing investments for the Royal Exchequer (compare liabilities, 3 a) 1,998,347 20
(b) Advances and loans to trusts and institutions 2,460,605 04
(c) Advanced in accounts current 1,120,818 95
(d) Advances in behalf of annuity foundations 113,861 11
(e) Advances in behalf of redeeming coupons of three per cent. Prussian consols held abroad (compare liabilities, 3 e) 36,713 73
(f) Commercial houses 97,980 90
(g) Deposits of sundry patrons, in effects, mortgage bonds, securities, receipts, and policies (compare liabilities, 3 g) 419,031,127 85
(h) Sundry accounts 3,835,249 20
428,694,703 98
Total assets 520,475,624 05
1. Debt on the Association’s obligations 370,921 03
2. Drafts 440,755 98
3. Domestic and foreign creditors:
(a) Royal Exchequer (compare assets, 7 a) 29,000,000 00
(b) Credited to trusts and institutions 2,121,904 62
(c) In favor of accounts current 29,852,289 43
(d) To the account of annuity foundations 2,344 15
(e) Toward redemption of coupons of three per cent. Prussian consols held abroad (compare assets, 7 e) 162,370 51
(f) Commercial houses
(g) Depositors (compare assets, 7 g) 419,031,127 85
(h) Sundry accounts 3,562,199 51
483,732,236 07
4. Capital account 38,886,322 71
5. Net profits of the Association for 1893-94 2,045,388 26
Total liabilities 520,475,624 05


We have before us the business statements of one hundred and thirty-seven banking institutions for the year 1894; which information the author owes to the courtesy of Mr. W. Christian, editor of the German “Ökonomist,” of Berlin. These establishments include eight banks of issue, one of which has since renounced its right of issue; thirty-three mortgage banks, and ninety-six credit banks, including the crédit mobilier organizations. One hundred and thirty-five of these banks are joint-stock companies; one is a municipal institution, and there is one company with unlimited obligations. We do not under this designation include the thousands of co-operative societies, which are to be considered next.

For the valuable statistical compilations of the “Ökonomist,” reference is made to the Appendix at the end of this treatise.


For detailed information on this class of banks, the reader is referred to the Appendix to this part of the work.

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Under the native designations Volksbanken (people’s banks) and Vorschusscassen (cash-advancing banks), Germany has a number of co-operative societies, or co-operative stores, which not only furnish ordinary commodities to consumers, but also handle raw materials, and endeavor to make a more productive use of machinery for wholesale purposes. Principally, they serve as money-lending institutions. Their origin dates from the reactionary period of depression in the fifties. Their principal founder, Schulze-Delitsch, of the province of Prussian Saxony, had the twofold object of raising credit for the minor industrial classes, and educating the great body of poor workmen to independence and self-help. In brief, he desired to make a powerful popular application of progressive modern ideas. This accessory thought exciting suspicion on the part of the Prussian police, it was resisted by virtue of the statute requiring State concession for any societies of limited liability. The founder’s projects being thus regularly set aside. Schulze-Delitsch resolved to form companies of unlimited liability, although such organizations had not maintained themselves in England. But there was no other way of circumventing official distrust. Eminent economists were well aware of the unfortunate consequences of unlimited liability schemes in Great Britain; but they refrained from combatting a political propaganda; whereas the people, though at first shy of unlimited liability, which affected the credit of the poor man more seriously than that of the rich, who had recourse to banks and banking houses, nevertheless eagerly participated in the movement. The cause advanced with greater strides after the reorganization of the German Empire, when the societies were also invested with special statutory rights. Shortly after 1880, the number of societies had reached about two thousand, with half a million members, an associate or corporate capital of over one hundred million marks, and an annual business of fifteen hundred million marks in loans. Deposits amounted to three hundred and seventy-five million marks. Advocates of the original scheme now remembered the objections and obstacles which they had encountered in many social circles at the start. Meanwhile, the limited liability companies had victoriously pulled through in Great Britain, and in Germany as well; political changes had so modified laws and sentiments that the societies were no longer opposed, save that the reformers carried the day in the matter of limiting the liabilities. To this Schulze-Delitsch made obstinate resistance; but he, too, finally surrendered to public opinion, and the provision of limited liability became statutory for the co-operative societies by revised imperial laws. There was an extension of the co-operative movement along the lower Rhine through Raiffeisen; which, on account of their liberal terms in granting credit, found much favor among the farmers.

In order to facilitate business between the separate societies, the man Edition: current; Page: [65] agers, for several decades past, have used a form of co-operative bank as a clearing-house, and the firm of Sörgel, Parisius & Co. has been employed for the same purpose. The resulting benefits and conveniences have been inestimable. The co-operative bank was founded on the joint-stock plan, and its present capital is about 21,000,000 marks. After a regular addition, in late years, of five per cent. to the reserve fund, there is a customary net profit of four to seven per cent. It would far exceed the space at our command were we to follow up the history of all the separate co-operative societies; we can merely refer to their official reports, annually published at Leipzig (Julius Klinghardt).

We may venture, however, to trace the development of a typical co-operative society—one which is regarded in Germany as a model institution, both in respect of its commercial magnitude and its excellent management of discounts and loans. It has even been a widely educating power among the middle classes in matters of banking and money. We allude to the Industrial Bank of Frankfort-on-the-Main, first started as an unlimited liability company, now limited. Its bank statement for 1892 supplies the following data: Its membership, in 1892, increased by a net number of sixty-nine, allowing for deceases and voluntary retirements. This raised the total membership to 1811. Every member is liable to the amount of his shares at a thousand marks each. At the close of 1891, the liability of 1742 members, with 2845 shares, amounted to 2,845,000 marks. An addition of 242 shares in 1892 increased the liability by 242,000 marks, and the round sum of membership liabilities at the close of 1892 was therefore above 3,000,000 marks. The corporate property itself was only 1,473,650 marks, but there was a reserve fund of 323,842 marks and a special reserve of 88,769 marks, together with an endowment and pension fund of 42,152 marks; total corporate property, 1,928,413 marks. Savings deposits and accounts current amounted to 7,173,601 marks. The combined working capital thus rose to 9,102,014 marks. The transactions included collections, discounting of bills, at a rate varying from two to four per cent. according to the paper, and accounts current, in which latter business either marketable securities or personal bonds are commonly pledged. Finally, there was an account with the Imperial Bank and one with the Bank of Frankfort. The Industrial Bank also carries on a commission business with foreign correspondents. Net profits for 1892 amounted to 117,924 marks, yielding a dividend of six per cent.

We append the following balance for 1892:

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Available at Once.
1. Cash 317,026 94
2. Credited in banks 262,411 24
3. Bills of exchange 3,282,233 62
4. Advances at short sight 1,109,588 00
4,971,259 80
Resources Outstanding.
1. Loans maturing in three months 1,200,463 31
2. Accounts current, secured by effects and pledged bills maturing in three months 2,377,934 27
3. Mortgages redeemable quarterly 1,040,800 00
Total 4,619,197 58
Immediate or Subject to Short Notice.
1. Balance of creditors in account current 4,673,319 90
2. Back dividends 842 52
3. Savings deposits in amounts of 100 marks or less 200,000 00
Total 4,874,162 42
Savings deposits running three, six, and twelve months 2,604,913 08

The accompanying table gives a review of the business conditions of the Frankfort Industrial Bank for the first three decades of its operation, as well as a general indication of the rapid growth of the city, whose water trade since the Main was opened for canal service twelve years ago—this inland port being thus made accessible to maritime navigation—has increased thirty-fold:

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Industrial Bank of Frankfort.—Review of Business Results, 1862-1892.
YEARS. Number of Members. Stock Capital Paid In. BILLS RECEIVED. ACCOUNTS CURRENT. Advanced on Effects, Close of Year. Cash at Annual Settlement. Cash Turned Over. Surplus Fund at Annual Settlement. Percentage of Annual Capital on which Dividends are based.
Local. External. On Credit. Without Credit. Net Profits. Dividends.
Accepted Credit. Accounts of Patrons. Paid Out to the Same. Deposits. Paid on Checks.
1862 113 17,314 787
1863 225 50,454 443 202,184 338 102,156 179,700 418,496 482,362 251,957 229,351 143,581 37,000 2,190,575 2,418 11.25 6
1864 336 87,640 932 419,744 1,636 221,959 277,290 532,516 699,585 775,639 637,444 85,445 37,969 4,355,049 5,659 12.16 8
1865 514 153,354 1,600 916,013 2,579 291,827 393,210 681,055 926,686 1,708,208 1,576,054 209,832 60,332 9,759,795 11,695 14.75 8
1866 644 203,275 1,621 1,114,126 2,627 320,010 494,930 450,136 764,076 1,567,858 1,506,566 196,744 55,204 8,685,257 17,108 11.50 7
1867 694 239,177 1,933 1,069,258 3,103 376,924 408,120 373,154 651,656 1,850,724 1,716,441 395,940 112,340 13,224,594 21,986 8.75 7
1868 789 283,673 2,461 1,213,815 4,899 552,187 239,983 734,301 736,428 2,509,377 2,307,295 597,683 138,856 18,562,794 25,958 9.10 8
1869 944 353,506 3,338 1,525,399 7,402 862,246 317,931 1,027,126 1,102,254 2,846,841 2,821,066 560,014 169,969 25,432,034 35,609 9.75 8
1870 1067 412,662 3,266 1,835,996 6,087 774,885 607,720 1,539,380 1,634,389 3,035,222 2,947,790 542,104 188,250 20,661,395 43,135 9.50 7
1871 1241 486,517 3,210 1,914,933 6,391 1,016,020 712,690 2,131,330 2,255,159 4,575,910 4,155,024 1,045,589 269,245 25,896,172 47,188 10.00 8
1872 1525 616,836 3,688 3,016,776 8,888 1,385,966 774,235 3,032,970 3,131,202 7,837,865 7,398,440 1,129,979 337,048 38,947,771 56,850 12.70 10
1873 1815 756,522 5,055 5,780,421 9,623 1,647,976 1,181,945 3,731,542 4,131,104 10,464,353 9,708,480 1,299,855 520,849 44,458,546 69,337 12.80 9
1874 2139 978,982 5,785 8,696,692 9,266 2,614,361 1,404,236 5,418,433 5,447,178 12,932,327 12,112,628 1,220,122 568,398 56,037,091 93,981
1,678,255 14,908,614 4,481,762 2,407,264 9,288,742 9,338,019 22,169,703 20,764,505 2,091,639 974,396 96,063,585 161,110 9.40 7
1875 2153 1,902,013 5,878 15,635,716 10,368 9,549,094 3,365,825 16,295,072 16,285,774 21,843,804 21,567,508 2,526,796 1,115,830 106,765,358 197,367 9.50 8
1876 2118 1,900,207 6,430 18,952,297 9,377 9,299,178 2,243,652 14,443,997 14,704,140 19,887,720 19,641,808 2,645,858 1,535,721 117,515,198 220,352 10.08 7
1877 2098 1,899,232 6,357 15,926,025 7,092 4,600,098 2,490,376 8,632,020 8,589,013 18,905,494 19,879,257 2,770,577 1,746,003 103,010,596 247,669 8.80 7
1878 2099 1,887,272 5,949 14,106,871 6,806 2,883,207 2,326,701 7,503,790 7,297,244 16,380,152 16,822,913 3,251,142 1,905,329 88,383,255 284,027 8.70 7
1879 2051 1,856,013 6,078 12,615,362 6,726 2,362,979 2,270,833 8,752,691 8,824,824 13,555,098 14,247,342 3,380,820 2,199,606 86,123,678 317,673 6.00 5
1880 1941 1,790,116 5,165 9,351,041 5,835 2,035,036 2,418,152 9,364,218 9,709,582 13,001,882 13,531,070 3,444,062 2,660,035 81,186,302 340,868 8.00 7
1881 1836 1,726,316 5,504 12,880,549 8,128 3,239,318 1,832,073 10,553,420 10,082,227 15,040,946 14,983,728 2,764,903 2,784,583 95,919,699 345,055 8.56
1882 1780 1,672,000 5,205 12,023,691 10,708 4,087,736 1,909,758 8,951,427 9,151,686 15,536,086 15,612,873 2,814,852 3,201,591 99,962,682 362,369 8.75
1883 1742 1,593,000 5,252 11,291,435 12,723 5,839,144 2,473,778 10,623,344 11,200,500 17,543,672 17,357,457 2,741,655 3,482,175 117,801,573 371,801 6.73 6
1884 1697 1,551,800 5,957 14,880,250 18,742 7,680,589 2,900,818 11,129,099 11,348,781 21,438,132 21,128,345 2,396,015 3,252,738 143,105,624 369,201 6.97 6
1885 1669 1,498,300 6,090 14,586,614 26,595 10,367,283 2,773,007 11,393,874 11,258,903 22,039,015 21,958,519 2,291,660 3,307,317 150,028,646 337,869 6.98 6
1886 1617 1,460,100 6,391 14,313,921 31,424 9,976,662 2,931,172 13,953,061 14,010,308 23,720,301 23,532,366 1,783,330 3,283,320 160,449,746 340,869 6.50
1887 1522 1,402,000 5,559 13,240,518 29,725 8,265,525 2,151,825 11,851,553 11,282,695 21,812,384 22,210,808 1,809,735 3,205,757 138,388,811 341,969 8.36 7
1888 1494 1,343,000 5,673 12,716,490 28,076 7,831,707 2,255,835 15,929,313 16,033,474 23,437,454 23,018,761 1,637,915 3,261,308 150,481,245 343,969 8.82
1889 1586 1,351,910 6,788 15,091,523 27,311 8,322,729 3,648,415 22,187,894 23,330,555 26,117,261 26,026,644 1,317,505 3,138,153 188,124,030 348,344 10.64 8
1890 1666 1,358,625 7,157 14,498,521 27,242 8,279,399 4,124,100 22,940,853 22,477,400 29,376,407 29,511,682 1,561,555 2,954,700 161,989,966 362,851 11.82 8
1891 1742 1,421,650 7,397 16,142,887 27,609 7,737,383 1,759,820 13,843,220 13,355,212 31,695,717 30,963,175 1,812,680 2,842,474 144,213,932 391,401 9.65 7
1892 1811 1,473,650 7,292 15,605,838 28,341 8,327,528 4,237,970 15,464,567 16,384,047 31,540,249 31,611,491 1,553,551 2,804,952 145,979,899 412,651 7.78
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The extraordinary development of the traffic in money and effects is also reflected in the material equipment of the Industrial Bank on a scale worthy of a great institution. Since 1894, the property includes a steel-lined store-chamber, on the plan of the “stronghold” of the Vienna Cassenverein, and similar to the London safe-deposit vaults; an apartment containing about twenty-five fire and burglar-proof safes. The walls, floor, and ceiling are so covered with steel and other non-combustible substances that the place may be regarded as absolutely fire-proof; being also, as before implied, a hopeless field for burglars. This retreat is used by the members for the safe-keeping of valuables, with a sense of extreme tranquillity.

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THE privileged bank of issue which, under this name, centralizes and monopolizes the circulation of bank notes in Austria-Hungary was founded in 1816. Its original title was “Austrian National Bank,” and its domicile was in Vienna. The State was at that time obliged to use compulsory paper tender, much inflated on account of military necessities; and but for this accident the Austrian Bank might have enjoyed easier lines than either the Banks of England and France or the German Imperial Bank, since it was the exclusive bank of issue in the whole country. Thus, though its general constitution resembled that of the Banks of England and France, it possessed an advantage over the two former banks from its very origin—that is to say, perfect monopoly and uniformity of note circulation, which long experience has shown to be the best and the most advantageous to the public. This was also proved by the particular testimony of the French bank investigating committee in 1863. Germany has eight banks of issue besides the Imperial Bank; there are still more in Great Britain, co-existing with the Bank of England; whereas nine banks of issue were operating in France until 1848, concurrently with the Bank of France. But in Austria-Hungary the privileged Austrian Bank was a monopoly, as a matter of course, for all issues of notes.

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Far from causing embarrassment or occasioning losses to the public, this uniform arrangement rather contributed to strengthen the Bank’s credit and heighten its responsibility. It is true that the Austrian National Bank was repeatedly compelled to suspend payments in coin, and use obligatory paper currency; but for this the Bank administration was not to blame. The trouble proceeded from embarrassments of the Imperial Government, which either made abnormal draughts on the Bank in critical emergencies, or else, waiving its promise, emitted State paper currency as obligatory legal tender, and so rendered it impossible for the Bank to fulfill prescribed requirements in the matter of redeeming notes in coin. If we study the Bank’s independent action, we shall find that, even in great crises and in times of dire political peril, it remained firm as a secure anchor while everything else was in commotion, and served as a mainstay to demoralized trade. The good offices of the Bank led to the public conviction, upon the dual reorganization of the Monarchy in 1867 and in spite of Hungary’s eagerness for independence, that it would enhance the credit interests of both States to maintain such a single institution; and this is feasibly effected through the unity of the Bank’s administration. It is of more than merely historical interest to review the motives which influenced the founders of the Austrian National Bank, as these motives are expressed in the Imperial patent of June 1, 1816, from which we select the following passages:

“The mighty convulsions which have shaken Europe in the course of the past five and twenty years have also involved us, from the beginning of our reign, in a series of heavy wars, to the jeopardy of our stability and monarchial independence, including whatever is most precious to rulers and peoples. We neither could nor should have spared our people the omission of any effort or sacrifice. * * * From this time forth be there never again a creation of new paper currency having obligatory value or compulsory circulation; nor any augmentation of the present issue. Should extraordinary events occur, causing outlays beyond the limit of the usual financial resources which the State commands, then let the Exchequer take thought and provide means for meeting such abnormal charges by broaching new springs of wealth, or by sounding other depths of relief, and in no case enforce the circulation of obligatory paper money. The redemption of the paper currency is incumbent on a privileged national bank, to which the right of redemption is herewith conveyed.”


The charter was renewed in 1841 and 1862, in each instance after a revision of the appertaining statutes. In 1856, a new department was created for transactions in hypothecated securities, or land mortgages. When the charter expired in 1877, ten years after the dual reconstruction of the Monarchy, the Bank was reorganized under the new name of Austro-Hungarian Bank, and by the request of Hungary, Buda-Pesth became a second Edition: current; Page: [71] headquarters of the nation’s banking business. These changes were ratified by the law of June 17, 1878. Apart from such external modifications as were made necessary by the reorganization itself, there were no essential changes in the tenor of the Bank Act. As the statutes were again revised upon renewal of the political treaty of 1888, and as we shall consider their contents further on, we may confine our attention at this point to a few fundamental features of the Bank’s operations during the first two decades of the dual Government, especially noting the manifold efforts of the Bank to restore specie payments, its policy during and after the crisis of 1873, and the synchronous phenomenal increase of its gold reserve. We must first return to times when, pending the joint exertions of Government and Bank toward the restoration of specie payments, the State and the Bank, summoned to its aid, were thrown out of their normal conditions.

The patent of July 1, 1841, extended the Bank’s charter to the last of December, 1866. The revolution of 1848, and the consequent war of 1849, with imperative Government orders on the Bank for its assistance, were strains which shook its previously solid foundations. The wealthy classes were seized with a sudden panic in 1848, which especially manifested itself through a distrust of credit. Even the notes of the substantial Prussian Bank were for a time accepted only at a premium, and for a term of several weeks Prussian exchequer bills were positively refused in South Germany. Great exports of coin were on their way to London; and this movement also soon reached such proportions in Austria-Hungary that the Government, in a disastrous moment, prohibited all export of gold and silver from its dominions. The immediate consequence was, that gold and silver were locked up, in increasing amounts, and silver being the money standard, it presently commanded a premium of one and one-half per cent. In April, 1848, it was at a premium of eleven per cent., and by the end of the year twelve per cent. The dearth of small currency became so great that people sought to relieve their wants by cutting up bank notes and using private issues of small paper money. The premium on silver in 1849 fluctuated between seven and twenty-two per cent.; between twelve and thirty-three per cent. in 1850; from thirty-three to twenty per cent. in 1851; ten to twenty-four per cent. in 1852; three to sixteen per cent. in 1853; sixteen to thirty-nine per cent. in 1854, and twenty-eight to nine per cent. in 1855. After a considerable decline, in the period from 1856 to 1858, when the premium fell to two per cent., there was a sudden rise again to thirty-nine and forty per cent. in the spring of 1859, as a consequence of the proclamation of war by Napoleon III., in his new year’s speech of the same year.

Even before the outbreak of this war, the Government had been obliged to exhaust its credit and seek extraordinary assistance during the momentous Crimean War. The Monarchy’s credit had been drained by the loan of six hundred million florins during the occupation of the Danubian principalities, along with the secret and forced increase of this loan to eleven hundred million florins, resulting in the tragical fate of Finance Minister Edition: current; Page: [72] Baron von Bruck, who committed suicide and fell a lamentable sacrifice to the fruitless financiering of that age.


In 1857, the Vienna Convention standard was replaced by the Austrian standard. The original regulation whereby bank notes had been made and issued in sums of five, ten, twenty-five, fifty, one hundred, five hundred, and one thousand florins was modified by the Imperial ordinance of 1858 prescribing that, on and after November 1, 1858, only those notes should be legitimate which bore the Austrian standard values of ten, one hundred, and one thousand florins. At least one-third of the legal notes in circulation must be covered by standard silver coin or bullion, though in certain circumstances gold coin or bullion might be employed, with the consent of the Finance Minister; and the remainder should be protected by legally discounted paper or secured loans. After the close of 1858, it was decreed that all outstanding notes of the Vienna Convention standard should be speedily withdrawn within a maximum limit of one hundred million florins, and notes of one, two, and five florins be altogether canceled by December 31, 1859. At the same time, the Austrian National Bank was authorized to issue one-florin Austrian standard notes to the amount of one hundred million florins, in proportion as it retired the one, two, and five florin notes of the Vienna Convention standard. The statute requiring protection of bank notes by coin, etc., did not apply to the new one-florin notes, but these were to be used, up to the amount of one hundred million florins, as a separate and sufficient fund for covering State property conveyed to the Bank. In all other respects, the one-florin Austrian standard notes should be legal tender on the same basis as the notes for ten, one hundred, and one thousand florins. The notes were all alike affected by the obligatory Legal-Tender Act, which was binding after June 2, 1848; but the act was also then declared operative only until January 2, 1859, by which date specie payments should be resumed.


However, the subsequent outbreak of war frustrated the eagerly expected plans of reform not only for Austria-Hungary, but also for half the peoples of Europe. In the early course of the war, and at the close of April, 1859, the promise of a restoration of specie payments was disannulled for the time being by the State itself. The Imperial ordinance of April 29, 1859, provided for defraying the necessary and extraordinary increase of expenses by the levy of a loan to the amount of two hundred million florins in five per cent. bonds, and empowered the Finance Minister, in proportion to the demands of the situation, to negotiate the loan of these bonds at the National Bank at two-thirds of their nominal value. The same ordinance authorized the Bank to issue, for this purpose, Austrian standard notes for five florins, Edition: current; Page: [73] governed by the same regulations as the other bank notes. Except on occasional suspension of specie payments, all these notes, of the several denominations one florin, five, ten, one hundred, and one thousand florins, Austrian standard, may be redeemed at the Bank’s headquarters in Vienna in standard silver coin. Notes of ten, one hundred, and one thousand florins might be issued in amounts not exceeding three times the coin reserve; notes of five florins to the amount of one hundred and thirty million florins; and the one-florin notes to the amount of one hundred million florins. The one and the five florin notes need not be covered in coin, since the former are pledged by State property and the latter by bonds.

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WE must now glance at the origin of the State’s obligations to the Bank. The oldest of such obligations, the so-called “primitive” or funded debt, originated in the redemption of Vienna standard paper currency, conformably to the agreement of March 3, 1820; which subsequently underwent many modifications. The Bank redeemed with its own notes a total amount of 443,899,092 florins of Vienna standard paper currency, which in Austrian standard money would amount to 186,437,601 florins. In compensation, it received State endowments amounting to 73,500,000 florins, Austrian standard; the remaining 112,937,601 florins devolved upon its own resources. The State acknowledged the ensuing claims of the Bank by four per cent. State bonds to the amount of sixty-three million florins, and 49,937,601 florins in bonds without interest. Further security was furnished to the Bank through so-called mortgage bonds amounting to 161,339,251 florins, Austrian standard, which were publicly quoted at seventy per cent.

The extinction of these bonds was to have been compassed by annual installments dating from January 1, 1821; but by a contract dated November 18, 1822, the time was postponed until 1837. Meanwhile, the State made other compensatory payments. From 1837 forward, the annual installments were paid without interruption; and in 1860 the Bank’s claim had been reduced to 43,074,606 florins, Austrian standard. For this amount, the Bank held round sums of 20,500,000 florins in four per cent. State bonds, 22,500,000 florins in bonds without interest, and 61,500,000 florins in five per cent. mortgage bonds. By the contract, then, the round sums of 20,500,000 florins in interest-bearing bonds, and 22,500,000 florins in bonds without interest, or a total of forty-three million florins, was to be canceled from 1861 Edition: current; Page: [75] to 1870. Besides these items, the State had gradually contracted from 1822 forward, a debt of 91,422,477 florins, Austrian standard, for which State lands were offered as security.


After 1822, the Bank had commonly discounted money orders of the central State Exchequer, which were meant to bring about a more expeditious use of State currency circulating in remote provinces, in case of transactions with the capital. Agreements, in this branch of business, were renewed from year to year. From an original limit of six million florins, and notwithstanding partial repayments, this business had reached the sum of fifty million florins by 1848. The original interest of five per cent. was reduced to four per cent. in 1823. and to three per cent. in 1834. In 1842 the Exchequer began to issue further three per cent. State Treasury certificates, which should not exceed an amount of five million florins; but they reached a total of 10,900,000 florins in 1848, and at the close of 1849 were taken up in a so-called two per cent. consolidated debt. The events of 1848 compelled the Government to make a still heavier draught on the credit of the National Bank. It was purposed to offer a mortgage of forty million florins as a means for procuring gold and silver from abroad, whereby to strengthen the coin reserve of the Bank. The plan miscarried on account of the general unrest in the spring of 1848. But in April, 1848, a substitute plan was taken up; namely, the issue of thirty million florins in partial mortgage bonds which were secured by the State salt mines at Gmunden, and which availed to meet the most urgent of the existing necessities. On these new bonds the Bank advanced twenty million florins at four per cent. interest, and in the same year assisted the Government to raise two new loans, one of six million florins and the other of fourteen million florins, both at five per cent., in Exchequer certificates. The Bank furthermore granted a credit of twenty million florins without interest, and received by way of security the Government shares in the Vienna-Gloggnitz Railroad, and mortgage bonds of the State Northern line. At the same time the Government bound itself to pay the Bank a round sum of four million florins for defraying half the cost of procuring silver in 1848, but the Bank later renounced this claim.

At the beginning of 1849, extraordinary State exigencies were met by the issue of three per cent. certificates in denominations from one thousand florins down to five florins, which were accepted in payments at the Exchequer and at the Bank’s counters. By the middle of the same year they had become obligatory legal tender; and at the close of the year they had accumulated in the Bank to an amount of 44,500,000 florins. About this time the Government also began to issue certificates on the Hungarian revenues, in denominations from one florin upward, which, in turn, became obligatory legal tender except in Lombardy and Venetia, or the “Lombardo-Venetian Kingdom.” To quote from the memorable Imperial patent of Edition: current; Page: [76] June 28, 1849: “The violent shocks to which the political fabric has been subjected for more than a year, and the necessity of meeting the extraordinary expenses involved in fighting formidable foes at home and abroad, have rendered unusual measures indispensable; nor was it possible to effectuate the same in such extremely difficult circumstances without recourse to credit. The Austrian National Bank has therefore ably contrived to perform highly helpful service in the interests of the State, amidst conditions which must have paralyzed all other instruments of aid; and we would not withhold this expression of our satisfaction.” The Imperial patent decreed: (1) that the National Bank should not be prohibited from covering the Government demands with a more extensive issue of notes, and (2) that any sums not needed by the State for current expenses, whether such sums proceeded from the loan about to be negotiated, or were represented by newly issued three per cent. obligatory legal-tender State Exchequer certificates, or accrued from the Sardinian war indemnity, should be conveyed to the National Bank toward canceling the State’s obligations.


This led to an agreement between the Government and the Bank under date of December 6, 1849, according to which all the sundry claims of the Bank on the State should be consolidated into a round sum of ninety-seven million florins. Within the first six months of the following year announcement was made that the three per cent. certificates should be retired against an issue, to be administered by the Bank, of Imperial Exchequer certificates, in denominations of one hundred, five hundred, and one thousand florins; and in December, 1850, there was ordered a further issue of Imperial Exchequer certificates, in denominations of one florin, two, five, ten, and fifty florins, to be likewise used as obligatory legal tender. In April, 1851, there was an issue of mortgaged certificates to the amount of thirty million florins. Thus followed loan upon loan, year after year, until by the patent of July 5, 1854, a subscription of three hundred million to five hundred million florins was advertised, by means of which the earlier loans should be paid off. At the same time the Financial Ministry ruled that the total debt of the State to the Bank should be reduced to eighty million florins by August 24, 1858. We have already indicated that the difficulties of the situation were not yet overpast, and that after the outbreak of war in 1859, though specie payments had been undertaken from the beginning of September, 1858, until the end of April, 1859, they were then again suspended.


For the forty-odd years from the founding of the Bank to 1860, the status of the State’s debt to the Bank was as follows, stated in florins: Edition: current; Page: [77] 1818, 10,000,000; 1823, 47,000,000; 1827, 98,000,000; 1838, 131,000,000; 1850, 150,000,000; 1857, 203,000,000; 1859, 300,000,000; 1860, 257,000,000.

For nearly thirty years the Austrian National Bank had maintained an unhesitating practice of redeeming its notes. Grave political events, commercial crises, the French revolutions of July, 1830, and February, 1848; the uprising in Poland, and Oriental entanglements, had indeed exerted an adverse influence on the Bank’s coin reserve; but however unfavorable the relations between coin reserve and the note circulation often were, they had never quite come to fatal extremities.

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THE condition of stability and sound credit, due to good administration of the Bank’s business, was somewhat unsettled in consequence of the February revolution in 1848. Within three months from that outbreak the coin reserve decreased by more than forty-three million florins. A panicky terror seized everybody, and the crowd grew daily bigger which thronged the Bank’s counters. On May 21, 1848, the Bank directors announced that, by sanction of the Government, all payments in coin would be limited to twenty-five florins, and that, in order to facilitate small transactions, there would shortly be an issue of one and two florin bank notes. It was characteristic of the times that this important announcement first came from the Bank, and that the State ordinance prescribing obligatory legal tender was dated May 22d, a day later than the Bank’s proclamation. The Imperial patent was delayed till June 2d. The exchange of notes for coin was restricted, but not wholly intermitted; though the coin reserve decreased by an amount of nearly one hundred million florins from 1848 to 1855, through redemption of notes in behalf of the State, municipal governments, corporations, and private business.


In 1849 and 1850, the coin reserve was reinforced by the purchase of precious metals to an amount of twenty-eight million florins, at an expense of 3,200,000 florins to the Bank; and a much larger addition to the coin reserve was effected in 1855 by the issue of 50,000 shares for the establishment of a mortgage department of the Bank. This brought in a premium for the Bank amounting to six million florins. The note circulation was also increased relatively to the coin reserve on occasion of large advances to the State, and special grants of credit which the Bank was obliged to extend to Edition: current; Page: [79] private firms with a view toward obviating, in a great many instances, the mischievous consequences of the disturbances of 1848. In this way no less than eighteen million florins were granted on extraordinary credit to commercial houses, industrial enterprises, communities, and other corporations in 1848 and 1849. Four million florins of this amount went to the endowment fund of the Vienna Relief Committee, and two millions to the assistance of needy trades-people.


In the following decade, like advances were made to the sum of thirty-seven million florins. In the same period the first branch banks were organized, in the following chronological order: Prague, Buda-Pesth, Lintz, Lemberg, Brünn, Trieste, Olmütz, Troppau, Kronstadt, Gratz, Klagenfurt, Cracow, Laibach, Fiume, Debreczen, Temesvär, Reichenberg, and Innsbruck (in 1857). The institution of branches dealing in loans on statutory securities was begun in 1854. The loan business of the main Bank in Vienna reached a continually greater magnitude from 1849 forward. Occasions for such increase were the augmentation of the State’s debt, the enfranchisement of landed property, and the difficulties incidental to negotiations of this kind. In 1857, nearly fifty-three million florins were loaned out in this way by the Bank in Vienna alone, of which 10,500,000 were employed in case of large estates.


The Bank had made every preparation to resume specie payments in the autumn of 1858. The premium on silver had fallen to two per cent., and as payments in coin were actually begun in September, 1858, the premium declined to one and one-eighth per cent. The note circulation then amounted to a round sum of 389,000,000 florins, the coin reserve to 110,000,000 florins, and bills payable in coin to seventeen million florins. The hope was therefore justified that the premium on silver would totally cease. Then, as before stated, came ominous war clouds—first, the menacing new year’s address of Napoleon III., and next his actual declaration of war. The premium on silver suddenly rose to thirty-one per cent. in April, 1859, and to forty per cent. in May, the note circulation also rising to 429,000,000 florins; whereas the coin reserve sank to ninety million florins, and the sum of bills payable in coin increased to twenty million florins. Notwithstanding the speedy conclusion of peace, which occasioned a drop to sixteen per cent. in the premium on silver, the note circulation still rose to 466,000,000 florins; the coin reserve declined to seventy-eight million florins, and bills payable in coin ranged around twenty million florins. Such was the course of affairs till 1865, when, by careful management, the Bank again succeeded in bringing the silver premium down to two per cent. But again all efforts to keep the notes at Edition: current; Page: [80] par were rendered fruitless by the impending German war. By the law of May 5, 1866, the one and five florin bank notes were adopted by the Exchequer and declared to be State currency. The National Bank was obliged immediately to transfer the total equivalent of these notes to the State in bank notes of the higher denominations.


By the law of July 7, 1866, concerning the creation of a credit of 200,000,000 florins, the National Bank was obliged to transfer to the State sixty million florins in bank notes, upon compensation for costs of manufacture, which loan should be repaid in bank notes, with the salt mines of Wieliczka for security. On the ground of irresistible political necessity, further issues of State notes were provided by the law of August 25, 1866, in order to meet extraordinary expenses of war and its costly consequences. The circulation of State notes was then so amalgamated with that of the partial mortgage bonds of Imperial salt mines—which bonds were a sort of floating State debt—that the total amount of circulating paper chargeable to the State should not exceed 400,000,000 florins. The maximum circulation of salt mine partial mortgage bonds alone was limited to 100,000,000 florins. Under pressure of these regulations, the premium on silver jumped from six to twenty-five per cent. (in May, 1866, it was six per cent.), and continued at twenty-five per cent., with but slight deviations, till the end of 1871. Then it fell to fifteen per cent.; the bank note circulation decreased to 317,000,000 florins; the coin reserve was 143,000,000 florins, and there were bills payable in coin to the sum of eight million florins. The State paper currency had meanwhile reached a circulation of 374,000,000 florins; and thus the aggregate paper circulation of State and Bank amounted to 691,000,000 florins, backed by only 151,000,000 florins in coin; certainly, far short of the legal one-third.


In order to indemnify the Bank for its sacrifices, at least in part, before the State should be able to make full restitution, the law of November 13, 1868, proposed certain measures, of which we would especially note the reduction of its liabilities to stockholders from 110,250,000 florins to ninety million florins; with corresponding statutory changes respecting the Department of Mortgaged Credit, such as the receiving of interest-bearing deposits, alteration in the terms of interest on the loan of eighty million florins, and extension of the loan business through contango bargains at the Bourse. The Bank used the latter facility very cautiously. The loan business at its maximum volume for 1861 (May 5th) amounted to 65,770,000 florins, distributed as follows:

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Ordinary loans in Vienna 24,344,000 florins.
Ordinary loans at the branch banks 17,173,000 florins.
Continuations, or contango business 24,253,000 florins.

If we now bear in mind that from 1855 to 1858 the loans in Vienna alone had averaged seventy-four million florins, we shall have to admit that the reproach upon the Bank on account of its contango operations was by no means justified. When the Bank first engaged in contango operations, the common complaint was heard that it had made far too narrow terms for itself, and had shown excessive anxiety, whereas it should have proceeded liberally and boldly. There was no voice of remonstrance against over-activity in contangoes until the Bank had given up that whole line of business. Premonitions of the inordinate speculations which ushered in the crisis of 1873 were already sensible. We quote from a report of the Agricultural Committee of the Austrian Imperial House of Deputies: “The development of the railway system in the Austro-Hungarian Monarchy was as yet hardly begun in the first half of the decade—1860 to 1870. Not until after the war of 1866 was there a beginning of progress in that direction. Stimulated on the one hand by the increased and inflated circulation of paper currency, and, on the other, by the remarkably abundant harvests of 1867 and 1868, which occasioned large and unprecedented exports of grain abroad and brought in supplies of foreign capital, and still further advanced by the wholesome reorganization of State finances in 1868, when, for the first time, the Austrian Government withdrew from the position of money-seeker in the great public market, the newly awakened spirit of enterprise devoted itself with a zeal no less beneficial than worthy to the construction of new railway lines within the Austrian dominions, on a scale so magnificent as to be truly revolutionary.”


The feverish over-haste in railway enterprises and the stock-gambling in bank shares and other securities were attended with unfortunate consequences, which first became manifest when the Bank withdrew from the contango business. The item of bills was growing at a pace beyond precedent, and in order to meet the ensuing public demands, the National Bank resolved, in 1872, to retire fifteen million florins in railway priority bonds from the reserve fund and sell the bonds. By the close of 1872 there was an addition of ninety-four million florins to the discount and loan transactions, for which capital was furnished both by the reserve fund and the mortgage department, and also by increased circulation of notes to an amount of over seventy-one million florins. The maximum of bills and loan transactions occurred in 1873 (the crisis of that year declared itself in Vienna on May 12th); also the maximum circulation of bank notes, protected by the required portion of silver. On the other hand, there were State notes in circulation to the amount of 378,000,000 florins, and the total circulation of bank notes and Edition: current; Page: [82] State notes, together, had risen to 725,000,000 florins. The Bank no less promptly proceeded to relieve the commercial community when the crisis came than it had previously given warning by a timely raising of discount rates, in anticipation of the worst. As we have earlier mentioned, the Bank served as a firm anchor of salvation. The wisdom of this management has been demonstrated by the results of a like policy followed for many years by the Bank of England.


While the capital employed for loans had decreased in the decade from 1862 to 1872 by twenty-five million florins, on account of the Bank’s retirement from the contango business, discounts had increased by more than 100,000,000 florins. Whereas the total discount business for 1863 was only 367,000,000 florins, the same item for 1872 was above 755,000,000 florins; a round increase of 106 per cent. In 1871, the Austrian National Bank had a bills portfolio more than thirty-four per cent. of that of all the other Austrian and Hungarian credit institutions, savings-banks, and insurance companies or associations combined; in 1872, thirty-five per cent.; thirty-seven and eight-tenths per cent. in 1873, and thirty per cent. in 1874. This comparison is the more significant when we consider the vast capital controlled by the other credit institutions; remembering also that the Bank is obliged to keep its large coin reserve locked up, whereas in this respect other institutions are allowed free discretion. We stated in an earlier connection that the National Bank used a part of its mortgage funds toward an extension of its operations in discounting bills of exchange.


When the mortgage credit department was organized, the statutes (Section 10) had prescribed that mortgage loans should be granted in the form of letters of mortgage to be realized by the debtors themselves. But since this would necessarily involve loss of time and additional expense to the borrowers, the Bank was also authorized to pay out mortgage loans in cash. According to Section 46 of the statutes, letters of mortgage may not mature within less than twelve months, except on approval of a shorter term by the Ministry of Finance. For this reason the Bank made no considerable application of the statute authorizing the payment of letters of mortgage in cash; and the trouble consequently devolving upon mortgage debtors rendered the mortgage department of the Bank rather unpopular. Many other mortgage banks, both in Austria and in Hungary, were therefore instituted, which ensured cash payments of mortgage loans. At first, the National Bank had allowed this in case of one-year mortgage bonds; later, for six-year bonds; and lastly, for twelve-year bonds. On maturity these letters of mortgage must be retired by the National Bank with bank notes. The debtors incurred this double disadvantage, that the negotiation of the Edition: current; Page: [83] bonds usually cost them so much time and expense that they were unprepared to pay the loans when due; whereas private mortgage banks imposed, as a rule, far easier conditions.


After the outbreak of the crisis of 1873, the Government felt constrained to suspend the rights conveyed by the Bank’s charter. On the very morrow of the crash an Imperial ordinance decreed the suspension of Section 14 of the statutes of 1863, concerning the protection of note circulation by coin reserve, and this ordinance remained in force till October 11, 1874. In a communication dated May 13, 1873—that is, on the same date as the Imperial decree—the Finance Minister assured the Bank that these extraordinary measures, which, as a matter of course, had been adopted only upon pressure of extreme necessity, should strictly cease as soon as the necessity ceased, and that their whole purpose was to obviate the shattering of confidence among solvent and substantial merchants and financiers. So the Bank’s credit replaced private credit, which had been badly damaged by over-speculation; and, thanks to the prudence of the Bank directors, the Bank was fortified against all shocks. Nevertheless, it was charged with being needlessly stingy in granting loans, especially by certain straitened business people of Hungary. At this time the Bank accomplished a plan which for sharpness and audacity of conception and cleverness of execution must win for its originator, First Secretary Wilhelm Baron von Lucam, an ever-honorable position in banking history.


We have hitherto seen that the administration of the Bank, from its earliest foundation, was based on solid principles; that for thirty years the Bank met all its cash obligations; and that it never deviated from statutory regulations except on Government orders, in perilous emergencies of war or panic, when there appeared to be no other help for the State than to draw on the resources of the Bank, which, in financial respects, were superior to those of the Government. This being the case, the Bank directors felt themselves obliged, so far as lay in their power, to bring about an improvement in the matter of circulation. Owing to the large issue of State notes, the Bank was much obstructed in its purpose of restoring specie payments. Since, however, the law of July 7, 1866, expressly declared that the Bank should have the right to resume specie payments by no later than one year after the conclusion of peace, by which time its most recent advances to the State were expected to be repaid, the Bank declared its policy unchanged, in a memorial of the First Secretary for 1876, affirming that, first and last, the National Bank would devote its fullest attention to the necessity of resuming specie payments. An occasion was furnished by Edition: current; Page: [84] Austria’s withdrawal from the German Monetary Union in 1867. At the draft of the terms of adjustment between Austria and Hungary in that same year, the question of adopting a gold standard was freely considered, and consistently with this consideration, the law of March 9, 1870, provided for the coinage of new gold pieces of four and eight florins, to circulate side by side with the old ducats. Shortly afterward, that shifting in the relative values of the precious metals began the effect of which we still observe today, and which the First Secretary closely watched. From May to December, 1871, the price of silver in London unexpectedly rose from 603/16d. to 60⅞d. per standard ounce; and, after a subsequent rise to 61⅛d. in the first half of 1872, it then again declined in September, 1872, to 601/16d. per ounce. Various reasons account for the continual decline of silver from that time forth; notably the gigantic increase in the silver production of Nevada, the adoption of a gold standard by the German Empire, and the suspension of the coinage of silver thalers by the States of the Latin Union.


That brief, temporary rise in the price of silver was an opportunity which the Austrian Bank was quick to seize. In fact, the Bank sold the great bulk of silver that lay treasured in its basement vaults for an equivalent amount of gold before there was any talk of a gold premium. The news of a rise in silver in the London market electrified First Bank-Secretary Baron von Lucam, and, as business director, he decided to take prompt advantage of this turn in the market by selling silver from the Bank. At the instigation of Von Lucam, an act of March 18, 1872, had circumspectly altered the statutes of 1863 so far as to provide that in future the Bank might maintain gold coin and bullion as well as silver in its coin reserve. As regards the particular transaction which we are now reviewing, Von Lucam divulged his plan to the Bank governor, Von Pipitz, who straightway approved it, remarking that he would immediately call a meeting of the board of directors, nowadays known as the General Counsellors (Generalrath), that he might obtain their acceptance. To this Von Lucam objected that such proceedings would shipwreck the whole plan, since there were bankers and financial arbitrators on the board, who would use the intelligence to fatten their own interests. There could be no hope for the scheme unless it were kept secret between the governor and the First Secretary, and on this condition, the secretary would bear the full responsibilities of the entire transaction. So the governor at last consented, and the First Secretary at once bestirred himself to effect his conversions by selling silver as comprehensively as possible; also in such several sums and with such discreet latitude as to times of payment as were likely to escape the vigilant notice of dealers in the precious metals, or of financial arbitrators. The Bank effected its silver sales in London, Paris, Amsterdam, Brussels, and Berlin without affording the first inkling to the great banking houses, dealers in Edition: current; Page: [85] gold and silver, financial arbitrators, or even to the Administrative Council of the National Bank, of what was going on. Thus jealously was the secret observed between the governor and the First Secretary, and the few officers with whom it must inevitably be shared in order to perfect the plan. These officers were the keeper of the coin, the bookkeeper, and one corresponding clerk.

The operations had continued about four years, and nearly eighty million florins in gold had been accumulated, before the first rumor thereof reached the Vienna Bourse. At the next meeting of the Bank directors, a certain member of the board who had been elected because of his expert knowledge in monetary matters, and at the suggestion of Von Lucam himself, who desired to have an efficient substitute in case of his own illness or absence, gave utterance to the Bourse rumors. We need not withhold this member’s name; he was the late Mr. Schaff, dealer in precious metals. He then propounded the question: “Is it true that the Bank is selling silver, and if so, why has the board of directors not been notified?” The First Secretary made answer that the Honorable member could best appreciate the reason and account for the silence from the standpoint of his own trade. A communication of the transaction would not have been kept confidential, and the whole enterprise would have been foiled. This was so palpable, he continued, that from the very moment the secret was out, the operations must cease. So it proved, in fact; and on the very next day, the Bank was obliged to suspend the sales on account of changes in the London market. The affair had progressed from the close of 1870 till the close of 1874. In 1875, there was a diminution in the supply of ready money, due to changes in the market for commercial paper; and but for the untimely interruption above related, the Bank, which at that time had a coin reserve of 134,000,000 florins, might have increased its gold purchases to a sum of 120,000,000 florins. And as it mostly sold silver at the old rates, without reference to the new law just going into effect concerning an alternative gold standard, it might have earned a gold premium of over twenty-five million florins, whereas its present premium on the coin reserve amounts to only 13,500,000 florins. Yet even the latter gain was a great achievement, which raised the Bank in the esteem of financial experts and commercial magnates throughout Europe. No less renowned an organ than the “Revue des Deux Mondes,” in an article by the eminent economist, Michel Chevalier, in the issue for August 1, 1876, expressed the following tribute: “We deem ourselves much superior to Austria, but Austria has administered her Bank far more cleverly than we have managed the Bank of France.”

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IN consideration of the extraordinary results which followed the sagacious and bold operations of Von Lucam, it might have been supposed that he would be rewarded with unusual honors. His plan had most profitably served not only the Bank, but the whole Austrian realm. But the renewal of the State contract and of the National Bank’s charter had the unexpected sequel that the man who had won the admiration of his fellow-experts in all Europe, and whose peer for directing the Bank could not be found, was removed from his high office. The main reason was his firm adherence to the correct and solid principles which he had ever applied in the management of discounts and interest. For this he was especially unpopular in Hungary, where, as a general rule, a large part of the population is addicted to a wider extension of credit, and makes heavier draughts on credit institutions, than Von Lucam’s policy would have allowed. In Hungary, too, there is a strongly cherished political sentiment in favor of an independent bank of issue. Upon renewal of the State contract with the Bank, in 1878, this political bias contrived to accomplish at least thus much, that the name “Austrian National Bank” was replaced by “Austro-Hungarian Bank,” and a second board of Bank directors was appointed for Hungary, with headquarters at Buda-Pesth, and an organization altogether similar to that of the Bank in Vienna. The new head Bank in Hungary is equipped with a working capital almost as large as that of the old Bank, although the disbursements of Hungary, in the common Imperial budget, are only one-third and the Austrian portion two-thirds. An unsalaried deputy-governor is elected for the headquarters in both Vienna and Buda-Pesth, and the joint administration is under a governor, who draws an annual salary of twenty thousand florins. The deputy-governors, instead of a fixed salary, draw extra pay (special fees). The actual, prime direction Edition: current; Page: [87] of affairs devolves upon the First Secretary, whose annual salary is twelve thousand florins.


When the new Bank Act of 1878 went into effect, the strenuous opposition to Von Lucam in Hungary succeeded in removing this inflexible man from office. The liberally salaried position of Bank governor, which he rightfully deserved for his twofold service to Bank and State, was carried over him and bestowed on a man of inferior ability—the former sinecure director of the Austrian Land Credit Institution. Von Lucam was offered the deputy-governor’s post in Vienna, which unsalaried office he might not at all have been warranted in accepting, since he had always despised using his genius and administrative experience for private ends, had not the Bank decently retired him with the life-long grant of his previous salary as a richly deserved pension. Shortly afterward, the man to whom ceaseless work had become a second nature, finding it impossible at the zenith of his bodily and mental powers to play fifth wheel to a wagon, withdrew from official service. In his memorial of 1876 on the Hungarian question, Von Lucam expressed himself as follows:

“In the lands of the Hungarian Crown, the National Bank was actually compelled to vindicate its legally defined authority. Whenever this happened, the Bank administration would invariably appeal to the fact that its charter was based on the law of December 27, 1862, which was operative in the whole Empire. For some time after the restoration of political autonomy to Hungary, the National Bank had not been moved to request a formal ruling for its status in Hungary, because nothing had occurred to call the recognition of its charter in Hungary into dispute. In the terms agreed upon by the Hungarian Royal Exchequer and the Imperial Department of Finance in March, 1867, the Hungarian Finance Minister expressly declared that he would not interfere with the existing regulations of the National Bank, in either an administrative or a legislative direction. The constructions which were later applied to this agreement were not yet in sight, though as far back as April 7, 1867, the Hungarian Finance Minister addressed a communication to the Bank, with reference to banking operations in the current year, wherein he proposed, for the sake of facilitating those operations, a material extension of the National Bank’s activity in Hungary. Since the details of his proposition would have involved a change in the statutes and banking regulations, the Bank forthwith answered that the legislative authorities must first be consulted. At all events, the Bank had vainly urged, in the second half of 1866, that the statutory changes which were then contemplated should be also made applicable to Hungary. It was not till the close of 1869 that the Bank began to exercise its full chartered prerogatives in Hungary, since that was the time when Hungary first began to challenge or dispute them. Thereupon the Bank significantly intimated, and in an official communication to the Finance Department, in March, 1870, plainly asserted that the acknowledgment of its rights in Hungary was hampered by conditions of which the Bank had not been seasonably notified; wherefore there was nothing to be done but resist them après coup, until a definite settlement of its relations in Hungary could be secured. By vote of both houses of the Hungarian Diet at the beginning of 1872, the Hungarian Government declared itself willing to decree a provisional recognition of the Bank charter by Hungary, provided the Bank established an endowment for Hungary on the same terms as that of Austria, and in proportion to Hungary’s contribution to the total budget expenses; and further, that a board of directors, supplementing the general board, should administer the Hungarian bank business, with headquarters at Buda-Pesth. But the Bank held it quite inexpedient to enter upon any such provisional, temporary arrangement, involving conditions wholly inadmissible by the responsible directors of a bank of issue. At the Edition: current; Page: [88] close of October, 1872, and in the early part of November, it was resolved that the Hungarian Finance Minister should assist in deciding the Bank question, provided the Hungarian endowment be increased. This was granted, at first by the amount of 4,500,000 florins. From the standpoint of the Austrian Finance Department, Hungary’s condition for joining the conferences on the Bank question was now fulfilled; but the Hungarian Exchequer claimed that the grant had come far short of the desired proportion.

“The Hungarian and Austrian Imperial commissioners made so little progress during 1873, that representatives of the Bank were not so much as invited to attend the sessions; and thus the matter dragged until near the end of 1875. The expiration of the Bank’s third charter was approaching, and its rights were not yet recognized in Hungary. As for State endowments, those of the Austrian branches, for discount business, were increased by twenty-eight million florins, or 103 per cent., from the close of 1867 to the close of 1875; and those of the Hungarian branches, 28,100,000 florins, or 216.6 per cent. The item of discounted bills and other paper was not quite 1,500,000 florins, or 2.8 per cent. lower, in Vienna at the close of 1875 than at the close of 1867; for the Austrian branches it was 19,600,000 florins, or 125 per cent. higher, and for the Hungarian branches, 21,900,000 florins, or 250 per cent. higher. The total amount of discounted bills and commercial effects increased for the period 1867-75 by 127,100,000 florins, or 69 per cent., in Vienna; nearly 145,500,000 florins, or 191 per cent., in the Austrian branches; and 110,300,000 florins, or 295 per cent., in the Hungarian branches. For the period 1865-75, Vienna’s portion of discount business shows a decline of 16.1 per cent., and that of the Austrian branches a decline of 7 per cent.; whereas that of the Hungarian branches rose 9.15 per cent.; namely, from 12.58 to 21.73 per cent. At the end of 1875, 10,750,000 florins of the Hungarian endowment for discount business were unemployed. For the same period (1865-75), the endowment of the Austrian branches for loans was increased by 7,500,000, or 83 per cent.; that of the Hungarian branches, 6,700,000 florins, or 268 per cent. Of the total endowment of the Hungarian branches for the loan business, only 900,000 florins were unemployed at the close of 1875. Of the total sum of mortgage loans, 57 per cent. fell to lands of the Hungarian Crown at the end of 1867, and 54 per cent. at the end of 1875. There was a general opinion in Austria that the National Bank had granted Hungary too much latitude in the use of credit. There is this to be considered on the other side of the question: In Hungary the opportunities of industry are easier and larger; for though the soil is more fertile, the price of land is from one-sixth to one-fifth cheaper than in most of the domains of Austria. The rate of wages is lower, and the Government gives greater attention to the development of trade and industry. Credit in Hungary, therefore, has better prospects of realizing good results than in Austria; and that more liberal grants of it should be made to Hungary is rationally defensible.

“While accumulating a supply of gold, the Bank gradually restored the statutory proportion between circulation of notes and coin reserve, and the latter again covered one-third of the bank notes; though this by no means released the Bank from the obligatory and indispensable Legal-Tender Act of 1866, with its ensuing issue of State notes amounting to some 350,000,000 florins, and circulating in conjunction with about the same amount of bank notes. With the understanding that the State notes would be redeemed, the Bank was enabled to resume specie payments by 1875; indeed, from 1872 forward, its fund of coin, bullion, gold certificates, bills, and loans entirely sufficed to cover its own circulation.”

So the protection of bank notes, says Von Lucam, was, on the whole, exceptionally strong in those very years when demands on the Bank were unusually heavy. The coin reserve was in itself somewhat weak; but this comparative deficiency was offset by a greater volume of discounted bills. The less available, or less promptly available, resources from loans afford a more passive protection. Other assets than those just mentioned have not been practically needed for covering the notes, within the past four years. The most active protection is generally furnished by coin and bullion, commercial securities, and discounted bills. The thought which guided the Edition: current; Page: [89] National Bank in this most momentous problem for every bank of issue was not based on a merely theoretical assumption; it is the same in principle as that which governs all the most important banks of the Continent. In the department of bills of exchange, the Bank followed the strict practice which obtains in Belgium and Germany; namely, that bills be received only from business people, merchants, or stable manufacturers, and never be discounted for the creation of capital, even though offered by banks and mercantile firms. As far back as May 7, 1863, the National Bank reminded its branches that only such bills might be discounted as could be realized in cash within short terms and beyond reasonable doubt. On the contrary, bills which are designed to procure capital or afford investments for industrial or mechanical enterprises, and which are therefore liable to be carried past maturity, have no proper place in the Bank’s portfolio, however solid the parties may be who back them. Prussian finances are proud to point a moral from the old Prussian Bank, whose bills, even during the Napoleonic wars, were commonly liquidated more punctually than mortgage loans or the interest thereon. In comparison with the Prussian Bank and the Bank of France, the discounted effects of the Austrian Bank averaged higher in amount, in terms of maturity, and in rates of interest.


It is a matter of observation that the total business of the Austrian Bank is not so large as that of the banks of Western Europe; and the same disparity equally applies to the branch offices, which were not very freely patronized by the business public at the start. In 1874, the Prussian Bank, then merging into the Imperial Bank, had forty-nine principal bureaus and eighty-nine accessory bureaus for transactions in bills, and one hundred and sixty-six for the loan business; whereas the Austrian National Bank at that time had only twenty-four branches, since then increased to thirty-four, though the total number is seventy-nine, if the supplementary branches are counted.*


In a country mainly devoted to agriculture and stock-raising, and not abounding in circulating currency, nor possessing highly developed mechanical industries, it is quite natural that interest should be higher than in manufacturing countries. Apart from this consideration, a fertile young soil affords better chances of realizing fat returns; and hence it is easier for Hungary to pay high interest than for Austria; and easier for Austria than for Germany. We find that the rent of lands in Hungary, averaging six per cent., is more easily paid than the lower rents in Western Austria and Germany. In the latter countries, lands renting at even only four per cent. no Edition: current; Page: [90] longer yield a clear living. Leaving out of account the great reduction of interest in Western Europe during the past twenty years, it may be noted that the rate of interest at the Austrian National Bank before its reorganization as the Austro-Hungarian Bank was an average of one-third per cent. higher than that of the Prussian Bank, seven-tenths per cent. higher than that of the Bank of France, and eight-tenths per cent. higher than that of the Bank of England. However, the Austrian Bank has followed the usage of the Bank of France in maintaining the utmost possible constancy of interest rates, and adopts modifications according to the trend of the international money market only at long intervals.

The year 1848 may be regarded as a turning-point in the history of the Austrian National Bank, since obligatory legal tender was then decreed; which, with an intermission of a few months in 1858 and 1859, has prevailed even to the present day. Other notable occurrences were the institution of the mortgage department in 1856, and the issue of State notes in 1866. But the chief event was the grant of the Bank’s fourth charter in 1868, inaugurating the gradual retirement of legal-tender paper currency and a return toward specie payments; as well as the partly designed, partly accidental, transition to a gold standard. On the renewal of the State compact between Austria and Hungary in 1878, the Bank’s charter was also subjected to a radical revision, in keeping with the political situation; being adapted, as before described, to the dual nature of the Government. We defer producing extracts from the revised statutes until we may recite the last legislative action in connection with a further revision in 1888.


The year 1878 was a time of important resolutions by various governments. The price of silver then began to fall by sudden jumps, and those States which had a silver or a bimetallic standard became apprehensive and instituted prudential measures. The Austro-Hungarian Government resolved to stop the coinage of silver for private parties, and the act was enforced from 1879 forward. The most significant consequences of this step were soon seen in the relative rise of silver florins in comparison with silver bullion; and even bank notes and State notes were quoted higher than silver florins. This favorable reaction would have come about still sooner had the dual Government carried things to their logical completion instead of stopping half-way; but whereas the coinage of silver florins for private parties was suspended, those for State uses were more abundant than ever.* In the period 1868-78 the State silver coinage amounted to 102,825,176 florins; and in the briefer period 1879-85, to 126,721,655 florins. Experts vigorously denounced the increased State coinage of silver, and their censure may have had some weight in connection with the constantly rising production of the Edition: current; Page: [91] silver mines; at all events, the sum of silver coinage has been appreciably reduced in recent years by Austria-Hungary.

When the Government continued the coinage of State silver florins on a large scale, it was generally believed that this was done to benefit the Public Exchequer, since there was a slight profit to the State and railway treasuries on their payments of interest, silver annuities, and silver priority shares abroad, when silver was cheap; but the true reason was more plausibly economic. That is to say, Austria owns a very old and productive silver mine at Przibram, in Bohemia, which has been extended to an enormous depth.* However, at the present low price of silver, even so productive a mine is worked at a loss; and the loss is not covered, as it was expected to be, by State coinage. It would have been more profitable to sell the bullion in the London market. Now, in any case, the State must provide for the silver miners at Przibram and at the Carpathian mines of Hungary as soon as a gold standard has been established; and also it must take organic measures to remedy the deficits and losses of many years’ unprofitable mining. The mining population will have to be trained to a new industry, or transferred to the 200 gold mines of Hungary, which are so defectively worked as to yield little above expenses. The characteristic market rise in bank notes and State notes was proportional to the decline of silver; and there is as yet no limit in sight for the latter downward movement, with the present ceaseless overproduction. Under these circumstances, the Austro-Hungarian Government chose the right time for proposing, by the law of 1892, a return to specie payments and the ultimate introduction of a gold standard.

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WHEN the Minister of Finance conveyed to the Bank the new statutes of 1878, as approved by the legislative houses, together with the documentary ratification of the State debt of 80,000,000 florins clear of interest, the approval of the shareholders was also voted at their general meeting. The new act still strictly aimed at uniformity of bank note circulation in every part of the Austro-Hungarian dominions, besides recognizing the dual nature of the Government by the organization of a common bank of issue on the same basis in each State, without political preference for either. The notes were printed in German on one side, in Hungarian on the other; and the business is likewise transacted bilingually. The German designation of the Bank is Oesterreichische-Ungarische Bank, and of the Hungarian, Osztrák-Magyar Bank. “The kingdoms and provinces represented in the Imperial Diet” and the “Lands of the Hungarian Crown” constitute the working territory of the Bank. In the two capitals, Vienna and Buda-Pesth, there are Bank headquarters, with like departments of business.

The Bank is obliged to institute branches in either Austria or Hungary, when the combined Ministry of either State and the General Bank Counsellors agree that local circumstances demand a new bank. The dissolution of existing banks is not lawful in either State except by consent of the State Ministry of Finance. There can be neither increase nor diminution of the capital stock without the sanction of the legislative body of both divisions of the Monarchy. None but Austrian and Hungarian citizens are allowed to hold membership in the General Assembly of the Bank. The Bank governor is appointed and sworn in by the Emperor, upon recommendation of the Finance Ministers of both States. The deputy-governor in each State is chosen by the General Counsellors from a set of three candidates, and this selection is then submitted to the Emperor for approval. The selection of General Counsellors from the General Bank Assembly is also referred to the Edition: current; Page: [93] Emperor for final ratification. In Vienna and at Buda-Pesth there are boards of managers, whose province it is to apportion the endowment fund among the various Bank establishments within their respective jurisdictions; to determine individual grants of credit, and appoint Bank inspectors. Each board of managers consists of a deputy-governor, as chairman, and of eight directors residing in Vienna or at Buda-Pesth, as the case may be; nor can any but Austrian or Hungarian citizens belong to these boards. Two directors on each board are chosen by the General Bank Assembly, upon recommendation of the managing boards; the rest are chosen by the General Counsellors. The former pairs of directors, as also the deputy-governors, are at the same time General Counsellors. Each State Government appoints a commissioner and his authorized substitute, who become the agents through whom each State administration receives conclusive assurance that the Bank is operated in strict accord with the statutes; and these commissioners have identical qualifications and the same powers in each State. Any difference of opinion between the Bank and the Government concerning the statutory validity of bank operations is decided by one of the supreme courts of justice in Vienna or Buda-Pesth. Grants of credit in either State are subject to identical regulations. All doubtful questions in this matter must be referred to the Finance Departments. All communications from the General Counsellors must be published in official journals at Vienna and Buda-Pesth, in both German and Hungarian. The Bank is obliged to redeem its notes on demand in current coin at headquarters in Vienna and Buda-Pesth. Complaints against the Bank and its branches in Austria must be carried before the Vienna Board of Trade, and in Hungary such complaints must be referred to the Board of Trade and Court of Accounts in Buda-Pesth. These tribunals are also qualified to decree the extinction of Bank records. Dissolution of the Bank before the lapse of its charter may be voted only by both parliaments.

The new Bank Act became operative on July 1, 1878. Until the General Counsellors of the reorganized Bank were officially installed, the directors of the old Bank continued business under the old title. On August 30, 1878, the directors of the Austrian National Bank summoned the shareholders to take part in organizing the General Assembly of the Austro-Hungarian Bank, and to hand in the shares. This Assembly convened on September 30, 1878, with the newly appointed governor, Aloysius Moser, as chairman, and the statutory election of General Counsellors was duly conducted. The new régime went into effect on October 30, 1878, and the old Austrian National Bank tranquilly departed after an honorable career of sixty-two years. The new reorganization was entirely completed in every department by January 9, 1879.

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Incisive though the changes were which took place in the outward organization of the Bank, the dispositions concerning business methods and practice were not materially altered. The Bank, without laying new foundations, could build higher and wider on the old, historical principles, and aspire toward the perfection of a policy already tested in serious crises. The third memorial of the Bank, on its administration for the period 1878-85, remarks that the former difficulties with Hungary, on account of that State’s refusal to recognize the Government loan of 80,000,000 florins, contracted without Hungary’s consent, had become quite simplified by the new Bank Act. Under the old, unsettled status of the Bank in Hungary, its powers had been maimed; but the new Austro-Hungarian Bank was enabled to devote its full attention to strictly economic business, and even in Hungary conquer broader fields of usefulness, now that its legality was confirmed and freely recognized. Whereas the old Bank had only the limited number of twenty-five branches—much restricted, moreover, in their affairs of discount and credit—the new administration, as early as 1879, began to extend the banking system in the Crown lands by marking off bank districts for the facilities of personal credit. Beginning with July 1, 1879, the business districts of all banking centres were extended beyond the narrow circumference of their cash collection areas to the outlying towns and county seats, according to the geographical configuration of the country and local conditions of trade, so that even persons or firms at a distance from banking centres, though within the range of a sub-district, could enjoy facilities of discount, raising loans, or other banking operations. In short, the Austro-Hungarian Bank has become practically accessible to business circles throughout the Empire. The bank districts were bounded with reference to the geographical positions of the existing and contemplated bank bureaus. Of fifteen new branches, five were located in Austria and ten in Hungary. In the distribution of the total forty branches, some regard was also observed for the precincts of the various chambers of commerce. Certain special utility districts were, furthermore, constituted, embracing domains or mercantile areas of either Crown.

We subjoin a list of the bank districts:

Absolute Circuit of Austrian Bank Districts, in Square Kilometres.
BANK DISTRICT. Square Kilometres.
1. Lemberg 36,116.59
2. Gratz 22,354.75
3. Cracow 20,534.00
4. Vienna 19,768.42
5. Innsbruck 18,469.95
6. Stanislau 16,861.73
7. Prague 15,317.64
8. Spalato 12,831.54
9. Czernowitz 12,798.14
10. Lintz 11,982.28
11. Brünn 11,834.07
12. Roveredo 10,822.85
13. Olmütz 10,389.78
14. Klagenfurt 10,327.63
15. Laibach 10,032.64
16. Budweis 9,538.19
17. Reichenberg 9,496.06
18. Trieste 7,966.93
19. Pilsen 7,381.14
20. Salzburg 7,154.54
21. Teplitz 5,242.10
22. Eger 4,966.69
23. Bielitz 4,920.99
24. Troppau 2,875.30
25. Debreczen 44,624.83
26. Buda-Pesth 40,437.82
27. Kassau 32,131.48
28. Temesvár 26,382.14
29. Klausenburg 25,583.86
30. Arad 18,551.64
31. Presburg 18,502.26
32. Agram 18,048.26
33. Eszek 17,189.68
34. Nagy Kanizsa 16,785.70
35. Kronstadt 15,139.79
36. Szegedin 14,493.06
37. Raab 10,436.03
38. Fiume 8,389.30
39. Œdenburg 8,342.50
40. Hermannstadt 8,075.47

The following statement affords an analysis of the outstanding credits of the two national banks on July 1, 1885, indicating the points at which the credits are issued, their number and the range of their amounts:

“Censorial” Credits. Austrian Branches. Austrian Banking Centres. “Censorial” Credits. Hungarian Branches. Hungarian Banking Centres.
2.000 fl. to 5.000 fl. 3.302 3.302 2.969 2.969 6.271
5.000 fl. to 10.000 fl. 2.343 2.343 2.039 2.039 4.382
10.000 fl. to 20.000 fl. 139 1.690 1.829 570 1.075 1.645 3.474
20.000 fl. to 40.000 fl. 220 995 1.215 352 558 910 2.125
40.000 fl. to 70.000 fl. 191 547 738 182 240 422 1.160
70.000 fl. to 100.000 fl. 142 358 500 92 137 229 729
100.000 fl. to 150.000 fl. 14 94 108 37 46 83 191
150.000 fl. to 200.000 fl. 141 119 260 39 37 76 336
200.000 fl. to 300.000 fl. 79 82 161 46 12 58 219
Over 300.000 fl. 173 96 269 83 6 89 358
1.009 9.626 10.725 1.401 7.119 8.520 19.245


Since the location of banks might not be determined exclusively by geographical boundaries, but must be partly settled by such questions as density of population and volume of business, sixteen accessory branches were organized in Austria and thirteen in the lands of the Hungarian Crown, making the total number of banks and branches sixty-nine in 1885. The system was also still further developed by the agency of correspondents, authorized in compliance with the solicitations of certain substantial firms in the provinces, not situated within easy reach of a bank. By the year 1885, the administration in Vienna had granted this favor to 262 provincial firms, and the administration in Buda-Pesth to 469. With these added facilities, the Bank organization appeared to be sufficient for existing business needs.

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Through this extended organization, not only were all parts of the country provided with banking facilities, but a wider and more systematic service of information was at the same time procured respecting every phase of mercantile and industrial activity, by means of frequent messengers and explicit local reports. The Bank was thus enabled to learn the standing of many firms and companies whose affairs had not hitherto been sufficiently well known. In particular, a directory was published which included every registered firm in the realm; and also a periodical, official review of Austro-Hungarian trade, compiled from authoritative sources and edited by the First Secretary’s department of the Austro-Hungarian Bank. This appears three times a month, and gives condensed, well-digested, critically estimated summaries of material derived from eighteen provincial papers. The task of judging bills presented for discount is thus lightened; besides which the statutes require that only those bills should be discounted which were backed by two firms, one of which must be registered according to the form prescribed by the laws of trade.

The Bank’s third memorial emphasized the necessity of uniform rates in case of external bills and local bills. The old Bank, for many years past, had imposed a higher rate of interest on outside bills, though perfectly secured, than on local bills; but this distinction was wisely and very justly abolished by the ruling of March 10, 1879 (a measure which private discount banks were prompt to imitate). It was a most reasonable desideratum that the banking facilities should not only be accessible to all, but on equal terms for all; whereas from 1853, when external bills were first received for discount, until 1879, they were charged one-half per cent. more than local bills.


Under the old organization, the Bank officers who served with secondary functions on the committee of Bank censors had only an advisory voice in the censorial proceedings; but under the new organization the Bank officers might even preside at the meetings of the committee, and also exercise veto power in questions of accepting doubtful bills of exchange. This reform has proved wholly advantageous to the Bank. One of the vital traditions and practical usages which came down to the new Bank from the old was that none but such commercial effects should be handled as might be certainly converted into cash within brief terms of maturity. In other words, the Bank must strictly deal on the basis of a cash-paying institution, and neglect no duty which appertains to a solvent bank. Finally, a department of personal credit was organized and constantly developed. Discount regulations were based both on the Bank Act and on laws of trade. A bill proposed for discount is viewed from two standpoints; first, its security, as determined by the solvency of its indorsers, and second by its business origin.

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By security is understood that bills will be paid in cash when they mature. In general, a bill, in order to be acceptable, must have originated in some recognized public business, and must represent its equivalent value in merchandise, consignments, transferred claims for securities furnished, or cash payments. In any case the transactions concerned must belong to some business capable of ensuring cash payment on maturity of the bill or within a reasonably short period of grace. In contradistinction from bills of exchange proper are the credit or money-seeking bills; nor may the latter be quite excluded where a bank operates in a country mainly devoted to agriculture. At the same time it is not the province of a bank of issue to grant protracted credit to land-owners. What must be absolutely avoided, however, is to grant accommodation bills, or “kites.” An essential guide for a bank of issue, in the matter of discounts, is afforded by the “Credit Lists,” in which current estimates are given of the potential solvency of every firm in the sundry banking districts. This maximum reckoning is the book-credit, which is granted only in occasional instances. It differs from the Bank censors’ credit, in that the latter is determined by the censorial committee. The dual boards of Bank directors annually regulate the amounts to which firms, companies, and individuals may be credited in case bills of exchange come in with their signatures attached. In such assessments, and in the larger commercial centres, no firms are entered which control less than 10,000 florins in the way of available resources. The number of smaller firms is too great to admit of separate assessments, and the committee reserves discretional powers toward the granting of loans on a lower scale than 10,000 florins security. It by no means follows that credit will be actually granted to the full figure of the assessment; for the committee always reserves the right to diminish the actual grant if circumstances make this advisable.


The fundamental dispositions touching loans rest with the General Counsellors, and not with the Bank directors. A list of articles is formulated on which loans may be granted (see Appendix), and a maximum limit is fixed within which loans may be apportioned according to the exchange value of the accompanying security. In fine, the General Counsellors prescribe the limitations and regulations of the entire loan business. In exceptional cases the banks must be guided by the following considerations: The object of the loan business is to furnish people of means with readily available money in case of sudden need, without compelling them to sacrifice their goods. There is economic justification for such business when the advances offered on pledged securities return in a short time to the Bank; on the contrary, loans of long maturity are excluded from the business of a bank of issue. The designation of those papers of value which are acceptable as pledges, and the proportional extent of the loans, as determined by rates of exchange; are communicated to the banks from Edition: current; Page: [98] time to time through headquarters in Vienna. These rules are necessarily general, and, in particular instances, the banks must themselves decide whether the pledge in question is of current value and easy of realization. Where “grace” is allowed, the banks must see to it that the advanced funds be not unduly detained for want of prompt notice, nor otherwise too long tied up. Loans too long protracted, and especially those of large amount, may be either wholly or partly recalled, and the grace be withheld.


The Bank’s capital stock of 90,000,000 florins being tethered to the State loan of 80,000,000 florins, the only funds practically available for purposes of credit are the 200,000,000 florins not legally required for protecting bank notes with coin. All notes issued in excess of this limit are subject to a tax of five per cent. The General Counsellors must also reserve the right of diverting a portion of the free funds toward State endowments if either division of the Monarchy be in pressing need thereof. At the new organization it was therefore ordained that a constant sum of 50,000,000 florins be assigned to the headquarters in Buda-Pesth for the discount and loan business of the Hungarian banks; and this allowance may be increased if urgent reasons so demand. The available 200,000,000 florins were divided as follows, on January 1, 1879: Constant endowment of headquarters in Vienna, 125,000,000 florins; in Buda-Pesth, 50,000,000 florins; reserved by General Counsellors, 25,000,000 florins. The General Counsellors voted that only twenty-five per cent. of these available funds should be used for loans; and that any surplus from the loan business should be employed in discounts. The same arrangement has been renewed from year to year. Increase of these funds is binding in both parts of the Empire. The maximum for headquarters in Vienna was 154,000,000 florins on December 30, 1884; and at Buda-Pesth, 66,000,000 florins on October 11, 1884. The combined maximum was 216,000,000 florins December 30, 1884.


From 1878 to 1885, five new banking centres were organized in Austria, ten in Hungary. For this reason as well as because of a general increase in financial business, the Bank was obliged to draw more and more heavily on its reserve fund. The new Hungarian branches alone reported a total of 13,000,000 florins for discounts at the end of 1885. The aggregate sum of discounts for the given period rose from 109,000,000 to 168,000,000 florins, though there was a decrease in 1885 to 136,400,000 florins. The portion of the Austrian banks had fallen off by 6.7 per cent., and that of the Hungarian banks had made a corresponding gain. We append a table of figures for the separate years, in millions of florins:

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Discounts for the Years 1878 to 1885, inclusive.
YEARS. Vienna. Austrian Branches. Austrian Total. Buda-Pesth. Hungarian Branches. Hungarian Total. Combined Total.
1878 43.646 38.883 82.529 23.434 3.217 26.651 109.181
1879 50.020 34.928 84.948 24.918 7.664 32.582 117.531
1880 60.084 39.107 99.191 26.390 13.526 39.916 139.108
1881 72.739 46.347 119.086 23.053 14.405 37.458 156.544
1882 58.444 59.783 118.227 29.432 15.008 44.440 162.668
1883 64.325 57.284 121.609 31.208 16.527 47.735 169.345
1884 61.854 53.683 115.537 31.872 20.303 52.175 167.712
1885 56.834 37.100 93.934 23.127 19.381 42.508 136.442
Annual average. 58.493 45.889 104.382 26.680 13.754 40.433 144.816

The Bank has noted the fact that from 1876 to 1885, the average maturity of bills decreased from 64 to 55 days. This both indicates a greater relative supply of money and the particular circumstance that bills were frequently presented from five to ten days before coming due. The Bank administration showed a decided tendency to treat small bills, provided they conformed to the regulations, exactly like large ones. While the total volume of discount business increased, the average amount of each bill decreased, at nearly all the Bank bureaus. The subjoined table will illustrate these remarks.

Amount of Bills. Number of Bills Discounted. Number of Bills Presented for Discount. Number Declined.
Under 10 florins 4 9 5
From 10 to 50 florins 6,458 7,469 1,011
From 50 to 150 florins 83,340 92,043 8,703
From 150 to 300 florins 130,867 142,440 11,573
From 300 to 600 florins 127,110 137,860 10,750
From 600 to 1,000 florins 90,690 97,592 6,902
From 1,000 to 2,000 florins 73,565 79,027 5,462
From 2,000 to 62,548 66,200 3,652
Total number of bills 574,582 622,640 48,058

After the Bank had accommodated 19,245 business people and firms with credit, complaints about discrimination became so importunate that a Bank statement was published on January 7, 1886, showing the number of firms, associations, and individuals included in the acceptance lists at that date to be 47,316. Among these were 498 foreign firms, 21,677 Austrian firms, and 25,141 Hungarian.

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Loans on marketable securities reached their minimum status on August 15, 1881, when they stood at 16,600,000 florins, and their maximum on October 31, 1882, at 36,800,000 florins. Various additional facilities were introduced about that time. In 1879 a uniform list of receivable effects was drawn up, and the previous local distinctions and limitations were abolished. The list of securities acceptable at all the banks alike embraced 224 varieties at the close of 1885; namely, 59 State, provincial, and municipal stocks, 45 bonds, 73 priority debentures, 13 first bonds, and 34 joint-stock shares. Moreover, correspondent firms were authorized to negotiate loans through correspondence. In 1882, the proportion in which loans might be granted with reference to the nominal value of securities was raised from eighty to eighty-five per cent. on mortgage bonds, and from seventy to seventy-five per cent. on stocks and debentures. At the same time advance payment of interest was introduced, and post-payment was collected when the loan was redeemed or prolonged. Since 1883 all the banks have been warranted to make advances upon certificates of deposit issued from headquarters in Vienna or in Buda-Pesth; such certificates denoting that securities have been deposited for custody or administration. Interest on loans is usually one per cent. higher than the discount rate for bills of exchange.


The discounting of securities and coupons maturing within ninety-two days was permitted for all the banks in 1879, and the practice was extended to a larger category of papers. Since 1880 all the banks have accepted coupons due, but not more than one year overdue, for immediate cash payment, in case of all the securities recognized by the Bank; and such payment is according to the expressed value of the coupons. We subjoin a table of coupons redeemed from 1880 to 1885:

Number of Coupons. Florins.
1880 294,059 4,979,775
1881 330,947 5,430,567
1882 290,464 4,790,528
1883 277,430 4,688,293
1884 260,269 4,474,563
1885 261,074 4,545,468

Since 1882 all the banks have managed coupons on commission, in so far as collection of the same is feasible, according to the Bank standard. Since 1885 the Bank has exercised discretional powers respecting new securities, as also concerning partial payments on outstanding paper. Since 1881 all the banks have been authorized to buy and sell on the Bank’s account both Austro-Hungarian gold ducats and gold pieces of the denominations francs Edition: current; Page: [101] and marks. Since 1882 the banks have undertaken commissions for procuring foreign money orders. The transactions in money orders for the period of the fourth Bank charter were as follows:

Money Orders.
Number. Florins. Number. Florins. Number. Florins.
1878 38,586 133,181,937 19,702 51,648,346 58,288 184,830,284 3,171
1879 34,838 114,181,551 19,306 47,665,720 54,144 161,847,271 2,989
1880 33,905 125,597,895 20,589 56,499,800 54,494 182,097,696 3,341
1881 33,679 126,002,735 21,494 57,528,639 55,173 183,531,375 3,326
1882 34,649 121,942,630 22,851 60,819,165 57,500 182,761,796 3,178
1883 34,201 114,525,323 23,854 56,511,684 58,055 171,037,007 2,946
1884 32,080 117,265,845 23,598 58,317,587 55,678 175,583,433 3,153
1885 24,546 101,998,689 21,753 53,629,430 46,299 155,628,119 3,361

Next follows a statement of Bank accounts for headquarters in Vienna. The sums represent total receipts and payments, inclusive of amounts brought forward:

1878 954,935,338
1879 687,604,738
1880 732,697,943
1881 745,365,746
1882 723,983,754
1883 873,120,419
1884 916,170,117
1885 706,457,625

Beginning with 1879, headquarters in Buda-Pesth received valuable papers for custody; and from 1881 at Vienna and 1884 at Buda-Pesth, such securities were also received for purposes of management in behalf of owners. The latter business increased very rapidly, as the following data will show:

Number of Deposits. Nominal Value. Number of Deposits. Nominal Value. Number of Deposits. Value.
1878 3,562 113,612,000 3,562 113,612,000
1879 3,533 119,965,000 3,533 119,965,000
1880 3,643 126,562,000 3,643 126,562,000
1881 3,515 107,415,000 4,716 31,645,000 8,231 139,060,000
1882 3,816 101,618,000 8,345 60,094,000 12,161 161,712,000
1883 4,020 98,842,000 11,997 84,316,000 16,017 183,158,000
1884 3,886 91,624,000 19,080 122,401,000 22,996 214,025,000
1885 4,018 91,073,000 25,308 165,114,000 29,326 256,187,000
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The transactions in bills on commission and in collections show the following extensive development from 1878 to 1885:

Number of Transactions. Amount. Number of Transactions. Amount. Number of Transactions. Amount.
1878 7,796 4,542,530 91 49,226 7,887 4,591,757 582
1879 9,208 6,484,495 1,758 290,447 10,966 6,775,243 618
1880 28,829 8,134,947 1,959 388,985 30,788 8,523,932 277
1881 35,675 13,253,506 1,425 893,866 37,100 14,147,372 381
1882 46,621 20,211,586 3,077 2,079,140 49,698 22,290,727 448
1883 42,528 17,155,189 4,464 2,890,318 46,992 20,045,507 426
1884 50,392 18,484,352 5,893 2,776,061 56,285 21,260,414 378
1885 67,592 17,909,701 8,196 2,997,792 75,788 20,907,493 276


The organization of mortgage credit was nearly a century later in Austria-Hungary than in Prussia, and the Austrian Bank had no mortgage department before 1856. Soon afterward a number of independent mortgage banks were instituted in the several provinces, with headquarters in Vienna, Buda-Pesth, Prague, and Lemberg. In some of the provinces, provincial land mortgage banks were founded, which are active competitors of the Austro-Hungarian Bank, and are not called upon to pay dividends. In certain regions—like Tyrol, for instance—the Austro-Hungarian Bank has no chance of a footing in the mortgage business, because the savings-banks and the administrators of church lands, with a view to influencing the peasantry, rather discourage mortgage traffic. The Bank’s mortgage operations in Austria are confined to eleven provinces out of the seventeen. The Hungarian business is a great deal more active, as the table on opposite page shows.

We have seen that the reserve fund was sometimes drawn upon for transactions in loans on securities; and from 1856 it also served for mortgage loans. Mortgage bonds were first issued at four and a half per cent., and then at four per cent. (their present rate). Interest on mortgage loans is increased from one-half to one per cent. in order to meet the costs of amortization; for all the loans must be paid back by annual installments. Originally, mortgage bonds within two-thirds of their nominal amount might be used as protection for bank notes; but when the statutes were revised in 1876, and the request was expressed that the Bank should give up its mortgage business and the latter be separately and independently organized, the bonds were no longer available for that purpose. The mortgage department then became so distinct that neither loans nor the purchase of mortgage bonds might be negotiated through bank notes. It was

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Comparative Statement of Mortgage Loans for 1876 and 1885.
PROVINCES. 1876. 1885. Difference.
Lower Austria 14,583,713 7,216,997 -7,366,715
Upper Austria
Styria 355,753 28,270 -326,882
Carinthia 6,563 34,599 +28,035
Carniola 74,838 -74,838
Coast Province 59,648 35,862 -23,786
Bohemia 4,881,835 187,527 -4,694,307
Moravia 1,806,662 602,583 -1,204,078
Silesia 302,735 89,890 -212,845
Galicia 18,709,145 11,288,299 -7,420,845
Bukowina 3,366,208 5,121,729 +1,755,520
Austrian total 44,147,104 24,606,360 -19,540,743
Hungary 53,324,063 62,453,554 +9,129,490
Croatia-Slavonia 3,051,275 2,309,299 -741,976
Hungarian total 56,375,339 64,762,853 +8,387,513

observed, in practice, that the number of loans on small properties gradually increased as compared with loans on vast estates. It is a matter for special congratulation that arrears of both principal and interest are on the decline. Their maximum extent, at the close of 1881, was only 163/100 per cent. of the total sum of mortgage loans, and only 75/100 per cent. at the close of 1885. Terms of grace are granted to debtors who so desire, for payment of both interest and principal; but should the final grace be overstepped, the Bank may apply its rights of execution. The proceeds from such sales of distress are not of portentous magnitude. The issue and allotment as well as the buying and selling of mortgage bonds is a rapidly growing phase of the Bank’s business. When the four and a half per cent. bonds rose above par, four per cent. bonds were issued, which at first stayed somewhat below par, but are now on a par basis.


The working resources of the Bank are derived from chiefly two sources—the capital stock of 90,000,000 florins, together with the reserve fund of 18,000,000 florins, and the bank notes, whose contingent limitation is 200,000,000 florins. Of the capital stock (as we have remarked before), 80,000,000 florins are tied up in a State loan, free of interest; and the remaining 10,000,000 florins are invested in the real estate reverting from transactions in mortgaged credit, previously redeemed or duly purchased mortgage bonds, outstanding and matured bills of exchange, etc. From the Edition: current; Page: [104] capital stock, therefore, the Bank practically derives no means at all for bank business proper. The Bank therefore has no other means at its disposal than the contingent fund of 200,000,000 florins, representing notes which are not necessarily covered by coin.

According to banking operations in England and North America, deposits should also constitute a very material part of a bank’s working funds; but in Austria-Hungary they are only quite sparingly used for this purpose. The explanation is twofold: on the one hand, ready capital is less abundant in Austria-Hungary; and again, there is frequent opportunity for passive investments in the cheap and fruitful soil. Moreover, the contingent of 200,000,000 florins has seldom been exhausted, having been overdrawn only in one or two instances to the amount of 6,000,000 to 7,000,000 florins. When this happens, the tax on over-issue of notes intervenes. The note circulation at the close of 1877 was 282,000,000 florins; 363,000,000 in 1885, while at the same time the coin reserve was constantly improving. For a circulation of 614,000,000 florins in bank notes on November 2, 1895, the Bank had a coin reserve of 363,000,000 florins, of which 234,000,000 florins were in gold and in bills payable in gold (227,000,000 florins in gold alone). The taxable overplus of note circulation amounted to a round sum of 33,000,000 florins; though, except for the State notes, the Bank would have been on a sound basis of perfect cash solvency. Of the State notes, 200,000,000 florins were withdrawn and canceled by the new law, and 125,000,000 florins have been thus far redeemed. But we anticipate our order of narration. In the eleven years from 1876 to 1887, the total endowed funds were so apportioned between Vienna and Buda-Pesth that an annual average of 60,000,000 to 86,000,000 florins fell to Vienna, and 32,000,000 to 40,000,000 florins to Buda-Pesth. Since the revised statutes of 1888, the portion of Buda-Pesth has been relatively higher.

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UPON renewal of the State compact between Austria and Hungary in 1878, the Bank’s charter was extended for ten years, with the understanding that neither part of the Monarchy should exercise its constitutional right of erecting independent banks of issue between July 1, 1878, and December 31, 1887; but that for the given period, the Austrian National Bank should independently serve both States, under the designation of Austro-Hungarian Bank. Several organic reforms were introduced with this purpose in view. New headquarters were established at Buda-Pesth without reference to the provision which determined that the Bank’s headquarters were in Vienna. For transactions in discounts and loans, an endowed fund of 50,000,000 florins was voted to Buda-Pesth for exclusive use in Hungary. In case of urgent need, and by ordinance of the General Counsellors, drafts may be made on the Bank’s general reserve. Five new branches were organized in Austria and three in Hungary in 1878 and 1879. The State loan of 80,000,000 florins, clear of interest, is to be gradually extinguished by means of the net profits of both divisions of the Bank; and should this fail to be accomplished before the charter expires, the debt shall be discharged in fifty equal annual installments, without interest, by Austria, toward which Hungary would contribute thirty per cent. The net proceeds of business, above seven per cent., are divided between the Bank and the dual Government. The statutes of 1887 being only externally, and not intrinsically, different from those of 1878, we shall treat the subject in a general and cursory way; with this reservation, that a law was passed on June 12, 1890, which authorized the Bank to discount warrants issued by public warehouses.

The capital stock consists of 90,000,000 florins, subscribed in 150,000 shares, of 600 florins each. The shares must be kept intact; and no shareholder is bound by more than his individual subscription. On the other hand, the aggregate liability of the Bank is covered by the total stock. For the punctual payment of interest and principal on mortgage bonds, the mortgage claims are accountable, and also the other movable and immovable Edition: current; Page: [106] Bank resources. Untransferable shares are entered in a separate book. Transferable shares may be filled out with any name the Bank approves, provided the transfer be plainly indorsed or signed in the name of the new holder. Untransferable shares may, however, change hands in case they have been legally acquired, and the holder furnishes public, legal, or judicial evidence of his rights. Permission for transfer must be sought with the General Counsellors, and be accompanied by the appertaining evidence. Untransferable shares are those which (a) are the property of minors; (b) or of corporations, communities, or trusts; (c) those which are legally attached for debt; (d) or whose free disposition is otherwise restricted, whether by process of law or through some arrangement premised by the Bank. Attachments are noted in the book of shares. Uncollected dividends, after the lapse of three years, accrue to the reserve fund.

The Bank’s Administration.—None but Austrian or Hungarian citizens may take part in the general meeting of shareholders; and they must hold as many as twenty shares per capita. Extraordinary sessions may be called by written request of forty shareholders, within a term of sixty days. Disqualified for attending the general sessions are persons deprived of the full rights of citizenship, those fallen in bankruptcy, or under any legal castigation. The presence of one hundred members constitutes a working quorum. No member may send a substitute in his place. The General Assembly elects the General Counsellors, eight of whom shall be direct members of the Assembly; and two, in each case, shall be selected from candidates proposed by the Superior Directors in Vienna and Buda-Pesth. The General Assembly, further, elects five auditors and deputies to consider statutory changes, and increase or decrease of capital stock. The General Counsellors include the governor, two deputy-governors, and twelve advisers. The governor, upon unanimous recommendation of the General Assembly, is appointed by the Emperor. The governor’s annual salary is 20,000 florins, paid out of the Bank’s resources; and he has the freedom of residence in the Bank building at Vienna. The board of General Counsellors, with the Bank governor as chairman, represents the Bank officially and extrajudicially, and controls all matters not specially vested in the General Assembly. In fine, the General Counsellors constitute the firm of the Austrian Bank. Signatures are valid if made by the governor, a deputy-governor, or a General Counsellor, and attested by the First Secretary or his deputy. Headquarters in Vienna and Buda-Pesth, from time to time, determine in what proportions the sums at their disposal for discounts and loans shall be distributed among the several banks; and set maximum limits for the credit that may be advanced to firms or individuals. Members of the administration in Vienna must be Austrian citizens, and those at Buda-Pesth Hungarian citizens. Each of the local administrations is presided over by one of the deputy-governors. The General Counsellors, recommended by the General Assembly, are also members of the Superior Administration; and these recommended counsellors need not exclusively be members of the General Edition: current; Page: [107] Assembly, but non-members are likewise eligible in so far as their individual means would qualify them to become members of the Assembly. The directors are not salaried. They meet once a week, as a rule, and on a day named by the presiding deputy-governor. The ultimate direction of all branches of business devolves upon the First Secretary, under supervision of the General Counsellors. The final appointment of officials and employees rests with the General Counsellors, who also decide in cases of dismissal. Bank officers are bound to observe secrecy in matters of business. Each Government appoints a commissioner and a deputy-commissioner as Government agents for dealing with the Bank and making sure that the Bank administration is obedient to the statutes.

Business Regulations.—(a) The Austro-Hungarian Bank is empowered to discount bills, marketable effects, and coupons, or make further negotiation thereof; (b) to grant loans on collateral security; (c) to receive deposits for custody, and, to a certain degree, for management in behalf of the depositor; (d) to receive moneys under bond; and also (e) to receive moneys, bills, and marketable effects of short maturity in accounts current, or Bank accounts; (f) to issue money orders on all its bureaus; (g) to do business on commission; (h) to make payment on papers acceptable for security, and on their coupons when due; (i) to procure and also to sell gold and silver coin or bullion, and foreign bills of exchange; (k) to grant letters of mortgage conformably to the statutes of the department of mortgaged credit, now incorporated with the general Bank statutes; (l) to buy and convey the Bank’s own mortgage bonds.

The Austro-Hungarian Bank in both parts of the Empire is exempt from the operation of laws limiting the rate of interest. Payments to the Bank are valid only when made in bank notes or in legal specie.

Discount Operations.—The Bank is authorized to discount bills of exchange, both its own and others, provided they be payable in Austrian currency and mature within three months, inside the realm. Acceptable bills must be indorsed by three, and in no case less than two, signatures of substantial and recognized vouchers. Small bills are not excluded.

Loans.—The Bank is authorized to grant loans on security for a maximum term of three months. The following are acceptable kinds of security: (1) Gold and silver in Austrian, Hungarian, or foreign coin or bullion. (2) Papers of value which appear in the official lists of Austro-Hungarian money markets, to wit: (a) Austrian or Hungarian State securities; (b) Austrian or Hungarian provincial bonds; (c) bonds issued, with Government approval, by communities or other corporations under Government control and entitled to make assessments, or by credit institutions employed by such corporations; (d) mortgage bonds of the Austro-Hungarian Bank, and of other mortgage credit institutions of the Austro-Hungarian Monarchy; like-wise, legal Austrian or Hungarian certificates for the lawful administration of minors’ funds or other trusts; (e) shares fully paid in of Austrian or Hungarian transportation companies or industrial enterprises in actual operation; Edition: current; Page: [108] (f) priority bonds of the like companies and enterprises. (3) Bills of exchange maturing within six months at the latest, and in other respects conforming to previous regulations for bills of exchange. The General Counsellors fix the conditions of loans on gold and silver and on bills; also determining what particular securities shall be accepted, and in what proportion to the market quotations loans may be allowed, or to what maximum amount. These dispositions are in force at all the Bank’s bureaus, in both parts of the Empire. The borrower is at liberty to pay back his loan before maturity; but he may not, in that event, recover interest already paid to the Bank.

Deposits, Accounts Current, Small Notes, etc.—The Bank is obliged to take charge of deposits bearing interest; and it admits accounts current. It further undertakes collections on commission; and may issue small notes of no lower denomination than ten florins, two-fifths of whose total amount must be protected with gold or silver coin or bullion, and the remainder by the usual statutory means. These notes enjoy the exclusive privilege of passing at their full nominal value in case of all payments called for in Austrian currency, both at public counters and in private transactions within the country.

Regulations of the Austrian and Hungarian tribunals of commerce are not applicable to the Bank in case they be at variance with the Bank statutes; nor was the Bank obliged to register itself in conformity to the laws of trade.

Redemption of its Notes.—The provision whereby the Bank is obliged to redeem its notes in silver coin or bullion at the rate of forty-five florins per mint pound of fine silver, was so far extended by the law of August 2, 1892, that the Bank, at headquarters in Vienna and Buda-Pesth, is now obliged to redeem notes in legal gold coin as well, or in gold bullion, at their full nominal value according to the Imperial standard. The Bank is authorized to have gold bullion assayed and tested by experts of the Bank’s choice, at the sellers’ expense; and furthermore, to deduct the prescribed Government royalty.

Distribution of Profits.—Of the annual proceeds from business and invested funds, the shareholders are entitled to five per cent. on their paid subscriptions, after all expenses have been cleared. Eight per cent. of the surplus goes to the reserve fund, two per cent. to the pension fund, and from the residue the shareholders’ dividends may be increased to seven per cent. Any further surplus is equally divided between the shareholders and the dual Government, Austria receiving seventy per cent., Hungary thirty per cent., of the Government portion. Business reports must be published four times a month.

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Upon reorganization of the Bank, the mortgage department was also overhauled, with certain statutory changes, of which we present the following summary: The main direction of the mortgage business is vested in the General Counsellors, who appoint the principal officers, fix the rate of interest, and other conditions with respect to loans, settlement of mortgage claims, and interest on the bonds. In certain circumstances, however, the advice of trustworthy outside specialists is obtained, at the discretion of the General Counsellors. The Government Bank Commissioners also inspect the mortgage department. The Bank’s general rights are supplemented, with reference to this department, in the following particulars: The Bank is exempt from all legal limitations of interest and from other conditions affecting loans. Of this, its books furnish ample evidence. No mortgage loan may be granted unless covered by twice its value in real estate; moreover, the Bank may assume loans already binding, provided there be full conveyance of all the appertaining rights. The committee of General Counsellors, upon consultation with the confidential outside specialists, estimates the value of the mortgage which is to secure the loan. Among means helpful for ascertaining the value of landed property may be mentioned legal assessments, revenues yielded in a series of years, contracts of lease or sale, divisions of inheritance, land-registry reports, the hundredth ground tax, and local prices and rent rates of land. The Bank is also empowered to collect the value of the proffered mortgage. In his bond the borrower must pledge himself: (a) To pay the interest and amortization rates semi-annually in advance; (b) in case of delayed interest, to pay forbearance dues; (c) on paying the second half-year’s charges, to satisfy the Bank that the fire insurance rates have been paid; (d) to undertake no alteration of the bond through subdivision or any like performance. The loan is not advanced until all conditions are fulfilled, and the borrower must especially make sure that his loan is properly classified. Even then, the payment may be refused in the following contingencies: (a) If the mortgage has declined in value since the loan was contracted; (b) when the borrower fails to collect his loan within thirty days; (c) when he has died; (d) when he has become insolvent; (e) when the mortgage is subject to legal auction.

Conditions and Limitations of Mortgage Bonds.—The Bank is authorized to issue bonds to the amount of 150,000,000 florins, though the total issue of bonds may not at any time exceed the total amount of current mortgage claims. Should mortgage loans be paid back in cash before they legally mature, the Bank is entitled to redeem the equivalent amount of mortgage bonds. The bonds are made out to the bearer, and accompanied by semiannual interest coupons. They are issued in specific amounts determined by the General Counsellors, but not under a minimum amount of 100 florins for a single bond. The mortgage bonds of the Austro-Hungarian Bank may be invested in both parts of the Empire, as a legitimate sort of productive Edition: current; Page: [110] capital, whether controlled by communities or other public corporations; and they may also be used as security for money of minors, private trusts, deposits, military marriages, and serve sundry other purposes of business and security, provided none of these transactions require cash payments. The bonds may be sold at the Bourse, and advertised in the official market reports. The latter dispositions afford a certain degree of compensation for the restriction which prevents the Bank from advancing cash or notes on its mortgage bonds; though even when the Bank offers to sell the bonds at the Bourse on the borrowers’ account, it remains at a disadvantage in comparison with the private mortgage banks, which may at once negotiate the loan in cash and so save the borrower time and expense.

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THE money revolution attending the enormous increase in the production of gold and silver at all sources of supply, together with the radical measures adopted by the Austrian and Hungarian exchequers, which have emerged from a condition of chronic deficit into one of surplus, and induced the statesmen of both governments to prepare the way for restoring specie payments. To this end, examining committees of experts were summoned to Vienna and Buda-Pesth, who, by a large majority, declared themselves in favor of currency reforms, and the transition to a gold standard. Legislative bills elaborated in the same spirit were voted with high majorities by both parliaments. Thus the great work was begun, but the co-operation of the Bank was necessary to the real task of execution; and this would involve new contracts and new statutes to be discussed and projected without delay by State and Bank authorities. Meanwhile, all preliminary steps have been taken. The Vienna mint has been equipped with the latest English machinery for expeditious coinage of the new gold, silver, nickel, and copper currency, and the Hungarian mint has been likewise energetic. The official reports affirm that the work of coining shall be completed by the autumn of 1896. Introductory measures promptly followed, as regards qualifying the Bank for the actual resumption of specie payments.


The principal factor of the currency reforms is provided in Article 4 of the law passed on August 11, 1892. This calls for coinage of national gold pieces of ten and twenty crowns; 147.6 twenty-crown pieces and 295.2 ten-crown pieces to be stamped from one kilogramme of mint standard Edition: current; Page: [112] gold; that is to say, 164 twenty-crown pieces and 328 ten-crown pieces to a kilogramme of fine gold. The national gold coins are alloyed in the proportion of 900,000 parts of fine gold to 100,000 parts of copper. So there are 2592 crowns to a kilogramme of mint gold, and 3280 crowns to a kilogramme of fine gold. Independently of the transition to a gold standard, the dual Government, in deference to the general notion that a small unit of currency favored a reduction of prices, had proposed, in the legislative bill, to abandon the denomination of florins, and adopt as the unit of currency the half of a florin, under the designation crown. The small kreutzers should also be halved, and half-kreutzers be circulated under the name of heller; 100 hellers making an Austrian crown. In brief, the florin shall be simply halved; and the silver florin will be replaced by two silver crowns. While the old silver and small coins continue in circulation for a time, the new crowns are gradually displacing florins, and nickel twenty-heller pieces displace the old ten-kreutzer silver pieces, which were thickly alloyed with copper. The big four-kreutzer copper coins are supplanted by nickel ten-heller pieces; and bronze hellers and two-heller pieces replace their copper predecessors. Silver crowns are alloyed at 835,000 parts of silver to 165,000 parts of copper. One kilogramme of mint silver yields 201 crowns; hence a silver crown weighs very nearly five grammes. One-crown pieces are coined only for the State; and the same is true of gold coins, except that twenty-crown pieces may be also coined for private individuals, in so far as the mint can do this without encroaching on its Government business. The coinage royalty shall not exceed three-tenths of one per cent. of the coin value. In future, no more four and eight florin gold pieces are to be coined; though the coinage of ducats is maintained because of their circulation in the Orient.

While the currency bill was pending, the Author submitted an open letter to the members of the Legislature, protesting against the halving of florins as a waste of time and a measure in itself superfluous. He also protested against the retirement of five-florin State notes, unless they were replaced by bank notes of like denomination, since the smaller, ten-crown gold coins wear away too rapidly, as appears from the experience of France, Great Britain, and the United States; and silver change consisting of twenty-crown gold pieces, too hugely stuffs the pockets. The adoption of crowns in place of silver florins was a mere fiddling to popular prejudice. As for the reduction of prices France has the small unit of francs and Great Britain the large unit of a pound sterling; yet bread is cheaper in London than in Paris. In connection with this matter, a member of the Austrian Examining Committee pointed out the fact that, on the former transition from the Vienna Convention standard to the Austrian standard, namely, from a larger to a smaller unit of currency, prices positively rose. The truth is, generalizations on this topic are worthless. In questions of universal variations in prices, we must distinguish between wholesale and retail, between transactions at great market centres and the penny dealings of the popular throng. Edition: current; Page: [113] We must consider both aggregate and separate sales of bread, meat, vegetables, grocery wares, drinks, etc. It may, indeed, happen in case of a transition from an old standard not easily reckoned in terms of the new, that Messieurs the innkeepers and traders will seek to clear a small profit of exchange; and this circumstance encourages the popular prejudice in favor of a small unit. But we are not at the like disadvantage in Austria, for, on passing from florins to crowns, the decimal system is retained, and the only operation required is to multiply by two; or divide by two, as the case may be. The old half-kreutzer will circulate under the new name, heller, without change of value. In regard to wholesale prices, which are regulated by the universal market, intense international competition is a safeguard against any defraudation in the event of currency reforms. Leaving out of account the slight fluctuations in rates of exchange and discount which follow the international movements of gold, the cost of a given amount of wheat, coal, petroleum, sugar, tobacco, or wine is not measured by a pound sterling, twenty-five francs, or five dollars; and the small unit of the Latin Monetary Union ensures not the least advantage over the Englishman’s pound sterling—twenty-five times the Latin unit. But such arguments made no impression on the parliamentary bodies; and the adoption of crowns was decreed along with the retirement of five-florin State notes. However, the opposition of the Chambers of Commerce has been so far effective that the Government proposes to authorize an issue of five-florin bank notes.

The difficult question of adjusting the ratio between silver and gold in changing the standard was settled by an easy compromise. The coinage of silver for private individuals had raised the price of paper florins sixteen to eighteen per cent. above that of the silver florins. Had the Government then wholly ignored the decline of silver, as was the fashion in States with a double standard, where silver thalers were accepted on a par with gold, the change of standards would have been seriously prejudicial to debtors. Equitable justice therefore occasioned a compromise by which both sides had to grant certain concessions. It was ordained that 100 crowns should be reckoned equal to forty-two florins in gold; that is, gold florins of the four-florin and eight-florin denominations. The silver value should be that of the standard silver florins prior to the great decline of 1872.


The ratification of these currency reforms called forth some complaints from creditors; but the changes found surprising favor with the population at large, and even the banking houses of Vienna and Buda-Pesth made patriotic efforts, sometimes to their own loss, to supply the Austro-Hungarian Bank with gold. The Finance Ministers of both States, in conjunction with a syndicate of bankers, operated the gold purchases and the appertaining conversions with such skill and felicity that for the most part only American gold coins, which were crowded out by the United States silver Edition: current; Page: [114] bill, and gold bullion from various gold-producing countries, were procured. The gold reserves of the great European banks were left intact; and not infrequently they stood higher in the German Imperial Bank and the Bank of England than the note circulation. Latterly, the gold reserve of the Bank of England was 19,000,000 pounds sterling. The same spirit which high financiers had manifested toward the new currency reforms also began to declare itself through speculations at the Stock Exchange.

The two Finance Ministers’ guarded purpose of achieving unity of plans, and their tact and confidence in the explanation and vindication of their methods, had not only dispelled many doubts on the part of the public, but had also inspired all circles of the produce and stock exchanges, capitalists, and brokers alike with confident anticipations of a successful realization of the proposed reforms.


After both governments had been for a long time accumulating gold reserves, and the Bank’s gold store of 80,000,000 florins had promptly increased by 40,000,000 florins in the autumn of 1892, there also began such a rise and activity in Austro-Hungarian securities as had not been witnessed in a quarter of a century; though their steady upward movement had been perceptible since 1890. In consequence of two nearly contemporary causes, which were the disappearance of State deficits in Austria-Hungary and the outbreak of the Argentine crisis, and also by reason of the failure of Messrs. Baring Brothers, English and German capital began to move in larger and larger proportions toward Austria for investment in Austro-Hungarian funds. These offered the double advantage of security and a high rate of interest; for while the prevailing rate of interest in Western Europe has declined within the past twenty years to about three per cent., as appears from the discount rates of the Banks of England, France, Germany, Holland, and Belgium; likewise from the conversions of British and Portuguese consols, North American bonds and the French rentes, Austro-Hungarian funds continued to yield four to four and a half per cent. The improvement which was steadily perceptible in Austro-Hungarian investments from 1890 forward received a new impulse in 1892; and the extraordinary activity of the market rise may be illustrated by the following examples. From the middle of 1889 to the middle of 1892, note rentes advanced from 8340/100 to 9535/100, and to 9555/100 by 1893. Hungarian four per cent. gold rentes advanced in the first period from 10070/100 to 11085/100; and from the middle of 1892 to 1893, to 11610/100. Austrian four per cent. gold rentes, in the same periods, advanced from 10910/100 to 11275/100 and 11785/100.


From the middle of August, 1892, the advance was so swift that the cool observer was bound to feel anxious even before the end of that year. In Edition: current; Page: [115] a short time Vienna and Buda-Pesth had become the leading bourses of Europe. This could not last. A countermine must inevitably be sprung against such flourishing operations; and when there is occasion for counter-mining, Berlin employs the most reckless agents. But even without the interference of foreign speculators, the high price of Austrian securities must have tempted our foreign creditors, among whom none are more perfected in worldly thrift than the capitalists of the German Empire to seize the opportunity for profitable sales. In fact, this was done in course of the winter of 1892-93 to such a vast extent that we hesitate to report the unofficial figures, our efforts to obtain authentic data having been poorly rewarded. Certain it is that many millions’ worth of Austro-Hungarian securities came home in the first six or seven months of 1893 from sojourns in Germany, Belgium, and Holland. The securities were payable in gold, and the 40,000,000 florins in gold which the Bank had acquired by virtue of the statutory concession of August, 1892, must also be covered by gold notes abroad. At the same time, the Government was gradually calling in and turning over to the Austrian and Hungarian mints the long-accumulated gold reserve, most of which had been prudently distributed among secure banks both at home and abroad, in order to obviate a tightening of the international gold market. Hence, the rates of foreign exchange in Vienna and Buda-Pesth were bound to rise, and again bring about a formidable premium on gold. As a matter of fact, more than 100,000,000 florins in gold were conveyed abroad during this period. Such is the true and simple explanation of the unfavorable reaction of exchange in Austria-Hungary in the course of 1892 and 1893; albeit Bourse dealers and the newspapers, both in attacking and in defending the turn of events, befogged the question, which they called the “Financial Problem,” with many stupefying arguments. We lay small stress on the attacking side, whose charges were plainly referable to the strategy of Bourse manipulators, and in particular to the countermining game of Berlin. Those bogus Tartar dispatches were also too transparent. Even the usually serious and respectable Berlin “National Gazette” (“Berliner National-Zeitung”) announced that Austria was visited with the worst harvests of a whole decennium; though official reports had already certified that the crops were of medium quantity and of exceptionally fine quality. Simultaneously it was announced that Japan had stopped coining silver, and that in St. Petersburg the Russian Exchequer had declared silver roubles an ordinary market commodity, as much as to imply the abrogation of the silver standard. But news of this brand bore its own mark and moral. The policy of defence was not much better; its main argument being that the mercantile assets for 1892 had been 80,000,000 florins less than for 1891. However, this must be observed, that the exports for 1891 had exceeded the imports by 160,000,000 florins, or double the excess for 1892. Besides, comparisons of commercial situations must be instituted not months afterward, but during the very progress of events. On August 15, 1892, the Bank’s coin reserve was 249,000,000 florins, and 289,000,000 florins on Edition: current; Page: [116] October 23d. The note circulation had risen from 412,000,000 florins on August 15th to 492,000,000 florins by October 31st; bills of exchange, from 149,000,000 florins to 186,000,000 florins. Meanwhile, or from then till now, the rate of discount has constantly stood at four per cent. The Bank was not compelled to exhaust its untaxed circulation of notes; though by locking up the 40,000,000 florins of gold which it had procured within six weeks, it necessarily disturbed the money market, and was sharply censured by merchants and financiers. We all know how nervously susceptible are the conditions of trade; how troubled by the slightest unfavorable accident; and how prompt is the cry for help. The wealthy merchant or manufacturer who takes it quite amiss that Socialistic Democrats grow eloquent in appeals for State subsidy makes no scruple of calling on the State for protective duties or bespeaking the assistance of a privileged bank of issue. In this matter we have the most conspicuous modern example of national egoism in case of the great American Republic, with its high protective tariff and its silver bill. We do not incline to favor such tendencies, and though it may have been well for the Bank to secure its gold treasure, we hold that it should have been profitably invested until actually wanted at the mint. The testimony of both Finance Ministers goes to show that the Bank administration adhered too strictly to the principle of security. According to the Finance Minister of Hungary, the gold reserve of the Bank and the dual Government had reached the sum of 312,000,000 florins, whereas the mints were not prepared to coin the whole amount within a year. So the Bank might have kept the greater part of the 40,000,000 florins invested or deposited for a year at solid banks abroad, and thereby strengthened the international market, as well as reaped a fair margin of interest. It did, in fact, leave only 6,000,000 florins for this purpose.


The dread of a scarceness of gold was suddenly augmented in the summer of 1893 by two events, which, though long foreboded, still greatly agitated the silver market. These were the close of the India mint against the free coinage of silver, and the repeal of the silver bill of 1890 in the United States. The prompt and perfectly confident resolution displayed by the Indian Government in connection with the report of the parliamentary silver commission both checked the increased valuation of silver and alarmed silver magnates in all parts of the world. Whole cargoes of silver were on their way to India; but when the Indian Government refused to accept them for coinage, all the silver-producing States announced either an impending reduction of their output or the contemplated closing of their mines. The Indian Government partly followed the policy of the States of the Latin Union in 1878, and that of Austria-Hungary since 1879; only with greater consistency and practical conviction. The agreement to give fifteen Indian rupees for a gold sovereign clearly denotes the aim of introducing a gold Edition: current; Page: [117] standard. Consequences have thus far demonstrated that the project is not so difficult as many suppose. The very vastness of the country, and its population of nearly 300,000,000, which some regard as obstacles, really lighten the task. The great bulk of the population is so poor, and wages are so low, that even under a gold standard ordinary transactions might be compassed with base coin or small silver (“token money”). The mass of the people scarcely ever acquire enough cash to need a gold coin at all; and, after the introduction of a gold standard in India, the principal use of gold pieces would be limited to foreign trade. In their secondary capacity of merely representing gold values, the silver coins will not be affected by fluctuations of the silver market; and business will be generally more secure. We must also consider the circumstance that the Indian foreign trade usually exhibits higher exports than imports. In India, moreover, much gold is hoarded; as appears from the surplus of gold imports, which in the past thirty years have amounted to more than 120,000,000 pounds sterling. Now, if the native population should gain such confidence in State resources as to open the hidden treasures, and invest them in railways, steamships, irrigation, new plantations of tea, coffee, sugar, cotton, indigo, and wheat, or even in new manufactures, the Indian currency reforms could succeed without the necessity of application for gold in the international money market.

Views of this cast appear to have become uppermost among our own public, and people are beginning to dismiss anxiety on the score of our currency reforms. No doubt, their confidence is strengthened by the increasing yield of gold and the constant export of gold from the United States; not to mention the gradual steps which Russia has latterly been taking toward the transition to a gold standard. We have learned from trustworthy diplomatic sources that Russia has already accumulated a gold reserve of 700,000,000 florins, which are stored in the Imperial Bank cellars and in the State Treasury.* The two ordinances which, on the one hand, sanction the validity of bills payable in gold, and in turn put a tariff on Russian gold coins, distinctly indicate Russia’s purpose of steering toward a gold standard; but at the same time, it is purposed to guard the public from pitfalls of arbitration.

Meanwhile, the Austro-Hungarian Government has been active in furthering the new currency laws; and, at the date of this writing, has advanced to the Bank 125,000,000 florins in twenty-crown gold pieces for an equivalent amount of silver florins and bank notes, to provide for the withdrawal and cancellation of the like sum of State notes. First of all, 65,000,000 florins in one-florin State notes were retired and destroyed; their whole issue being now extinct. Next, five-florin to fifty-florin State notes were withdrawn to the amount of about 60,000,000 florins; though the retirement of five-florin notes was afterward suspended in deference to loud public Edition: current; Page: [118] remonstrance and protests from the chambers of commerce on account of the dearth of small notes. The latter want was not satisfied by the tencrown gold pieces; and there were no five-florin bank notes. Even the previous withdrawal of State notes had caused the gold premium to disappear, and gold was twice down to par before the last Bourse panic.


The currency reforms have so far progressed that the resulting financial superstructure will soon be ready for the crowning-stone. On renewal of the Bank’s charter, its relations to the dual Government are also established on a new basis. The present charter expires at the close of 1897; but since the co-operation of the Bank is indispensable to the resumption of specie payments, its understanding with the State must be adjusted before the charter actually lapses. The Bank administration timely remembered this necessity, and proposed its terms and conditions. But they were so onesided and altogether favorable to the shareholders that sharp opposition arose in Government circles and in the press, and effectual negotiation between the Bank and the Government delegates has not yet been begun; although the last official report of the Vienna mint announces that the new coinage will be completed by the end of 1896. That is to say, by that time the Bank is expected to be ready to fully resume specie payments.

In a memorial of Hon. Emil von Mecenseffy, First Secretary of the Austro-Hungarian Bank, touching the worth and value of the charter, the claims of the public are considered in their true light. Especially this plea is advocated, that the State’s debt to the Bank, which by force of the statutes of 1888 yields no interest, and is to be gradually extinguished by the dividends accuring to both States, shall be now paid once for all, in order to enable the Bank to meet its constitutional obligations of redeeming its notes in gold coin at all times without fail. The memorial emphasizes the importance of mutual concessions, as follows: “In the proceedings pertaining to a charter, the Austro-Hungarian Bank assumes and plainly expresses the intention of meeting the wants of high governments and parliaments, upon the future establishment of the Bank, with all the wealth of its experience, and in the most responsive manner. The Bank also entertains the conviction that the high governments and parliaments, on ratifying the terms of the future charter, will incline to take full account of the grave duties, burdens, and responsibilities which will devolve on the Bank under its essentially altered relations.”

It seems to us that in all transactions between the Bank and the Government until the present time, there has been too little of acute discrimination respecting the intrinsic functions of note circulation. The issue of notes is, in fact, one of the forms of credit which the public allows the Bank. When the public, that is to say, the total community, uses the Bank’s notes in making payments, it virtually credits the issuing institution, which is bound Edition: current; Page: [119] to make answerable compensation. The least return the State can claim for its concessions of such credit, by vesting the Bank with exclusive powers, is half the net proceeds; and this is done in practice by the German Imperial Bank. These things being so, the Bank will probably agree to a reasonable compromise. But apart from fundamental precepts, it is charged that throughout the period of obligatory legal tender, the Bank favored the interests of its shareholders rather than the weal of the State. On another side, the reproach was urged that the Bank had been mismanaged in the matter of Von Lucam’s wise gold policy, that it had not warmed up to the proper realization of his plans for adopting a gold standard, but had sought to injure the shareholders by clinging to the existing silver standard, and, in the same spirit, had impeded the free course of discounts. We have already seen that there was no foundation for the reproach about Von Lucam’s gold policy, which in his own day was checked by the indiscreet prying of General Counsellors. But any strictures about conniving at the retention of the silver standard and profiting by the compulsory legal tender apply quite as directly to the public and the Government, also to the press; for, according to the general opinion, the reaction in favor of a gold standard is something wholly recent. Be this as it may, there is a prevailing sentiment, in Hungary at least, that the State should exercise a greater influence on the discount policy of the Austro-Hungarian Bank.


The press was outspoken in behalf of a revision of the Bank Act along lines followed by the German Imperial Bank; and as in Hungary questions of economics easily assume a political bent, there is also an extreme radical party, zealous for the creation of an independent Hungarian bank of issue as one of that country’s national rights. At the same time, an intermediate opinion is voiced, which proposes that, in addition to the present Austro-Hungarian Bank, which might be advantageously reconstructed as an Imperial Austrian Bank on the model of the German Imperial Bank, there shall be an independent royal Hungarian bank of issue, under the direct control of the Hungarian Finance Minister, just as the Austrian Finance Minister should be the supreme governor of the Austrian Bank. The two banks should have nothing organically in common—only the issue of notes. Hungary’s finances being now as well-ordered as those of Austria, and the once chronic deficits of both States being now replaced by an annual surplus, the author* of the intermediate plan believes that a separate Hungarian bank would be no less solvent than an Imperial Austrian Bank. The present practice of printing the notes in German on one side and in Hungarian on the other could be retained with slight verbal modifications. Of course, both banks Edition: current; Page: [120] would have to redeem their notes in gold; and against this there should be no obstacle, in view of the huge increase of the international supply of gold and the circumstance that Vienna and Buda-Pesth are only five hours apart by railway; so that any extraordinary diminution of either bank’s coin reserve could be offset without delay by transfer of gold from the other bank. Under this double security, the notes of both banks would enjoy such confidence in both States that they could circulate without hindrance in all the Empire, and also, to a greater degree than at present, in foreign countries, the premium on gold being removed.

This proposition had found much support among the people of Hungary, where everything is welcome which looks toward national independence. For this very reason it was received with coldness or distrust in Austria, where everything must exert itself to strengthen the political dualism. But since even in Hungary there is an influential minority of statesmen and financiers which opposes political separation on grounds of economy, the possibility remains that an adjustment will be again decreed according to the present organization of the Bank. Hungarian merchants are very willing to admit that since the statutory revision of 1887, the Austro-Hungarian Bank, as directed by a Hungarian governor and a Hungarian First Secretary, has carefully promoted the cause of Hungarian credit.

To sum up the situation: First, the claim of Hungary as regards establishing an independent bank of issue is not contested, though Austria fears a certain propensity on the part of Hungary toward inflation of currency, to the prejudice of unfailing redemption in coin. Secondly, Hungarian statesmen and financiers are themselves somewhat anxious lest under an independent bank Hungarian credit might deteriorate for want of a sufficient volume of deposits, the population of Hungary not ensuring their increase through the same thrift as prevails among the Austrians. Thirdly, therefore, a compromise on the present basis is likely to be adopted, possibly with some new features borrowed from the constitution of the German Imperial Bank. This should be achieved in 1896, or at the latest in 1897; so that, when the new coinage is completed, there may be no impediment in the way of restoring specie payments.

Just as we are about to dispatch our manuscript, we learn from an orthodox source that both governments, in order to smooth all susceptibilities, have adopted the following modus procedendi: The Bank governor and both deputy-governors shall be appointed by his Imperial and Royal Majesty, the Emperor of Austria and King of Hungary. The board of General Counsellors shall consist of six Austrians and six Hungarians—twelve members in all. These shall be appointed, half by the General Assembly, half by the Governments. Deliberations upon changes in the rate of interest and upon other weighty questions shall take shape at the joint sessions, held alternately in Vienna and Buda-Pesth.

In an appendix to this treatise we shall present a series of statistical statements which bring out with much distinctness the effect of the new Edition: current; Page: [121] currency reforms in augmenting the gold reserve. The reader is referred to the data for 1892 and 1893.


The General Counsellors of the Austro-Hungarian Bank determined the balance for 1895 in the first half of January, 1896. Net profits for 1895 amount to 7,081,219 florins, an increase of 441,695 florins over 1894. The shareholders first receive a dividend of five per cent. on their subscription, or a first dividend of 4,500,000 florins; then four per cent. of the residue, or 163,248 florins, is added to the pension fund; next, the dividend is increased to seven per cent.; and the final surplus, 677,970 florins, is equally divided between the Bank and the State—namely, the Bank receives 338,985 florins and the dual State the other half. The State further receives the note tax, which in 1895 amounted to 196,429 florins, payable out of the net profits. The total returns to the State were therefore 535,414 florins, which are employed in extinguishing the 80,000,000-florin debt, now reduced to 76,322,459 florins. So the shareholders received 338,985 florins in addition to the seven per cent. dividend, and 8985 florins were carried over to the new account. The General Counsellors fixed the final portion for the shareholders at forty-four florins and twenty kreutzers per share of 600 florins, or at 7367/1000 per cent., against forty-two florins and ninety kreutzers, or 715/100 per cent. for 1894. A partial payment of fifteen florins per share having been already furnished, the General Assembly will still have to approve twenty-nine florins and twenty kreutzers per share; and there is no doubt of their accepting the official balance.

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IT was first attempted to handle the clearing-house business at Vienna on the plan of the like English and American institutions; but the attempt proved so slow and feeble in the way of results that a new organization was introduced, which deserves to be generally known. We refer to the Vienna Giro und Cassen-Verein.

Frequent complaints were formerly heard that the Vienna mercantile community made too little of the “bank account” department of the old Austrian National Bank. As late as 1873, only 1474 of the registered Vienna firms, out of a total number of 6100, had their folios in the various local banks. In 1864, when the Bank of England joined the London Clearing-House, a similar institution was founded in Vienna, at the instigation of the Austrian Credit Bank, and under the name Vienna Saldirungsverein (Balancing Association). This began business on December 1, 1864, in the so-called Saldosaale (Balance Hall, or Clearing-House). Four of the principal banks had announced to the mercantile community that they would daily adjust their claims at the new institution by the exchange of bills, cheques, money orders, etc.; and they invited the community to patronize the new enterprise by opening bank accounts with the banks of Vienna. The four leading banks were the Austrian National, the Austrian Credit Bank, the Lower Austrian Discount Company, and the Anglo Bank. At this stage, the proportion of settlements made in cash was as high as forty and a half per cent. At present, ten banks are associated with the Vienna Saldirungsverein, namely, the following six in addition to the four previously mentioned—the Union Bank, General Commercial Bank, Vienna Giro und Cassen-Verein, General Deposit Bank, Territorial Bank, and the Vienna Banking Association. Edition: current; Page: [123] All except the General Commercial Bank had “bank account” departments in 1887. The clearances from 1865 to 1873 were from 300 to 700 million florins per annum—two-thirds being made in paper and one-third in cash. The paper facilities are by no means utilized to the same degree as in London and New York, where cash clearances average only from four to five per cent. The transactions for 1887 were 551,472,661 florins; the total item for the Austro-Hungarian Bank being 135,000,000 florins. But the clearing-house business in Vienna received a new impulse by the founding of the Giro und Cassen-Verein, which (as appeared above) was also associated with the Saldirungsverein, and in 1887 turned over 143,324,082 florins. It is true that London was a century before us in this branch of business, and both elsewhere in Great Britain and in the United States there were clearing-houses many years before we thought of starting one in Austria; nor may it be expected that Vienna will ever reach the colossal results of London and New York. Nevertheless, the Vienna Giro und Cassen-Verein is just as intense in its activity and as perfectly equipped as the model clearing-houses of the United States and England. in the latter centres, the clerks of associated banks or firms meet at stated times and in specially appointed halls, to exchange cheques, bills, etc., and settle various claims; but all such business, and more besides, is managed by the Giro und Cassen-Verein alone. Its maximum annual transactions were 7,668,904,167 florins in 1881, 5,571,638,178 florins in 1882, and 8,112,396,442 florins in 1894. This is a moderate showing, even for the relative size of Vienna, when we consider London clearances, amounting to 6,000,000,000 pounds sterling; yet it is large in view of the circumstance that cheques are but imperfectly naturalized with us, whereas in London all payments of the middle and upper classes are made by cheques. Such differences of habit are explained by the difference of circulating mediums and of popular traditions. Notwithstanding occasionally depreciated currency, the Austrian circulating mediums are more convenient, especially for dealings between Vienna and the provinces, than those of England. The lowest denomination of English bank notes is five pounds, or ten times our lowest in Austria. Moreover, the Bank of England employs no further protection against counterfeits than to manufacture its own notes from its own water-marked paper; so that, there, both the Bank managers and the public are more distrustful of counterfeits than in Austria. The Bank of England holds all notes once returned from circulation—perforates and eventually destroys them. This affords an exact history of the duration of circulated notes. Indeed, the London banks, hotels, and public are so suspicious of counterfeits that one may hardly get a ten-pound note changed without introduction by somebody of known credit. We were ourselves obliged to call on the clerk of one of our merchant friends in the City in order to get change for a ten-pound note; and a five-pound note led us the long two hours’ chase from the Grosvenor Hotel, by Victoria Station, to the Bank of England, because the note had been issued by the branch bank at Southampton, and so excited the hotel cashier’s suspicion. No wonder that Edition: current; Page: [124] every well-to-do citizen of London keeps a bank account, and always carries his cheque-book with him, and but little extra cash. The formality of cheques, however, is decidedly more troublesome than the Austrian general use of bank notes; and the small five and ten florin notes also save the inconvenience of carrying considerable sums of silver. This practical usefulness of our currency, and the comparative helplessness of the English note circulation, explain our limited and backward adoption of cheques and the enormous multiplication of cheques in London. Lately, however, postoffice orders have become a quite popular form of currency, and they are generally accepted. The business facilities enjoyed by patrons of the Giro und Cassen-Verein are much wider than those offered by the English and American clearing-houses.


The Vienna house not only receives deposits of money in accounts current, but also securities for deposit and bills of exchange for collection. The firms which deal with the Giro und Cassen-Verein are not obliged to handle the securities which they wish to buy or sell, but only to have the bargains transferred from one folio to the other. Besides buying and selling deposited securities, the Cassen-Verein also draws in coupons when due, and attends to time contracts. The Austrian Credit Bank and the Lower Austrian Discount Company pay two per cent. interest on deposits; but the Cassen-Verein, instead of paying interest, allows its patrons a percentage of the net profits in excess of six per cent., apportioned according to the size of their accounts. Even when the net profits come short of six per cent., and there is no surplus to be meted out, the Cassen-Verein’s patrons have this advantage, that all their business transfers are effected gratuitously. As a rule, the chief clearance business of nearly all the banks and banking houses is committed to the Cassen-Verein; they deal with it in accounts current, effect their mutual conveyances through its agency, and deposit with it their principal securities, inasmuch as the Cassen-Verein has extraordinary accommodations of security for this purpose. The transfer of securities, like that of money, being mostly effected by clearing-house paper, the banking houses need hardly half the clerical personnel required before the Giro und Cassen-Verein was founded. Many banking houses also keep reserve deposits at the Austro-Hungarian Bank. A great time-saving device has been adopted in the department of coupons, in the guise of an ingeniously constructed machine. This is fed with coupons in batches, and the slips are turned out perforated and automatically numbered. The trouble of stamping and numbering coupons by hand is thus avoided. They are delivered in bound parcels—100 parcels to a package—and the bearers receive accompanying cards, which give the numerical order and total amount of the coupons.

The structural arrangements of the palatial edifice which serves as the local habitation of the Giro und Cassen-Verein are admirable, and ensure Edition: current; Page: [125] perfect security to the deposits. Valuable papers are kept in two deep subterranean vaults, absolutely fire-proof, and lighted day and night by glass-insulated gas burners, high above reach, near the lofty ceiling. The light may be magnified or softened by turning the stop in a remote corner. Adjoining the vaults is a manipulating room, lighted from a deeply depressed courtyard. The windows are guarded by strong iron bars, and the whole basement can also be flooded with water in a very few minutes. The vaults are lined with great fire-proof safes, immured in the walls. An iron railway encircles the vaulted compartments. The surrounding corridor is nightly patrolled by two watchmen, who, through staunchly barred loop-holes, must look into the vaults every half-hour, to ascertain that nothing suspicious is brewing within, and they are obliged to attest their vigilant presence by touching an electric button. The instantaneous message is then communicated by a conducting-wire to a clock in the uppermost story, and this clock records the intelligence by dropping points on a great arch or conceptive dial, whose registrations are inspected every morning by the officer in charge. The telegraphic apparatus is further utilized. Fine wires are drawn across the space behind the iron bars, and any attempt to break through a door or window would be instantly signaled by the rupture of a wire. The electric bells in the rooms occupied by resident officials would loudly ring, and by pressing a button the basement could be straightway flooded. In view of the useful activity of the Cassen-Verein, which, as previously mentioned, undertakes more diversified operations than the English and American clearing-houses, it is not surprising that its transactions from the very start attained large proportions. It began business on July 1, 1872, and even in that first half-year the bank accounts amounted to 4,022,198 florins; cash accounts, to 2,681,520 florins, and the total sums turned over in the first half-year, to 2,296,598,351 florins.

By courtesy of Mr. Isidor Kanitz, director of the institution, we are enabled to give data for that and the succeeding years, as follows:

Vienna Clearing-House.
*Second half-year.
Total Transactions.
1872* 2,525,352,149
1873 2,781,033,157
1874 1,378,456,760
1875 1,563,162,022
1876 1,622,193,391
1877 2,554,959,172
1878 2,895,088,778
1879 4,451,683,261
1880 5,835,469,432
1881 8,032,899,891
1882 5,867,674,317
1883 4,903,940,795
1884 5,319,297,058
1885 4,506,318,946
1886 4,858,778,963
1887 4,806,128,521
1888 5,083,915,959
1889 5,931,559,071
1890 6,246,791,194
1891 5,643,350,756
1892 5,531,430,337
1893 6,843,483,172
1894 8,112,396,442
Edition: current; Page: [126]

(Oesterreichische Credit-Anstalt für Handel und Gewerbe.)

The Austrian Credit Bank, founded in 1855, is nearly as old as the French crédit mobilier. The company is located in Vienna, with privileges of organizing branches and agencies at home and abroad. Within terms defined by the laws of trade, it may also interest itself as a limited partner in other firms. Branches may be erected for all or for only some of the operations designated in the statutes, and whatever be their functions, they have the same rights and obligations as the main organization. The charter was granted for ninety years, dating from 1855. In a few years after the original company was chartered, branches were created at Prague, Brunn, Lemberg, Buda-Pesth, Trieste, and Alexandria, though the latter was subsequently discontinued.

The company’s business departments may be classified as follows:

(1) It is authorized to establish, or to take part in establishing, industrial, commercial, or other economic enterprises of a character designed to promote the public weal. (2) In connection with the founding or the operating of such establishments, it is empowered to organize joint-stock or joint-stock limited liability companies, as well as to reorganize existing enterprises on such bases; and for all the like enterprises and companies it may issue shares and bonds. (3) To negotiate State loans and also loans for separate provinces, districts, communities, joint-stock or limited liability companies, and private individuals, both at home and abroad; either on its own responsibility or in coalition with other parties; to subscribe toward such loans, or transfer them either wholly or in part to third persons. (4) To buy and sell raw materials both in its own behalf and for others: though the purchase price of any such bargains made in its own behalf must not exceed one-sixth of the paid-in capital stock. (5) To invest in real estate within limits not exceeding one-tenth of the paid-in capital stock, and without impairing the right of buying up such other real estate as may serve to cover precarious claims, or be necessary for business purposes, such as extra buildings or ground space. (6) To buy and sell all kinds of securities; to pledge the same, or exchange them for other articles of value. (7) To grant interest-bearing loans on securities or merchandise. (8) To handle moneys in current account, and give interest-bearing notes for the same; also to negotiate cheques on deposits. The promissory notes may not be made out in smaller sums than 100 florins; and they must be formulated agreeably to State regulations. (9) To receive in custody gold and silver coin or bullion, and securities of all kinds; giving due receipt for the same. (10) To collect or pay interest and dividends, and make general collections on commission. (11) To do a general exchange and banking business.

In addition to these comprehensive rights, the Credit Bank is also authorized to issue interest-bearing bonds of its own, whose total amount must always be secured by its proper resources, marketable effects, covered capital claims, and real estate. These bonds must not mature within less than one year, nor be issued in lower denominations than 100 florins. Their form must be submitted to the State for approval. The Credit Bank is authorized to issue certificates or warrants for the merchandise or raw materials on which it advances loans. The original capital stock was fixed at 100,000,000 florins, of which 60,000,000 florins were paid in. The result of twelve years’ operations showed that such a large capital was unnecessary, if the old Edition: current; Page: [127] experience held good, that a bank is a public receptacle for surplus capital, which it proceeds to distribute according to local needs. The Austrian Credit Bank soon became such a receiving and distributing centre, for its management was excellent. In 1868, it resolved to reduce its capital stock to 40,000,000 florins, in 250,000 shares at 160 florins each; and the step was defended as follows, in the business report for 1868.

“The Imperial edict dated May 20, 1868, sanctioned the resolution which was adopted at our general session of March 31, 1867, with reference to reducing our capital stock from 60,000,000 to 40,000,000 florins. To this end, we are authorized to buy in 50,000 joint-stock shares at their nominal value at the public Bourse; and then cancel the same, together with the 50,000 shares already bought in and held by the Bank. It was further ordained that these operations should be conducted in strict conformity to the regulations of the Commercial Code.”

The right of issuing new shares was reserved to the General Assembly of shareholders. Wide concessions were made to the founders of the institution, as in the event of an increase of capital stock above 60,000,000 florins they had the privilege of acquiring one-third of the added shares, while the other two-thirds should be held by the former shareholders. Despite these sweeping rights, or perhaps because of them, the institution rapidly gained vast influence, and suffered no loss of credit, even on occasion of several serious injuries by bad officials. Rather, the public confidence grew so great that the shares of the Credit Bank became the standard paper at the Bourses of Vienna and Buda-Pesth; and quite often even Berlin speculators based their operations on the status of Austrian Credit shares. The institution’s high status is also proved by the favor it receives when associated in raising State loans or effecting State conversions.

Data from the reports for 1894 will appear in the Appendix to this treatise.

The business development of the Austrian Credit Bank is especially important in the two features of State loans and discounts. As a syndicate firm for the floating of State loans, the institution has won an influential position, in line with the Rothschilds and the Berlin Discount Company, not to speak of other great banks in both Berlin and Vienna. By its judicious management, the great Hungarian loan of 400,000,000 florins was converted into four per cent. rentes, though only twenty years ago Hungary had to pay interest on the same at nine per cent.

The following table shows the dividends declared from 1856, the year after the institution was founded, to 1890, together with the price of shares:

Edition: current; Page: [128]
YEARS. Par Value Per Share. Dividend Per Share. Per Cent. Market Value of Shares on December 31.
1856 60 15.00 25.00 316.00
1857 190 9.50 5.00 217.00
1858 200 14.00 7.00 242.50
1859 200 12.00 6.00 206.20
1860 200 10.00 5.00 157.40
1861 200 15.50 179.40
1862 200 17.00 224.80
1863 200 12.00 6.00 182.90
1864 200 10.00 5.00 174.40
1865 200 9.00 150.40
1866 200 10.00 5.00 154.50
1867 200 15.50 182.40
1868 200 26.00 13.00 243.60
1869 200-160 29.00 16.1-9 266.75
1870 160 22.50 14.1-16 246.70
1871 160 28.00 17½ 327.50
1872 160 30.00 18¾ 331.00
1873 160 9.00 5⅝ 237.50
1874 160 11.00 6⅞ 235.75
1875 160 8.00 5.00 202.10
1876 160 2.00 135.60
1877 160 13.00 8⅛ 194.25
1878 160 14.00 219.80
1879 160 18.00 11¼ 291.50
1880 160 18.00 11¼ 289.75
1881 160 17.50 10.15-16 354.60
1882 160 15.00 9⅜ 282.80
1883 160 14.00 291.80
1884 160 15.00 9⅜ 294.20
1885 160 13.50 8.1-16 300.00
1886 160 13.00 8⅛ 294.00
1887 160 13.00 8⅛ 264.70
1888 160 14.50 9.1-16 310.30
1889 160 17.00 10⅝ 319.00
1890 160 17.00 10⅝ 306.75


This institution was founded in 1853, and next to the Austro-Hungarian Bank, it is the oldest discounting house in Austria. Its capital stock for the first few years consisted of 4,981,500 florins in 9963 shares of 500 florins each. The stock was increased to 5,000,000 florins in 1856, making 10,000 shares; and by another million florins in 1859, through the issue of 2000 new shares. It now consists of 9,800,000 florins, in 19,600 untransferable shares. The Discount Company supplied an urgent public want; and so sound has been its business régime that not even the embezzlement of 2,000,000 florins by one of its higher officials, about a decade ago, had power to undermine its credit. Business data will appear in the Appendix.


This bank was organized in 1864, with a capital stock of 20,000,000 florins, of which only thirty per cent. was originally paid in. By the end of 1870, the paid-in stock was increased to 14,000,000 florins, and it now amounts to 18,000,000 florins in 150,000,000 shares of nominally 200 florins each, but effectually only 120 florins each. The Anglo Bank also issues mortgage bonds at four and a half per cent., which may be legally offered by way of security and invested in the way of private foundations, minors’ and other trusts, and as ordinary deposits. Statistical data of this bank may be found in the Appendix.

Edition: current; Page: [129]


This institution was founded mainly by French capital. It rendered special service by drawing French investors to take part in the fusion of the extensive Styrian mining companies. Those capitalists, however, were obliged to divert a large portion of their funds to Servia, in order to reap speedier profits. The Territorial Bank was established in 1880, at first with a capital of 80,000,000 florins; but as it soon appeared that so great a sum could not immediately find profitable occupation, the stock was reduced to 40,000,000 florins in gold, Austrian standard, fully subscribed and paid in. The Bank has very diversified interests in foreign railways, mines, and State loans. Its privileges and limitations are similar to those of the Austrian Credit Bank. See Appendix for data.


This highly prosperous organization was started in 1864. At the first general meeting of shareholders, on April 24th, it was ascertained that 30,400 shares at 200 florins each had been paid in to the extent of forty per cent., and that there was no lack of customers. Indeed, the want of credit was so pressing that by the end of 1875, 11,189 applications for loans had come in, amounting to 54,532,700 florins; of which applications, 9277, amounting to 35,626,700 florins, had been rejected on statutory grounds; 1912 loans granted, amounting to 18,906,000 florins; but only 1648 of them realized, at an amount of 16,388,600 florins. The Bank’s charter was revised in 1881, with a term of ninety years. The business headquarters are in Vienna; and though the charter is limited to Austria, the actual operations also embrace Hungary.

The following rights and restrictions are provided:

(1) To grant mortgage loans on real estate, for longer or shorter periods. The loans may be redeemed either in single payments or by annual installments, according to conditions of the contract. (2) To redeem outstanding mortgage claims. (3) To grant loans to provincial, municipal, and district communities, or other juridical personæ, such as school boards, road committees, water companies, etc., either with or without mortgaged security. In the latter case, interest and guaranty of redemption must be secured through assessments. (4) To issue mortgage bonds or other bonds in connection with the foregoing branches of business. These may either be formulated for a specified term, or else retired by lot. For the latter sort, a final premium may be collected. (5) To discount the Bank’s own bonds, and make advances thereon. (6) To receive deposits on interest, and issue notes for the same, payable either to the bearer or to some specified person, and in sums not less than fifty florins, Austrian standard. The notes must have at least three days’ right of warning; and they must generally conform to statutory requirements. (7) To deal in accounts current in such sort that no cheques may be drawn, nor credit entered on the folio, save upon cash balance in favor, or upon cash deposits. (8) Deposits received under provision of the two preceding articles may be applied to the Bank’s mortgage and bonded loans, as well as to loans on securities publicly quoted at the Vienna Bourse. The same deposits may also be used in discounting certified bills of exchange, both domestic and foreign; and in transactions on commission, duly secured. Operations in blank credit are forbidden. (9) The Bank is furthermore Edition: current; Page: [130] authorized to support enterprises aiming at the improvement of property and buildings. (10) The total issue of mortgage and other bonds must not exceed thirty times the paid-in capital stock; and the funds applied to discounts on bills of exchange must not exceed twice the effectual stock. (11) The issue of bonds must never exceed the total mortgage claims; though the Bank may issue anticipatory bonds to the extent of 2,000,000 florins or less, pending contracts to the same or like amount. (12) The Bank pays mortgage loans in cash. They are mostly redeemable by annual installments; and the maximum term allowed is fifty-two years. The interest is rated according to the time of redemption, and runs from 5.7 to 6.5 per cent. a year.

The extraordinary activity which these liberal privileges encourage has not only never endangered the Bank’s stability, but has wholly contributed to its success. The net profits have averaged fourteen per cent. a year, save in the five years following the disasters of 1873. Before that time there had been dividends as high as 17, 20, 21, and 26 per cent. These remarkable profits are partly explained by the difference between the mortgage bonds and the mortgage loans, and partly by the directors’ management of bills of exchange at short sight. Much of the capital stock was subscribed in Paris, and this brought in a welcome supply of foreign funds, which were employed in agricultural improvements. The Bank requires mortgaged security three times the nominal value of its loans; and on this basis it had issued bonds to the amount of 15,600,000 florins, even by the close of 1865, in the first period of its operations. Outside its mortgage business it profitably devoted its working funds to the usual departments of banking; and the discount traffic reached a round sum of 54,000,000 florins; contango transactions, 30,000,000 florins, and the total cash transactions over 120,000,000 florins. Finally, the Bank might largely associate itself with great financial syndicates, and co-operate in the issue of State loans. At the beginning of 1887 the total item of loans was 143,000,000 florins, and the issue of mortgage bonds had risen to 138,000,000 florins.

For further facts, see Appendix; also, for the business report of 1894.


This bank was founded in 1870, with a capital stock of 12,000,000 florins. It was properly the amalgamation of four older banks. It has notably satisfied public wants in the way of opening a warehouse department, with capacious docks. In this connection it give an impetus to the legal issue of warrants. By 1887 more than 12,000,000 florins had been advanced on merchandise and warrants. The Bank has its own warehouse in Vienna; and, by the close of 1887, about 350,000 cwt. of goods lay stored therein, with an insurance value of over 3,000,000 florins. There are branches in Trieste and at Sarajevo, in Bosnia. It is widely concerned in syndicates and industrial enterprises.

For data, see Appendix.

Edition: current; Page: [131]


This was founded in 1869, with a nominal stock of 8,000,000 florins in 40,000 shares at 200 florins each, of which 40 per cent. was paid in; so that the effectual capital was 3,200,000 florins. In 1875, however, the effectual capital was increased to 12,000,000 florins. The Bank was thus put in a position to join a number of profitable syndicates.

For data, see Appendix.


The number of other discount, credit, and mortgage banks in Austria-Hungary is too great for us to attempt a complete review of their statutes and business operations; it must therefore suffice to give a sketch of them according to materials derived from sundry financial journals, and such statistical authorities as Mr. Ehrenberger and Dr. Rauchberg.

The years of over-speculation which led to the crisis of 1873 were serious times for banking in Austria-Hungary. Never had so many banks been founded in so short a time as were established at Vienna and Buda-Pesth in 1872 and 1873; nor did ever so many banks collapse shortly after their organization. Business which ought properly to have been managed by private persons was metamorphosed into the semblance of a bank; for instance, that of the stock-brokers, who were among the first to “break.” From data compiled by Mr. Ehrenberger, it appears that most of the banks founded prior to 1868, of which the principal ones had been started in the fifties, withstood the storm of 1873; whereas of the seventy banks founded at Vienna from 1868 to 1873, only eighteen were still operative in 1883, and of sixty-five provincial banks founded in the same year, only twenty-one were alive in 1883. We append an illustrative table showing the status of these institutions (expressed in millions and thousands):

YEARS. Number of Banks and Credit Institutions. Capital Stock Paid In. Liabilities. Receipts. Expenditures. Profit or Loss.
1872 131 508.63 1.968.34 133.26 44.38 +88.88
1873 102 480.84 1.757.78 101.35 140.46 -39.11
1874 75 329.72 1.478.36 70.83 51.95 +18.88
1875 71 321.58 1.383.55 58.00 46.04 +11.96
1876 65 269.84 1.340.80 55.01 46.03 +8.98
1877 57 238.74 1.291.17 52.42 35.12 +17.30
1878 53 236.27 1.319.56 53.71 34.66 +19.05
1879 53 239.89 1.400.08 58.62 36.11 +22.51
1880 54 262.81 1.486.30 58.17 35.93 +22.24
1881 55 310.40 1.651.86 65.98 38.20 +27.78
1882 56 312.08 1.650.54 63.89 37.56 +26.33
1883 58 313.21 1.641.72 62.13 37.37 +24.76
Edition: current; Page: [132]

With the exception of the Austrian Bank, only forty-seven banks may be regarded as still substantially solvent after 1883, geographically distributed as follows: Lower Austria, 15 (of which 14 belong to Vienna); Upper Austria, 2; Carniola, 1; Styria, 2; Coast Province, 2; Tyrol and Vorarlberg, 1; Bohemia, 12; Moravia, 2; Silesia, 1; Galicia, 4; Bukowina, 1; Dalmatia, 4. Twenty-nine of these banks engage in mercantile and industrial applications of credit, as well as in agricultural operations of the crédit mobilier; sixteen confine themselves to ordinary banking business; and others, including some of both the preceding classes, make most of their profits through large foundations, funding of loans, etc. In the period from 1869 to 1883, the movements in the capital stock, including that of the Austro-Hungarian Bank, were as follows:

YEARS. VIENNA. PROVINCES. Total Banks. Total Stock Paid In.
Existing Joint-Stock Banks. Capital Stock Paid In. Number of Banks. Capital Stock Paid In.
End of 1869 23 209.182 24 22.663 47 231.845
End of 1870 21 218.700 29 23.589 50 242.289
End of 1871 31 258.940 36 28.745 67 287.685
End of 1872 59 417.194 66 91.437 125 508.631
May, 1873 69 519.290 72 99.800 141 619.090
End of 1873 42 410.660 54 70.180 96 480.840
End of 1874 28 280.680 40 49.044 68 329.724
End of 1875 25 277.572 39 44.009 64 321.581
End of 1876 18 228.500 38 41.337 56 269.837
End of 1877 15 204.388 33 34.347 48 238.735
End of 1878 14 203.788 31 32.485 45 236.273
End of 1879 14 206.788 31 33.099 45 239.887
End of 1880 15 231.588 31 31.217 46 262.805
End of 1881 15 279.725 31 30.678 46 310.403
End of 1882 15 279.725 32 32.359 47 312.084
End of 1883 15 279.725 33 33.480 48 313.205

Including the Austro-Hungarian Bank, we may classify the banks as follows, the amounts being represented in Austrian florins:

CATEGORY OF BANKS. Number of Joint-Stock Banks. CAPITAL STOCK, 1883.
Austro-Hungarian Bank 1 90,000,000 28.73 per cent.
Discount, deposit, and loan banks 16 22,973,000 7.33 per cent.
Crédit mobilier banks 13 172,127,000 54.95 per cent.
Mortgage credit institutions 7 21,687,000 6.93 per cent.
People’s banks 6 479,000 0.16 per cent.
Loan and pawning concerns 5 5,939,000 1.90 per cent.
Total 48 313,205,000 100.00 per cent.
Edition: current; Page: [133]

The balances for the separate years from 1870 to 1883 reveal unexampled fluctuations. Except in the case of the Austro-Hungarian Bank, the maximum total of liabilities occurred in 1872, at 1,466,000,000 florins, and the minimum, 784,000,000 florins, in 1877. The liabilities of Vienna banks decreased by fifty-four per cent.; those of the provincial banks by only twenty per cent. As business revived, liabilities rose again from 1878 forward; not appreciably, however, in the case of the Austro-Hungarian Bank. The following table shows the distribution of liabilities in percentages, exclusive of the Austro-Hungarian Bank:

YEARS. Capital Stock. Mortgage Capital. Exchequer Bills and Money Deposits. Acceptances and Bank Accounts Creditors. Reserve Fund. Profit and Loss Account. Other Liabilities. Total.
1870 20.84 24.43 11.09 5.46 30.80 1.23 3.58 2.57 100.00
1871 20.08 21.38 12.64 6.47 31.61 1.40 3.93 2.49 100.00
1872 20.96 16.08 9.73 6.34 38.03 0.97 5.28 2.61 100.00
1873 30.08 22.21 9.05 7.91 23.27 2.87 0.96 3.65 100.00
1874 24.66 29.03 11.25 7.09 20.61 3.24 1.56 2.56 100.00
1875 25.49 33.17 10.77 6.41 17.23 3.32 0.96 2.65 100.00
1876 21.67 36.98 10.42 8.08 17.86 1.38 0.73 2.88 100.00
1877 19.04 40.35 10.77 8.06 15.74 1.71 1.23 3.10 100.00
1878 18.32 41.69 10.58 7.12 16.98 1.38 1.45 2.48 100.00
1879 17.61 40.63 10.99 6.49 18.66 1.45 1.87 2.30 100.00
1880 16.52 41.64 10.64 5.83 19.63 1.53 1.80 2.41 100.00
1881 20.46 36.19 9.69 5.13 21.70 2.41 2.00 2.42 100.00
1882 20.77 36.06 9.06 6.10 20.95 2.69 1.80 2.57 100.00
1883 21.23 36.62 9.78 6.95 18.41 2.87 1.69 2.45 100.00

The item of exchequer bills calls for special remark, as they require longer terms of notice than other interest-bearing deposits. On the side of assets, the least fluctuation appeared in the items of bills of exchange and mortgage loans. The latter departments represent the ordinary course of business, and are least influenced by speculations at the Bourse. Still, the bills portfolio could not altogether escape the effects of critical years; and from its maximum status of 337,000,000 florins in 1872, it declined to 259,000,000 florins in the six years following. A constant improvement set in at the close of 1878, and by 1883 the bills had again reached a maximum of 338,000,000 florins. Their subsequent movement varied somewhat according to turns of the market, but on the whole it was steadily and solidly upward. Loans show less uniformity, because they are also connected with contango operations, and these are more or less subject to chance. Loans dropped by a round fifty per cent. from their high status just before the critical period, in the course of the next nine years. We subjoin a classified table of assets in percentages, exclusive of the Austro-Hungarian Bank:

Edition: current; Page: [134]
YEARS. Cash. Bills of Exchange Commercial Effects and Securities. Loans. Mortgage Loans. Real Estate and Building Lots. Advances on Merchandise and Securities. Other Assets. Total.
1870 2.88 19.44 4.95 36.93 24.52 0.76 7.32 3.20 100
1871 2.80 19.49 3.75 38.89 21.10 0.61 9.74 3.62 100
1872 2.48 11.58 6.05 51.00 16.46 0.55 9.43 2.45 100
1873 2.10 12.87 7.70 39.85 22.59 2.41 3.81 8.58 100
1874 2.68 18.17 7.19 29.39 29.21 3.52 3.93 5.91 100
1875 3.38 18.50 6.36 26.52 32.96 2.34 4.16 5.78 100
1876 2.18 17.93 6.37 26.94 36.62 2.38 3.19 4.39 100
1877 2.50 19.41 6.44 21.42 40.30 2.56 3.71 3.66 100
1878 3.02 18.63 5.39 22.06 41.04 2.55 4.07 3.24 100
1879 3.00 17.75 4.17 21.71 40.02 2.58 7.72 3.05 100
1880 3.10 16.65 4.18 22.16 39.60 2.63 8.30 3.38 100
1881 3.20 14.33 4.65 26.27 34.08 2.32 10.83 4.32 100
1882 2.78 14.82 4.45 31.10 35.03 2.79 5.30 3.73 100
1883 2.87 16.04 4.14 29.08 35.86 2.74 5.52 3.75 100

Next, we may distribute the assets among the respective banks as follows, including the Austro-Hungarian, stated in millions of florins and percentages:

Coin Reserve and Coin Bills of Exchange. Cash. Exchequer Bills, Savings Deposits, and Money Orders. Bills on Hand. Coin Reserve and Coin Bills of Exchange. Cash. Exchequer Bills, Savings Deposits and Money Orders. Bills on Hand.
Austro-Hungarian Bank 200.94 2.44 169.34 34.04 0.41 28.69
Discount, deposit, and loan banks:
In Vienna 6.22 44.10 10.07 71.43
In the provinces 2.27 35.94 3.44 54.48
Total 8.49 80.04 6.65 62.68
Crédit mobilier banks:
In Vienna 14.56 0.17 67.44 3.67 0.04 16.99
In the provinces 0.79 0.84 10.81 1.90 2.02 26.06
Total 15.35 1.01 78.25 3.50 0.23 17.85
Mortgage credit institutions:
Joint-stock mortgage banks 4.10 6.44 9.11 1.54 2.43 3.43
Mutual liability companies 1.44 4.78 0.01 0.81 2.69 0.01
Mtge. department of savings-banks 0.40 1.46 1.42 5.23
Total 5.94 12.68 9.12 1.26 2.69 1.94
People’s banks 0.04 0.56 2.56 33.87
Pawn concerns 0.38 0.63 3.07 4.99
Total 200.94 32.64 13.69 337.94 12.24 1.98 0.83 20.58
Edition: current; Page: [135]

The several headings of the assets columns below express the sundry departments of business; nearly all of which require special technical direction. That direction implies an adaptation to banks of the general economic principle known as division of labor. (We are at present quoting from Dr. Heinrich Rauchberg.)

Assets, 1883—Million Florins, Austrian Standard.
CATEGORY OF BANKS. Commercial Effects and Securities. Coupons and Interest. Loans. Merchandise. Mortgage Loans. Real Estate and Building Lots. Advances on Merchandise and Securities. Foundation Expenses and Inventory. Sundry Assets. Total Assets, 1883.
Austro-Hungarian Bank 4.11 0.15 79.45 86.99 2.91 30.03 13.92 590.28
Discount, deposit, and loan banks:
In Vienna 0.98 0.51 1.62 7.46 0.03 0.81 61.73
In the provinces 1.52 0.02 23.01 0.08 1.60 0.87 0.07 0.60 65.98
Total 2.50 0.02 23.52 0.08 3.22 8.33 0.10 0.41 127.71
Crédit mobilier banks:
In Vienna 29.15 0.17 241.67 0.23 11.08 29.31 0.15 2.94 396.87
In the provinces 2.14 0.02 9.85 8.17 4.88 3.92 0.04 0.04 41.50
Total 31.29 0.19 251.52 8.17 0.23 15.96 33.23 0.19 2.98 438.37
Mtge. credit institutions:
Joint-stock mtge. banks 5.50 0.01 26.48 196.08 6.96 8.57 0.05 2.20 265.50
Mutual liability co’s 3.73 3.59 1.53 161.29 0.92 0.34 0.05 0.13 177.81
Mtge. dept. of savings-banks 0.18 0.04 19.30 0.36 0.07 6.11 27.92
Total 9.23 3.78 28.05 376.67 8.24 8.98 0.10 8.44 471.23
People’s banks 0.04 0.50 0.09 0.25 0.14 1.62
Pawn concerns 0.49 0.22 2.12 0.02 1.37 7.23 0.03 0.02 12.51
Total 47.66 4.36 385.16 8.17 464.08 31.70 88.05 0.42 26.91 1641.72
Edition: current; Page: [136]

The following statement gives the same items in percentages:

CATEGORY OF BANKS. Commercial Effects and Securities. Coupons and Interest. Loans. Merchandise. Mortgage Loans. Real Estate and Building Lots. Advances on Merchandise and Securities. Foundation Expenses and Inventory. Sundry Assets. Total Assets, 1883.
Austro-Hungarian Bank 0.70 0.02 13.46 14.74 0.49 5.09 2.36 100
Discount, deposit, and loan banks:
In Vienna 1.58 0.83 2.63 12.09 0.05 1.32 100
In the provinces 2.29 0.04 34.87 0.13 2.42 1.32 0.10 0.91 100
Total 1.95 0.02 18.42 0.06 2.52 6.52 0.07 1.11 100
Crédit mobilier banks:
In Vienna 7.35 0.04 60.89 0.06 2.79 7.39 0.04 0.74 100
In the provinces 5.14 0.06 23.72 19.70 11.75 9.45 0.10 0.10 100
Total 7.14 0.04 57.38 1.87 0.05 3.64 7.58 0.04 0.68 100
Mtge. credit institutions:
Joint-stock mtge. banks 2.07 0.01 9.97 73.85 2.62 3.23 0.02 0.83 100
Mutual liability co’s 2.10 2.02 0.86 90.71 0.52 0.19 0.02 0.07 100
Mtge. dept. of savings-banks 0.67 0.16 69.10 1.27 0.25 21.88 100
Total 1.96 0.80 5.95 79.93 1.75 1.91 0.02 1.79 100
People’s banks 2.94 0.26 30.45 5.57 14.61 0.44 9.30 100
Pawn concerns 4.00 1.65 16.99 0.16 11.02 57.79 0.23 0.10 100
Total 2.90 0.30 23.45 0.50 28.27 1.93 5.36 0.02 1.64 100
Profit and Loss Account for a Series of Years, expressed in Millions of Florins, Austrian Standard.
YEARS. PROFIT (+) OR LOSS (-) FOR ALL THE JOINT-STOCK BANKS, EXCEPT THE AUSTRO-HUNGARIAN. Proceeds of Banks without Joint Stock. Proceeds of the Austro-Hungarian Bank. Profit (+) or Loss (-) of all the Banks, the Austro-Hungarian included.
Vienna. Provinces. Total.
1870 +22.07 + 2.88 +24.95 +0.14 + 8.25 +33.34
1871 +30.63 + 4.01 +34.64 +0.19 + 9.18 +44.01
1872 +67.89 +10.38 +78.27 +0.33 +10.28 +88.88
1873 -43.09 - 7.15 -50.24 +0.27 +10.86 -39.11
1874 + 5.99 + 3.35 + 9.34 +0.45 + 9.09 +18.88
1875 + 1.90 + 2.09 + 3.99 +0.46 + 7.51 +11.96
1876 - 0.21 + 1.73 + 1.52 +0.44 + 7.01 + 8.97
1877 + 7.00 + 2.61 + 9.61 +0.55 + 7.14 +17.30
1878 + 9.32 + 2.40 +11.72 +0.47 + 6.86 +19.05
1879 +13.66 + 2.67 +16.33 +0.33 + 5.85 +22.51
1880 +13.70 + 2.34 +16.04 +0.45 + 5.75 +22.24
1881 +18.45 + 3.24 +21.69 +0.23 + 5.86 +27.78
1882 +16.41 + 3.17 +19.58 +0.13 + 6.62 +26.33
1883 +14.69 + 3.34 +18.03 +0.12 + 6.61 +24.76
Edition: current; Page: [137]
Application of Net Profits for a Series of Years—Percentages.
YEARS. To Interest and Dividends. Tantiemes. Appropriations & Reserve Fund. Other Applications. Total.
1870 78.71 7.25 12.35 1.69 100
1871 82.74 7.53 7.40 2.33 100
1872 64.45 7.50 18.58 9.47 100
1873 84.84 4.27 6.61 4.28 100
1874 68.51 3.83 7.04 20.62 100
1875 51.73 2.44 8.33 37.50 100
1876 71.94 3.07 15.73 9.26 100
1877 79.27 3.78 11.31 5.64 100
1878 75.16 2.95 12.87 9.02 100
1879 71.15 4.73 12.81 11.31 100
1880 73.98 4.90 12.71 8.41 100
1881 77.80 5.28 12.17 4.75 100
1882 81.11 4.50 10.89 3.50 100
1883 82.82 3.98 10.18 3.02 100


These institutions were legally organized toward the close of 1860. The Imperial Diet, in considering measures to be adopted, very carefully avoided the mistake of the German Empire, and gave no advantage to the rich over the poor. The matter of limited or unlimited liability was left optional with the organizing members. In practice, the societies are about equally divided. However, this remarkable fact was observed in the stormy years following the crisis of 1873, that the number of unlimited societies which fell into bankruptcy was much greater than that of bankrupt limited societies. There was the same reason for this as in England; namely, that in case of unlimited liability, the partners feel too much confidence in the directors and attach too little importance to cautious management. In Austria, co-operative societies have not attained wide development; there were too many older, powerful savings institutions, not to mention the new and admirable postal savings-banks, with their highly successful system of cheques. Lastly, there is the effectual competition of many local and provincial banks. The transactions of these societies are therefore very modest; their savings deposits are usually in sums less than 100 florins, and only in exceptional instances do the separate sums amount to 3000, 4000, or 7000 florins. Data furnished by the Austro-Hungarian financial year-book, “Compass,” are so meagre that we shall not attempt any tabulated statements.


In the front rank of savings-banks appears the Postal Savings-Bank, which has by far the most perfect organization. Founded as recently as 1883, this Edition: current; Page: [138] institution soon spread into fourteen of the Crown lands; and when the department of cheques, or money orders, was added to its business, all classes of society patronized its bureaus. The number of its customers in 1894 was about 2,000,000, and their deposits amounted to more than 124,000,000 florins. There were over 1,000,000 depositors under twenty years of age, one-third of whom were children under ten years. Transactions in cheques and clearances amounted to 46,000,000 florins in 1884, 265,000,000 florins in 1885, and above 1,367,000,000 in 1894. The secret of this prodigious activity is quite simple, in that the whole transfer of payments is gratuitous. Every postal savings-bank money order, drawn by any depositor, is at once made payable in cash and receipted at any post-office in any part of the Empire, without cost of postage or other charges whatsoever.

For further data, see Appendix.

Edition: current; Page: [139]



PRIVATE banking in Hungary received its main impulse about the time of the crisis of 1873, when many joint-stock companies came into being. The Hungarian soil is a fruitful field for credit operations, for it is the most fertile in Europe, and the climate is mild. Moreover, land is cheap and wages are lower than in most of the Austrian provinces. Under such conditions, interest on movable capital is high, greatly varying also according to the different counties. Only ten years ago, the interest rates of savings-banks ranged from four and a half to twelve per cent.; and fifteen years ago, the State itself had to pay nine per cent. on loans at short sight. But such excessive rates have given way to the powerful financial revolutions of the past decade. The State now pays only four per cent. on its gold rentes; and the Austro-Hungarian Bank maintains a very constant interest rate of four and a half to five per cent. By the revised Bank Act of 1887, the appropriation to the Austro-Hungarian Bank for discounts in Hungary was materially increased, and the same bank’s Hungarian mortgage loans rose to 90,000,000 florins. Again, Hungary’s liberal concessions to foreign industrial enterprises, in the way of periodical abatement of taxes, customs, and State railway freights, offer potent inducements to outside capital. In 1882, there were 113 discount and commercial banks in Hungary and 289 co-operative banking societies, with rates of discount ranging from four to fourteen per cent., and of interest on loans from six to ten per cent. Interest-bearing deposits, for which certificates or bonds are issued, yielded from three and a half to four and a half per cent. We append a table showing the condition of the aggregate Hungarian joint-stock banks and credit institutions from 1873 to 1882, inclusive, stated in Austrian florins:

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YEARS. Shares Paid In. Reserve Fund. Deposits and Interest. Profits. Bills of Exchange. Advances. Mortgage Loans on Real Estate. Debtors in Accounts Current. Market Value of Securities. Cash.
1882 22,924,407 14,297,140 293,809,574 5,714,400 109,063,374 9,777,117 109,060,912 5,872,572 75,992,827 8,349,620
1881 21,100,985 13,072,129 283,696,713 5,806,384 103,357,781 7,390,900 101,393,576 9,124,895 70,777,433 8,969,350
1880 20,802,965 10,337,968 260,022,068 5,392,933 95,641,828 7,508,506 98,305,789 5,455,429 66,817,670 7,860,682
1879 20,274,689 7,640,767 242,838,115 5,329,824 91,730,519 7,232,267 94,583,415 5,617,281 48,273,933 7,766,435
1878 19,671,009 5,172,157 215,680,148 4,662,652 83,354,953 7,766,093 90,568,158 6,057,566 35,843,060 6,689,544
1877 19,794,784 4,361,803 206,291,870 4,625,822 75,939,034 8,432,853 90,080,780 3,866,520 32,048,127 6,117,339
1876 19,775,220 3,641,816 189,713,114 4,250,591 71,468,221 8,067,143 88,323,444 3,090,146 24,627,938 5,948,854
1875 19,499,152 3,401,398 173,631,413 4,130,233 67,608,373 9,817,226 80,836,320 3,082,627 23,022,717 5,217,053
1874 18,217,014 3,140,092 158,931,264 4,197,893 65,158,472 1,237,839 77,436,174 2,741,097 20,172,328 6,573,933
1873 17,201,766 2,695,819 152,092,648 3,762,069 61,642,511 1,932,058 75,076,378 2,264,484 16,532,364 5,890,092


In addition to the mortgage department of the Austro-Hungarian Bank, there were five independent mortgage credit institutions in Hungary in 1882. Certain Vienna mortgage banks also had considerable business with Hungary. The prevailing discount rate was from four to seven per cent.; the rate on dead-pledge loans, four and a half to seven per cent., and on mortgage loans, four and a half to eight per cent., besides the usual fees, or according as an amortization charge is stipulated or not. Mortgage banks pay from four to five per cent. on deposits. Three of these five Hungarian mortgage banks are located in Buda-Pesth, one is at Sopron, and the fifth at Hermannstadt, or Nagy-Szeben. We append their balances for 1876-1882:

Edition: current; Page: [141]
Hungarian Mortgage Banks, Assets for 1876-1882, in Austrian Florins.
YEARS. Bank Bills. Credit Bills. Securities and Pledges. Mortgage Loans on Real Estate. Loans by Promissory Notes. Debtors in Accounts Current Market Value of Securities. Inventory and Value of Movables. Losses and Transient Items. Remaining Assets. Cash. Total Assets.
1882 2,870,423 968,796 95,069,130 5,215,687 16,747,167 1,374,455 4,554,703 774,583 127,574,944
1881 2,699,981 4,463,921 81,376,861 5,911,664 13,523,191 1,385,388 5,260,521 793,951 115,415,478
1880 3,195,406 1,449,449 72,264,256 9,995,830 8,138,621 1,751,936 4,337,641 912,171 102,045,310
1879 2,963,779 3,245,518 63,437,353 3,682,086 5,493,959 2,080,052 3,617,749 751,874 85,272,370
1878 1,207,362 38,350 64,085 62,516,289 7,509,467 6,227,393 1,939,825 2,618,352 2,627,976 525,509 85,274,608
1877 1,385,934 42,745 70,068 59,797,334 42,827 2,664,210 7,035,230 1,712,223 3,063,758 2,883,648 531,796 79,229,773
1876 4,150,900 50,774 74,787 57,959,396 40,479 2,730,044 5,968,247 1,727,913 2,950,306 2,414,372 678,817 78,746,037
Hungarian Mortgage Banks, Liabilities for 1876-1882, in Austrian Florins.
YEARS. Statutory Capital Stock. Shares Paid In. Capital Investments. Reserve Fund. Creditors’ Surety and Reserve Fund. Savings Deposits and Interest. Exchequer Bills & Drafts in Circulation (or outstanding). Acceptances in Circulation. Creditors in Accounts Current. Mortgage Bonds. Sundry Liabilities. Profits. Total Liabilities.
1882 20,480,000 12,210,326 7,077,840 190,408 585,375 357,600 5,925,261 95,352,710 3,278,979 2,596,445 127,574,944
1881 20,450,000 12,228,326 6,830,702 100,865 540,069 422,000 4,978,152 84,442,360 3,452,160 2,420,844 115,415,478
1880 50,540,000 7,958,000 6,937,002 423,111 554,900 162,785 6,534,611 74,181,220 3,322,075 1,971,606 102,045,310
1879 35,540,000 7,678,000 4,747,071 330,997 391,081 4,299,967 63,326,550 2,584,729 1,913,975 85,272,370
1878 36,290,000 11,840,140 5,428,954 6,775 510,871 416,100 2,127,044 62,185,985 1,840,986 916,553 85,274,608
1877 36,290,000 8,978,000 5,198,877 6,504 403,043 387,013 1,999,167 59,805,694 1,860,516 590,959 79,229,773
1876 36,230,000 8,960,000 21,290 3,834,858 6,788 233,160 558,441 2,741,309 57,910,790 4,275,272 445,629 78,746,037
Edition: current; Page: [142]


To pass on ten years, in 1892 there were 203 discount and loan banks in Hungary; six mortgage credit banks; 660 co-operative banking societies, besides 101 in Croatia-Slavonia, and four banking establishments in the strongly Italian-savored port, Fiume. To all these we may add 505 savings-banks, which commonly engage in banking operations, receiving and placing deposits, investing in mortgage loans, making advances on securities, and discounting bills. Official returns show that at the close of 1892, and inclusive of the savings-banks, 1479 credit organizations in the Hungarian Kingdom owned a paid capital stock of 111,920,000 florins, of which 37,930,000 florins were in joint-stock shares; 50,360,000 florins in the general reserve fund; 17,020,000 florins constituted a special reserve; 940,000 florins a surety fund for creditors; and, in fine, the total controlled capital was 218,180,000 florins. The liabilities included 661,900,000 florins in savings deposits; 7,650,000 florins in deposits and cheques; 9,950,000 florins in outstanding acceptances; 160,700,000 florins in accounts current; 225,880,000 florins in mortgage bonds debit, and a profit balance of 22,970,000 florins. Liabilities all told amounted to 1,455,500,000 florins. Total profits came to ten and a half per cent. of the net capital. At the close of 1892, discounts amounted to 366,300,000 florins; surety bills, 7,400,000 florins; loans on securities, accepted bills, and mortgage loans, 446,700,000 florins; obligations, 188,590,000 florins; bank accounts, 120,400,000 florins; securities, inventory, and real estate, 28,900,000 florins; other claims and current items, 60,400,000 florins; cash, 25,530,000 florins; total assets, 1,455,500,000 florins (not so by the addition of all the reported items). In percentages on the savings deposits and interest due, discounts amounted to 507/10 per cent.; surety acceptances, 11/10 per cent.; loans, 11 per cent.; mortgage loans, 674/10 per cent.; obligations debit, 195/10 per cent.; securities, 195/10 per cent.

Our latest reports (see Appendix) include the balances for 1894. The most striking feature of affairs from 1885 to 1894 is the enlarged rôle of the Austro-Hungarian Bank in Hungary. Owing to the increased statutory provisions of 1887, discounts in the Hungarian department of the Austro-Hungarian Bank rose from a round sum of forty-five million florins to eighty million florins; and mortgage loans from sixty-two million florins to 108,000,000 florins. Of the latter total, twenty-one million florins were loaned on houses; eighty million florins on estates, and seven million florins on small properties.

At the close of 1894 the Austro-Hungarian Bank had twenty-one branches and eighty accessory branches in Hungary, besides the headquarters in Buda-Pesth. Of the Bank’s total transactions for 1894, amounting to 2,311,775,000 florins, 555,478,000 florins fell to Hungary; 1,756,297,000 florins to Austria. Its discounts were 433,070,000 florins in Hungary; 643,370,000 Edition: current; Page: [143] florins in Austria. Loans, 37,593,000 florins in Hungary; 117,185,000 florins in Austria.

Status of the Austro-Hungarian Bank in Hungary, 1881-94, expressed in Thousands of Florins.
YEARS. Bills Portfolio at the Beginning of the Year. VALUE OF BILLS. Close of the Year.
Collected during the Year. Discounted during the Year.
Average 1881-1885 44,345 220,185 219,667 44,863
Average 1886-1890 49,848 244,616 241,671 52,793
1891 57,228 336,487 320,293 73,422
1892 73,422 325,807 330,411 68,818
1893 68,818 427,565 414,906 81,477
1894 81,477 433,070 436,323 78,224
YEARS. Beginning of the Year. Loaned in course of Year. Standing at close of Year. On Houses. On Estates. On small Properties.
Average, 1881-1885 61,214 10,914 62,224 7,684 49,453 5,087
Average, 1886-1890 73,950 11,624 78,530 11,570 61,583 5,377
1891 87,662 11,414 91,133 16,366 68,662 6,105
1892 91,133 9,321 95,963 18,160 71,493 6,310
1893 95,963 10,714 101,129 19,488 74,878 6,763
1894 101,129 17,658 108,379 21,057 80,005 7,371

From the financial year-book, “The Compass,” for 1896, we borrow the following data: At the close of 1894 there were 835 banking concerns in Hungary, and 782 of them published their balances. These 782 concerns represent a total of assets reaching 158,450,000 florins, and 124,740,000 florins of liabilities. The balances at the end of 1894 gave 33,710,000 florins net income, only seven banks showing a small loss. The net income was shared by seven mortgage banks with 11,770,000 florins; by ten Buda-Pesth banks and savings-banks with 24,470,000 florins, and 752 provincial institutions with 11,240,000 florins. In the average, each institution gets 750,000 florins, equal to 24.8 per cent. of the joint stock. Each provincial bank gets 14,948 florins, or 18.7 per cent. of the capital. The reserve fund had been increased in 1894 by 7,560,000 florins (or 49.89 per cent. of the joint-stock capital).

The total of the savings deposits and emitted bonds has reached 1,139,400,000 florins, an increase in 1894 of 76,400,000 florins. Amongst the Edition: current; Page: [144] 158,450,000 florins of assets above mentioned as belonging to 782 institutions are included 1.3 per cent. cash; 7.73 per cent. securities; 1.67 per cent. immovables; 0.05 per cent. inventory; 39 per cent. mortgage loans; 4.91 per cent. loans on securities; 1.27 per cent. obligations and effects; 26.57 per cent. bills of exchange; 11 per cent. diverse debtors; 0.6 per cent. current accounts; 5.4 per cent. investments in large industrial undertakings. Thirty-nine per cent. are therefore invested in mortgage loans and other emissions whose prompt liquidation is not easy.

The liabilities of 124,740,000 florins comprise 9.5 per cent. of capital; 4.72 per cent. reserve fund; 71.9 per cent. bonds and deposits; 0.39 per cent. pension fund; 5.6 per cent. creditors; 1.35 per cent. current accounts; 4.69 per cent. rediscount; 2.13 per cent. net income (or 22 per cent. of the shareholders’ capital). Croatia, which is not included in these figures, has fifty-five balance-sheets from fifty-five institutions, the total number being sixty-six. Those concerns report 60,920,000 florins of assets; 59,960,000 florins of liabilities; 960,000 florins net income, averaging 7.4 per cent. of the capital stock. Of these institutions, thirty banks and savings-banks are at Buda-Pesth, and show the following total balance in 1894: Assets—Cash, 8,890,000 florins; discounts, 99,430,000 florins; loans, 67,710,000 florins; mortgage loans, 424,230,000 florins; securities and effects, 72,140,000 florins; investments in industrial undertakings and banking concerns, 361,000 florins; in immovables, 7,440,000 florins; syndicates, 112,610,000 florins; inventory, 310,000 florins; transient items, 9,980,000 florins. Total, 885,940,000 florins. Liabilities—Joint stock, 90,440,000 florins; reserve fund, 45,060,000 florins; pension fund, 2,650,000 florins; acceptances, 6,520,000 florins; deposits, bonds, cheques, 644,290,000 florins; transient items, 11,570,000 florins; creditors, 62,940,000 florins; net income, 22,470,000 florins. Total, 885,940,000 florins.


A detailed account of all the prominent Hungarian joint-stock banks would be too voluminous to present here; but we must make an exception in the case of the Hungarian General Credit Bank, which is a financial rival of the Austrian Credit Bank, and plays the same part in Buda-Pesth as the latter in Vienna. It was founded in 1867, and its charter was last revised in 1891. The capital stock at first stood nominally at 15,000,000 florins, in 75,000 shares, of which forty per cent. was paid in. This made an effectual stock of 6,000,000 florins; increased to 12,000,000 florins in 1872; reduced to 10,000,000 florins in 1877, and again increased, to 14,000,000 florins in 1890. Shares held by the Austrian Credit Bank to an amount of 3,000,000 florins were paid back; and the latter institution’s interests in the Hungarian Credit Bank were cut down to twenty-five per cent. after 1892. Other shareholders were allowed to hold two new shares to each of their former shares fully paid in. The purchase price of the new shares was 290 florins Edition: current; Page: [145] each, with the addition of five per cent. interest dating from January 1, 1891. The business development of this institution is outlined in tables reserved for the Appendix.


In 1882, there were two hundred and eighty-nine co-operative societies, or “people’s banks,” in Hungary, whose rates of discount varied from six to twelve per cent., and of interest on loans from eight to ten per cent. They paid from four to six per cent. on deposits at short sight, and five to eight per cent. on those of longer dates. We append balances for the period 1877-82, the values being expressed in Austrian florins:

YEARS. Capital Stock. Savings Deposits and Interest. Profits. Bills of Exchange. Advances. Mortgage Loans. Promissory Notes. Cash.
1882 15,717,885 13,371,328 4,205,401 16,898,773 958,150 1,061,220 13,408,364 949,466
1881 15,184,088 11,688,233 1,116,850 10,961,900 506,169 4,274,270 11,609,210 866,755
1880 14,752,024 10,418,570 1,217,012 8,821,467 689,932 3,936,105 12,008,240 794,160
1879 14,031,746 9,241,712 1,112,689 8,467,790 521,349 3,359,475 10,898,481 865,132
1878 13,059,386 7,872,603 1,077,642 8,034,237 503,309 2,874,337 10,079,564 707,340
1877 12,546,544 7,119,854 926,654 7,712,080 404,608 2,452,641 9,384,649 588,314

The status of 660 Hungarian co-operative societies was ascertained in 1892. Their assets ranged between 100 and 1200 florins each, and their dividends from 4 to 14 florins. Discounts ranged from 100 to 700 florins. Loans on pledges and securities varied from 100 to 1000 florins; mortgage loans, from 100 to 1100 florins. These facts singularly illustrate how, in Hungary, the poorest classes combine to protect and utilize their very small earnings, and experience seems to indicate that they manage this business with entirely satisfactory results.


Savings-banks do a large business for the general public, especially in the rural country and in small towns; or in localities not directly reached by the Austro-Hungarian Bank, nor by private discount banks. Both with respect to the number of new bureaus and to the sum total of deposits, the savings-banks Edition: current; Page: [146] have shown constant growth. In 1882, there were 335 savings-banks in Hungary; which rated their discounts in proportion to the fertility of the soil and the density of population. The range was from four and a half to twelve per cent. and the prevailing average seven per cent. But since Hungary reorganized her budget, and also in consequence of the international market adjustments, the former high rates have declined; and the national currency reforms have had their effect. In a word, savngs-banks have been influenced greatly to their advantage by the universal improvement in financial methods. By 1894, the number of these banks in Hungary had increased to 505. The following table gives data for 1873-1882:

Statistics of Hungarian Savings-Banks, 1873 to 1882, stated in Austrian Florins.
YEARS. Shares Paid In. Reserve Fund. Deposits and Exchequer Bills. Creditors In Accounts Current. Profits. Bills of Exchange. Advances. Debtors in Accounts Current. Market Value of Securities. Cash.
1882 48,987,201 6,071,917 50,895,508 33,166,620 4,892,167 60,318,620 11,094,835 29,736,729 13,381,341 4,207,822
1881 38,863,086 2,841,543 46,044,893 34,490,415 3,942,497 51,791,910 10,850,699 29,529,310 11,350,673 4,495,536
1880 32,991,969 2,449,496 40,024,090 23,954,550 3,183,256 49,503,630 7,980,377 17,557,228 8,942,443 3,411,302
1879 27,137,184 1,992,631 34,512,158 19,978,804 3,288,065 46,191,496 7,232,786 16,014,905 4,693,261 2,937,642
1878 27,608,384 1,724,473 29,699,741 13,161,481 3,010,993 44,047,540 4,479,987 10,505,583 4,440,295 1,970,709
1877 31,526,622 1,280,980 27,426,561 12,791,197 2,960,230 40,782,659 4,836,446 12,715,868 4,670,379 2,025,992
1876 38,292,405 1,081,872 26,493,689 13,189,179 1,861,183 36,977,440 4,644,058 11,608,915 7,549,570 2,001,662
1875 48,951,631 1,110,917 24,116,359 11,688,320 1,878,277 33,397,657 6,126,994 13,477,734 10,197,179 2,586,888
1874 54,181,655 1,448,632 24,261,061 16,109,983 3,132,250 35,156,368 6,089,971 17,003,304 9,163,183 2,350,778
1873 52,806,342 1,528,454 23,551,069 28,264,521 2,650,036 30,962,833 8,584,422 28,140,952 9,176,271 2,467,301
Edition: current; Page: [147]
Summarized Balance of 437 Hungarian Savings-Banks, 1890, stated in Austrian Florins.
Bills of exchange 188,158,200 Capital stock paid in 31,595,900
Mortgage loans 156,970,100 Reserve fund 16,044,700
Advances 17,147,200 Deposits 452,018,900
Securities 74,485,600 Rediscounts 15,026,600
Various investments 102,136,400 Sundry liabilities 51,640,400
Real estate 14,190,400 Profits for 1890 8,435,500
Cash 10,723,900
Other assets 10,950,200
Total 574,762,000 Total 574,762,000
Dividends paid for 1890 5,613,833
Deposits brought over from 1889 +32,764,400
Summarized Balance of 35 Croatian Savings-Banks, 1890, stated in Austrian Florins.
Bills of exchange 11,870,200 Capital stock paid in 1,343,700
Mortgage loans 6,998,800 Reserve fund 1,038,400
Advances 1,023,200 Deposits 22,679,400
Securities 4,235,600 Rediscounts 1,037,500
Various investments 907,500 Sundry liabilities 1,040,500
Real estate 1,542,500 Profits for 1890 367,100
Cash 532,800
Other assets 396,000
Total 27,506,600 Total 27,506,600
Dividends paid for 1890 205,400
Deposits brought over from 1889 +565,700


The Royal Hungarian Post Savings-Bank was instituted in 1886. It shows the following development:

1886. 1893.
Number of bureaus 2,000 3,907
Savings depositors 85,517 234,131
Drawers of cheques (1890) 910 2,568
Clearance patrons (1890) 656 1,751
Deposits 65,714,013 256,029,968
Total deposits, 1886 to 1893 686,990,810
Total payments, 1886 to 1893 672,559,794
Edition: current; Page: [148]

From 1886 to 1893, 568,753 deposit books were given out (421,905 Hungarian, 96,222 Magyar-Teutonic, 20,437 Magyar-Croatian, 17,237 Magyar-Slovak, 7116 Magyar Roumanian, etc.), 334,622 books (58.8 per cent.) were balanced and canceled, while 234,131 remained open and in good order at the end of 1893. 67.5 per cent. of the deposits in 1893 were in sums under five florins. In the department of cheques, or orders, there were 2568 patrons at the close of 1893 (555 in Buda-Pesth, 1173 provincial, 94 Croatian, 728 Austrian, and 18 from other outside countries). 1751 firms or persons took part in the clearance business, which amounted to 51,062,838 florins, and comprised 45,572 transactions. Securities were bought to the amount of 4,876,730 florins. Annuity books were issued to the number of 996.


In our sketch of Austro-Hungarian banking, we may not omit insurance companies; for these are wont to employ their surplus premiums in discounting bills and negotiating loans. Their business in the two States must be treated under one head, as they observe no sharply defined territorial divisions. In addition to the older insurance companies, some of which trace their origin back to the times of Charlemagne (for even then there were insurances against fire and theft)—that is, in addition to fire, life, marine, steam-boiler, plate-glass, cattle, hail, and accident insurance companies—there are also societies for the dower of marriageable daughters, the care of widows and orphans, for the military service, etc. There are forty-eight domestic insurance companies in Austria, thirteen in Hungary, and sixty-eight foreign companies in the whole Empire. Apart from the proper usefulness of these organizations in the way of insuring our population, they procure for us the extra economic advantage of increasing our business buildings. The law requires them all, foreign as well as native, to maintain their own administrative buildings; which condition has been fulfilled with notable magnificence by the New York insurance companies. In both Vienna and Buda-Pesth, they have reared veritable palaces.

Though no summarized accounts are at our command, we may fairly infer from the circumstance that so many companies find profitable occupation in it, that the insurance business is in a flourishing condition, and that losses are on the wane. Damages by fire have been greatly diminished through the excellent improvement of the Fire Department in Vienna.

Edition: current; Page: [149]



For the following tabular statements, with accompanying explanatory remarks, relating to German non-issuing banks in the latter half of the nineteenth century, the author is largely indebted to the “German Ökonomist,” of Berlin.


Capital and Surplus of German Private Banks, as per Annual Statements, 1883-1894.
YEARS. Capital Stock. Surplus. Per Cent. of Surplus.
1883 1,248,700,000 174,400,000 14.00
1884 1,265,700,000 175,100,000 13.83
1885 2,272,200,000 181,800,000 14.30
1886 1,290,200,000 190,900,000 14.80
1887 1,315,500,000 202,700,000 15.40
1888 1,328,100,000 213,300,000 16.10
1889 1,536,400,000 262,100,000 17.06
1890 1,621,600,000 303,500,000 18.72
1891 1,623,900,000 312,400,000 19.24
1892 1,652,800,000 326,000,000 19.72
1893 1,667,800,000 337,800,000 20.25
1894 1,700,400,000 347,000,000 20.41

At the annual settlements, the banks also had the use of the following outside resources, including business profits. The sums are in millions of marks:

RESOURCES. 1886. 1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894.
Due to creditors and profits to be paid 1,041.6 1,050.6 1,180.4 1,489.1 1,296.3 1,290.9 1,292.3 1,344.9 1,638.9
Deposits 607.5 657.7 659.3 759.7 791.7 821.1 789.4 797.7 969.7
Acceptances 457.5 483.6 486.0 562.5 562.6 561.2 586.4 581.5 667.8
2,106.6 2,191.9 2,325.7 2,811.3 2,650.6 2,673.2 2,668.1 2,724.1 3,276.4
Bank notes 1,215.8 1,207.8 1,288.5 1,351.0 1,295.0 1,313.9 1,327.8 1,297.5 1,402.2
3,322.4 3,399.7 3,614.2 4,162.3 3,945.6 3,987.1 3,995.9 4,021.6 4,678.6
Mortgage bonds 2,123.5 2,268.4 2,523.1 2,859.3 3,081.7 3,353.4 3,721.3 4,001.1 4,490.8
5,445.9 5,668.1 6,137.3 7,021.6 7,027.3 7,340.5 7,717.2 8,022.7 9,169.4
Cash 977.4 1,059.1 1,168.5 1,096.0 1,125.1 1,282.3 1,207.3 1,176.2 1,431.0
Discounts 1,342.7 1,401.0 1,415.3 1,762.4 1,718.5 1,702.9 1,799.7 1,841.0 2,040.8
Bills of exchange 1,277.0 1,364.0 1,307.5 1,583.1 1,670.0 1,661.8 1,650.6 1,611.5 1,736.1
Effects 533.2 454.2 482.9 408.2 408.7 474.0 466.6 489.9 538.3
Loans on securities 438.5 384.0 523.0 791.5 643.4 508.5 550.7 556.0 647.1
4,568.8 4,662.4 4,897.2 5,641.2 5,565.7 5,629.5 5,674.9 5,674.6 6,394.8
Mortgages, etc 2,343.8 2,511.4 2,770.8 3,166.9 3,377.7 3,640.3 4,016.2 4,349.9 4,816.9
Total 6,912.6 7,173.8 7,668.0 8,808.1 8,943.4 9,269.8 9,691.1 10,024.5 11,211.0

The influence of changes in the money market may be distinctly observed in the ascending amount of acceptances and loans on securities. The statements attest a high degree of steadiness, which, however, is not so much owing to industrial causes as to the efforts of many banking concerns to prevent an undue fluctuation in dividends. By careful methods of balancing accounts, provision is made in favorable years for unfavorable times to come. We may here call attention to the fact that recent dividends, on an average, have not been lower than six and nineteen-hundredths per cent., nor higher than eight and nine-hundredths per cent. The variation in Bourse rates finds expression in the average per cent. of dividends as follows:

Per Cent. of Dividends.
1883 6.74
1884 6.74
1885 6.35
1886 6.19
1887 6.33
1888 7.10
1889 8.09
1890 7.60
1891 6.50
1892 6.20
1893 6.25
1894 6.74

The average dividends for 1893 and 1894 may be further classified, with respect to the several kinds of banks:

Per Cent. of Dividends.
Banks of issue 6.68 in 1893; 5.69 in 1894.
Mortgage banks 7.68 in 1893; 7.94 in 1894.
Banks of deposit 5.72 in 1893; 6.49 in 1894.

For payment of dividends in 1894, 113,550,000 marks were required out of gross profits amounting to 199,600,000 marks. The stock on which these dividends were based amounted to 1,685,300,000 marks in 1894; the corresponding stock for 1893 was 1,656,700,000 marks. Subscriptions were credited in 1894 to the amount of 12,100,000 marks; and reserve funds were endowed to the amount of 10,000,000 marks. We must not omit to mention that bank expenses have almost doubled in the past twelve years, and in 1894 amounted to some 48,666,000 marks. The reasons are, increased numbers of bank officials, higher salaries, greater taxes, and more comfortable equipment and furniture. The greatest general progress in German banking is shown by the banks of Berlin. We subjoin comparative balances of the collective private banks:

Edition: current; Page: [151]
Balances of all Private Banks (in Millions of Marks).
Number of Banks. Business Year. Cash. Bills of Exchange. Loans on Securities. Effects, Etc. Debtors, Branches, Etc. Real Estate Mortgages. Premiums.
137 1894 1,431.8 1,736.1 647.1 538.3 2,040.8 4,816.9 5.8
133 1893 1,176.2 1,611.5 556.0 489.9 1,841.0 4,349.9 3.8
134 1892 1,207.3 1,650.6 550.7 466.6 1,799.7 4,016.2 4.8
135 1891 1,282.3 1,661.8 508.5 474.0 1,702.9 3,640.3 7.0
136 1890 1,125.1 1,670.0 643.4 408.7 1,718.5 3,377.7 9.1
137 1889 1,096.0 1,583.1 791.5 408.2 1,762.4 3,166.9 11.9
114 1888 1,168.5 1,307.5 523.0 482.9 1,415.3 2,770.8 11.8
115 1887 1,059.1 1,364.1 384.0 454.2 1,401.0 2,511.4 12.6
116 1886 977.4 1,277.0 438.5 533.3 1,342.7 2,343.8 13.8
113 1885 906.1 1,248.2 362.6 493.2 1,327.2 2,143.7 11.9
113 1884 803.9 1,246.7 499.8 473.9 1,199.1 2,068.6 13.6
113 1883 827.1 1,203.2 392.7 461.6 1,079.6 1,957.5 12.8
Number of Banks. Business Years. Capital Stock. Creditors and Profits, Etc. Deposits. Acceptances. Surplus. Bank Notes and Letters of Mortgage. Total for Both Sides.
137 1894 1,700.4 1,638.9 969.7 667.8 347.0 5,893.0 11,216.8
133 1893 1,667.8 1,344.9 797.7 581.5 337.8 5,298.6 10,028.3
134 1892 1,652.8 1,292.3 789.4 586.4 326.0 5,049.1 9,695.9
135 1891 1,623.9 1,290.9 821.1 561.2 312.4 4,667.3 9,276.8
136 1890 1,621.6 1,296.3 791.7 562.6 303.5 4,376.7 8,952.4
137 1889 1,536.4 1,489.1 759.7 562.8 262.1 4,210.3 8,820.0
114 1888 1,328.1 1,180.4 659.3 486.0 213.3 3,811.6 7,679.9
115 1887 1,315.5 1,050.6 657.7 483.6 202.7 3,476.2 7,186.2
116 1886 1,290.2 1,041.6 607.5 457.0 190.9 3,339.3 6,926.5
113 1885 1,272.2 999.1 612.7 422.0 181.8 3,004.8 6,492.8
113 1884 1,265.7 940.4 595.9 409.6 175.1 2,918.3 6,305.9
113 1883 1,248.7 768.9 514.7 374.5 174.4 2,769.4 5,934.5

After the City Bank of Breslau had renounced its right of issue, only eight banks of issue, including the Imperial Bank, were operating in 1894. The note circulation and coin reserve of all these remaining issuing banks collectively appear in the following table, stated in millions of marks:

END OF Note Circulation. Coin Reserve.
1883 1,030.2 703.2 = 68.2 p. c.
1884 1,061.9 663.4 = 62.4 p. c.
1885 1,063.2 769.5 = 70.4 p. c.
1886 1,215.8 819.6 = 67.7 p. c.
1887 1,207.8 900.0 = 74.5 p. c.
1888 1,288.5 987.3 = 76.7 p. c.
1889 1,351.0 869.2 = 64.3 p. c.
1890 1,295.0 900.9 = 70.0 p. c.
1891 1,313.9 1,043.6 = 79.4 p. c.
1892 1,327.8 974.7 = 73.4 p. c.
1893 1,297.5 929.5 = 71.6 p. c.
1894 1,402.2 1,150.2 = 82.1 p. c.
Edition: current; Page: [152]


The Bank Act prescribes that one-third of the notes shall be covered by coin or bullion; but the foregoing figures show that the average reserve of all the banks at the annual settlement of accounts was generally in more than twice that ratio. The maximum amount and proportion of the reserve appear at the close of 1894. The relation between reserve and notes is always much stronger on the side of coin, in case of the Imperial Bank, than with other banks of issue, as will appear from the following comparison, stated in millions of marks:

Note Circulation. Coin Reserve. Note Circulation. Coin Reserve.
1883 829.7 592.0 = 71.3 p. c. 200.3 111.2 = 55.6 p. c.
1884 854.1 547.6 = 64.1 p. c. 207.8 115.8 = 55.7 p. c.
1885 859.9 655.6 = 76.3 p. c. 203.3 113.8 = 60.0 p. c.
1886 1,009.5 700.5 = 69.3 p. c. 206.3 119.1 = 57.7 p. c.
1887 1,010.5 794.7 = 78.6 p. c. 197.3 105.3 = 53.3 p. c.
1888 1,093.4 883.5 = 80.8 p. c. 195.1 103.8 = 53.2 p. c.
1889 1,160.5 764.5 = 65.9 p. c. 190.4 104.7 = 55.1 p. c.
1890 1,102.6 788.3 = 71.5 p. c. 192.4 112.6 = 58.5 p. c.
1891 1,122.5 931.8 = 83.0 p. c. 191.4 111.8 = 58.4 p. c.
1892 1,140.2 865.0 = 75.9 p. c. 187.7 109.6 = 58.4 p. c.
1893 1,110.1 826.4 = 74.4 p. c. 187.4 103.1 = 55.0 p. c.
1894 1,211.2 1,041.4 = 86.0 p. c. 191.0 108.8 = 57.1 p. c.

It has often happened, and this for some time past, that the Imperial Bank has carried a coin reserve in excess of its note circulation. As a matter of course, changes in the money market are much more vividly reflected by the Imperial Bank than by the other banks of issue, whose uncovered circulation commonly approximates their authorized contingent, and even frequently oversteps it, thereby incurring the tax on over-issue of notes. The constant increase of coin reserves, almost entirely in gold, triumphantly refutes the bimetallist fairy tales about a dearth of gold.

The following table applies the same comparison to the amount of

Bills of Exchange and Loans on Securities, stated in Millions of Marks:
Bills of Exchange. Loans on Securities. Bills of Exchange. Loans on Securities. Bills of Exchange. Loans on Securities.
1883 467.00 75.86 282.30 34.61 749.90 110.46
1884 511.86 140.12 287.05 31.27 798.91 171.39
1885 461.83 78.94 278.53 33.01 740.35 111.95
1886 546.48 115.55 271.10 35.15 817.58 150.70
1887 564.35 83.92 276.57 34.17 840.93 118.09
1888 517.62 93.07 251.21 41.72 768.83 134.79
1889 653.94 186.22 208.75 39.61 862.70 225.83
1890 613.77 146.13 209.88 36.19 823.66 182.32
1891 572.13 138.61 210.63 26.50 782.76 165.11
1892 606.14 118.90 211.95 25.43 818.09 144.32
1893 604.28 149.16 206.54 28.22 810.82 177.38
1894 602.85 100.38 217.52 23.81 820.37 124.19

As competition between the Reichsbank and the private banks is developing new tendencies as to the distribution of business, it may be proper to remark that the amount of bills of exchange Edition: current; Page: [153] was collectively and considerably greater at the end of 1894 than at the end of 1893. The increase of 10,000,000 marks in the item of bills, however, is offset by a decrease of 53,000,000 marks in the item of loans; the decrease being 49,000,000 marks for the Imperial Bank alone. The explanation is that the credit banks offered their services at such cheap rates that the Imperial Bank could not compete with them without reducing interest still lower; and it is a recognized maxim in discount economy that the Imperial Bank is not obedient to every casual fluctuation of the money market, either above or below par. Its conservative restraint in the matter of loans is especially noteworthy. There is a wide erroneous impression that the Imperial Bank is in a position to grant loans on marketable securities at all times, and can even do so in critical emergencies. This is by no means the fact. The Bank may not use loan securities toward covering notes, and consequently cannot advance notes on paper securities, after other means are unavailable. Such loans may be made from the capital stock and reserve fund, exclusively of real estate; and that has been done even in times of a large general surplus of gold. Ordinary deposits are subject to daily recall, and though a small portion of them can be safely loaned when times are good, such latitude is of necessity precluded in critical conditions of the money market. Deposits practically require a higher grade of contingent liquidation of resources than the bank notes afford; and it is therefore interesting to observe that the deposits and notes together, amounting to 1,885,560,000 marks, were covered with 1,150,190,000 marks in coin and bullion; a round percentage of seventy per cent., or sixty-three per cent. in case of the Imperial Bank alone. But if we separate the deposits from the coin reserve (a more correct process, as we regard it), the cash covering of notes would stand as follows.

Coin Reserve, Excluding Deposits. Note Circulation. Percentage of
MARKS. MARKS. Notes Covered.
Imperial Bank 606,100,000 1,211,200,000 50
Other banks 60,800,000 191,000,000 32

According to this way of reckoning, the Imperial Bank had half its notes covered in coin, seventy-five per cent of which was in gold; and the proportion of notes covered in case of the other banks averaged even less than the legal one-third. We are aware that this view of the matter will be opposed; but it is the strictly correct view, since deposits have nothing to do with the protection of bank notes, being moneys in trust and liable to daily withdrawal. It makes no essential difference in the argument to consider that the Imperial Bank theoretically diminishes the demand of deposits by regarding them as means of balancing bank accounts with patrons.

We subjoin a comparative statement of deposits for 1883-1894:

Deposits of Private Banks and Reichsbank, 1883 to 1894 (in Millions of Marks).
END OF Imperial Bank. Other Banks. Combined Total.
1883 210.15 54.03 264.18
1884 266.38 53.42 319.80
1885 260.26 54.97 315.23
1886 290.25 57.17 347.42
1887 331.88 53.87 385.75
1888 301.90 54.04 355.94
1889 347.84 40.90 388.74
1890 346.93 41.73 388.65
1891 396.40 38.71 435.11
1892 359.27 40.26 399.53
1893 373.24 37.28 410.52
1894 435.30 48.03 483.33

Deposits bear no interest, they constitute the working capital of bank accounts, and furnish means for the continual increase of the gold reserve. They also add to the credit resources of the whole business world; a point necessary to be considered in any general review of cash means at the disposal of banks collectively.

Edition: current; Page: [154]


The number of deposit banks, in 1894, had risen to ninety-six, which, for a period of twelve years (1883-1894), controlled the following resources:

1883 1,961,700,000
1884 2,122,600,000 Increase 160,900,000
1885 2,229,000,000 Increase 106,400,000
1886 2,283,400,000 Increase 54,400,000
1887 2,338,800,000 Increase 55,400,000
1888 2,529,800,000 Increase 191,000,000
1889 3,156,200,000 Increase 626,400,000
1890 3,149,900,000 Decrease 6,300,000
1891 3,104,000,000 Decrease 45,900,000
1892 3,151,500,000 Increase 47,500,000
1893 3,167,300,000 Increase 15,800,000
1894 3,593,500,000 Increase 426,200,000

By grouping some of the principal deposit banks in the order of their available or employed capital, which is a fair indication of their commercial importance, we shall have the following exhibit:

Assets and Capital of Deposit Banks (in Millions of Marks).
1894. 1893. 1892. 1891. 1890.
German Bank 459 426 417 403 423 75
Discount Company 320 276 267 248 266 75
Dresden Bank 270 219 219 186 195 70
Bank for Trade and Industry 201 166 167 172 181 80
Berlin Trading Company 172 154 158 170 134 65
North German Bank 164 146 150 155 145 60
A. Schaaffhausen Bank-Verein 160 129 118 115 98 48
German National Bank 119 94 91 82 90 36
Middle German Credit Bank 90 77 79 83 85 30
Discount and Commercial Bank of Hamburg 81 73 75 67 67 30

The German Bank, at both ends of the given period, shows by far the greatest volume of business; indeed, it is a recognized phenomenon that further development is more constant on high levels than on lower planes. The Discount Company has also taken a great stride forward, though not at the same rapid pace as the Dresden Bank. The amount of outside capital included in the preceding totals we tabulate separately, as below, in millions of marks:

Creditors. Deposits. Total. Creditors. Deposits. Total.
1883 498.51 250.42 749.03
1884 598.44 276.07 874.51
1885 664.43 297.45 961.88
1886 713.31 260.13 973.44
1887 697.44 271.96 969.40
1888 814.96 303.43 1,118.39
1889 1,021.20 370.98 1,392.18 612.68 130.99 743.67
1890 883.23 403.01 1,286.24 510.92 138.14 649.06
1891 895.42 385.96 1,281.38 528.58 105.34 633.92
1892 893.08 389.86 1,282.94 517.91 103.25 621.16
1893 934.31 387.19 1,321.50 533.76 119.90 653.66
1894 1,141.52 486.39 1,627.91 738.42 163.69 902.11
Edition: current; Page: [155]

The Cash Movement.

The movement of money in the principal credit banks for 1890-1894, through creditors’ accounts and deposits, is herewith presented, in millions of marks:

BANKS. 1894. 1893. 1892. 1891. 1890.
German Bank 255.10 221.30 212.54 204.4 208.2
Discount Company 167.79 134.31 120.42 113.7 130.3
Dresden Bank 116.96 82.98 74.48 69.3 75.4
Bank for Trade and Industry 58.72 36.65 35.12 46.9 54.0
Berlin Trading Company 55.84 46.15 49.51 66.2 43.6
North German Bank 62.27 52.41 53.12 52.9 44.4
Schaaffhausen Bank-Verein 64.17 39.80 35.39 35.0 32.5

Additional banking resources were derived from acceptances as below (in millions of marks):

1886. 1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894.
All the banks 419.8 445.7 448.3 516.0 523.2 503.6 534.4 531.5 613.1
Berlin banks 239.6 254.5 281.2 278.0 246.1 283.5 283.4 370.6

Acceptances of Leading Banks.

We next present a comparative tabulation of acceptances (1) for a number of leading banks, and (2) for certain mortgage banks of the mixed system, with acceptances in circulation:

INSTITUTIONS. 1894. 1893. 1892. 1891.
German Bank 93,865,000 96,325,000 96,094,000 89,067,000
Dresden Bank 61,279,000 46,478,000 53,583,000 38,856,000
Discount Company 45,772,000 37,544,000 36,695,000 28,157,000
A. Schaaffhausen Bank-Verein 40,576,000 34,574,000 29,043,000 26,553,000
Bank for Trade and Industry 38,564,000 26,961,000 27,635,000 24,939,000
Middle German Credit Bank 29,330,000 26,865,000 26,106,000 28,331,000
General German Credit Concern 24,257,000 20,917,000 21,750,000 27,351,000
Berlin Trading Company 26,965,000 20,254,000 19,778,000 17,049,000
German Union Bank 18,715,000 20,135,000 23,280,000 22,433,000
Discount and Commercial Bank 23,498,000 19,264,000 19,569,000 14,675,000
German National Bank 20,967,000 17,434,000 14,067,000 8,984,000
North German Bank 24,409,000 16,773,000 19,493,000 25,392,000
German Effects and Exchange Bank 16,646,000 14,700,000 14,642,000 14,156,000
Rhenish Credit Bank 16,127,000 13,914,000 18,232,000 17,639,000
Margraviate and Mining Bank 12,577,000 13,382,000 12,150,000 12,967,000
Union Bank of Würtemberg 10,438,000 10,785,000 11,565,000 15,854,000
D. G.-B. Soergel, Parrisius & Co. 11,799,000 10,335,000 8,695,000 9,877,000
Bank of Bremen 13,687,000 10,160,000 12,826,000 11,606,000
Bavarian Union Bank 9,571,000 9,998,000 10,435,000 7,193,000
Bank of Leipzig 9,035,000 8,485,000 10,275,000 8,544,000
Discount Bank of Breslau 7,354,000 7,458,000 7,565,000 8,041,000
Bank of Mülhausen 5,374,000 7,031,000 4,512,000 5,861,000
Palatinate Bank 10,706,000 6,679,000 5,589,000 5,154,000
Edition: current; Page: [156]
INSTITUTIONS. 1894. 1893. 1892. 1891.
Discount Company of Aix-la-Chapelle 4,646,000 5,333,000 4,446,000 5,593,000
Barmen Banking Company 5,532,000 4,854,000 6,538,000 6,526,000
German Union Bank 2,948,000 4,358,000 5,572,000 4,706,000
German National Bank 3,009,000 3,916,000 2,977,000 2,298,000
Essen Credit Concern 4,657,000 3,618,000 3,982,000 4,025,000
Köster’s Bank 4,298,000 3,486,000 3,522,000 4,010,000
Bavarian Trading Bank 4,145,000 3,486,000 2,864,000 3,267,000
Würtemberg Banking Concern 3,906,000 3,422,000 4,896,000 4,575,000
Bavarian Exchange and Mortgage Bank 4,237,000 3,274,000 3,721,000 2,641,000
Union Bank of Hamburg 1,986,000 3,235,000 2,508,000 4,586,000
Lower Saxon Bank 2,475,000 3,233,000 3,483,000 3,279,000
Silesian Banking Company 3,222,000 2,962,000 2,690,000 3,494,000
Duisburg-Ruhrort Bank 3,537,000 2,549,000 1,826,000 3,236,000
Bank of Alsace-Lorraine 3,520,000 2,534,000 3,023,000 2,729,000
Hamburg Exchange Bank 3,103,000 2,528,000 2,722,000 2,839,000
Breslau Exchange Bank 2,286,000 2,291,000 2,337,000 2,467,000
General Alsatian Banking Company 2,696,000 2,194,000 1,953,000 1,910,000
Exchange and Commercial Bank of Cologne. 2,155,000 1,939,000 2,095,000 2,334,000
Westphalian Bank 1,967,000 1,876,000 1,910,000 1,860,000
Rhenish and Westphalian Bank 1,328,000 1,795,000 1,113,000 718,000
Private Bank of Gotha 1,702,000 1,635,000 1,180,000 883,000
Königsberg Union Bank 1,879,000 1,632,000 1,529,000 306,000
Halle Banking Company 1,121,000 1,295,000 1,256,000 612,000
Private Bank of Magdeburg 2,506,000 1,280,000 806,000
Credit and Savings-Bank of Leipzig 1,753,000 1,262,000 856,000
Dresden Banking Company 1,961,000 1,079,000 1,137,000 768,000
Provincial Bank of Anhalt-Dessau 1,078,000 1,078,000 1,078,000 878,000
German Transmarine Bank 1,404,000 1,069,000 312,000
Dortmund Banking Company 1,504,000 1,022,000 835,000
Brunswick Credit Concern 1,097,000 1,009,000 942,000
Bank of Mannheim 1,998,000
Bank of Osnabrück 1,017,000 865,000

Characteristic of the business movement is the proportion of acceptances in arrear. For 1886-1894 it stood as follows:

Acceptances in Arrear (in Millions of Marks).
1886. 1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894.
Arrears 1,047.1 1,119.4 1,138.2 1,426.2 1,428.5 1,365.3 1,450.9 1,471.1 1,631.4
Accepted 419.8 445.7 448.3 516.0 523.2 503.6 534.4 531.5 613.1
Remain’g arrears 627.3 673.7 689.9 910.2 905.3 861.7 916.5 939.6 1,018.3

This statement shows it to be a constant fact that considerably more than a third of all accounts current is utilized in the way of acceptances. This is mainly done for the sake of procuring cheap money with a view to speculation. A person who wishes to speculate at the Bourse beyond his means goes and opens a bank account credit, then draws on the bank, discounts the bill, often at the bank itself, as a private transaction; and the resulting proceeds are credited to him in cash. The acceptance is made payable three months from date, and for the intervening, visible credit, marketable effects are bought in. Thus the speculator’s account appears well regulated, Edition: current; Page: [157] whereas he is actually speculating with the bank’s credit. Fundamentally considered, these are corrupt transactions, and they powerfully stimulate over-speculation at the Bourse.

The obligations of the banks through borrowing and deposits are presented, in millions of marks, in the following summary for 1886-1894:

1886. 1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894.
Creditors 713.3 697.4 815.0 1,021.2 883.1 895.4 893.1 934.3 1,141.5
Deposits 260.1 272.0 303.4 371.0 403.0 386.0 389.9 387.2 486.4
Acceptances 419.8 445.7 448.3 516.0 523.2 503.6 534.4 531.5 613.1
Profits to be paid out 57.2 57.7 75.4 110.5 98.3 74.1 76.9 71.8 85.1
Total 1,450.4 1,472.9 1,642.1 2,018.7 1,907.6 1,859.1 1,894.3 1,924.8 2,326.1

Available, or theoretically available, resources (as we must consider them in part) were as follows for all the credit banks in the same period of years:

1886. 1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894.
Cash 125.5 136.3 151.2 192.2 190.9 206.6 194.6 213.7 232.6
Bills of exch 459.4 523.2 538.7 584.1 691.2 793.1 737.1 705.0 795.4
Loans on securities 258.9 224.8 344.8 533.9 427.0 306.0 362.4 342.2 469.3
Effects, etc 296.0 288.7 310.4 362.8 355.7 374.9 346.6 375.4 400.2
Total 1,139.8 1,173.0 1,345.1 1,673.0 1,664.8 1,680.6 1,640.7 1,636.5 1,897.3

Immediately available resources, therefore, came short of the obligations by the following sums: 1886, 310,600,000 marks; 1887, 299,900,000; 1888, 297,000,000; 1889, 345,700,000; 1890, 242,800,000; 1891, 178,500,000; 1892, 253,600,000; 1893, 288,500,000; 1894, 428,600,000.

These figures simply indicate the general tendency, which has become less favorable in respect to conditions of liquidation. It is, moreover, to be observed that no collective liquidation can be ordered, but only for each bank separately. This being the case, bare figures are insufficient data for forming an opinion, since very different conditions may exist behind similar sets of accounts. One bank may have all its effects within reach of realization at all times; another may have no effects whatever that can be realized at once. The same is true of collateral loans. At all events, the preceding data reveal a significant tendency, and for this reason we append corresponding figures for the Berlin credit banks, in millions of marks:

Ready Assets of Berlin Credit Banks.
1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894.
Cash 91.05 99.41 131.08 131.86 142.71 114.79 139.34 171.33
Bills of exchange 271.25 280.98 269.15 339.18 407.62 379.41 352.34 415.76
Loans on securities 109.11 211.60 343.59 243.69 123.61 174.67 161.22 282.21
Effects 135.57 158.60 169.84 173.86 202.18 187.59 200.87 230.90
Resources 606.98 750.59 913.66 888.59 876.12 856.46 853.77 1,100.20
Deposits and borrowings of banks 748.35 911.52 1,088.85 979.82 915.65 943.81 970.07 1,319.51
Excess of obligat’ns 141.37 160.93 175.19 91.23 39.53 87.35 116.30 219.31
Edition: current; Page: [158]

From these figures it is apparent that there is a deterioration in conditions of liquidation, in case of the Berlin banks particularly. The numerical expression of this would be 113,000,000 marks for the Berlin banks, to 27,000,000 marks for provincial banks.

The prominent items of loans and “effects” (also including trust payments and a few small mortgages), for the period 1891-1894, are next tabulated from reports of leading institutions:

Loans and Effects of Leading German Banks (in Millions of Marks).
BANKS, ETC. 1891. 1892. 1893. 1894.
Loans. Effects. Loans. Effects. Loans. Effects. Loans. Effects.
German Bank 26.15 39.72 43.66 46.47 34.26 51.95 69.83 65.09
Discount Company 14.94 45.63 11.38 43.61 18.65 50.62 48.58 36.23
Bank for Trade and Industry 22.73 10.85 27.62 10.87 24.07 9.70 30.46 22.90
Dresden Bank 2.05 44.63 33.04 27.67 28.90 27.76 54.13 29.02
Berlin Trading Company 15.38 30.06 16.42 28.70 10.40 29.85 21.13 19.33
Middle German Credit Bank 8.47 7.02 10.61 7.28 11.19 7.00 19.77 6.98
German National Bank 12.09 8.23 10.32 7.17 10.60 12.58 17.74 10.86
North German Bank 19.46 31.23 20.92 30.46 22.02 35.92 15.61 32.16
Commercial Bank of Hamburg 8.35 13.62 8.16 12.23 10.35 11.83 10.47 10.88
Union Bank of Hamburg 15.39 5.19 17.42 5.25 16.88 5.82 15.06 5.84
Schaaff hausen Bank-Verein 14.05 13.40 11.84 16.57 18.77
German Union B’k of Frankfort 3.58 7.12 6.31 6.78 4.20 7.20 9.11 6.79
German Effects and Exch. B’k 2.21 6.11 9.74 4.99 7.21 6.66 9.87 11.88

The capital and surplus of the banks show the following development, stated in millions of marks:

Capital Stock. Surplus. Capital Stock. Surplus.
1883 705.60 90.85 = 13.00 p. c. 1885 326.74 55.08 = 17.00 p. c.
1884 719.48 89.49 = 12.45 p. c. 1886 332.75 59.52 = 18.00 p. c.
1885 723.95 93.24 = 12.90 p. c. 1887 354.75 67.14 = 19.00 p. c.
1886 733.69 99.27 = 13.53 p. c. 1888 368.18 74.03 = 20.11 p. c.
1887 758.00 107.90 = 14.23 p. c. 1889 473.12 103.82 = 22.00 p. c.
1888 772.40 115.32 = 15.00 p. c. 1890 507.45 119.65 = 23.58 p. c.
1889 981.45 156.06 = 15.90 p. c. 1891 481.24 117.91 = 24.50 p. c.
1890 1,054.33 187.88 = 17.82 p. c. 1892 494.39 123.18 = 24.92 p. c.
1891 1,053.21 191.72 = 18.20 p. c. 1893 486.40 117.56 = 24.17 p. c.
1892 1,057.09 200.31 = 18.95 p. c. 1894 534.20 120.49 = 22.56 p. c.
1893 1,046,17 196.33 = 18.77 p. c.
1894 1,067.52 199.82 = 18.72 p. c.

Dividends of Berlin banks have always averaged higher than those of other German banks. We present a table by way of illustration: All the banks—1885, 6.41 per cent.; 1886, 6.43; 1887, 6.53; 1888, 7.79; 1889, 8.64; 1890, 7.60; 1891, 6.11; 1892, 5.80; 1893, 5.72; 1894, 6.49. Berlin Banks—1885, 7.56 per cent.; 1886, 7.34; 1887, 7.60; 1888, 9.11; 1889, 10.49; 1890, 8.69; 1891, 6.77; 1892, 6.03; 1893, 5.73; 1894, 7.14.

A just view of the productiveness of a bank is afforded only as we bear in mind that the reserves themselves are a part of the working capital, from which dividends may be drawn; to this end they contribute quite as effectually as the capital stock. The subjoined statement gives the respective percentages for 1891-1894:

Edition: current; Page: [159]
ITEMS. 1894. 1893. 1892. 1891.
Capital stock 1,057,302,200 1,044,519,000 1,055,276,000 1,048,708,000
Surplus 196,331,000 200,313,000 191,717,000 187,880,000
Working capital 1,253,633,200 1,244,832,000 1,246,993,000 1,236,588,000
Apportioned dividends 68,617,000 59,738,000 61,230,000 64,070,000
Actual per cent. of dividends 5.48 p. c. 4.80 p. c. 4.91 p. c. 5.18 p. c.
Per ct. on capital stock alone 6.49 p. c. 5.72 p. c. 5.80 p. c. 6.11 p. c.

Hence, we perceive that about one per cent. of the dividends is furnished by the reserves; the proportion being higher, of course, where the reserves are large in comparison with the capital stock. In 1894, three banks declared no dividends—the Real Credit Bank and the Börsen-Handels-Verein* of Berlin, and the Maklerbank of Hamburg.


The proportion of capital stock to circulation of mortgage bonds, in 1894, will appear below, for the purely mortgage banks:

Proportion of Capital to Mortgages.

BANKS, ETC. Capital Stock. Circulation of Mortgage Bonds. Number of Times the Capital Stock.
Prussian Central Land Credit Company 21,600,000 433,829,000 20.1
Prussian Joint-Stock Land Credit Bank 30,000,000 188,640,000 6.3
Prussian Joint-Stock Mortgage Bank 15,000,000 223,973,000 14.9
Frankfort Mortgage Bank 12,000,000 214,529,000 17.9
Frankfort Mortgage Credit Union 6,000,000 91,429,000 15.2
Silesian Joint-Stock Land Credit Bank 7,500,000 100,168,000 13.3
German Mortgage Bank, Berlin 5,400,000 67,550,000 12.5
Pomeranian Joint-Stock Mortgage Bank 9,000,000 90,866,000 10.1
National Mortgage Credit Society 629,000 42,736,000 67.9
North German Land Credit Bank 4,500,000 40,011,000 8.8
German Mortgage Bank 6,000,000 87,159,000 14.5
West German Land Credit Concern 5,000,000 12,193,000 2.4
Joint-Stock Land and Commercial Credit Company 4,800,000 65,699,000 13.7
Brunswick-Hanover Mortgage Bank 9,000,000 114,010,000 12.7
Citizens’ Bank of the Kingdom of Saxony 600,000 24,308,000 40.5
German Land Credit Bank, Gotha 10,500,000 94,453,000 9.0
German Mortgage Bank, Meiningen 16,801,000 267,921,000 15.9
Mortgage Bank, Hamburg 15,000,000 283,703,000 18.8
Rhenish Mortgage Bank, Mannheim 9,000,000 192,099,000 21.3
Würtemberg Mortgage Bank 11,000,000 105,976,000 9.6
South German Joint-Stock Land Credit Bank 24,000,000 344,765,000 14.4
Palatinate Mortgage Bank 8,000,000 116,458,000 14.5
Leipzig Mortgage Bank 580,000 6,223,000 10.8

The maintenance of a definite proportion between capital stock and circulation of bonds is not prescribed for all the banks; and for those of the mixed system it is even an irrelevant matter, in so far as they have other creditors besides the bondholders.

Edition: current; Page: [160]

Mortgage Bonds Issued by Each Class of Land Banks.

The bond circulation for each set of banks was as follows, in millions of marks:

YEARS. Purely Mortgage Prussian Banks. Yearly Increase. Other Purely Mortgage (German) Banks. Yearly Increase. Mixed Banks. Yearly Increase.
1884 563.8 641.8 651.8
1885 591.5 27.7 666.0 24.2 684.0 32.2
1886 628.2 36.7 748.6 82.6 746.6 62.6
1887 671.2 43.0 804.6 56.0 792.6 46.0
1888 742.0 70.8 899.9 95.3 881.2 88.6
1889 864.9 122.9 1,011.2 111.3 983.3 102.1
1890 950.9 86.0 1,094.5 83.3 1,036.3 53.0
1891 1,068.8 117.9 1,196.3 101.8 1,088.3 52.0
1892 1,235.5 166.7 1,341.8 145.5 1,144.1 55.8
1893 1,367.7 132.2 1,443.8 102.0 1,189.7 45.6
1894 1,553.1 185.4 1,655.6 211.8 1,282.1 92.4

Open Obligations of Land Banks.

Open obligations existing side by side with the bond circulation were as follows, including net profits: 1884, 253,500,000 marks; 1885, 249,300,000; 1886, 257,000,000; 1887, 272,300,000; 1888, 282,900,000; 1889, 360,400,000; 1890, 300,100,000; 1891, 321,900,000; 1892, 324,700,000; 1893, 337,400,000; 1894, 419,200,000.

Their distribution is here presented:

YEARS. Prussian Mortgage Banks. German Mortgage Banks. Mixed Banks.
1887 40,400,000 53,400,000 178,500,000
1888 39,800,000 50,800,000 192,400,000
1889 50,300,000 53,700,000 256,400,000
1890 46,200,000 47,000,000 207,500,000
1891 41,400,000 47,800,000 232,700,000
1892 54,900,000 48,600,000 221,200,000
1893 54,700,000 45,800,000 237,000,000
1894 82,400,000 54,900,000 281,900,000
Edition: current; Page: [a]
a6½ per cent. on 8,015,000 marks of capital stock for one year.
b8 per cent. on 3,000,000 marks of capital stock for one year.
8 per cent. on 1,500,000 marks of capital stock for four months.
c6½ per cent. on 10,790,700 marks of capital stock for one year.
d7 per cent. on 10,500,000 marks of capital stock for one year.
e6 per cent. on 3,100,000 marks of capital stock for one year.
6 per cent. on 1,900,000 marks of capital stock for four months.
f5½ per cent. on 6,000,000 marks of capital stock for one year.
5½ per cent. on 3,000,000 marks of capital stock for six months.
g Incl. 600,000 marks deficit.
h The loss amounted to 957,956 marks, and was covered to the extent of 600,000 marks by reserve fund and contributions of the Board of Inspectors.
i7 per cent. on 7,500,000 marks of capital stock for one year. 7 per cent. on 3,750,000 marks of capital stock for six months.
j5.33 per cent. on 571,052,200 marks of capital stock for one year.
k6.49 per cent. on 1,057,302,200 marks of capital stock for one year.
l5.72 per cent. on 1,044,519,000 marks of capital stock for one year.
m5.80 per cent. on 1,055,276,000 marks of capital stock for one year.
n6.11 per cent. on 1,048,708,000 marks of capital stock for one year.
o7.60 per cent. on 1,049,478,000 marks of capital stock for one year.
p8.77 per cent. on 934,190,000 marks of capital stock for one year.
Cash. Bills of Exchange. Loans. Effects, Mortgages, Trust and Syndicate Funds. Debtors and Sundries. Real Estate and Movables. Capital Stock. Creditors. Deposits. Acceptances. Surplus. Net Profits. Total Balance. Gross Profits. Interest. Commissions. Expenses. Dividends. Canceled Accounts. Added to the Reserves.
Amount. Per Cent.
Bank of Trade and Industry, Aix-la-Chapelle 347 1,343 418 3,656 115 2,500 1,029 1,693 318 196 143 5,879 358 151 78 63 125 5 2 14
Discount Company of Aix-la-Chapelle 631 3,202 1,969 1,657 14,114 9,000 5,167 1,052 4,646 1,124 584 21,573 921 539 288 183 536 34
General Alsatian Banking Company 1,153 4,481 9,308 3,174 11,640 465 4,800 11,885 9,522 2,696 943 375 30,221 981 813 165 306 360 24 253
Rhenish and Westphalian Bank 213 1,163 180 2,245 3,200 316 4,350 877 24 1,328 435 303 7,317 381 40 74 78 261 6
Bank of Alsace-Lorraine 1,506 8,599 1,910 21,560 554 7,200 18,042 3,823 3,520 866 678 34,129 1,158 676 323 433 504 7 71 33
Barmen Banking Company 692 5,937 709 15,483 350 9,356 4,130 2,383 5,532 1,236 534 23,171 907 520 277 276 521 a 29 33
Margraviate and Mining Bank 2,041 17,012 19,839 1,871 25,211 978 20,000 22,515 7,223 12,577 2,825 1,812 66,952 2,438 1,360 929 621 1,400 7 25 147
Brunswick Credit Concern 297 3,504 1,439 253 6,840 188 6,750 583 3,154 1,097 527 410 12,521 520 317 74 110 360 5⅛ 29
Bank of Bremen 2,164 10,223 10,291 7,028 27,526 1,964 20,000 3,439 19,514 13,687 1,732 824 59,196 1,296 731 376 252 800 4 178 43
Discount Bank of Breslau 516 4,453 152 3,589 15,139 935 10,500 3,796 811 7,354 1,457 866 24,784 1,242 479 253 238 682 125 43
Exchange Bank of Breslau 1,144 2,687 285 1,488 8,622 2,100 8,000 2,799 1,672 2,286 1,080 489 16,326 723 345 92 170 400 5 74 30
Chemnitz Banking Company 144 870 126 5 3,841 127 3,000 1,008 426 44 419 216 5,113 307 219 85 66 180 6 25 14
Coburg-Gotha Credit Company 417 457 215 1,522 4,649 352 3,900 1,730 888 279 650 165 7,612 246 115 31 61 156 4 12 8
Discount and Commercial Bank 1,747 10,630 10,470 10,880 45,900 1,057 30,000 8,676 12,879 23,498 3,724 1,907 80,684 2,408 999 478 375 1,800 6 103 21
Municipal Bank of Görlitz 839 4,746 959 10,552 378 4,500 7,819 3,488 1,322 345 17,474 468 394 46 91 332 7.36 30
Private Bank of Dantzig 103 1,148 10,467 865 729 50 4,500 1,960 4,851 404 1,318 329 13,362 431 281 62 102 280 b8 13
German Effects and Exchange Bank 2,834 7,143 9,868 11,882 31,913 27 15,000 28,439 16,646 2,046 1,536 63,667 2,156 620 328 609 975 37 224
German National Bank 90 5,585 1,068 1,670 9,425 895 11,250 2,282 319 3,009 1,129 744 18,733 934 481 214 126 701 c 64
German Unionbank 587 2,628 1,346 593 6,131 22 6,000 1,880 2,948 194 285 11,307 505 185 112 199 240 4 21 34
German Union Bank 1,936 8,748 9,108 6,787 29,076 898 24,000 8,787 1,742 18,715 1,684 1,623 56,553 2,094 720 597 461 1,320 1 81
Dortmund Banking Company 162 3,251 106 4,701 234 3,001 1,095 2,257 1,504 338 259 8,454 333 297 99 75 195 14 24
Dresden Banking Company 426 2,463 1,848 207 7,888 454 6,000 2,647 1,495 1,961 643 540 13,286 660 431 199 121 360 6 43 81
Bank of Duisburg-Ruhrort 1,139 1,729 897 7,762 139 1,980 4,447 1,124 3,537 450 128 11,666 324 150 150 126 120 6 70
Düsseldorf Banking Company 106 1,713 2,583 136 1,000 1,176 1,602 568 92 100 4,538 176 96 80 35 60 6 5 46
Discount Bank of Eisleben 267 312 93 3,449 66 900 415 2,584 173 115 4,187 157 102 44 28 81 9 29 5
Bank of Erfurt 140 867 121 3,564 183 2,000 2,385 50 80 229 125 4,875 203 79 113 47 100 5 11 28
Essen Credit Concern 1,499 5,629 1,513 22,003 86 13,312 6,831 2,591 4,657 2,400 939 30,730 1,227 715 335 268 735 d7 20 100
Private Bank of Flensburg 238 1,256 147 2,019 1,878 41 600 2,547 2,102 71 185 74 5,579 126 104 17 36 60 10 1 15
Bank of Geestemünde 155 1,436 577 5,612 177 1,000 1,126 5,259 252 204 116 7,957 194 121 29 47 90 9 6 26
Halle Banking Company 419 4,676 265 575 16,744 185 9,000 6,573 3,430 1,121 2,050 690 22,864 817 550 169 141 602 7⅙ 4 18
Bank of Hanover 910 8,454 2,093 3,377 6,981 689 12,000 7,791 120 745 1,201 647 22,504 858 358 207 203 60 5 8
Bank of Hildesheim 361 2,155 305 5,628 237 2,250 4,084 1,439 525 175 213 8,686 300 139 47 87 157 7 10
Bank of Kiel 127 2,677 1,131 157 1,784 74 1,500 1,520 2,261 361 143 165 5,950 211 139 70 48 120 8 1 9
Exchange Bank of Cologne 640 2,125 285 319 5,831 263 5,194 917 381 2,155 501 315 9,463 464 292 128 117 260 5 30 19
Königsberg Union Bank 493 6,788 867 778 6,094 490 6,000 2,170 4,621 1,879 478 362 15,510 572 496 21 129 300 5 81 18
Köster’s Bank 644 4,694 658 786 10,621 528 5,000 7,859 4,298 394 380 17,931 609 326 132 229 221 e6 54 50
Bank of Leipzig 2,983 14,147 2,551 4,891 24,381 405 24,000 327 10,603 9,035 3,701 1,692 49,358 2,103 1,159 563 329 1,440 6 83 100
Leipzig Credit Bank 1,158 4,103 1,010 123 1,085 371 3,000 119 4,089 410 232 7,850 358 324 29 106 180 6 20 11
Leipzig Credit and Savings Bank 736 6,777 985 1,529 9,594 526 7,500 2,808 6,284 1,753 1,250 552 20,147 712 396 227 157 450 6 3 40
Commercial Bank of Lübeck 618 4,693 1,870 674 1,483 125 1,920 1,785 4,589 752 290 127 9,463 175 125 25 49 115 6
Private Bank of Lübeck 584 3,283 2,469 171 628 185 1,200 552 4,642 601 235 90 7,320 157 131 15 54 84 7 5 3
Magdeburg Banking Company 234 3,372 2,066 448 6,740 462 7,500 4,486 39 885 412 13,322 617 357 161 133 375 5 16 47
Private Bank of Magdeburg 565 4,786 449 1,530 12,071 621 9,000 5,553 1,672 2,506 782 509 20,022 652 368 155 130 412 f 13 56
Brokers’ Bank, Hamburg 51 524 g891 1,200 266 1,466 1,058 42 127 100 h 958
Bank of Mannheim 331 1,264 342 312 4,743 123 2,400 1,532 477 1,998 520 188 7,115 284 135 84 70 149 7 4 22
Bank of Mecklenburg 251 412 471 7,755 150 2,000 94 6,737 86 122 9,039 173 126 7 42 110 2
Mecklenburg Savings-Bank 211 8,318 6,400 13,116 2,428 29 2,000 194 27,390 541 377 30,502 541 455 47 149 200 10 15 103
Middle Rhenish Bank 68 251 280 1,876 73 1,200 418 120 561 155 94 2,548 118 54 25 31 72 6 4
Bank of Mülhausen 1,019 24,950 2,757 25,314 432 4,800 34,957 6,192 5,374 2,196 953 54,472 1,313 360 432 9 20 196
Minden Banking Company 52 1,042 603 209 3,684 75 2,000 512 2,266 590 152 145 5,665 201 138 42 46 110 11 21
Lower Saxon Bank 657 3,803 2,110 721 12,438 482 6,000 4,344 6,424 2,475 538 430 20,211 678 352 162 186 360 6 20 46
North German Bank 6,263 31,700 15,608 32,165 75,886 2,270 60,000 38,462 23,804 24,409 14,500 2,717 163,892 3,451 1,788 1,118 653 2,700 81
Bank of Nordhausen 169 1,456 314 2,615 196 1,500 1,494 593 893 166 104 4,750 157 83 50 31 90 6 21
Upper Lusatian Bank 185 969 329 355 3,737 156 2,700 1,003 1,548 13 275 192 5,731 264 175 69 50 162 6 22 9
Upper Silesian Credit Company 104 1,371 19 172 1,954 19 1,200 530 1,311 207 247 144 3,639 188 131 36 53 96 8 17
Provincial Bank of Oldenburg 238 9,296 7,324 2,562 7,613 90 1,200 1,045 24,145 39 482 212 27,123 294 135 25 77 144 12 6 14
Oldenburg Savings and Loan Bank 441 7,444 8,693 4,706 10,557 201 3,000 2,426 25,475 57 750 334 32,042 520 341 30 179 280 9⅓ 6
Bank of Osnabrück 427 2,316 1,059 948 8,417 269 3,000 3,273 5,267 1,017 615 264 13,436 429 281 103 111 210 7 7 45
East Frisian Bank 394 3,877 761 3,262 72 900 1,493 5,652 3 213 105 8,366 150 106 24 45 45 5 59
Palatinate Bank 690 7,106 7,641 4,437 22,197 827 11,250 10,269 8,123 10,706 1,527 1,023 42,898 1,298 588 321 275 656 i7 19 100
Provincial Joint-Stock Bank of the Grand Duchy of Posen 69 3,601 1,062 10 119 139 3,000 85 1,019 753 143 5,000 195 188 3 50 135 2
Private Bank of Gotha 547 1,976 247 12,926 206 6,000 5,638 1,494 1,702 731 337 15,902 556 382 77 205 320 5⅓ 4 10
Rhenish Credit Bank 2,964 11,825 5,139 3,111 28,718 532 15,000 17,249 16,127 2,625 1,288 52,289 1,871 877 525 544 900 6 39 50
Bank of Rostock 255 3,425 3,002 2,363 2,358 200 5,000 2,969 3,319 124 191 11,603 376 286 15 65 180 3 3-5 120 9
Saxon Discount Bank 99 2,434 63 63 1,693 102 1,800 1,116 908 102 317 211 4,454 277 190 70 54 117 8 39
Silesian Banking Company 1,700 11,053 476 6,528 28,083 966 22,500 13,883 4,046 3,222 3,594 1,561 48,806 1,968 1,254 237 343 1,237 64 156
Schwarzburg Provincial Bank 161 131 2,144 273 1,611 50 1,000 30 3,229 1 48 62 4,370 104 74 10 41 50 5 2 2
Siegen Bank for Trade and Industry 66 542 102 1,017 53 1,060 528 162 30 1,780 59 39 14 29 16 1 9
Union Bank of Hamburg 6,704 23,577 15,056 5,842 16,314 900 18,000 38,312 5,698 1,986 2,645 1,752 68,393 2,228 1,300 374 454 1,440 8 21 103
Union Bank of Hanover 267 829 576 1,307 315 1,000 1,875 296 59 64 3,294 108 39 24 42 55 2 3
Union Bank of Mühlhausen in Thuringia 123 427 43 1,953 68 1,200 691 458 23 146 96 2,614 141 81 36 26 72 6 20
Union Bank of Wismar 176 5,179 492 180 1,510 35 1,000 262 6,003 218 89 7,572 172 156 3 24 70 7 60
Union Bank of Zwickau 372 2,716 965 602 3,048 157 1,500 936 4,149 707 375 193 7,860 253 127 79 59 112 6 30
Vogtland Bank 290 2,725 262 381 5,646 77 2,000 2,557 3,478 568 466 312 9,381 393 62 42 79 200 10 6 45
Exchange Bank of Hamburg 510 1,014 2,999 811 4,504 5 3,750 1,604 691 3,103 244 451 9,843 593 154 163 131 337 9 11 63
Westphalian Bank 261 2,094 411 6,996 341 4,500 1,997 576 1,967 744 319 10,103 410 323 83 74 270 6 17
Westphalian Banking Company 183 882 114 295 4,568 4 2,000 699 2,181 763 247 156 6,046 212 141 56 37 140 7 11 16
Würtemberg Bank Concern 778 2,481 144 1,961 9,693 300 6,000 3,508 477 3,906 839 627 15,357 757 78 133 164 420 7 58
Bank of Zwickau 139 1,203 246 61 1,604 206 1,200 793 779 504 76 107 3,459 174 100 61 60 60 5 7 35
79 Banks, 1894 61,219 379,634 187,117 169,371 793,347 28,569 533,323 403,102 322,694 242,465 79,330 38,443 1,619,257 42,850 28,021 12,172 12,454 30,457 j5.32 2,848 3,107
96 Banks, 1894 232,552 795,394 469,325 400,274 1,631,402 64,522 1,067,525 1,141,519 486,386 613,110 199,822 85,107 3,593,469 112,287 54,486 28,149 26,218 68,617 k6.49 8,322 5,731
93 Banks, 1893 213,707 704,996 342,237 375,448 1,471,108 59,780 1,046,169 934,306 387,192 531,512 196,331 71,766 3,167,276 110,030 60,501 27,719 26,957 59,738 l5.72 10,086 3,549
94 Banks, 1892 194,634 737,090 362,386 346,629 1,450,918 59,889 1,057,089 893,078 389,855 534,360 200,313 76,851 3,151,546 111,927 54,685 26,737 25,618 61,230 m5.80 8,210 7,045
95 Banks, 1891 206,595 793,131 306,022 374,874 1,365,269 58,122 1,053,208 895,423 385,960 503,560 191,717 74,145 3,104,013 112,149 60,714 28,774 24,070 64,070 n6.11 8,976 5,168
92 Banks, 1890 190,907 691,219 427,026 355,668 1,428,459 56,596 1,054,328 883,106 408,014 523,244 187,880 98,303 3,149,875 141,042 65,647 32,218 23,403 79,630 o7.60 6,677 11,132
93 Banks, 1889 192,211 584,113 533,945 362,804 1,426,230 56,897 981,450 1,021,205 370,977 516,007 156,056 110,505 3,156,200 141,000 53,505 32,137 22,747 81,917 p8.77 5,464 11,349
71 Banks, 1888 151,179 538,739 344,761 310,411 1,138,186 46,525 772,403 814,959 303,433 448,296 115,318 75,392 2,529,801 110,478 36,858 24,243 17,111 58,966 7.79 8,296 6,963
71 Banks, 1887 136,261 523,177 224,838 288,670 1,119,407 46,460 758,005 697,445 271,965 445,755 107,902 57,741 2,338,813 80,974 34,042 20,653 15,617 47,997 6.53 5,910 3,748
71 Banks, 1886 125,480 459,449 258,911 255,987 1,097,072 46,512 733,693 713,306 260,132 419,823 99,274 57,183 2,283,411 78,695 31,571 20,516 14,843 47,170 6.43 4,708 4,278
71 Banks, 1885 113,496 507,806 205,585 254,322 1,100,353 47,451 723,946 664,429 297,454 393,798 93,244 56,142 2,229,013 77,808 34,694 19,704 14,003 46,432 6.41 6,634 4,528
71 Banks, 1884 112,646 447,841 288,707 241,706 981,907 49,759 719,479 598,443 276,072 379,232 89,492 59,848 2,122,566 83,018 34,978 19,913 13,509 51,175 7.11 3,729 5,650
71 Banks, 1883 100,947 453,327 223,276 247,406 886,360 50,428 705,600 498,506 250,522 346,795 90,847 1,961,744 83,965 12,376 49,326 6.99 3,210 3,475
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Circulating Acceptances.

The “mixed banks” include circulating acceptances to the following amounts:

BANKS. 1894. 1893. 1892.
Bavarian Exchange and Mortgage Bank 4,236,621 3,274,200 3,721,393
Bavarian Union Bank 9,571,297 9,997,863 10,434,734
Bavarian Trades’ Bank 4,145,453 3,485,604 2,864,006
Nuremberg Union Bank 828,814 478,246 634,164
Provincial Bank of Anhalt-Dessau 1,078,500 1,078,500 1,078,500
General German Credit Concern, Leipzig 24,256,584 20,917,234 21,749,841
Würtemberg Union Bank 10,433,068 10,784,560 11,565,395
Total 54,550,337 50,016,207 52,048,033
1891. 1890. 1889.
Bavarian Exchange and Mortgage Bank 2,640,508 1,850,072 1,814,247
Bavarian Union Bank 7,192,627 4,503,519 4,868,573
Bavarian Trades’ Bank 3,267,175 3,018,659 3,048,949
Nuremberg Union Bank 452,674 136,460 239,749
Provincial Bank of Anhalt-Dessau 878,500 478,500 63,500
General German Credit Concern, Leipzig 27,350,672 15,686,668 18,486,085
Würtemberg Union Bank 15,853,916 13,713,514 17,972,295
Total 57,636,072 39,387,392 46,439,398

Foreclosures of Mortgages.

The amount of real estate foreclosed by process of law compares as follows for a series of years: 1884, 18,400,000 marks; 1885, 14,000,000; 1886, 21,200,000; 1887, 18,300,000; 1888, 16,300,000; 1889, 13,700,000; 1890, 11,900,000; 1891, 8,100,000; 1892, 10,500,000; 1893, 11,900,000; 1894, 12,100,000.

Dividends of Mortgage Banks.

The productiveness of the banks will be indicated by the following table, giving the per cent. of dividends on capital stock:

YEARS. Prussian Mortgage Banks. German Mortgage Banks Mixed Banks. General Average.
1884 6.07 4.32 8.57 6.75
1885 5.93 4.92 8.31 6.78
1886 6.06 5.15 8.20 6.68
1887 6.02 5.35 8.27 6.89
1888 6.29 5.40 8.74 7.30
1889 6.57 5.29 9.49 7.56
1890 6.95 5.40 9.49 7.74
1891 6.93 5.87 8.65 7.46
1892 7.23 6.26 8.68 7.67
1893 7.17 6.43 8.70 7.68
1894 7.20 6.55 9.28 7.94

Dividends have constantly risen, but not in proportion to the growing volume of business. The lowest dividend was four per cent., and no bank was unable to pay dividends in 1894.

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Net Profits and Expenses of Land Banks.

Net profits from the mortgage business and other departments of the banks were as follows, for the period 1884 to 1894:

YEARS. Prussian Mortgage Banks. German Mortgage Banks. Mixed Banks. Combined Total.
1884 7,550,000 6,750,000 15,480,000 29,780,000
1885 7,420,000 8,640,000 15,520,000 31,580,000
1886 7,640,000 8,390,000 17,270,000 33,300,000
1887 8,650,000 8,280,000 16,810,000 33,750,000
1888 9,010,000 8,740,000 20,480,000 38,220,000
1889 10,800,000 9,600,000 23,500,000 43,900,000
1890 11,350,000 10,180,000 24,090,000 45,630,000
1891 11,640,000 10,970,000 22,670,000 45,290,000
1892 12,280,000 12,510,000 23,740,000 48,180,000
1893 13,370,000 12,480,000 25,110,000 50,960,000
1894 15,370,000 13,649,000 27,900,000 56,910,000

Expenses from 1887 to 1894 were as follows:

YEARS. Prussian Mortgage Banks. German Mortgage Banks. Mixed Banks. Combined Total.
1887 1,560,000 1,630,000 2,410,000 5,610,000
1888 1,690,000 1,730,000 2,470,000 5,900,000
1889 1,860,000 1,960,000 2,780,000 6,610,000
1890 1,920,000 1,920,000 2,940,000 6,790,000
1891 2,100,000 1,970,000 3,090,000 7,160,000
1892 2,420,000 2,260,000 3,320,000 8,010,000
1893 2,720,000 2,340,000 3,160,000 8,220,000
1894 3,040,000 2,730,000 3,530,000 9,290,000
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Surplus Accruing from Loans.

We have attempted to ascertain the surplus accruing to the banks through loans, assuming that they received four per cent. from those mortgage loans which they held on their own account, apart from the issue of mortgage bonds to outsiders. Upon that basis, we tabulate the following data, expressed in thousands of marks:

BANKS, ETC. Surplus of Loans Over Mortgage Bonds. Interest at 4 Per Cent., Etc. Net Proceeds of Mortgage Business. Remaining for Mortgage Business PROCEEDS OF MORTGAGE BONDS.
1894. Per Cent. 1893. Per Cent. 1892. Per Cent. 1891. Per Cent. 1890. Per Cent. 1889. Per Cent. 1888. Per Cent. 1887. Per Cent.
Prussian Central Land Credit Company 21,510 860 2,131 1,271 0.29 0.48 0.52 0.66 0.69 0.71 0.55 0.70
Prussian Joint-Stock Land Credit Bank 20,183 807 2,479 1,672 0.88 0.64 0.96 0.93 1.04 1.02 1.19 1.34
Prussian Joint-Stock Mortgage Bank 11,780 471 1,368 897 0.40 0.27 0.57 0.71 0.69 0.56 0.63 0.70
Frankfort Mortgage Bank 4,564 183 1,270 1,087 0.51 0.39 0.53 0.47 0.51 0.52 0.49 0.66
Silesian Land Credit Bank 4,320 173 624 451 0.45 0.49 0.58 0.56 0.63 0.15 0.56 0.65
German Mortgage Bank, Berlin 4,432 177 600 423 0.63 0.63 0.72 0.80 0.80 0.83 0.93 1.00
Pomeranian Mortgage Bank 3,165 127 529 402 0.44 0.64 0.66
German Mortgage Bank 6,706 268 360 92 0.11 0.24 0.60
Palatinate Mortgage Bank 5,441 218 913 695 0.59 0.45 0.67
Joint-Stock Land and Commercial Credit Co. 4,100 164 472 308 0.47 0.56 0.52 0.55 0.61 0.36 0.44 0.36
Brunswick-Hanover Mortgage Bank 3,152 126 586 460 0.40 0.32 0.32 0.41 0.46 0.34 0.41 0.39
German Land Credit Bank, Gotha 7,647 306 692 386 0.41 0.35 0.38 0.51 0.54 0.41 0.75 0.53
German Mortgage Bank, Meiningen 9,261 370 1,821 1,451 0.54 0.44 0.45 0.34 0.41 0.59 0.68 0.60
Mortgage Bank, Hamburg 7,786 311 1,493 1,182 0.42 0.31 0.30 0.32 0.26 0.33 0.28 0.43
Rhenish Mortgage Bank, Mannheim 5,262 210 1,536 1,326 0.68 0.73 0.88 0.97 1.01 0.92 0.66 0.85
Würtemberg Mortgage Bank 11,872 475 884 409 0.39 0.39 0.42 0.49 0.45 0.91 0.48 0.53
South German Land Credit Bank 3,814 153 2,331 2,178 0.63 0.72 0.68 0.77 0.79 0.71 0.75 0.81
Bavarian Exchange and Mortgage Bank 24,753 990 4,015 3,025 0.51 0.51 0.53 0.59 0.50 0.54 0.54 0.51
Bavarian Union Bank 288 11 1,160 1,149 0.51 0.51 0.45 0.47 0.39 0.44 0.58 0.49
Bavarian Trades’ Bank 4,371 175 815 640 0.54 0.54 0.51 0.45 0.47 0.51 0.46 0.46
Nuremberg Union Bank 7,213 289 1,024 735 0.42 0.46 0.57 0.54 0.59 0.61 0.65 0.59
Provincial Bank of Anhalt-Dessau 1 25 25 0.31 0.22 0.52 0.58 0.51 0.47 0.60 0.30
General German Credit Concern, Leipzig 3,323 133 196 63 0.21 0.41 0.41 0.32 0.44 0.66 0.29 0.44
Mecklenburg Exchange and Mortgage Bank 9,791 392 704 312 0.77 0.51 0.48 0.78 1.00 0.68 2.42 1.20
Würtemberg Union Bank 131 5 32 27 0.27 0.37 0.49 0.35 0.40 0.28 0.32 0.56
Total 184,866 7,304 28,060 20,666 0.49 0.49 0.56 0.59 0.62 0.58 0.62 0.63
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Summary Statement of Mortgage Banks, arranged by Classes, for Years 1883 to 1894 (in Thousands of Marks).
aCash and Bills of Exchange are thrown together, amounting to 1,912,443 marks. We estimated 956,000 marks in the Bills account and added the sum to the Effects column. bInclude 860 marks Amortization Fund. cInclude 600,000 marks Amortization Fund. dInclude 8,786,820 marks Allotted Mortgage Bonds. eInclude 372,833 marks Mortgage Premium Fund. fInclude 109,271 marks Allotted Mortgage Bonds. gInclude 37,485 marks Allotted Mortgage Bonds. hInclude 36,090 marks Allotted Mortgage Bonds. iOn Capital Stock of 3,900,000 marks for one year, 300,000 marks for ten months; 300,000 marks for five months, and 300,000 marks for three months. jInclude 136,410 marks Amortization Fund. kInclude, 2,838,180 marks Allotted Mortgage Bonds. lInclude 427,809 marks Amortization Fund. mInclude 117,923 marks Amortization Fund. nInclude 50,119 marks Allotted Mortgage Bonds. oOn Capital Stock of 5,998,000 marks for one year. pIn last year’s review we had included 2,480,000 marks in Real Estate, but we had to omit this item in our present review for want of satisfactory data. qInclude 11,325,000 marks Amortization Fund. rInclude 25,400 marks Retired Bonds. sOn Capital Stock of 113,629,000 marks for one year. tInclude 1,641,542 marks Premium Fund. uInclude 254,106 marks Allotted Mortgage Bonds. vReserves include 799,142 marks in commissions already paid and available for future use. wInclude 39,181 marks Matured Bonds. xInclude 2,505,900 marks Allotted Bonds. yOn Capital Stock of 7,000,000 marks for one year, and 1,000,000 marks for nine months. zOn Capital Stock of 113,530,000 marks for one year. aaInclude 700,000 marks of Warehouse Capital needed for covering sundry risks. bbInclude 920,000 marks Dividend Reserve. ccInclude 203,900 marks Allotted Bonds. ddInclude 161,691 marks Premium Fund. eeInclude 62,523 marks Premium Fund. ffInclude 52,956 marks Allotted Bonds. ggExcluding commissions, since these are lumped with commissions accruing through the other business of the Bank. hhThe tied-up funds of this institution are about one-third higher than the figures show, because of its contracted association with the Würtemberg bank system. iiOn Capital Stock of 408,330,000 marks for one year. jjOn Capital Stock of 389,490,000 marks for one year. kkOn Capital Stock of 371,493,000 marks for one year. llOn Capital Stock of 348,830,000 marks for one year. mmOn Capital Stock of 334,209,000 marks for one year. nnOn Capital Stock of 315,209,000 marks for one year.
Cash. Bills of Exchange and Effects. Mortgages and Municipal Loans. Loans on Securities Debtors and Sundries Bank Buildings and Movables. Real Estate. Premiums Capital Stock. Surplus Funds. Mortgage and Municipal Bonds Sundry Liabilities, Including Net Profits. Total Balance. Mortgage Proceeds. Mortgage Bonds, Interest, Amortizations, etc. Net Proceeds of Mortgages. Sundry Other Proceeds, Excluding Amount Brought Over from Last Year. Total. Expenses. Canceled Accounts, Losses, and Manufacture of Bonds. Reserves. Amount. Per Cent.
I.—Prussian Banks.
Prussian Central Land Credit Company a956 7,302 455,339 600 5,159 1,400 730 4,280 21,600 b1,940 433,829 18,397 475,766 18,112 15,981 2,131 814 2,945 574 92 114 2,052
Prussian Joint-Stock Land Credit Bank 571 4,886 208,823 14,096 1,338 500 1,500 30,000 c5,964 d188,640 7,110 231,714 9,569 7,090 2,479 982 3,461 392 556 2,100 7
Prussian Joint-Stock Mortgage Bank 2,505 15,528 235,753 9,880 1,711 15,000 e2,605 f223,973 23,799 265,377 9,713 8,345 1,368 1,116 2,484 565 152 119 975
Frankfort Mortgage Bank 2,035 3,887 219,093 4,860 3,452 387 12,000 3,630 g214,529 3,561 233,720 9,088 7,818 1,270 234 1,504 263 56 124 840 7
Frankfort Mortgage Credit Union 1,624 685 94,218 3,570 1,343 6,000 465 h91,429 3,546 101,440 3,575 3,257 318 401 719 124 56 55 283 i
Silesian Joint-Stock Land Credit Bank 1,549 4,897 104,488 1,041 390 610 7,500 j2,039 k100,168 3,268 112,975 4,367 3,743 624 303 927 248 45 64 525 7
German Mortgage Bank, Berlin 910 635 71,982 1,795 425 300 5,400 l1,458 67,550 1,639 76,047 600 600 43 643 131 46 35 378 7
Pomeranian Joint-Stock Mortgage Bank 1,942 7,295 94,031 1,051 9 9,000 m2,356 n90,866 2,106 104,328 3,673 3,144 529 440 969 285 69 111 360 o6
National Mortgage Credit Company 434 3,145 42,397 1,193 p110 711 629 676 42,736 3,949 47,990 179 179 98 21 7 22 4
German Mortgage Bank 950 8,205 93,865 4,727 20 6,000 q263 r87,159 14,345 107,767 3,462 3,102 360 767 1,117 239 87 255 420 7
Westphalian Land Credit Bank 7 14,451 3,164 225 5,000 12,193 654 17,847 239 159 80 346 426 117 49 16 225
Total 13,483 56,465 1,634,440 25,968 32,122 5,272 2,230 4,991 118,129 21,396 1,553,072 82,374 1,774,971 9,749 5,615 15,374 3,036 673 1,456 8,180 s7.20
II.—Other German Purely Mortgage Banks.
Leipzig Mortgage Bank 40 6,917 138 580 56 6,223 236 7,095 260 218 42 56 98 18 18 46 8
Joint-Stock Commercial and Land Credit Bank 813 4,697 69,799 2,870 615 832 74 4,800 917 65,699 8,284 79,700 2,750 2,278 472 228 700 255 110 25 288 6
Brunswick-Hanover Mortgage Bank 510 5,311 117,162 352 3,257 554 295 9,000 1,271 114,010 3,160 127,441 4,940 4,354 586 343 929 159 152 31 540 6
Citizens’ Bank of the Kingdom of Saxony 44 282 25,176 421 9 1 600 282 24,308 743 25,933 17 17 65 82 18 4 54 9
German Mortgage Bank, Gotha 355 2,895 102,100 8,048 170 765 10,500 2,344 94,453 7,036 114,333 4,421 3,729 692 470 1,162 200 52 420 4
German Mortgage Bank, Meiningen 300 4,083 277,181 1,015 9,992 1,115 16,800 t3,374 u267,921 5,591 293,686 12,361 10,540 1,821 263 2,084 368 64 482 1,008 6
Mortgage Bank, Hamburg 12,536 1,510 291,489 853 3,582 500 70 15,000 v3,409 w283,703 8,428 310,540 11,971 10,478 1,493 444 1,937 396 152 1,200 8
Rhenish Mortgage Bank, Mannheim 423 197,361 9,450 95 114 9,000 1,522 x192,099 4,822 207,443 8,402 6,926 1,536 140 1,685 248 216 200 720 8
Würtemberg Mortgage Bank 207 1,315 117,848 96 394 774 3 11,000 2,396 105,976 1,265 120,637 4,864 3,980 884 83 967 186 9 615
South German Joint-Stock Land Credit Bank 688 14,915 348,579 33 13,749 305 2,399 24,000 2,705 344,765 9,198 380,668 15,208 12,877 2,331 75 2,406 642 5 100 1,680 7
Palatinate Mortgage Bank 1,017 293 121,899 4,641 135 331 8,000 800 116,458 3,058 128,316 4,895 3,982 913 187 1,100 129 87 151 542 y7
North German Land Credit Bank 331 594 42,017 514 1,507 2,756 4,500 152 40,011 3,056 47,719 1,874 1,398 476 18 494 112 26 78 225 5
Total 17,264 35,895 1,717,528 3,284 57,637 4,169 6,920 814 113,780 19,228 1,655,626 54,877 1,843,511 11,263 2,381 13,644 2,731 721 1,241 7,438 z6.55
III.—Mixed Banks.
Bavarian Exchange and Mortgage Bank 4,558 40,009 620,013 2,929 52,395 3,231 39,286 19,041 595,260 69,548 723,135 25,610 21,595 4,015 4,271 8,286 1,029 506 4,858 12.367
Bavarian Union Bank 3,194 21,054 227,745 1,210 50,563 2,074 27,000 8,283 227,257 43,300 305,840 9,121 7,961 1,160 2,071 3,231 554 65 25 2,295
Bavarian Trades’ Bank 1,121 11,869 123,394 1,932 aa13,410 978 15,286 bb3,458 cc119,023 14,937 152,704 6,256 5,441 815 1,080 1,891 200 18 266 1,177 7 7-10
Nuremberg Union Bank 450 12,859 182,585 1,022 7,478 585 12,000 dd4,109 175,372 13,498 204,979 7,963 6,939 1,024 641 1,665 228 226 1,080 9
Provincial Bank of Anhalt-Dessau 495 3,291 7,992 7,953 753 80 7,500 1,536 7,991 3,537 20,564 25 25 680 705 92 2 562
Agricultural Credit Bank 93 274 5,776 104 773 7 600 164 5,359 904 7,027 294 246 48 47 95 27 1 5 30 5
General German Credit Institution, Leipzig 5,022 38,973 32,849 4,305 70,110 2,410 1,066 42,000 14,478 29,526 68,731 154,735 196 196 5,764 5,960 610 81 4,200 10
Mecklenburg Exchange and Mortgage Bank 1,073 5,819 50,155 6,049 24,429 60 443 9,000 ee1,144 ff40,364 37,520 88,028 gg2,224 1,520 704 1,954 2,658 134 140 720 8
Würtemberg Union Bank(hh) 1,534 11,606 10,515 4,658 27,392 8 761 18,000 4,350 10,384 23,740 56,474 32 32 2,195 2,227 493 150 1,260 7
Prussian Letter of Mortgage Bank 855 2,444 80,602 2,161 3,830 667 10,500 2,309 71,545 6,205 90,559 3,255 2,310 945 230 1,175 160 126 630 6
Total 18,395 148,198 1,341,626 24,370 258,333 10,188 2,935 181,172 58,872 1,282,081 281,920 1,804,045 8,964 18,933 27,897 3,527 307 1,304 16,812 9.28
33 Mortgage banks, 1894 19,142 240,558 4,693,594 53,622 348,092 19,629 12,085 5,805 413,081 99,496 4,490,779 419,171 5,422,527 29,976 20,929 56,915 9,294 1,701 4,001 32,430 ii7.94
31 Mortgage banks, 1893 33,038 191,428 4,232,539 36,400 301,716 19,803 11,934 3,780 398,888 93,177 4,001,134 337,439 4,830,638 28,428 22,556 50,964 8,220 1,937 3,619 29,393 jj7.68
31 Mortgage banks, 1892 38,028 190,798 3,904,733 43,901 288,701 15,368 10,546 4,828 372,993 77,896 3,721,313 324,701 4,496,903 27,860 20,318 48,178 8,014 1,584 3,136 28,483 kk7.67
31 Mortgage banks, 1891 32,186 171,859 3,532,810 37,369 292,527 16,126 8,111 6,994 348,905 73,466 3,353,439 321,902 4,097,712 27,207 18,083 45,290 7,156 1,907 3,545 26,008 ll7.46
31 Mortgage banks, 1890 33,194 155,271 3,270,788 33,992 257,337 13,901 11,926 9,096 335,997 67,643 3,081,745 300,118 3,785,505 26,259 19,370 45,629 6,787 1,758 3,188 25,868 mm7.74
31 Mortgage banks, 1889 34,610 136,315 3,057,753 31,737 301,665 14,035 13,660 11,854 320,629 61,258 2,859,336 360,424 3,601,647 23,885 20,038 43,923 6,609 2,460 3,871 23,831 nn7.56
27 Mortgage banks, 1888 30,006 136,950 2,669,047 43,367 230,244 13,998 16,306 11,810 292,814 52,918 2,523,079 282,916 3,151,727 21,122 17,202 38,220 5,901 1,621 2,712 21,340 7.30
27 Mortgage banks, 1887 22,805 144,177 2,408,161 41,100 221,536 13,898 18,285 12,582 292,582 49,603 2,268,353 272,306 2,882,844 20,182 13,568 33,750 5,612 1,779 1,625 20,061 6.89
27 Mortgage banks, 1886 32,348 156,249 2,238,120 28,884 210,413 14,064 21,238 13,791 288,242 46,447 2,123,460 256,958 2,715,107 19,097 14,204 33,301 4,927 3,102 2,109 19,257 6.68
24 Mortgage banks, 1885 23,110 175,292 2,046,226 45,099 186,984 12,020 14,033 11,922 279,993 43,786 1,941,577 249,330 2,514,686 18,560 13,017 31,577 4,833 2,675 2,102 18,977 6.78
24 Mortgage banks, 1884 27,974 169,208 1,964,380 39,736 184,896 12,224 18,403 13,570 277,864 41,891 1,857,408 253,505 2,430,392 16,658 13,119 29,777 5,052 1,664 2,201 18,752 6.75
24 Mortgage banks, 1883 23,048 171,098 1,850,142 58,863 169,507 10,422 22,880 12,793 274,850 41,124 1,739,176 263,405 2,318,754 15,199 16,522 31,721 4,927 2,033 1,667 18,756 6.82
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asterisks For References, see next page.

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Assets and Liabilities for Years 1876, 1885, 1895, on December 31st.
*Including payables to banks.
ASSETS. 1876. 1885. 1895.
Coin reserve 136,607,783 198,796,035 244,091,527
Foreign bills, payable in gold 11,139,397 10,242,126 6,827,247
Discounts 135,591,771 136,442,984 219,474,480
Loans on securities 29,011,300 27,216,700 46,274,000
Redeemed matured securities and coupons 197,931 230,392
State notes on hand 1,699,634 4,496,136 13,752,815
Debt of kingdoms and provinces represented in Diet 80,000,000 79,403,386 76,322,459
Mortgage loans 100,522,443 89,369,213 134,290,233
Market value of mortgage bonds bought in by Bank 4,958,532 7,053,627 8,730,600
Market value of securities in reserve fund 11,343,270 10,577,091 18,848,146
Securities purchased by current proceeds 1,500,000
Market value of securities in pension fund 2,439,497 3,660,703 5,175,204
Buildings and fundus instructus 3,285,834 2,990,391 4,886,421
Capital stock 90,000,000 90,000,000 90,000,000
Reserve fund 17,815,425 18,098,114 32,457,754
Circulating notes outstanding 295,910,060 363,603,020 619,854,140
Outside funds payable on demand* 1,295,745 4,815,951 12,618,510
Other demand obligations 914,873 7,272,023 12,527,778
Mortgage bonds outstanding 99,940,180 81,191,000 128,541,300
Pension fund 2,439,497 3,660,754 5,274,453
Carried over from current proceeds toward interest on mortgage bonds of next year 2,572,300 1,875,711 1,638,491
Net annual proceeds 7,009,909 5,810,516 7,085,685
Balance-sheet of the Austro-Hungarian Bank, December 31, 1895.
Coin reserve: FLORINS.
Gold coin in crowns, gold bullion, foreign and commercial gold coin at 1638 florins per kilogramme fine 244,091,527.19.0
Foreign bills payable in gold 6,827,247.81.0
Silver currency 126,602,571.00.0
State notes 13,752,815.00.0
Discounted bills, warrants, and securities:
Vienna 50,245,300.98.0
Austrian branches 70,901,622.27.0
Buda-Pesth 62,005,394.01.0
Hungarian branches 36,322,163.68.0
Loans on securities:
Vienna 17,760,560.00.0
Austrian branches 16,715,260.00.0
Buda-Pesth 7,300,830.00.0
Hungarian branches 4,497,860.00.0
Redeemed matured securities and coupons 15,100.14.5
Debt of kingdoms and provinces represented in the Imperial Diet 76,322,459.47.5
Mortgage loans 134,290,233.73.0
Mortgage bonds bought in by the Bank 8,730,600.00.0
Securities in the reserve fund 18,848,146.48.0
Securities in the pension fund 5,175,204.40.0
Buildings and fundus instructus 4,886,421.00.0
Other assets 10,170,978.67.5
Total 915,462,295.84.5
Capital stock 90,000,000.00.0
Reserve fund 32,457,754.78.0
Circulation of bank notes 619,854,140.00.0
Gold balance in favor of the Imperial and Royal Austrian Exchequer 1,517,968.90.0
Gold balance in favor of the Royal Hungarian Exchequer 1,115,382.48.5
Outside funds payable on demand:
Bank accounts 12,618,510.37.0
Other accounts and outstanding drafts or money orders 12,527,778.24.5
Allotted mortgage bonds, due and not yet redeemed 695,200.00.0
Uncollected interest on mortgage bonds 44,118.25.0
Uncollected dividends 43,760.50.0
Mortgage bonds in circulation 128,541,300.00.0
Annual interest on mortgage bonds, not yet due 1,310,483.00.0
Pension fund 5,278,453.19.0
Other liabilities 3,425,503.27.5
Carried over from current proceeds toward interest on mortgage bonds for next year 1,638,491.12.0
Net proceeds for 1895 7,085,685.97.0
Applied to dividends for July, 1895 2,250,000.00.0
Applied to pension fund 103,248.79.0
Applied to dual Government 338,985.45.0 2,692,234.24.0 4,393,451.73.0
Total 915,462,295.84.5
[Kreutzers are included in this statement, because otherwise there would be discrepancies in the totals.]
Edition: current; Page: [171]
Items from the Official Report for 1895.
*Exclusive of amount brought over from 1894 and of sums in transit.
Total volume of transactions 2,532,289,026
Number of papers discounted, 1,507,968 (including 187,578 pieces brought over from 1894).
Amount of discounts 1,430,655,383
Amount of discounts collected 1,211,180,902
Date of maximum status of discounts, October 31st 227,715,000
Date of minimum status of discounts, March 15th 116,974,000
Annual total of loans on securities 189,890,510
Bank accounts:
Total receipts* 3,966,563,502
Total payments 3,963,183,951
Annual number of deposits, 110,434; nominal value 662,064,538
Total of cash turned over in 1896 21,506,355,574

Number of mortgage loans applied for in 1895, 700; number granted, 375.

Amount of loans applied for 20,497,700
Amount of loans granted 10,019,700
Number granted in Austria, 41; amount 623,000
Number granted in Hungary, 315; amount 9,124,900
Number granted in Croatia-Slavonia, 19; amount 271,800


Balance-sheet for 1894.
Stocks and bonds 2,722,860.93
Bills of Exchange:
Vienna 20,406,586.24
Branches 9,969,898.21
Vienna 3,583,041.27
Branches 1,706,838.57
Advanced on securities:
Vienna 27,494,173.81
Branches 273,948.00
Vienna 26,700.00
Branches 32,900.00
Real estate:
Bank building in Vienna 1,000,000.00
Agricult’l property at Pecek, Treboul & Zbozi. 1,193,518.88
Branches 570,092.23
Vienna { Foreign 4,397,097.76
{ Domestic 20,010,776.95
{ Local 36,430,891.82
Branches { Foreign 6,268,253.81
{ Domestic 23,821,973.09
{ Local 43,214,565.34
73,304,792.24 134,143,558.77
Total 203,124,116.91
Joint-stock capital of 250,000 shares at 160 florins 40,000,000.00
Reserve fund (or surplus fund) 8,000,000.00
Back dividends, 1889-1894 16,094.00
Acceptances 18,962,304.08
Interest-bearing deposits:
Vienna 3,605,130.15
Branches 2,116,589.04
Vienna { Foreign 9,471,474.22
{ Domestic 12,063,897.89
{ Local 43,545,201.33
Branches { Foreign 15,518,465.41
{ Domestic 14,279,480.10
{ Local 30,152,093.41
Profits 5,393,387.28
Total 203,124,116.91
Edition: current; Page: [173]
Market Investments of the Bank.
Number of Shares Dec. 31, 1894. DESIGNATION OF SHARES. Market Quotation Dec. 31, 1894. AMOUNT IN FLORINS.
Bank shares:
20 Austro-Hungarian Bank 1,043 20,860
5 Lower Austrian Discount Company 810 4,050
25 Vienna Giro und Cassen-Verein 315 7,875 32,785
Transportation shares:
4,964 Potscherad-Wurzmes Railway 120 595,680
Industrial shares:
750 Brünn Water-Works 410 307,500
125 Vienna-Neustadt Locomotive-Works 276 34,500
22 Pecek Sugar Refinery Par. 110,000 452,000
Sundry bonds 1,642,395


Abstract of Operations in 1894.
Business on commission—Vienna 609,651,000
Business on commission—Branches 680,766,000
Total 1,290,417,000
Commission charges—Vienna 467,539
Commission charges—Branches 1,016,242
Total 1,483,781
Bills of exchange—Vienna 170,963,000
Bills of exchange—Branches 117,428,000
Total 288,391,000
Proceeds in interest 1,162,472
Accepted drafts 116,152,000
Foreign bills—Vienna 970,010,000
Foreign bills—Branches 336,870,000
Total 1,306,880,000
Net returns 512,781
Advances on securities—Vienna 211,223,000
Advances on securities—Branches 139,000
Total 211,362,000
Proceeds of this business—Vienna 1,301,106
Proceeds of this business—Branches 17,349
Total 1,318,455
Bank accounts—Total transactions in 1894 83,927,000
Bank’s clearance account with the Vienna Clearing-House Assoc’n 72,577,000
Edition: current; Page: [174]
Money Orders.
Brought Over from December 31, 1893. Issued in 1894. Total Issued. Paid Back in 1894. Outstanding on December 31, 1894.
Number. Florins. Number. Florins. Number. Florins. Number. Florins. Number. Florins.
Vienna 532 1,030,600 938 1,712,200 1,470 2,742,800 903 1,586,000 567 1,156,800
Branches 1,209 1,602,100 1,997 2,845,700 3,206 4,447,800 2,350 3,243,700 856 1,204,100
Total 1,741 2,632,700 2,935 4,557,900 4,676 7,190,600 3,253 4,829,700 1,423 2,360,900
Cash movement in 1894—Vienna 1,713,771,000.00
Cash movement in 1894—Branches 318,179,000.00
Total 2,031,950,000.00
Total interest from the various branches of business 4,439,260.15
Total commission fees 1,483,781.44
Total proceeds from real estate 89,152.57
Total proceeds from securities 512,781.28
Profits in the banking and merchandise department of the Hungarian General Credit Bank at Buda-Pesth 194,407.02
Deduct quota falling to the directors of the Hungarian General Credit Bank 9,720.35
Deduct salaries and expenses 1,734,411.36
Deduct tax on current business 400,789.14
Deduct unpaid claims 4,614.24
Net proceeds 4,569,847.37

Current business, without reference to market investments and association with syndicates, thus yielded very nearly 11 425-1000 per cent. on the capital stock of 40,000,000 florins.


Abstract from Reports of 1870, 1880, and 1890.
ITEMS. 1870. 1880. 1890.
Cash 1,557,000 1,722,000 1,250,000
Bills of exchange 7,225,000 2,365,000 6,494,000
Our own securities 2,220,000 3,705,000 4,391,000
Advanced on securities 4,449,000 1,924,000 5,944,000
Advanced on merchandise 3,407,000 1,895,000
Real estate 901,000
Warehouse, etc. 1,166,000
Debtors 29,172,000 16,294,000 16,182,000
Syndicate business 1,764,000 3,612,000
Inventory and tax on shares 143,000 94,000
Total (approximate) 44,924,000 36,211,000 39,770,000
ITEMS. 1870. 1880. 1890.
Capital stock 12,000,000 15,000,000 12,000,000
Surplus fund 450,000 391,000
Drafts 2,222,000 4,552,000 1,568,000
Money orders in circulation 403,000 382,000 5,819,000
Creditors 28,241,000 9,651,000 18,484,000
Items from Report of December 31, 1894.
Bills of exchange 14,823,000 Capital stock 12,000,000
Securities 3,861,000 Surplus fund 777,000
Advances 22,133,000 Deposits on interest 7,807,000
Debtors 25,941,000 Acceptances 2,396,000
Cash 2,828,000 Creditors 44,335,000
Total assets 69,586,000


Abstract from Reports for 1881 and 1890.
ITEMS. 1881. 1890. ITEMS. 1881. 1890.
Cash 1,201,000 3,169,000 Capital stock 40,000,000 40,000,000
Bills of exchange:
Austrian 7,825,000 14,254,000 6,825,000 Redeemed gold premium
Foreign 1,062,000 4,278,000 Gold premium surplus. 250,000
Securities 10,473,000 8,497,000 Ordinary surplus fund. 712,000
Advanced on securities 20,462,000 7,551,000 Extraordinary surplus fund 7,024,000 7,180,000
Debtors 29,220,000 59,107,000 Drafts 6,932,000 16,039,000
Syndicate business 11,187,000 12,561,000 Deposits on interest 2,939,000
Real estate and inventory 75,000 5,369,000 Pension fund 342,000
Creditors 18,157,000 43,458,000
Total 81,505,000 114,786,000 Reserved for doubtful claims 102,000
Paris Branch, as per Statement of December 31, 1890
Cash 673,029 Appropriation fund 5,000,000
Bills of exchange 5,386,999 Drafts 7,161,004
Securities 172,179 Creditors 5,317,265
Advanced on securities 2,517,236 17,478,270
Certified debtors 8,728,824
Edition: current; Page: [176]
Summarized Report for December 31, 1894.
Bills of exchange 19,429,000 Capital stock 40,000,000
Securities 14,988,000 Surplus fund 9,988,000
Advances 9,663,000 Deposits on interest 4,024,000
Real estate and inventory 5,487,000 Acceptances 23,576,000
Debtors 81,357,000 Creditors 53,162,000
Cash 4,590,000 Other liabilities 711,000
Other assets 546,000
Total assets 136,060,000


Abstract from Reports of 1869-70, 1880, and 1890.
ITEMS. 1869-70. 1880. 1890.
Cash 341,000 1,978,000
Bills of exchange 1,497,000 6,375,000
Advanced on securities 602,000 1,403,000 7,435,000
Our own securities 386,000 3,014,000 4,700,000
Furnished in syndicate operations 805,000 2,176,000 6,616,000
Debtors 5,294,000 26,222,000
Real estate 781,000 1,826,000 1,617,000
Current accounts credit 3,728,000 1,643,000
Total 6,302,000 17,194,000 54,943,000
ITEMS. 1869-70. 1880. 1890.
Capital stock 3,200,000 8,000,000 25,000,000
Surplus fund 545,000 1,347,000
Special surplus fund 1,221,000 2,877,000
Acceptances 227,000 7,853,000
Creditors 1,126,000 7,315,000 18,039,000
Items from Report of December 31, 1894.
Bills of exchange 20,801,000 Capital stock 25,000,000
Securities 6,747,000 Surplus fund 4,553,000
Advances 5,274,000 Acceptances 13,534,000
Real estate and inventory 1,480,000 Creditors 46,670,000
Debtors 53,920,000 Other liabilities 2,000
Cash 4,117,000
Other assets 918,000
Total assets 93,257,000
Edition: current; Page: [177]


Abstract from Reports of 1870, 1880, 1890.
ITEMS. 1870. 1880. 1890.
Cash 2,029,000 6,700,000 3,284,000
Bills of exchange 4,535,000 2,662,000 14,387,000
Advanced on securities 5,441,000 21,685,000 26,197,000
Our own securities 1,769,000 2,264,000 3,980,000
Mortgage bonds in Bank 1,018,000
Loans on public domains 55,827,000 49,474,000 39,765,000
Mortgage loans: Gold 25,708,000 38,678,000 15,098,000
Bank funds 19,132,000 32,187,000 55,502,000
Municipal loans: Gold 411,000 7,352,000 95,000
Bank funds 13,102,000 52,750,000
Annuities 561,000 1,584,000 446,000
Real estate 2,578,000 2,905,000
Debtors 18,780,000 31,003,000
Deposited securities 41,613,000
Current accounts 8,363,000
Total assets 166,407,000 197,046,000 245,412,000
ITEMS. 1870. 1880. 1890.
Capital stock 9,600,000 9,600,000 9,600,000
Premium fund 3,074,000
Ordinary surplus fund 1,145,000 223,000 4,691,000
Extraordinary surplus fund 2,241,000 423,000 3,495,000
Mortgage bonds: On public domains 56,040,000 51,129,000 39,048,000
In gold 27,370,000 36,762,000 16,009,000
In bank notes 16,399,000 31,454,000 53,665,000
Municipal bonds: In gold 410,000
In bank funds
Premium bonds 20,000,000 51,512,000
Interest on mortgage bonds, etc. 2,665,000 2,446,000 2,233,000
Allotted mortgage bonds 385,000 9,510,000 1,075,000
Interest on loans 762,000 939,000 305,000
Exchequer bills 3,110,000 906,000
Drafts 1,342,000 312,000 7,000
Creditors 20,903,000 53,341,000
Reserved for doubtful claims 322,000 322,000
Current accounts 10,349,000 4,201,000
Edition: current; Page: [178]
Balance-sheet for December 31, 1894.
Cash, coin, coupons, bank accounts credit at the Austro-Hungarian Bank and the Vienna Giro und Cassen-Verein 4,278,435
Bills of exchange 10,859,488
Advanced on securities 37,277,184
Securities 7,335,760
Debtors 29,449,831
Loans on public domains 34,988,695.10
Mortgage loans in gold 8,834,284.04
Mortgage loans in bank funds 66,361,980.19
Municipal loans in bank funds 62,514,616.96
Annuities 469,764
Real estate 2,173,259
Capital stock paid in 9,600,000
Premium fund 3,737,096
Ordinary surplus fund 8,029,849.21
Extraordinary surplus fund 5,986,399.86
Reserved for doubtful claims 322,415
Drafts 135,732
Creditors 58,504,650
Mortgage bonds on public domains 34,138,920
Mortgage bonds in German Imperial currency 7,972,800
Mortgage bonds in bank funds 62,618,300
Premium bonds 57,777,600
Interest on mortgage and premium bonds 2,365,987
Allotted bonds on public domains 1,014,298
Allotted bonds in gold 9,120
Allotted bonds in German Imperial currency 213,651
Allotted bonds in bank funds 39,100
Allotted municipal bonds in gold 246
Allotted premium bonds 561,300
Interest on loans: amount brought forward for first half of 1895 331,847
Balance of current accounts 7,843,387
Profit and loss account 3,340,599
Edition: current; Page: [179]


Abstract from Reports for 1864, 1870, 1880, and 1890, stated in Millions and Thousands of Florins.
ITEMS. 1864. 1870. 1880. 1890.
Cash 2.607 4.618 1.929 2.277
Bills of exchange 4.401 6.879 7.108 11.479
Advances on securities 3.297 3.795 2.729 1.236
Own securities 2.110 5.649 2.404 4.216
Real estate, inventory, and mines 0.032 0.418 3.823 2.111
Mortgage loans 3.464
Debtors 9.269 56.622 25.869 34.875
Total (approximate) 22.617 77.983 43.863 59.658
ITEMS. 1864. 1870. 1880. 1890.
Capital stock 6.000 14.000 18.000 18.000
Silver premium 0.900 3.405
Surplus (or reserve) fund 1.538 1.572 1.787
Acceptances 6.327 8.451 10.495 11.693
Money orders 6.140 1.824 1.177 0.903
Mortgage bonds 3.485
Creditors 2.577 44.766 11.398 21.376
Summarized Report for December 31, 1894.
Bills of exchange 12,682,000 Capital stock 18,000,000
Securities 1,003,000 Surplus fund 2,434,000
Advances 15,183,000 Mortgage bonds 1,625,000
Mortgage loans 1,703,000 Deposits on interest 1,530,000
Real estate and inventory 1,413,000 Acceptances 31,320,000
Debtors 56,885,000 Creditors 33,885,000
Cash 1,889,000 Other liabilities 8,000
Total assets 90,758,000

The dividends of this bank exhibit large fluctuations, as shown by the following comparisons:

1864 8½ per cent., silver.
1866 9 per cent., silver.
1867 35 per cent., silver.
1868 76⅔ per cent., silver.
1870 15 per cent., silver.
1872 25 per cent., notes.
1873 5 per cent., notes.
1880 2½ per cent., notes.
1890 8⅓ per cent., notes.
Edition: current; Page: [180]


Abstract from Reports of 1860, 1870, 1880, and 1890, stated in Millions and Thousands of Florins.
ITEMS. 1860. 1870. 1880. 1890.
Cash 1.735 0.806 1.324 1.308
Bills of exchange 28.772 31.630 41.228 21.458
Advances on securities 0.468 3.651 8.026 4.851
Own securities 0.076 0.456 0.326 5.232
Banking and exchange business 4.831 0.958 1.340
Debtors 0.265 1.806 0.857 8.944
Real estate and movables 0.358 0.293 0.380 0.790
Round total 31.700 43.583 53.643 44.646
ITEMS. 1860. 1870. 1880. 1890.
Capital stock 7.000 7.000 7.000 9.800
Shareholders’ surplus fund 0.071 0.455 0.905 0.355
Creditors’ surplus fund 0.053 0.364 0.090 0.328
Creditors’ surety fund 2.222 2.278 2.067 1.494
Due to other banks 2.209 8.466 1.881
Current accounts 20.955 19.929 23.545 15.702
Creditors 0.471 9.500 9.844 13.381
Statement of Dividends, Years 1854 to 1890.
YEARS. Amount of Dividends Per Share. Per Cent. of Dividends. Market Value of Shares December 31.
1854 25 5 474⅜
1855 35 7 462½
1856 40 8 585
1857 44 8.4-5 588⅛
1858 39 7.2-5 630
1859 40 8 583
1860 40 8 545
1861 47.50 601
1862 48 9.3-5 648
1863 45 9 654
1864 37.50 580
1865 40.50 8.1-10 574
1866 40 8 608
1867 41 8.1-5 616
1868 65 13 670
1869 100 20 895
1870 74 14.4-5 889
1871 81 16.1-5 988
1872 92.50 18½ 1,155
1873 62.50 12½ 880
1874 45 9 859
1875 40 8 700
1876 35 7 640
1877 42 8.2-5 710
1878 43 8.3-5 750
1879 41 8.1-5 810
1880 43 8.3-5 800
1881 50 10 890
1882 45 9 840
1883 37 7.2-5 845
1884 10 2 660
1885 12½ 555
1886 22½ 546
1887 22½ 505
1888 25 5 513
1889 30 6 585
1890 30 6 600
Edition: current; Page: [181]
Summarized Report of the same Bank for December 31, 1894.
*Including Bank and exchange accounts, securities of the pension fund, and of creditors’ reserve fund. *Including surety fund of creditors, with interest thereon; creditors’ reserve fund, Bank accounts, pension fund, interest on current bills, uncollected interest, and dividends.
Bills of exchange 22,649,000 Capital stock 9,800,000
Securities 1,470,000 Surplus fund 831,000
Advances 9,518,000 Deposits on interest 13,237,000
Real estate and inventory 840,000 Creditors 18,574,000
Debtors 13,661,000 Other liabilities* 9,042,000
Cash 1,866,000
Other assets* 2,045,000
Total assets 52,049,000


Balance-sheet for 1894.
Cash 1,182,029 Joint-stock capital 3,000,000
Local bills 7,663,821 Surplus fund 425,695
Advances on securities 5,159,430 Back dividends 40
Bank property 460,000 Bank accounts, credit 7,783,327
Bonded security 2,532,700
“Arrangement” security 153,595
Brought over 220,084
Profits 349,838
Total assets 14,465,281 Total liabilities 14,465,281
Edition: current; Page: [182]


Designation of Depositors for the Seven Years Period, 1883 to 1890.
Issued. Closed. Open.
Children 120,575 21,657 98,918
Students and school children 445,940 168,691 277,249
Private citizens 95,405 43,649 51,756
Married women and widows 54,711 23,821 30,890
State, provincial, and municipal officials 23,249 10,212 13,037
Private officials 40,207 17,708 22,499
Clerical and religious 7,213 2,923 4,290
Military 28,737 12,539 16,198
Police (“organs of safety”) and bank watchmen 9,287 2,403 6,884
Scholars, professors, teachers, artists 26,817 10,852 15,965
Advocates and notaries 3,769 2,927 842
Physicians, medical persons, and apothecaries 5,758 4,690 1,068
Poets, authors, journalists 2,541 1,914 627
Trades-people 25,356 11,320 14,036
Artisans 7,884 5,574 2,310
Industrial hands, mechanics 177,631 76,159 101,472
Shopkeepers’ assistants 36,007 19,512 16,495
Factory hands 22,289 12,522 9,767
Ouvrières 20,684 8,736 11,948
Men-servants and messengers 97,549 35,089 62,460
Farmers 15,041 8,699 6,342
Farm servants 4,406 2,960 1,446
Day laborers 8,029 4,146 3,883
Miners, smelters, woodsmen 5,535 1,974 3,561
Sailors 643 293 350
Associations and juris personæ 19,700 12,922 6,778
Persons of unknown calling 2,584 474 2,110
Convicts 82 57 25
Total 1,307,629 524,423 783,206
Depositors for the Seven Years 1883 to 1890, with respect to Age.
DEPOSITORS Books Issued. Closed. Open.
Ten years and under 235,711 40,627 195,084
From 10 to 20 years 474,758 203,669 271,089
From 20 to 30 years 291,704 118,432 173,272
From 30 to 40 years 169,874 83,803 86,071
From 40 to 50 years 71,247 43,597 27,650
From 50 to 60 years 26,901 14,193 12,708
From 60 to 70 years 11,510 4,424 7,086
From 70 to 80 years 4,143 1,729 2,414
From 80 to 90 years 806 647 159
Above 90 years 48 32 16
Of uncertain age 1,227 348 879
Associations and juris personæ 19,700 12,922 6,778
Total 1,307,629 524,423 783,206
Edition: current; Page: [183]
Growth of Business from 1891 to 1894.
1891—Deposits 23,300,000
1892—Deposits 26,500,000
1893—Deposits 29,500,000
1894—Deposits 32,500,000

The transactions in cheques and clearances rose from 1,001,000,000 florins in 1891, to 1,367,000,000 florins in 1894.


Data by Decades, from 1820 to 1890, stated in Millions and Thousands of Florins.
*Until 1858, the currency of the Bank was of the Vienna Convention standard. The sums from 1860 forward are in Austrian standard florins.
1820. 1830. 1840. 1850. 1860. 1870. 1880. 1890.
Deposits .083 4.320 5.380 8.132 8.600 25.811 41.433 41.441
Paid back .020 4.529 5.224 6.077 8.607 21.609 44.374 47.854
Increase of interest .001 .298 .747 1.055 1.511 2.743 5.159 6.539
Deposit capital .084 7.901 20.890 29.392 35.704 62.099 132.593 184.006
Surplus fund .008 .150 .975 2.567 3.881 3.922 4.630 6.000
Total administrative funds .092 8.287 22.400 32.169 40.028 67.251 144.517 193.781
Applicat’n of administrative funds:
Mortgage claims 4.831 10.617 14.245 26.981 32.972 58.103 94.131
Valid bills of exchange, Exchequer mortgage bonds, current accts .021 .801 4.758 12.960 10.020 16.064 65.292 55.080
Advances on State securities and bank shares .934 5.427 1.760 .651 5.512 6.126 4.368
Bank shares and State bonds .047 1.231 .706 1.325 .912 10.296 4.791 30.275
Number of open accounts 2.601 32.543 91.409 125.570 169.596 199.133 276.514 401.970


Total Assets and Liabilities of 414 Austrian Savings-Banks for 1890.
A further sum of 28,851,300 florins does not appear in the balanced statements.
Excluding 5,479,500 florins not entered in the balanced statements.
Mortgage loans 822,722,800 Deposits 1,281,569,600
Bills of exchange 50,324,300 Sundry liabilities 33,865,600
Advances 11,911,300 Surplus fund 65,130,100
Securities 317,972,400 Profits 3,717,600
Sundry investments 99,502,900
Real estate 21,991,500
Cash 20,003,700
Other assets 39,854,000
Total 1,384,282,900 Total 1,384,282,900
Edition: current; Page: [184]


Summarized Reports for 1870, 1880, and 1890, stated in Millions and Thousands of Florins.
*For 1880 and 1890, the returns include the Central Office, and the Bank and Warehouse departments.
ITEMS. 1870. 1880.* 1890.*
Cash 50 1.038 2.677
Bills of exchange 13.515 10.004 10.652
Advances on securities 3.198 41 7
Advances on merchandise .399 .115
Securities 2.074 1.234 3.276
Merchandise 1.413 .804
Debtors 19.467 27.113
Real estate and inventory 15 .773 .443
Steam mills .972 1.207
Sundry assets and syndicate investments 3.966 3.280 10.493
Total (approximate) 22.892 38.621 56.610
ITEMS. 1870. 1880. 1890.
Capital stock 6.000 10.000 10.000
Surplus fund 42 .754 1.322
Creditors 12.259 11.001 32.794
Acceptances .909 .626 .521
Exchequer bills .172 .409
Deposit of Austrian Credit Bank 3.000 3.000
Balance of Central Office 9.105 3.235
Sundry items 3.240 2.259 3.878
Edition: current; Page: [185]
Table of Dividends, 1868 to 1890.
YEARS. Paid In Per Share. Amount of Dividend. Per Cent. Closing Value of Shares at Vienna Bourse.
1868 (for 15 months) 80 11.65 1165/100 92.25
1869 80 7 875/100 78.50
1870 80 5.50 6⅞ 81.50
1871 80 13.50 16⅞ 126.50
1872 160 18 1125/100 178
1873 160 9 5⅝ 125.50
1874 200 17 225
1875 200 10 5 189.25
1876 200 5 101
1877 200 21 10½ 185
1878 200 20.50 1025/100 213.40
1879 200 25 12½ 268.75
1880 200 19.50 975/100 265.25
1881 200 21 10½ 351
1882 200 19.50 975/100 272.50
1883 200 19.50 975/100 290.50
1884 200 21 10½ 307
1885 200 19 306.50
1886 200 18 9 302.75
1887 200 16 8 264.75
1888 200 18.50 925/100 306
1889 200 24 12 342
1890 200 24 12 359


Summarized Reports for 1870, 1880, and 1890, stated in Millions and Thousands of Florins.
*Including State subsidized industries.
ITEMS. 1870. 1880. 1890.
Cash .116 .312 1.208
Bills of exchange 4.776 4.944 10.844
Advances on securities and pledges 2.486 2.621 15.356
Mortgage loans 4.928 7.762 27.897
Municipal loans 10.352
Own mortgage and other honds 65 .680 3.648
Securities on sundry funds .112 1.431 1.925
Investments with other institutions .659 .238
Debtors* .200 13.135
Exchange account .561
Syndicate operations .736 .665
Real estate and inventory .318 .681 .325
Total (approximate) 13.717 19.406 85.915
ITEMS. 1870. 1880. 1890.
Capital stock 1.575 2.500 8.000
Surplus funds .100 29 2.097
Mortgage bonds 4.943 10.235 27.759
Municipal bonds 10.403
Creditors’ surety fund .142 92
Sundry deposits 5.602 3.746 28.914
Creditors .882 2.277 4.749
Acceptances 97
Transient items .265 .191 1.816


Returns for 1870, 1880, and 1890, stated in Millions and Thousands of Florins.
ITEMS. 1870. 1880. 1890.
Cash 5 10 .290
Bills of exchange 2 .112
Mortgage loans .814 1.505 32.427
Municipal loans 45.998
Own mortgage bonds .249 3.275
State securities .208 2.718
Advances on securities .382 15 3.698
Sundry securities .136 1 3.038
Hungarian Discount and Exchange Bank .121 .188
Debtors 28 51 5.150
Deposits with other institutions .368
Annuities .537
Real estate and inventory .330 .556
Current accounts 6 .632
Total (approximate) 1.527 2.624 98.799
ITEMS. 1870. 1880. 1890.
Capital stock .600 .700 10.970
Surplus fund 2 23 .829
Gold premium surplus fund .245
Exchange variation fund 60
Surety fund of mortgage debtors 56 .543
Mortgage bonds .779 1.588 34.886
Premium bonds 42.510
Anticipatory payment of mortgage loans .760
Creditors .100 .184 3.853
Coupons and uncollected dividends 10 34 .991
Current accounts 8 .603
Edition: current; Page: [187]


Items from Report for 1870, 1880, and 1890, stated in Millions and Thousands of Florins.
ITEMS. 1870. 1880. 1890.
Cash .962 .640 .517
Bills of exchange .406 1.359 1.400
Mortgage loans 28.173 65.769 94.169
Investments at short notice 50 4.081 7.672
Advances and accounts current .345 1.583 1.171
Securities for mortgage bond surety fund 4.823
Sundry securities 2.590 4.648 1.375
Mortgage bond deposit of joint liability fund .213 .500 .577
Real estate and inventory .253 .484 .253
Mortgage bond redemption account .769 1.207
Foundation obligations 1.478
Total (approximate) 34.482 79.939 128.851
ITEMS. 1870. 1880. 1890.
Mortgage bonds ready for allotment 28.058 65.573 91.047
Mortgage bonds allotted 3.029 2.707
Creditors 1.306 2.296 6.052
Exchequer bills .858 .320 1
Coupons due .121 .65 93
Annuity certificates .250
Transient interest .689 1.525 2.131
Joint liability fund .368 .990 1.411
Net foundation capital 1.677 .167 .167
Due to State .500 .500 .500
Surplus fund .654 4.704 7.886
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Banking in the Netherlands.






Edition: current; Page: [190] Edition: current; Page: [191]



THE development of Dutch Banking offers but few points for critical remark. An event of real importance, however, arose about 1814, when Holland adopted the bank note system. Before that date, a few resultless attempts had been made toward this important step. Dutch Banking in general followed the type of the exchange banks (Wisselbanken). Although they had increased in the course of years beyond their originally limited sphere, no great progress in principle was apparent. It was only in the nineteenth century that, in all branches of banking, a greater variety of form and a better adaptation of ruling principles of credit to the commercial interests began to appear. In the same degree that economic conditions all around changed, the banks changed their methods from exchanging money to the exchange of credits.

Dutch Banking has a history of about 300 years. Its origin was a natural consequence of the large increase of commerce, which demanded intermediary establishments for money interchanges.

These agencies appeared earlier than in most other European States; the reason for this being in the circumstance that Dutch international commerce had at an early period attained considerable importance. This trade made but little use of the resources of credit. Bills of exchange, which in these days form so predominant a part of the international settlements, were hardly known to the Dutch merchants up to the beginning of the seventeenth century. Most commercial transactions were made in specie. Consequently, a mass of different foreign coins poured into Holland, and were put into circulation, partly with, partly without permission of the authorities. This gave rise to a necessity for authorized agents for the exchange of these coins. These conditions were aggravated by the bad state of currency systems which existed during the sixteenth century in all European States.

Edition: current; Page: [192]

The systematic deterioration of coin brought much bad money into the country. Good coins were thus taken from the market, or when left in circulation, brought an agio. All efforts made by the Government to secure a fixed price for each coin proved useless. This deplorable condition had its great drawbacks for trade, and the Dutch monetary system was in such disorder that it only increased the general confusion. A national currency did not exist in Holland. There was but one recognized coin, according to which the various tariffs establishing the prices of coins admitted to circulation were valued. That coin, for a long time, was the “gulden” (guilder); the actual coining of which, however, did not commence until 1681 in the provinces of Holland and Western Friesland. Not only the provinces, but also the towns, struck their own money. Even illegal minting appears to have flourished, which is proved by the repeated prohibitions published against it.

The unbearable state of the currency in the sixteenth and seventeenth centuries, which was aggravated by wars, finds its characteristic expression in the numerous currency decrees of this period. The great number of coins shows sufficiently the many difficulties against which commerce had to contend. The decree of the Earl of Leicester (August 4, 1586*) is accompanied by a “Beeldenaar of Figuerboeck”—i. e., a collection of copies of coins—which mentions about 130 different kinds of silver coins and 370 gold coins as in circulation. Among the latter are, for example, twelve French crowns, four double and fifty-nine single Italian pistoles, eighteen double and forty-eight single Italian ducats, eighteen Spanish and thirty-eight Hungarian ducats, and seventy-one German goldgulden. On the basis of this decree a “Manuael” (manual) was issued for the use of changers, in which the prices for more than 500 different kinds of gold coins and more than 340 different silver coins were fixed. To the ordinance of the Staaten-Generaal—i. e., the Dutch Parliament—of the provinces of Holland and Western Friesland from December 19, 1603, is attached a “Beeldenaar,” with the copies of 120 silver and about 380 gold coins, amongst which there are fifteen French crowns, five Spanish pistoles, eight double and sixty single Italian pistoles, eighteen double and forty-eight single Italian ducats, thirty-seven Hungarian ducats, and seventy German goldgulden. The “Manuael” for changers, published in accordance with this decree, mentions more than 320 silver and more than 500 gold coins. In the “Beeldenaar,” added to the ordinance of the Staaten-Generaal of the United Netherlands, dating from March 21, 1606, are included the copies of 148 silver and 396 gold coins, and in the corresponding “Manuael” 341 silver and 505 gold coins from many foreign countries.

These figures prove better than any further explanation how difficult it was for a merchant, toward the end of the sixteenth and the beginning of the seventeenth century, to find his way in this maze of money. No wonder Edition: current; Page: [193] that people wished and were compelled to shift this trouble on professional changers, and that the business of money-changing became very lucrative and very important. Cash trade was more and more concentrated in the changers’ offices; and changers in Holland, as well as in Germany and other countries, were the predecessors of the bankers and the banks.


It was thoroughly in accordance with the notions of those days that such an important trade should be licensed. The money-changers were even in the fourteenth century official persons, and remained so afterward. But money-changing seems also to have had a great attraction for other people, and many unlicensed individuals appear to have taken it up. This fact is proved by the complaints of the minting decrees of the Earl of Leicester, August 4, 1586, and that of the Parliament (Staaten-Generaal) of Holland and Western Friesland of December 19, 1603. Those documents say that money-changing was driven to “tot willen, lust ende believen van een yegelyks”—i.e., at the wish, goodwill, and pleasure of everybody. For that reason, it was over and over again impressed by the authorities upon the public that the trade of money-changing was allowed only to duly licensed changers. According to the decree of August 4, 1586, above mentioned, which agrees with the minting ordinances of Emperor Maximilian (December 14, 1489), and of Charles V. (February 4, 1520), concerning money-changers, the generaals van der munte (head manager of the mint) is to appoint as many money-changers in the capital towns of the province as are needed, according to a report of the Town Council. Only persons of good name and reputation, not suspected of unlicensed minting (hegmunterey) might be appointed to this office. The Minting Master gave to the changer an “instruction,” upon which this money-changer had to take an oath. Outside of their offices (named “winkel”) the sworn money-changers were obliged to exhibit the “dish or bowl” (schotel ofte nappe), with the coat of arms of the province painted on the same. They had to purchase precious metals and coins and to exchange the same according to the officially stated prices in the “Manuael.” This “Manuael” was to be kept open on their table, with the signature of the Minting Master, as well as an authorized copy of the existing decrees concerning coins and money-changing. They were not allowed to sell the coinage material to goldsmiths and silversmiths, or to any other person; but they were bound to deliver the same to the mint office of their province.

This the money-changers evidently evaded. They tried to put into circulation again the coins allowed to circulate with an agio, and to sell the purchased precious metals, with a profit, to the goldsmiths and silversmiths. First, by the decree of the Staaten-Generaal of the United Netherlands of March 21, 1606, changers were allowed to sell coinage material to the home manufacturing consumers. By the ordinance of the Staaten-Generaal of Edition: current; Page: [194] Holland and Western Friesland of December 19, 1603, money-changers also had been permitted to supply merchants with such money as they required for their international exchanges. For the rest, the orders of 1603 and 1606 are in accordance with the decree of 1586, with the exception of one point (to which later reference will be made); and the appointment of money-changers rested with the Town Council.

It seems that money-changers were not always very particular with respect to their scales and weights. The above-mentioned decrees (1586, 1603, and 1606) all agree that, in consequence of “this long-lasting war, the conformity and proper bias of weights and scales have not been properly attended to by the masters of the mint, changers, jewelers, goldsmiths and silversmiths, etc. Therefore, it has been urged over and over again that the weights of the changers need to be officially tested and that the scales of the money-changers should be adjusted (justirt), and that unexpected revisions will settle any infringements.” A very interesting new order is to be found in article thirty-seven of the decree of March 21, 1606. That clause forbade all changers to keep money or cash for merchants, or to receive money for their account from any person, or to pay by bills of exchange, or to make remittances, or in any way, directly or indirectly, to make settlements for others. In this article it is stated that certain “money-changers and other people daily attempt to keep either money or cash for merchants, to receive and repay their debts by drafts, bills of exchange, remittances, and other means, and thus give occasion to fraud and cause the replacement of heavier coins by lighter ones.”

The above-mentioned business was known as that of “cashiers,” who are to be considered the immediate predecessors of bankers. No doubt the cashiers had previously existed and owed their origin to the requirements of commerce. It was natural that merchants found it to their interest to place their money transactions in the hands of certain persons familiar with such affairs. So far as can be traced, however, the cashiers are not officially mentioned before the beginning of the seventeenth century.* The authorities did not by any means regard the cashiers with a friendly eye, as their trade offered many occasions for dishonest actions. But it had become indispensable to the merchants. It is evident, from the above-mentioned prohibitions of article thirty-seven of the decree of March 21, 1606, that the money-changers also occupied themselves with the business of cashiers. The money-changers being, naturally, considered wealthy people, enjoyed great credit in the commercial community; they were, moreover, sworn and under official control, and in a position which enabled them to do a cashing trade on the cheapest terms, as they were obliged to keep their own stock of coin and metal in safe places, and thus already possessed the necessary Edition: current; Page: [195] arrangements for safe-keeping in behalf of others. The changers accepted the money of the merchants on deposit, received payments for them, cashed their bills, called in their assignations, bills, etc.; and, on the other hand, made payments for them, but they were not allowed by law to use the deposited funds for their own business.

The foregoing may be regarded as a depositing business in the narrowest sense of the word. These operations cannot be compared to the modern deposit business so perfectly developed; but they may be considered the original form of banking in Holland. At all events, the operations of the first banks in Holland were nothing more than the continuation of the trade of changers and cashiers.

Edition: current; Page: [196]



PERIOD 1609-1814.


Measures Against the “Cashiers” in Amsterdam—Formation of the Amsterdam Exchange Bank. 1609—Fruitless Attempts to Secure to the Bank a Monopoly in Exchange and Cashing—Establishment of the Middelburg Exchange Bank. 1616—Origin of the Rotterdam Exchange Bank. 1635—Continued Existence of Private “Cashiers.”

THE first Dutch exchange bank (Wisselbank) was established at Amsterdam. This could by no means happen by chance. In the fourteenth century, Amsterdam already began to flourish, and became more and more the centre of the great international trade which was concentrated in Holland. Great wealth was gathered there. It is characteristic of the town that half the capital (6,500,000 guilders) of the Dutch East India Company, founded on March 20, 1602, was contributed by the Amsterdam merchants, one-quarter by the merchants in Middelburg, and by the merchants of Delft, Rotterdam, Enkhuizen and Hoorn one-sixteenth part each.*

The comparatively large income and expenditure of Amsterdam in Edition: current; Page: [197] those days speak for the importance of this town as a mercantile centre.* The port of Amsterdam was large enough for 4000 ships. Amsterdam itself was the home of about 500 ships, and the freight business was an important source of revenue to the citizens. Toward the end of the sixteenth century, the circulation of bills of exchange in Amsterdam also began to increase. In 1597 the “costumen” of Antwerp, which had already formerly been used for the exchanging trade in Amsterdam, were indorsed “good for Amsterdam,” and in commerce also the circulation of papers of credit increased considerably. Owing to this extensive trade, inconveniences resulting from the confusion of coin were all the more felt, and changers and cashiers for this reason were of great importance. It is even possible that cashiers had been employed in Amsterdam earlier than anywhere else.

Neither the cashiers nor the use of credit paper met with the approval of the Amsterdam Government. On January 5, 1604, severe orders were issued against the cashiers; but they were not enforced on account of the remonstrances of the merchants. A new decree was issued on July 15, 1608, by which it was strictly prohibited to anyone to act as cashier. The deplorable state of the coin market had meanwhile considerably increased, and forced the Government to take these measures. It is explained in the decree that “experience shows how within the past four years (since 1604), by the trade of the aforesaid mischievous people (who only care to increase their own income at the expense of the loss and ruin of the common welfare), so much harm had been done that money was raised up to a much higher value than in former years, even up to nine per cent.” It was feared that by these proceedings the commonwealth would be entirely ruined unless strict measures were adopted. But this decree had to be modified on July 29, 1608, on account of the necessities of the merchants, which modification took place under the form of an “interpretation”; by virtue of which a merchant had the permission to employ a cashier outside of his own house, if the cashier did not serve any other than the one merchant, and on condition that he previously took an oath to the mayor of the town not to interfere with the Edition: current; Page: [198] exchange business, neither to receive or pay any coin higher than the legal ordinance permitted, nor to deal in coins nor to sell them to money-changers. A professional banking cash business was of course not possible, being limited by the permission to serve only one merchant for the time being. The decree of July 15, 1608, tried at the same time to hinder the circulation of private credit paper, and ordered, for that reason, that no one should give or receive from his debtor any bills, obligations, or assignations, but that all claims should be paid in hard cash. The use of private credit paper in connection with the business of “cashing” was looked upon by the Town Council as liable to increase the bad state of the currency; but also in this case the decree of July 29, 1608, had to allow certain exceptions. The Town Council already, at this period, contemplated a new scheme* to remedy the inconveniences of the currency.


It was the official intention to substitute cashing and exchanging by private persons by a large bank. This plan was realized, and by the decree of January 31, 1609, the Amsterdam Wisselbank was established, the first great bank of Holland, being indeed one of the first European banks.

The purpose intended by the establishment of this Banck van Wissel was, according to the decree of January 31, 1609, “to check all agio (of the current money) and confusion of coin, and to be of use to all persons who are in need of any kind of coin in business.”

The Bank was intended to serve as a general exchange office, and had to fix in front of its door the coat of arms of the province, in the same manner as the money-changers, besides keeping on its table a copy of the last mint decree and the Exchange Manual. The Bank was to raise “as little agio as possible” for exchanging of money. At the same time, the Bank had to serve as a general cashier for the merchants. Every merchant was permitted to deposit the precious metals in coin or bars at the Bank, and to withdraw it again at his pleasure. The smallest sum that could be deposited was 300 guilders, excluding coin smaller than the shilling. The latter coin was not allowed to exceed three per cent. of the total deposited. The depositor enjoyed a credit at the Bank which corresponded to the sum deposited by him. The value of this sum had to be in accordance with the mint decrees.

This credit was called “bank money.” The depositor could dispose of it by assignation, if he did not choose to withdraw it in hard cash. The amount of his assignation was not allowed to exceed his bank credit, under penalty of a fine of three per cent. of the sum overdrawn. The assignations were balanced by payment or transfer from one account to another. “For better and safer payment of money drawn on bills,” it was further decreed Edition: current; Page: [199] that all bills of exchange drawn in Amsterdam after February 14, 1609, and all foreign bills payable in Amsterdam after that date, of the value of 600 guilders and upward, had to be paid in bank money, otherwise the bill was to be considered as “badly paid,” and the offender fined twenty-five florins.

This regulation involved a great privilege for the Bank, because every merchant was obliged to keep an account with it. Still more, by a decree of April 1, 1609, private exchange, and by decree of November 28, 1609, private cashing, were prohibited under penalty of a fine of twenty-five per cent. of the amount received and paid. An attempt was thus made to give the Bank a monopoly in the exchange and cashing business. For the better accommodation of merchants, the same decree (November 28, 1609) appointed buyten-ontfanghers (out-of-door receivers). It became the duty of these receivers to act as intermediaries between the Bank and the merchants, and they had to do the depositing and paying for the latter at the Bank, for a compensation of one stiver for each 100 guldens. The money received they were not allowed to keep in their possession, but must deliver it after three days to the owner, or pay it for him at the Bank. The delivery of this money to others was strictly forbidden. These instructions also forbade these agents to receive or to pay any money independently, on higher terms or in any way not in conformity with the decrees. It was only by order of the head commissioners of the Bank that the buyten-ontfanghers were allowed to exchange coins with the agio intrusted to them by these commissioners. The receivers had to keep a register of their receipts and expenditures, so as to be better able to settle their accounts with the head commissioners. They were obliged to communicate to the head commissioners any irregularity in minting or defects in coins which came to their notice. They were of course “zealously and faithfully” to mind their own business, and they had to find security of 12,000 guilders as a guarantee for the Bank and their clients. The city guaranteed the deposits at the Bank, and they could not be attached.

It will be perceived that the Amsterdam Bank was originally a bank of deposit and “giro,” in the primary sense of the word. As the Bank was not allowed to lend the deposits, it was obviously not able to pay interest to the depositor. On the contrary, the depositor had to pay a fee, which was fixed by the decree of January 31, 1609, at one-half stiver for every 100 guilders paid to the Bank or by the Bank. The original amount of the capital of the Bank appears uncertain; but the settlement of the first annual account for 1609 amounted to 1,000,000 guilders.


It was in accordance with the notions of that time that an attempt was made to secure a monopoly for the Bank; but it does not seem to have been in the interest of the merchants, and the monopoly could not be realized. It was not possible to enforce the rule that all bills of the value of Edition: current; Page: [200] 600 guilders and upward should be paid in bank money. Already, by the decree of June 16, 1615, this order had to be repeated and the bill-brokers were threatened with removal from their functions if they sought to infringe the decree of January 31, 1609. At the same time, the brokers were obliged to communicate to the mayor any infringement which came to their notice. The entire abolition of money-changers also failed of success. The city could only remove sworn money-changers, which she herself employed, but it was impossible to prevent the appearance of unsworn changers.

The merchants, moreover, did not want to renounce the services of private cashiers. At last, the decrees of June 4 and 19, 1621, had not only to sanction the business of the cashiers, but also to regulate it. According to these decrees, the cashiers were to be appointed by the Town Council, had to take an oath on their appointment, and to find security to the amount of 3000 guilders. The sworn cashiers had to be at the service of anybody who wanted to trust them with carrying, reclaiming, or paying money. When they had to call in assignations, they were obliged to communicate to their employers within fourteen days whether these were paid or not. They had to remit money received for their employers within twenty-four hours to the latter, in the same specie in which they had received it. The cashier had to make payments for his employer by assignations, but only in hard and good cash. He was obliged to accept and to remit all coins at the prices fixed by decrees. For weighing coins he had to have in his office an accurate pair of scales and weights. Coins under value the cashier was not allowed to give out again, but he had to deliver them to the Bank, where the intrinsic value was paid for them. All infringements of the decrees concerning minting and cashing, the cashier was obliged to communicate to the mayor or commissioners of the Bank.

The cashier had to enregister all transactions made by him in two books, called “specie-boeken,”* one of which had to contain all the money received and the other all the money paid out, together with the values on which his transactions were based. Besides this, the cashier had to keep a cash-book detailing his transactions of the day before. These books the cashier had to be ready to show when the authorities requested it. The cashier had to give a proper written account to his employer, and he received for his trouble a fee of two stivers for each 100 guilders.

Under these regulations the sphere of action of sworn cashiers was very restricted. By the prohibition against keeping money received longer than twenty-four hours, cash-holding was made impossible. Probably this measure was taken to assure to the Amsterdam Wisselbank the monopoly of this business. We may presume that this order was often infringed, and that in consequence of such infringement, sworn cashiers were able to exist till a later day. By the decree of May 9, 1617, it was forbidden to transfer less than 600 guilders from one account to another, and a depositor could Edition: current; Page: [201] only dispose of money transferred from another’s account to his own on the following day.


The plan of the Amsterdam Wisselbank was copied in other towns. First, Middelburg—then an important commercial town—adopted the system. The Middelburg Wisselbank was opened on May 1, 1616, according to a decree (March 28, 1616) issued by the Middleburg Town Council. As far as can be traced, the original organization of this bank was very similar to that of the Amsterdam institution. Schimmel (“Geschiedkundig overzicht van het muntwezen in Nederland,” Amsterdam, 1882, page 24) mentions a Wisselbank at Dordrecht, about which I have not been able to get any information.

Rotterdam followed in 1635 with its Wisselbank. The establishment of this bank had been resolved on by the Vroedschap (Senate) on February 9-19, 1635, and the Bank was opened according to a decree of the Staaten-Generaal of Holland and Western Friesland of April 4, 1635; published on April 18, 1635. In the introductory part of this decree it is especially mentioned that the Publijcque Wisselbank (public exchange bank) “has been established according to the example of Amsterdam or Middelburg,” and that Delft, Amsterdam, and Hoorn had been consulted about the project.

The Bank was to begin operations on May 1, 1636, and was at first a privileged exchange office. The initial article of the decree prohibited to private persons money-changing and business in coins and precious metals under penalty of a fine of twenty-five guilders for the first offence and fifty guilders for the second. Any transactions in precious metals (coins or bars) could, according to article two, only be done through the intervention of the commissioners of the Bank. The agio which they could demand had to be posted on the door of the Bank. Second, the Rotterdam Bank did a cashing business. It received all coins admitted to circulation and not abraded, at the values fixed in the tables. Coins which were light, not legally current, or false, had to be cut into pieces at the Bank and returned to the owner (Art. 4). Coin smaller than a shilling, the Bank was not allowed to receive, and of shillings it was permitted to take only ten per cent. The smallest permissible deposits at the Bank were of 150 guilders (Art. 5). The public transferred their deposits by assignation, and these had to be delivered by the owner or by an authorized commissioner (Art. 8). No one was allowed to draw more than stood to his account, under penalty of a fine of three per cent. of the sum overdrawn (Art. 6). All the money which was paid at the Bank or assigned for an individual account had to remain at least twenty-four hours on the same account (Art. 9). All bills for 50 Flemish pounds (300 guilders) and upward which, after April 18, 1635, had been drawn in Rotterdam, or after May 1st anywhere else, and were made payable in Rotterdam, had to be paid in bank money, otherwise they were considered Edition: current; Page: [202] imperfectly paid, and for this the payer and payee had each to pay twenty-five guilders fine, for the benefit of the Bank (Art. 3). The city guaranteed the deposits (Art. 13). The deposits could not be attached by legal process (Art. 14). The depositors had to pay a fee of one-half stiver for each 100 guilders (Art. 15).

It is remarkable that the prohibition of private cashing, which had been futile in Amsterdam, is not to be found in the decree of April 4-18, 1635. Private cashing, as already stated, existed side by side with the Wisselbanken of the towns. The cashiers steadily grew in importance, and had under their control large banking operations. I presume that they facilitated the settling of payment of the merchants by clearing, and that they sometimes gave credit to their employers; but accurate data concerning private cashing are, unfortunately, not to be found.

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Their Importance to Trade in Coin and Precious Metals—The “Bank Money” of the Amsterdam Exchange Bank—The “Bank Money” of the Rotterdam Exchange Bank—Reorganization of the Middelburg Exchange Bank, 1681—The “Bank Money” of the Middelburg Exchange Bank—The Receipt System in Rotterdam and Amsterdam—The Lombard (loans) on Stocks in Middelburg.

THE importance of the exchange banks mentioned in the preceding section was very considerable during the rest of the seventeenth and in the greater part of the eighteenth century. This is especially true of the Amsterdam Bank, respecting which the most accurate data are to be found. The Wisselbanken, as we have seen, were at first meant to do the changing and the trade in coin and the precious metals in place of the private changers. But these latter were not to be pushed aside. The Rotterdam Town Council was induced, on August 24, 1720, to reserve to itself the right of giving the privilege of money-changing to a private person. This fact proves that the scheme of monopolizing the business of money-changing for the benefit of the Wisselbanken was not realized.

Many vain attempts were made in Amsterdam to suppress the private trade in coin and the precious metals. By a decree of November 22, 1655, gold and silver wire-drawers were obliged to use nothing but metal bought at the Wisselbank. By a decree of April 16, 1684, the Bank commissioners secured the monopoly of the trade in silver and silver coin. The few exceptions made here were in favor of goldsmiths and silversmiths and merchants, who received the metal from foreign countries. The export of uncoined metal was allowed only when accompanied by a certificate given by the Bank commissioners. These and many other orders were found insufficient to suppress private trade in the precious metals, or private changing at Amsterdam.

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Nevertheless, the Amsterdam Wisselbank attained great importance in all that relates to transactions in coin and the precious metals. The Bank had a large stock of both, and for this reason a lively business in coin and the precious metals developed at Amsterdam. The Town Council of Amsterdam became convinced, after a long struggle, of the uselessness of trying to assure the Bank’s monopoly. Accordingly, it sanctioned by the decree of June 27, 1749, the private trade in specie, and even ordered that the regulation of the values of the coins had to be fixed by commercial agreement. The business of changing and dealing in coin and the precious metals was of great importance to the Wisselbanken, but their position as banks of deposit and “giro” was still more important.


The Wisselbanken accepted coins and precious metals, and the depositor received for the deposited value a credit, named “bank money,” a term which was used in the Amsterdam decree of November 10, 1638, for the first time by authority. This bank money became of vital significance at the Amsterdam Wisselbank, and we shall first consider its development in connection with this institution. The bank money tended to replace the confusion of coins by a certain uniform method of account for the commercial community. It could not, however, correct the deplorable condition of the coin system or fix the agio of good and true coin. The Bank reckoned with guilders, which were struck for the first time in the eighth decade of the seventeenth century. When the Bank was established there were but two kinds of silver coin in circulation, the Dutch rycksdaelder (rix-dollar) and the leeuwdaelder (lion dollar), and we may assume that most of the deposits at the Bank were made in these coins. The proportion of rycksdaelders to bank guilders was fixed as follows:

1609 1 rycksdaelder = 2 florins 7 stivers.
1610 1 rycksdaelder = 2 florins 8 stivers.
1619 1 rycksdaelder = 2 florins 10 stivers.
1622 1 rycksdaelder = 2 florins 10 stivers.

The value of the lighter lion dollar was established by a decree of September 26, 1615, at two guilders. The average value of the Amsterdam bank guilder was 212¾ Dutch azen fine silver. The better coins received in commerce usually bore an agio, as the current coin mostly was and remained of less value. Bank money representing good coin had also an agio. That was not originally intended, but it was not possible to prevent bank money being estimated by the merchants higher than the poor current money (courant geld or kas geld). The number of bad and damaged coins augmented continually. Therefore the Bank was early obliged to refuse deposits in other coin than bank specie, coins which it received and paid at values fixed by decrees. In exchanging, however, this Edition: current; Page: [205] restriction did not operate, and when a certain kind of coins were in demand the Bank exacted an agio. Especially rycksdaelders and leeuwdaelders composed this bank specie. These coins were received by the Bank at the prices fixed by a decree of 1622. The aforenamed silver coins were removed more and more by the ducaton and the patacon, coins that had been struck by Archduke Albert and Archduchess Isabella in 1617 and 1618 in the southern parts of Holland. A want of bank specie, which meant a high agio for bank money, might result from the circumstance that private cashiers bought up and retained the bank specie, or that a temporarily large demand was made by the merchants. This happened in 1638. It was tried to remedy these inconveniences by the decree of November 10, 1638, under which the Bank was also allowed to receive on deposit ducatons and patacons. The value of the ducaton was fixed at three guilders, of the patacon at two guilders eight stivers, and only at this rate the merchants were allowed to deposit at the Bank or to withdraw within a period of four months.* By decree of October 26, 1641, both kinds were declared “good bank money,” and had to be deposited and paid at the above-mentioned rates. Thus they were fully accepted as bank specie.


This augmentation of bank specie was not sufficient to assure to merchants always the kind they asked for. The Senate of Amsterdam, therefore, ordered by decree of August 5, 1645, that the Bank must pay the desired description of coin, reserving the right to demand a suitable agio if the coin in question was scarce. At first the Bank respected this order only as to a few, but later it was held to cover all kinds of bank specie.

The Government was often obliged to take measures against the tendency to increase the agio on the bank money. Very remarkable is a decree of October 6, 1656, according to which a loan on ducatons and patacons, fixed at the price of three guilders and two guilders eight stivers, was once more authorized. The depositor of these coins received a receipt (récépissé), drawn on the bearer. The coins not claimed up to that date belonged to the Bank. This system of loans on coins, which was probably adopted as to other kinds of coins, did not last long, the pretence being made that the Bank had lost money by loans on bad Russian coins.

By a decree of August 11, 1659, the intrusive ducatons and patacons were replaced by the silver rider and the silver ducat, at prices of three guilders and two guilders eight stivers, respectively. These bank prices, as well as the calculation of rycksdaelders at two guilders ten stivers, and Edition: current; Page: [206] of lion dollars at two guilders, were called “zwaargeld” (heavy money). In current money (courant geld), the silver rider passed for three guilders three stivers, and the silver ducat for two guilders ten stivers.

The calculation in heavy money was adopted by the Bank, and therefore bank money had to represent heavy money. The prices of the current money being otherwise fixed than the valuation of heavy money, the agio of the bank money may be considered as legalized. In consequence of these measures, the bank money was more and more considered to have a fixed value, and the fluctuations of agio were believed to be the consequences of high or low values of the coins which were represented by bank money. Thus the bank money became an instrument of commerce, corresponding to paper money, without taking its form.


In reality, the bank money had no constant value, but the Bank was able to fix the value of it by making the agio higher or lower, just as it liked, and to check an inconvenient drain by raising the agio. Usually bank money was not demanded at all. In disturbed times this state of things did not prevent merchants from calling for the bank money. We find an example in 1672. The armies of the French king, Louis XIV., marched to a short distance from Amsterdam. People were afraid they would become masters of the Bank’s treasure, and regarded the money deposited as unsafe. For that reason many deposits were drawn out of the Bank. In the beginning the depositors doubted whether the deposited coins would still be found in the coffers of the Bank. This supposition would at least help to explain the temporary drop in the market value of bank money to five per cent. below the current money. This would not have happened if everybody had been convinced that the coins represented by bank money were lying untouched in the Bank vaults, as they ought to have been. At all events, the Bank stood the test very well. The payment of bank money was not interrupted, so that a calmer view of the situation soon prevailed.

After 1681, the currency of Holland began to improve. By decree of September 25, 1681, the Staaten-Generaal of Holland and Western Friesland ordered three, two, one, and half guilders to be struck.

The supposititious coin the Bank had employed up to this time thus became a struck coin. By decrees of March 17, 1694, and December 31, 1699, the new currency system was adopted for the whole country, and remained in force till 1806. The legal tender was the three-guilder piece, containing 603 azen fine silver. The one-guilder piece contained but 200 azen fine silver, so that it was minted a fraction too light. Although the provincial mints still continued to exist, the Government tried very carefully to prevent any deterioration of coin.* Owing to the great extension of Dutch commerce, Edition: current; Page: [207] it came about that a lot of negotiepenningen (coins of trade) were used together with the national coins. As these pennigen had a fluctuating market value, nobody was obliged to take them. The chief negotiepenningen were the golden ducat, the silver ducat, the silver rider,* the old Dutch rix-dollar, and the lion dollar. The two latter went later out of use.

The negotiepenningen formed during the eighteenth century the bulk of deposits made at the Bank. Especially the silver rider, at a bank price of three guilders, had a leading place.

Meanwhile the bank money had assumed a different character, for in 1683 a sort of loan on deposited coins had been tried for the third time, and was now to prove durable. The depositor received, as before, a récépissé (receipt) drawn on the bearer, entitling him to take out again the money deposited, at any time within six months, upon paying one-eighth per cent., and upon redepositing in the Bank that amount of bank money which was credited to him when the deposit was made.


A very important innovation was the permission to prolong the loan for another six months by paying an interest charge of one-eighth per cent. This system (which will be explained more in detail further on) was at first applied only to the silver rider and to the new three-guilder piece. The time came when the latter could no more be pledged, but the practice prevailed also in regard to negotiepenningen and many foreign coins, as well as to the precious metals. Gold coins could also be pledged at a later date. This was one of the causes why bank money was not any more drawn out.

If anyone wished to have a certain kind of coin from the Bank, he had only to buy a receipt, given for deposits of the coin in question. The receipt empowered him to demand of the Bank the coin mentioned therein at the price recorded. Thus an important trade sprung up in “receipts” in “bank money.” This trade was carried on by private cashiers or by special brokers, who received a fee of one-half per mille. These transactions were commonly made between 10 and 11 a. m. before the town-hall, in which the Bank was established. The Bank had an interest in keeping the current value of the bank money as stable as possible and bore its part in this trade with much ability. As soon as the rate of exchange sank below a certain value—at the end of the eighteenth century under four and one-fourth per cent., later under three per cent.—it bought bank money and resold it when Edition: current; Page: [208] the agio approached five per cent.* This was the rule, but the Bank operated differently according to circumstances. When a low agio of bank money and a rate of exchange which favored the export of coin coincided, the Bank sometimes did not buy bank money. This happened, for example, in 1763, when the value of bank money, in consequence of the crisis, fell even one-half per cent. below the value of current money. In ordinary and quiet times, however, the Bank sought to keep the agio at a uniform figure by its transactions in bank money. Under the “instruction” of April 26, 1782, the Bank commissioners were expressly charged with the supervision of such transactions, so as to prevent the decline of the agio below four per cent. or its use above five per cent.

The Bank pretty generally attained its end, which contributed to sustain the opinion that the bank money was unvarying in value, whereas the coins were considered variable. This opinion aided the operations of the Bank to a great extent. The bank money was very much prized in Holland and foreign parts chiefly because of its supposed stability in value. Of course other advantages were added to this. Adam Smith says in his “Inquiry into the Nature and the Causes of the Wealth of Nations”: “Bank money is secure from fire, robbery, and other accidents; the city of Amsterdam is bound for it; it can be paid away by a simple transfer, without the trouble of counting or the risk of transporting it from one place to another.” Besides this, bank money could not be attached by legal process. In reality, all the commerce of the East India Company was transacted in bank money, and it was also much used for other commercial operations.


The trade in bills of exchange, which had become of great importance in Amsterdam, was also conducted in bank money. This was principally caused by the privilege of 1609, according to which all bills of the value of 600 guilders and upward had to be paid in bank money. By decree of December 11, 1643, payment in bank money had been ordered for all bills of 300 guilders and upward. Adam Smith says (volume 2, page 233): “It is generally reckoned that there are about two thousand people who keep accounts with the Bank, and allowing them to have, one with another, the value of fifteen hundred pounds sterling lying upon their respective accounts, * * * the whole quantity of bank money, and, consequently, of treasure, in the Bank will amount to about three millions sterling, or * * * thirty-three millions of guilders.” This approaches the estimate of Mees (page 111) very Edition: current; Page: [209] closely, who supposes that the average aggregate of bank money exceeded thirty millions of guilders, and that the number of merchants who had accounts at the Bank was sometimes more than five thousand. The city of Amsterdam, which owned the Bank and guaranteed the deposits, derived from it a considerable revenue. The guarantee of the city very seldom gave rise to any claims against it. Here and there, however, we find an example of this, as in 1686, when the city had to replace 43,770 guilders stolen from the Bank. The expenses of administration were small, consisting mainly of salaries. The net profit to the city fluctuated considerably, and was, for example, in 1781, 266, 167 guilders, and in 1784 only 28,403 guilders. So far as I can find, the city had not to complain of any losses up to 1790. Mees (page 150) has calculated the total revenue of the city from this source between 1609 and 1796 at 12,256,000 guilders.

The surplus chiefly accrued from the fees, which had to be paid by the depositors. For the loans on specie there had to be paid a certain rent. Upon first opening an account, the depositor had to pay a fee of ten guilders (after 1782 a fee of fourteen guilders). For every transfer of 100 guilders one-half stiver had at first to be paid; after 1683, one stiver; after 1715, two stivers; after 1782, three stivers, and if the transfer was for less than 300 guilders, six stivers. The East and West India Companies and the town officials enjoyed certain privileges. It may also be assumed that the profits of the transactions in bank money were very considerable.


The Amsterdam bank money bore a very important relation to the Rotterdam bank money, which, after 1660, only represented the value of the former in current funds.

The Rotterdam Exchange Bank might have had an independent agio if the merchants had not found it to be to their interest to prevent the introduction of another kind of bank money, each with its own agio. For this reason they evidently tried to keep the agio at Rotterdam on a par with the rate of exchange existing at Amsterdam. The Bank had, as it seems to me, early in its history, limited the deposit of bank specie, which did not conform to the original rules. It was in 1660 that the Bank was again ordered to receive all current coins (among these, ten per cent. in shillings), adding the “agio of the bank money.” Mees (page 213) concludes from the later organization of the Bank, that by this was meant the agio of the Amsterdam bank money, and that the Rotterdam Bank, after this date, paid its bank money in current coin, with the addition of the Amsterdam agio, after deducting a fee of one-eighth per cent. for the safe custody, as was the practice in the eighteenth century. Bank money could always be obtained in Rotterdam by depositing current money and making the additional payment of the agio. Therefore, it was also possible to give to a creditor current money, plus the additional agio, in payment of debts, which ought to have been paid in Edition: current; Page: [210] bank money, without making any use of the Bank’s services. From this cause, the Rotterdam bank money did not become so important as the Amsterdam bank money, far-famed in the eighteenth century.

Besides an account in bank money, we find at the Rotterdam Bank another kind of account in current money, called “courant-rekening.” This courant-rekening was more used than the account in bank money, and made it possible to deposit current money (at least 150 guilders), to dispose of it by transfers, and to withdraw it at any time. Transfers and withdrawals were permitted only if the deposit had been at least one day to the credit of the depositor. In 1720, permission was also given to pay bills by the aid of courant-rekening, after adding the agio.


The Middelburg Wisselbank proved unable to respond to the heavy demands made on it in 1672.* A temporary suspension and a stagnation for several years was the result. By decree of March 11, 1681, an entire reorganization was effected. According to this decree, the Bank remained a central office for exchanging and cashing. As to exchanging, article three ordered that all persons who wanted to sell or buy gold or silver, coined or uncoined, might address themselves to the Bank commissioners, who had to serve everyone on receiving an agio publicly announced on a poster fixed to the door of the Bank. As for cashing, the Bank was obliged to receive deposits in coin as well as in bars, and these deposits could be redemanded at any time (Art. 1). Article twelve provides that deposits cannot be attached. The guarantee for these deposits was not required from the town, but from the Bank commissioners (Art. 14). The owner of deposits in hard cash was allowed to dispose of them the same day they were made; for deposits in transfer he had to wait twenty-four hours (Art. 10). Overdrawing was prohibited under penalty of a fine of three per cent. of the whole assigned sum, for the benefit of the Bank (Art. 8).

All this was according to the former regulations, except the charging of the commissioners with the guarantee.

Another interesting provision of the decree of 1681 is the creation of two kinds of accounts at Middelburg. Article one prescribes an account in metallic bank money and an account in current money. If a merchant wanted to get the former money, he could deposit hard cash, with the additional agio, at the Bank (Art. 2), provided always that he was not able to get metallic bank money from the Bank commissioners or from private account-holders. It is an important point that the agio was settled by the Bank commissioners (Art. 2), and had to be made public, as stated. Although the agio was fixed by the Bank commissioners, it probably approached the Amsterdam agio, for the same reasons as existed in Rotterdam. It is proved Edition: current; Page: [211] that in the middle of the eighteenth century the agio was always one-fourth to three-eighths per cent. lower than at Amsterdam. Payment in heavy bank money was ordered for all merchandise sold by auction by the East India Company, and for all foreign bills of exchange of the value of fifty Flemish pounds (300 guilders) and upward. Otherwise the bills were considered badly paid, and a fine of three per cent. was imposed on both payer and payee. Only amounts upward of 300 guilders could be paid or transferred in heavy bank money. This order did not touch the East and West India Companies (Art. 11).

All admitted, good current coins could be deposited at their legal value to the account of courant-rekening. Five per cent. of the deposits might be made in double stivers and twenty-five per cent. in shillings (Art. 7). The lowest sum which could be deposited, transferred, or redemanded was 150 guilders (Art. 11). All merchandise sold at auction for private persons had to be paid for in heavy or current bank money, if the amount equaled 300 guilders or more (Art. 4). Home bills of exchange, drawn on current money, had to be paid in courant-rekening (Art. 5).


The above-mentioned restrictions were in accordance with the original rules of the Wisselbanken. Only the receipt system may be considered a deviation, as it resembles the system of a credit bank. This receipt system had been adopted in Amsterdam for a short time in 1638 and 1656; after 1683 it proved permanent. The Rotterdam Bank also had a receipt system in the second part of the eighteenth century, details of which are not known. The Amsterdam system was as follows:

The depositor of coin of a certain kind received, according to the decree of 1683, credit for a fixed sum in bank money, and a receipt (récépissé). This receipt entitled the depositor to take out the bullion again within six months, upon retransferring to the Bank a sum* of money equal to that for which credit had been given to him when the deposit was made, and upon paying the fixed rent for the keeping of the bank money for which he had received credit. The Bank was not permitted to use the deposits, but had, on the contrary, to keep them untouched. If the depositor neglected to reclaim his deposits, they belonged to the Bank, and he was not forced to repay the sum of bank money credited to him.

The receipt could also be extended always for another six months by paying the rent for the preceding period. It was also permissible to divide a receipt into several of smaller value, and thus be able to dispose of smaller sums. The receipts were drawn for the holder even if they contained the name of the depositor. Mees (pp. 138, 139) believes that this operation was nothing else than a selling of the deposit to the Bank for a certain sum of Edition: current; Page: [212] bank money, with the power on the part of the depositor to reclaim his deposit for the same sum of bank money received for it (pactum de retro emendo).

It seems to me that another explanation is much more obvious. Here it is only a question of a loan, or “lombard.” The lombard houses, called “banken van leening,” had, according to A. I. van Citters (“De Rechtstoestand van de Banken van Leening,” Leyden, 1886, page 5), sprung up as early as the thirteenth century in Holland. They gave to those persons who pawned effects “lombard bills,” by which the bank promised to return the articles to the owner of the pawn on repayment of the borrowed money, with the interest. These lombard bills were drawn on the holder. The sale of the bills was allowed, and the bearer had the power to take the pawn so long as there was no suspicion of an illegal acquisition of it.

It has been shown that this way of pawning had been practised in Holland in the beginning of the seventeenth century. Felix Hecht (“Ein Beitrag zur Geschichte der Inhaberpapiere in den Niederlande,” Erlangen, 1869) gives the text of the decree for Amsterdam of April 25, 1614, which proves this beyond a doubt. In Rotterdam (1635), and Enkhuizen also (1662), similar decrees had been promulgated.

The agreement of the receipt system, finally adopted in 1683 by the Amsterdam Exchange Bank, with the methods of the lombard houses is so evident as to be readily explicable, on the theory that it was copied from them. Adam Smith does not believe that there is here any question of selling with the power of redemption. He calls the interest to be paid by the depositor “a sort of warehouse rent.” In reality, there is simply in question a deposit received by the Bank in pawn. This pawning of the Amsterdam Exchange Bank was first established for new standard coins stamped since 1681 (i. e., for the three-guilder pieces) and for the zilveren rijder (silver rider). The three-guilder pieces were subsequently not generally received, but the system was afterward extended to other silver and gold coins. In regard to some kinds of coin—as, for example, the golden rider—the Bank often changed its practice. Coins on which loans could be given had to have a certain weight and a fixed fineness; but this was not demanded for every single coin, but only for every whole bagful.

Gold and silver bullion was already received in the beginning of the eighteenth century, but it was only in the latter decades of the eighteenth century that both metals were always received. The public made use of the privilege when the price of bullion was lower than usual.


The amount of bank money which the Bank gave for the pawned bullion or coin often changed. The value given to some coins corresponded almost exactly to their intrinsic value. Adam Smith gives the prices at Edition: current; Page: [213] which the Bank received bullion and coin in September, 1775. The values in guilders, mentioned by him, are as follows:

(a) Silver.
Mexican dollars } 22 per mark.
French crowns }
English silver coin }
Mexican dollars, new coin 21.10 per mark.
Ducatons 3 per ducaton.
Rix-dollars 2.8 per rix-dollar.
Bar silver containing 11-12 fine silver 21 per mark.
Fine bars 23 per mark.
(b) Gold.
Portuguese coins } 310 per mark.
Guineas }
Louis d’ors, new }
Louis d’ors, old 300 per mark.
New ducats 4.19.8 per ducat.
Fine bars 340 per mark.

Mees (page 294) has found the following bank values by S. Ricard (“Traité Général du Commerce,” Amsterdam, 1781), given in guilders:

*It was divided into eight ounces; the ounce contained twenty engels, one engel — 32 azen.
(a) Silver.
Ducatons 3 per ducaton.
Rix-dollars 2.8 per rix-dollar.
Old Spanish piastres 22 per mark.
New Spanish piastres 21.10 per mark.
Fine bars 23 per mark.
(b) Gold.
Ducats 4.19.8 per ducat.
Old French louis d’ors 8.14 louis d’or.
New French louis d’ors 10.14 louis d’or.
Portuguese coins 310 per mark.
Fine bars 340 per mark.
(The mark* was ½ troy pound, and weighed 246.0839 grammes.)

The rent which had to be paid for the keeping of the deposits in bullion by the receipt-holder was one-half per cent. for each six months; for silver coin in the beginning, one-eighth per cent., and later on, one-fourth per cent., excepting the ducatons, for which one-eighth per cent. only was charged.

For gold coins the rent was one-half per cent., and after 1770, one-quarter per cent.

The amount receipted for was chiefly regulated according to the market prices of specie and bullion. The values of the receipts, therefore, often changed and gave many occasions for extensive speculation.

While the receipt system of the Amsterdam Wisselbank may be considered Edition: current; Page: [214] a loan on specie and bullion, the Middelburg Wisselbank, on the other hand, had, in the middle of the eighteenth century, a system of loans on stocks. The Bank lent money for three, six, or twelve months, at a rate of interest which was about one-quarter or one-half per cent. higher than the customary rate, and on the security of bonds on Seeland, Walcheren, or Middelburg, or in shares of the East India Company. Repayment in whole or in part could be made every month; but the shares of the India Company could be pawned only for a whole year. This fact is stated by Mees (page 231); further details of the practice I have not been able to find. At all events, this was an important step toward the creation of a bank of credit. The Bank had to take from its deposits the sums which it lent, and while it is true that it had in the stocks pledged an equivalent which could always be realized on in quiet times, it is evident that the principles of a bank of deposit, pure and simple, were no longer strictly maintained.

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Abuses of Credit in Middelburg, Rotterdam, and Amsterdam—Crisis of the Amsterdam Exchange Bank (1789)—Reorganization of the Amsterdam Exchange Bank (1796)—Decay and End of the Amsterdam Exchange Bank (1819)—Ruin of the Rotterdam Exchange Bank (1794)—Reorganization of the Middelburg Exchange Bank (1802-1806)—Crisis of the Middelburg Exchange Bank (1830)—Reopening of the Middelburg Exchange Bank (1831)—Decay and End of the Middelburg Exchange Bank (1838-1878).

IN Middelburg, as has been shown at the end of the preceding section, loans on stocks had been openly given out of the funds of the Bank; in Rotterdam and Amsterdam, however, the deposits could not be touched.

The credit of the Wisselbanken could only be maintained so long as the public was convinced that for each guilder of bank money there was a corresponding amount of specie and bullion in the coffers of the Bank. Such an equivalent was also necessary for the receipt system. The administrators of the Bank, and of the town, therefore took great pains to make the public understand that the deposits were always intact. On the other hand, there was a great temptation to make loans in the fact that the Bank had in its coffers considerable sums which could easily be invested to the manifest increase of the revenue of the Bank. The Wisselbanken did not resist this temptation. When the public, in 1672, fearing the advancing French armies, demanded the deposits, the Middelburg Exchange Bank, which had not yet openly begun to lend money, and the Rotterdam Exchange Bank, could not satisfy the demands made on them. This was a proof of their having, without authority, touched the deposits. Mees (page 216) says that this was the sole example of such an abuse in the history of the Rotterdam Exchange Bank.

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The abuse was older and more extended at the Amsterdam Exchange Bank. As early as January 22, 1657, the city government was induced to interfere in the business of lending to private persons. It is, however, characteristic that the Bank shortly afterward, on August 17, 1657, began to advance money on loan to the East India Company. These advances could not be made without the knowledge of the city government. The lending did not cease in after years, and finally proved fatal to the Bank and to the finances of the city.

The city government of Amsterdam considered the East India Company of such importance to the prosperity of the city that they in every way tried to aid it. I presume that the readiness of the city to aid the company was increased by the fact that often former mayors or members of the Senate of Amsterdam took part in the administration of the company.* As soon as the company came to be in want of money, the stock of coin of the city bank controlled by the authorities was at its disposal. The sums necessary in autumn for the equipment of ships belonging to the company were lent by the Bank. At first, the city had to give a special permission for each loan. Later on it was taken more easily, and by decree of October 5, 1682, the East India Company could at any time have at its disposal 1,700,000 of bank guilders. An independent bank might have demurred to such a treatment of its resources, but a city bank was powerless. At the head of the Bank there were at first three commissioners; in 1715, five; in 1716, six, and later, at times, seven or eight commissioners; but I do not know whether they ever tried to offer assistance. This is hardly likely, as among the Bank commissioners the merchants were usually in the minority as against the former aldermen and members of council. Besides, the commissioners had to obey the orders of the mayor, and the Bank functionaries in their turn depended on the commissioners.

The advances to the East India Company could by permission of the mayor exceed 1,700,000 bank guilders, and this privilege was freely used. In 1698, the company had a debt of 3,200,000 bank guilders. In 1760, 30,000000 guilders were deposited at the Bank, and only 10,000,000 could be found there. The company had to pay only a very small rate of interest. By decree of the Senate of February 18, 1723, the interest charged to the company was reduced from three and one-half per cent. to three per cent., and on January 13, 1724, to two and one-half per cent.


This abuse of the bank deposits is all the more incomprehensible when one remembers that the East India Company was involved in debt at the Edition: current; Page: [217] end of the seventeenth century, and afterward had to struggle with a growing deficit. The position of the company became still worse when England and Holland, in 1780, were involved in war. The company sustained great losses by the capturing of many ships returning from the East with valuable cargoes, and was not able to pay its debts to the Bank. An attempt was made to mend the situation by giving to the Bank as security for the borrowed bank money, bonds issued by the company under guaranty of the province. The interest of these obligations the city received. The situation of the company becoming more and more critical, the Bank commissioners were empowered by a decree of October 8, 1782, to transfer 5,100,000 guilders of the company’s debts to the account of the city, and to lend another 2,550,000 guilders to the company on the city’s behalf. As the company’s bonds were given as a security, the whole transaction was nothing but a veiling of the company’s debts.

The city government, on its own account, borrowed money from the Bank, chiefly for the purpose of establishing a loan office, which was first opened in 1773 and again in 1781, in consequence of hard times. All this was disclosed in 1795 by a report of the Committee of Commerce and Navigation. This committee had been charged by the new government with an examination of the state of the Bank, and it found that more than 9,000,000 guilders in coin was missing. The principal debtors of the Bank were the city treasury (to the amount of 7,650,000 bank guilders, for which sum 6,273,000 guilders in bonds of the East India Company had been given as security) and the loan office (to the amount of 1,200,000 bank guilders, for which latter were pawned, 838,857 guilders 1 stiver in bonds of the provinces of Holland and Western Friesland).


Till then these loans had been carefully kept secret. The loans were agreed upon by the mayors and the Bank commissioners. It is scarcely possible that they always acted in good faith. The nature of the Bank organization lent itself to this secrecy. The Bank commissioners had, as already mentioned, to obey the mayors’ orders, and all the other Bank officers had to obey the commissioners. All officials had to swear strict silence in everything concerning the Bank’s operations, both while in its employ and after quitting it. A constant and independent control of the Bank was wanting. The Bank commissioners had once a year to render an account, and the mayors had to compare the books of the Bank with the bullion in the coffers of the Bank. As a matter of course, the mayors did not publish abroad the loans which they had permitted or ordered. Therefore, abuses were continued for whole decades without exciting the suspicions of the public.

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It was only at the end of the eighth decade of the eighteenth century that the public began to suspect. The agio, which, as a rule, had not exceeded three per cent. in the preceding years, went down in the winter of 1789-90 to two per cent., and in April, 1790, to one and one-fourth per cent. In August, 1790, the value of the bank money was equal to the value of current money, and in November, 1790, it was even two per cent. below the value of the latter. Other circumstances contributed to this decline; as, for example, the great coin export of the time, extensive sales of bank money for hard cash by the East India Company, etc. The Bank might have overcome these difficulties by buying up bank money if it had not unreasonably diminished its stock of coin. It excited the suspicion of the public that the Bank did not buy bank money.

This state of things was aggravated by the action of the city government on November 12, 1790. According to an order then promulgated, the Bank value was to be 26 guilders 15 stivers per mark fine silver for November, and later on the rate was to be fixed by the Bank for every month. Nobody was to be allowed to draw silver out of the Bank if he had not at least 2500 guilders to his account, and nobody could transfer more than 50,000 guilders in one day. This approached a declaration of bankruptcy, and was a palpable injustice to those having accounts. Before this, the Bank had taken the silver at a price of 24 guilders 2 stivers, which was very nearly the market price. The fixing of the bank value at 26 guilders 15 stivers was to be regarded as a deterioration of bank money. Besides this, the Bank reserved for itself the power of changing every month the value of the amount to the depositor’s credit by fixing the bank rate for silver.


No wonder that the value of the bank money fell during the winter of 1790-91 two and one-half per cent. below the value of current coin, and that the claims made on the specie of the Bank went on growing. The Bank tried to surmount these difficulties by declaring its duty of paying out coin to be optional. The idea was even suggested of making for the purchase of bank money a new coin, which was to have a value higher than its intrinsic value. Some merchants, invited to report on these and other projects, did not approve of them (January, 1791), and recommended the raising of a loan, in order to buy up the bank money. At the same time the Bank was openly accused of giving credit in an unauthorized manner. The Bank tried in vain to get out of its troubles by ordering that coin should be given only to cashiers, and stopped other coin payments on February 3, 1791. Then the raising of a loan of 6,000,000 guilders at three and one-half per cent. was finally decided upon in order to be able to buy bank money.

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The realization of this plan made it possible to keep for a few years the current value of bank money on a level with current coin. A new decline took place at the end of 1794.

On October 11, 1794, the current value of bank money was quoted at eighty-four per cent.; on November 11, eighty-four and one-half per cent. (after, in the meantime, having risen to ninety-two per cent.); and at the end of the year it was eighty-nine per cent. Büsch says that the cause of this was “fearing an invasion by the French.” As the new government proclaimed the city’s guarantee for the Bank (February, 1795), the current value remained at ninety per cent. The new government, which had also ordered the investigation of the Bank already referred to, raised, in the beginning of March, 1795, a loan of 8,000,000 guilders at three and one-half per cent., destined to pay the debts of the city to the Bank, as well as other municipal obligations; but of this sum the Bank did not get much. The Government, therefore, decided to raise another loan of 7,000,000 guilders at four per cent., which was to serve solely for paying off the debts of the city to the Bank.


The Amsterdam Wisselbank was reorganized on March 31, 1796, on the same basis as before, with some few exceptions. The credit of the Bank had been, however, severely shaken. The Government tried in vain to help the Bank by decreeing, on October 6, 1796, that all bills, of any amount, drawn upon Amsterdam by foreign countries, or drawn upon foreign countries by Amsterdam, after October 15, 1796, were to be paid in bank money. It availed nothing that in 1802 it was repeatedly declared that all debts to the Bank were paid, and that all the bank money was now covered by specie and bullion. Many attempts were made to recover for the Bank the confidence of the public. It was strictly forbidden to the Bank commissioners to give credit to anybody who had not an equal quantity of the precious metals deposited. For any infringement of this order they were to be held responsible in their person and fortune. They were allowed to refuse the execution of any outstanding order, and were protected against the consequences of such a refusal. All this proved ineffectual. The vigor of the Bank had departed, and the highly depressed state of trade in that unquiet time decreased the necessity of employing the Bank’s services. After 1802 the Bank could not even cover one-fifth of its expenses by its own revenue, although they had been diminished by one-half.*

By royal decree of December 19, 1819, an end was put to the long agony of the Bank. The liquidation began on January 19, 1820, and lasted a long time.

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The Rotterdam Wisselbank, although devoid of blame, was involved in the inglorious fall of the Amsterdam Wisselbank. The Rotterdam Bank, having up till then always adopted the Amsterdam agio, tried to go its own way when in 1789 the agio of bank money in Amsterdam went below two per cent. The effort was made, according to the wish of many merchants, to maintain the agio at two per cent., in order to prevent the deposit of coins with a view to speculation. On April 24, 1790, the Rotterdam Wisselbank was, however, persuaded by Amsterdam brokers to bring its bank money agio nearer to the Amsterdam rate, and to fix it at one and one-half per cent. In the meantime the Amsterdam agio had gone down to one and one-fourth per cent. On June 14, 1790, the agio was again equalized with the Amsterdam agio. The Rotterdam Bank, however, intended to keep the bank money at least at par with the current money. In the meantime the use of bank money and of courant-rekening was omitted because of the depressed state of trade. In 1800 there were not a dozen of private persons having accounts in current money. The balances of the Bank steadily sank from 544,000 guilders in 1800 to 237,000 in 1805. Then the cashiers made large deposits, so that the balance increased to 1,294,000 guiders in 1809; but in the following year the cashiers ceased to make use of the services of the Bank. In 1812 the balance was 108,000 guilders, and then the Bank gradually ceased to exist, showing that the Wisselbanken were no longer adapted to the needs of the time.


The Middelburg Wisselbank, as we have seen, had taken its own course by openly adopting the system of lending on stocks in the second part of the eighteenth century. Therefore, it was not affected by the difficulties of the Amsterdam Bank after 1789. But it could not escape the influence of contemporary disaster, and it was this very system of making loans on stock that became fatal. By the shrinkage of the value of the stocks held in pledge, the Bank, in 1794, was obliged to suspend payment, and it was for a long time reduced to stagnation.

In consequence of a petition of some account-holders, the Bank was reorganized by decree of the Government of the Batavian Republic on November 11, 1802, supplemented by a decree of December 30, 1805. Past transactions had, however, first to be settled, and then the reorganized Bank was opened on January 6, 1806. Now, as before, the Bank was named “Wisselbank,” but had certain differences of organization and method. The Bank had to receive coin on deposit and to give loans, “so as to serve the best advantage of the people, combined with a full security for account-holders” (Art. 1). As to the first matter, it was ordered that everybody could deposit coin, and could use it at any time either by drawing it out or Edition: current; Page: [221] by transferring it to others by assignation. The amount drawn or transferred had, however, to be at least 150 guilders (Art. 11). Clipped coins were not received by the Bank. Coins smaller than half a zeeuwsche, rycksdaelder, or a guilder were received only up to an amount equal to 10 per cent. of the sum deposited (Art. 15). The account-holder who ordered a transfer for more than was credited to his account was obliged to pay three per cent. of the whole assigned sum, for the benefit of the Bank (Art. 12). The deposits could not be attached (Art. 16). On opening an account with the Bank, three guilders three stivers had to be paid (Art. 10). All merchant bills payable at Middelburg had to be paid at the Wisselbank, under penalty of three per cent. fine (Art. 13). Here we have again a trade in bank money, without any difference between heavy bank money and current coin.

With regard to the business of lending, article nineteen ordered that only on the following coins and stocks loans might be given: (1) Foreign gold and silver coin and gold or silver bars, calculated at five per cent. below their intrinsic value; (2) public funds belonging to the national debt, calculated at least at ten per cent. below the current quotation. For all loans, bills of exchange payable in six months had to be given (Art. 20). If the market value of the stocks deposited sank considerably, the Bank could demand the making good of the security (Art. 21). It was not allowed to give credit on receipts, to lend without sufficient security, or at an interest lower than that fixed, or to give credit for an amount higher than the deposits. The Bank commissioners were not obliged to obey any contradictory order of the city government (Art. 23). Loans on stocks, specie, and bullion the Bank commissioners were allowed to give only to people they knew. Brokers, clerks, or captains could receive loans only on account of their constituents, after being specially authorized by a written request of the latter (Art. 18).

The money for these loans had to be taken from the deposited coin. The proposal for a loan had to be addressed to the controllers, who decided if it might be given, and to what amount of the value of the security, at what rate of interest, and in what proportion to the bullion of the Bank (Art. 17). A fifth part of the net profit was set aside for a reserve fund (Art. 26). The Bank was a city establishment (Art. 1), and the city guaranteed the Bank (Art. 27), whose affairs it had to direct, according to the decrees of 1802 and 1805, receiving three-fifths of the net profits (Art. 26). By article twenty-nine the Government was empowered to change the existing regulations, in spite of the power of the city authorities over the Bank.


The new method of administration had evidently been planned with the intention of establishing an independent control over the management of the Bank. The conduct of the business was placed in the hands of four sworn Edition: current; Page: [222] commissioners, appointed by the city (Arts. 2 and 28). At least one of the commissioners had to be a respectable merchant having an account at the Bank. The commissioners were not allowed to be at the same time members of the city administration (Art. 3). Each commissioner had to find two good guarantors for 2000 Flemish pounds,* equal to 12,000 guilders, and every year the security had to be renewed (Art. 4). Each commissioner was to receive 500 guilders a year and five per cent. of the net profits (Arts. 5 and 26). The commissioners were personally responsible for their administration and for “the accurate and secure keeping of the Bank treasure and the deposited securities for loans” (Art. 24, decree of December 30, 1805). The commissioners had to make a report every year, in January, before the opening of the Bank. This statement had to be examined by a committee composed of members of the Town Council and the Board of Control (Art. 25).

Five controllers had to supervise the management of the commissioners. Three of the controllers were selected for life from respectable merchants who had an account at the Bank. A fourth controller had to be a member of the Town Council, and was appointed by an appointee of the Council itself. The fifth was appointed by the Exchequer. The two latter officers could be removed at any time (Arts. 6 and 9). The controllers had to be sworn (Art. 28). They had to watch with great care over the loans of the Bank. At least once a month the controllers had to meet, in order to receive reports on the amount of bullion of the Bank and on the loans (Art. 22). Later on, one director and four commissioners were charged with the Bank management. The commissioners were appointed by the Town Council; two of them were members of the Council, two were merchants.

On foreign coins and on the Dutch public funds loans were made, mostly at four per cent., for from one to six months. The order concerning the payment of bills of exchange at the Bank was in course of time disregarded. The secret conduct of affairs which had characterized the former Wisselbanken still survived.


The political events of 1830 (the French Revolution and the separation of Belgium) obliged the Bank to suspend payments. The Bank was reopened on April 9, 1830; and Mees says, in 1838, “Since that time the Bank seems to have prospered. Communications by letter made to me from Middelburg state that in 1838 and later on the Bank was simply a cash office, at which one had an account current, and without charge deposited and transferred money, but without receiving interest. The Bank made money by loans on stocks and merchandise, for which a part of the deposits were used. One director and several commissioners, all appointed by the Town Council, managed the Bank. In the later period of its existence, three commissioners Edition: current; Page: [223] were appointed, who yearly received 500 guilders. Besides these, there were two bookkeepers and one cashier.”

Bank notes were nearly unknown in Middelburg after 1838. The means of payment were almost exclusively silver coin, and this fact was very profitable to the Bank.

Everybody who turned over money to any amount worth mentioning had an account with the Bank; nearly all larger payments were made by transfers or cheques. Business was restricted to the transactions of Middelburg merchants. The importance of the Bank decreased when the Amsterdam cashiers and bankers began to pay interest on accounts current. Many merchants opened an account current in Amsterdam, and the balances of the Middelburg Bank were considerably reduced. The Bank got into a very depressed state; it could not lend much, as the balance on hand was small, and it hardly could cover expenses. The establishment of an agency of the Netherlands Bank at Middelburg accelerated the fall of the Bank. This agency was no rival in the loan market, because in 1864 the Middelburg Bank was then unable to lend any considerable sum; but when it became possible to accept bank notes as means of payment, the services of the Wisselbank were no longer required. For some years the Bank remained in a state of stagnation; and some doubts arose, and not without reason, as to whether the Bank was sound enough to meet a demand for the balances at any time. By resolution of the Town Council, on December 27, 1878, the last of the former deposit banks was closed, after having existed for two and a half centuries.

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Early Substitutes for Bank Notes—Origin and Growth of the Bank of the Netherlands—History of the Colonial Banks of Java and Surinam.

OUR inquiry into the development of Dutch Banking before 1814 has shown that the principles upon which are founded the operation of the banks of to-day as establishments for giving credit were in those days unknown. The character of banks of deposit and circulation (giro) had not been officially given up by the already mentioned city banks. Only in the loans on specie and bullion in Rotterdam and Amsterdam, and still more in the loans on stocks in Middelburg, do we find a glimmering of the idea that a bank serves the public interest if it uses part of the means intrusted to its keeping in giving credit to the productive classes. The private cashiers had* even in the eighteenth century not only done a loaning business, but also discounted bills of exchange and given credit in blank. The city banks, however, had not made so much progress.

It may be presumed that the Netherlands would have adopted earlier the modern principles of banking if Great Britain, at that time growing very rapidly in power, had not repressed Dutch trade more and more, and if the effects of war, after 1780, had not seriously injured the country. The East India Company had been ruined at this time, the Dutch colonies were devastated, and for the greater part lost.

The Bavarian Republic (constituted in 1795) was not able to protect their small country from the results of the disturbed times. The kingdom of Holland (constituted in 1806) was drawn into the wars of Napoleon, the country was severely shaken and its trade was ruined by the “continental system.”

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It was first by the treaties of 1814 and 1815 that the basis was furnished for a term of more favorable development. King William I. of Orange anxiously sought to promote the national welfare, but a long time was required to restore the commerce, so important for the Netherlands, because of the adverse conditions of the times.

Since the middle of the nineteenth century, the country has made considerable progress. From 1847 till 1871 the yearly average commerce showed an increase (for every quinquennial period), as follows:

*l. e., entries for immediate consumption and withdrawals from warehouse for consumption.
l. e., exports of domestic merchandise.
Total import from 276,000,000 to 629,000,000 guilders.
Special* import from 184,000,000 to 493,000,000 guilders.
Total export from 215,000,000 to 524,000,000 guilders.
Special export from 132,000,000 to 392,000,000 guilders.
Transit export from 86,000,000 to 132,000,000 guilders.

From 1872 till 1891, the yearly average for each quinquennial period was increased:

Total import from 6,793,000 to 14,076,000 kilog.
Total export from 3,269,000 to 7,753,000 kilog.
Transit (without reload’g) from 600,000 to 2,203,000 kilog.
Special import* from 681,000 to 1,262,000 guilders.
Special export from 516,000 to 1,086,000 guilders.


Trade and banking being always closely connected, it was natural that Dutch banking should become of great importance in the nineteenth century, and should be adapted to the modern system of credit. The first and most important step in this direction was made in 1814 by King William, who introduced the bank note system. We have seen that before this time this very important instrument of modern credit was not desired.

If the Dutch merchants wished to have paper credits, they could get them in other ways. It was therefore unnecessary to copy the bank note system adopted a long time before in England. Thus the men of those times reasoned.

The private cashiers supplied, in the eighteenth century, the wants of the merchants. It is supposed that the number of cashiers in Amsterdam alone was more than fifty in the seventh decade of the eighteenth century. The cashiers promoted a considerable intercourse between the merchants, and issued paper which circulated in the commercial towns. Of this paper, the kassiers promessin and the kassiers quitantien were the most important elements.

The kassiers promesse was a promise of payment, given by the cashier, Edition: current; Page: [226] answering to our promissory note. The kassiers quitantie was an assignation drawn on the cashier. It is true that these papers were only an imperfect substitute for bank notes. Besides these, the bank money of the Wisselbanken and the book credit by the private cashiers served as currency. The book credits were very serviceable on account of the cashiers clearing system.

In 1795 the attempt was made for the first time to introduce bank bills, but in a very imperfect form. The province of Holland resolved on May 12, 1795, to establish a general provincial lombard house (Bank van Beleening), in order to obviate the difficulty of negotiating the provincial loan of March 4, 1794, a difficulty arising from the scarcity of money at that time. The Bank van Beleening was to do business from July 1, 1795, to July 1, 1798. It made advances at a rate of interest of four per cent. on certain stocks, movables, and realty up to eighty per cent. of their value.

The advances were not paid in hard cash, but in beleen bank geld (i. e., loan bank money), and were entered in the account of the Exchequer as the contribution of the debtor to the provincial loan. A receipt was given to the debtor for the amount, and the receipt was transferable to a very limited extent. The beleen bank geld bore interest at three per cent. and could not be reclaimed in specie. These receipts cannot be considered bank notes in the modern sense of the word, but they offered a safe investment to capitalists.


To facilitate a new loan, the Government proposed to Parliament on December 28, 1798, to establish a nationale beleen, discompto, en deposito bank (a national loan, discount, and deposit bank); the proposal, however, was not discussed. But the beleen bank of 1795 did not suspend operations in 1798. Vissering* says that in 1802 the liquidation of the bank established in 1795 was resolved upon, and that in 1807 King Lewis put an end to it.

More important than the scheme of this bank, which never was of much consequence, was the bill of May 21, 1802, by which the Government, having in view the example of the Bank of England, proposed to establish on July 1, 1802, for the following twenty-five years, a similar bank, under the name of “Algemeene Bataafsche Beleen, Discompto, en Deposito Bank (General Batavian Loan, Discount, and Deposit Bank). The parliamentary committee in its report of July 29, 1803, objected to this proposal, especially to the bank notes, which the committee regarded as dangerous, and the bank was not established.

King William reverted, however, to this plan, and issued, by decree of March 25, 1814, precise regulations for the Nederlandsche Bank (i. e., Netherlands Bank), which was chartered for the following twenty-five years as a joint-stock bank, with the privilege of issuing notes.

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In the introduction to the decree, attention is particularly drawn to the necessity of raising commerce from the state of depression caused by the unfavorable circumstances of the times, and of increasing the circulation. Experience has conclusively shown the importance of these measures. At that time, however, the Government was more far-sighted than the merchants, who did not avail themselves of the services of the Bank, and considered their use as indicating a dubious condition of solvency. The subscription of the capital, fixed at 5,000,000 guilders, met with much passive opposition from suspicious capitalists. At the end of the first year, only 2,400,000 guilders had been subscribed, of which 1,000,000 was the gift of the Government. In the second working year, the whole capital was subscribed. But it was not till many years afterward that the Bank was fully appreciated by the Dutch merchants.


In the kingdom of the Netherlands the Netherlands Bank remained the sole bank of issue, while in the Dutch colonies two note banks existed. The more important of them is the Java Bank at Batavia, exclusively privileged to issue bank notes in the Dutch East Indies.

The early history of this bank begins in 1746. On August 26th of that year, the establishment of a joint-stock company at Batavia, named “Bank van Leening” (i. e., loan office), had been decided upon. It had to make advances on gold, silver, jewels, merchandise, linen, furniture, etc. The capital of the Bank was divided into 300 shares of 1000 rycksdaelders each; the Government had subscribed for 200, and the public for 100 shares. The Bank was opened on December 1, 1746, but had so little business that it lent its capital at interest to the Government, in order to employ it profitably. Very early in its history the transformation of this bank into an exchange bank had been sanctioned. In 1752, in fact an exchange bank was established, and in the same year amalgamated with the Bank van Leening, under the style of “Bank en Bank van Leening” (i. e., bank and loan office). This institution took up the operations of the Dutch deposit banks, combined with the granting of loans on merchandise. Besides this, the Bank issued a sort of paper currency.

For his money the depositor received a certificate, called a bank bill. These bank bills, issued to the depositor’s order and indorsable, could at any time be exchanged for hard cash. In consequence of the great variety in the circulating coins, the bank bills were often and readily used as substitutes for money. The general state of affairs in the Dutch East Indies, however, was unfavorable to such a great establishment, and the Bank could not get into full working order. At the same time that the Amsterdam Bank went through its fatal crisis, the bank at Batavia also was ruined. In 1790, a deficiency, reaching the amount of 63,000 rycksdaelders, had been discovered, Edition: current; Page: [228] of which the directors could not give a satisfactory explanation. The Bank was dissolved on April 5, 1794.

The loan office (Bank van Leening) was continued, first as a dependent, but after 1809 as an independent institution. The English Government, which, from 1811, was in possession of Java, empowered the Bank van Leening to issue bank bills; but this measure met with no success. The payment of the bank bills was made impossible in consequence of the scarcity of ready money, and the plan of redemption by colonial goods, offered instead, proved entirely unacceptable. In 1817, this establishment passed into the hands of the Dutch Government and then ceased to exist. The bank bills still in circulation had to be presented for payment before June 18, 1818.*

Five years later, the merchants petitioned for the establishment of a private bank on the island of Java, and on July 16, 1823, the draft of a decree concerning the establishment of a Nederlandsche-Oostindische Bank was submitted to the committee of the Batavian Exchange. Nevertheless, four years more passed before the plan was carried into execution. By a decree of December 11, 1827, the new note bank was opened under the style of “Javasche Bank” (Java Bank), and organized according to the model of the Netherlands Bank. The Java Bank did not at first find much support from the public. Its capital was fixed at 4,000,000 guilders (8000 shares of 500 guilders), and the Bank was to begin business as soon as 2000 shares had been subscribed. On January 24, 1828, this condition was fulfilled. The placing of the remaining shares met with many difficulties, although the Government tried to induce the officers to subscribe. It was not before the year 1831-32 that 2,000,000 guilders had been subscribed, and for a long time no increase took place.


The third bank of issue, the Surinam Bank, had been established at Surinam, in 1829, as a note bank. It was described as a private bank, but in reality was a Government undertaking. The Bank gave credit too freely to planters and very soon was ruined.

By royal decree of May 19, 1864, the now existing Surinam Bank was established as a joint-stock company, and was empowered for the following twenty-five years to issue bank notes in Dutch Guiana (Surinam). The capital of this bank was at first 1,000,000 guilders. The head board of directors is at Amsterdam, while there is a local board at Paramaribo, the capital of the colony. The Surinam Bank is not of the same importance as the other two note banks, and may therefore be more briefly dealt with.

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Decrees of 1814, 1838, and 1852 Concerning the Capital, Administration, Privileges, and Operations of the Bank—Lack of Provision for Publicity—Other Defects in the Decrees—Relations of the Bank to the Government—The Succession of Orders for the Maximum Note Issue and Their Metallic Reserve from 1847.

THE period of time which we propose to treat in this section does not readily lend itself to division into shorter periods. On superficial examination it is true such a division would seem advisable, as within the first fifty years of the Bank’s existence some very important changes took place, such as the renewal of the Bank’s charter, a repeated increase of capital, and the adoption of greater publicity in its dealings. But these considerations are all outweighed by the fact that until the end of 1863 the Bank was a purely local (i. e., Amsterdam) institution, while in 1864 it extended its operations and became a national Dutch institution. Before speaking about the working of the Bank in its first fifty years, it is necessary to explain its legal position, its organization, and its objects.

The Bank’s affairs were first regulated by the decree of King William I., of March 25, 1814, which to a great extent is identical with the already mentioned draft bill of 1802. The Bank’s charter was renewed by royal decree of August 21, 1838. The two decrees have but few differences.

The Bank was a joint-stock company. In 1814 (Art. 7), its capital was fixed at 5,000,000 guilders (divided into 5000 registered shares of 1000 Edition: current; Page: [230] guilders each); in 1838 (Art. 6), at 10,000,000 guilders—an amount of capital which really existed from 1819. The shares were transferred by a special note entered in the shareholders’ register in presence of the Bank’s directors (1814, Arts. 9 and 10; 1838, Arts. 8 and 9). Selling shares for future delivery was, in 1814, forbidden (Art. 11). In 1838, the interdict was not renewed.


The management of the Bank was in the hands of a president, five directors, and a secretary. The president and the secretary were appointed by the King as permanent members (1814, Art. 49; 1838, Art. 40). According to the decree of 1814 (Arts. 49-51), the King had to appoint for the first time two of the five directors. The other three were selected by the King from six persons nominated by the Bank commissioners, together with the president and the two directors already appointed by the King. Under the decree of 1838 the King appointed for the first time all the five directors. In later years the King had to appoint five directors out of the ten persons nominated by the commissioners together with the directors (1814, Art. 52; 1838, Art. 41).

The decree of 1814 (Art. 47) required that the directors should be shareholders of the Bank, that they should live in Holland, and be at least for six months registered as holders of ten shares of the Bank stock. By the decree of 1838 these requirements were repeated, and it was further prescribed that each director should acquire another five shares before entering on his functions. By the royal decree of June 9, 1852, it was ordered that each director on assuming his functions must be the registered holder of fifteen shares. He was obliged to keep these fifteen shares during his term of office. Every six months (1814, Art. 48), and later on, every year (1838, Art. 39), one director had to resign, who at first was designated by lot and later by seniority. The retiring director could be re-elected.

The president and the directors were obliged to have their domicile in Amsterdam. Only on urgent danger and by a special royal order were they allowed to change their residence (1814, Art. 38; 1838, Art. 29). The president, the directors, and the secretary received a share in the profits, specially fixed by the King (1814, Art. 40; 1838, Art. 32). The president and the directors were sworn before entering on their functions (1814, Art. 42; 1838, Art. 33). They had to be guided by legal and reglementary orders, and in conformity with special instructions given by the King (1814, Art. 39; 1838, Art. 30). They were not responsible for any loss resulting from their licensed operations (1814, Art. 41; 1838, Art. 32).

The whole body of the shareholders was represented by a committee of fifty of the largest of their number. At the end of the first year these fifty had to elect, by an absolute majority, six shareholders to act as commissioners, and they had to fill all vacancies in the same way (1814, Art. 53; 1838, Art. 42).

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These commissioners had to be registered holders of six (from 1838-78) shares at first, on the day they were elected, and later for the last six months. Every year, the third part of the commissioners had to retire, but they could be re-elected.

It was the duty of the commissioners to examine the balance-sheet, which had to be submitted to them at the end of every year. The bookkeepers and the cashiers had to confirm by oath the correctness of the balance-sheet. If everything was in order, the commissioners had to liberate the president and the directors from their responsibility. The commissioners had also to declare the dividend according to the reports of the president and the directors (1814, Art. 55; 1838, Art. 44).

Amsterdam was the seat of the Bank, but the president and the directors were allowed to extend the Bank’s operations to Rotterdam, Dordrecht, and all the other principal towns of Holland, either by special correspondents or by delegates. The decree of 1838 (Art. 34) provided for the establishment in Rotterdam of a branch (bij-bank), and the president and the directors had to make to the King proposals to this effect within three months after the decree came into force.


The Bank, in 1814 and 1838, being chartered for twenty-five years, enjoyed many privileges. First of all, article three of the decrees of 1814 and 1838 must be mentioned. This article says that during the time the Bank is chartered, no other institution shall be allowed to issue bank notes. The Bank, therefore, had a monopoly of note issues. Its other privileges were also exclusive.

A great number of such favors were granted to the Netherlands Bank by decree of March 25, 1814. In the introductory notes to this decree it is expressly stated:* “Qu’une telle institution mérite sous tous les rapports d’être protégée par des prérogatives extraordinaires.”

Total exemption from taxes was assured by article fifty-nine to the capital, the shares, the profits, and the dividends. Article sixty exempted “toutes quittances, récépissés ou billets de banque, à émettre par la Direction de la Banque, ainsi que toutes autres assignations ou effets comptables, les livres et les régistres” from stamp duty and registry duty (droit d’enrégistrement), “afin de favoriser cette institution et la rendre plus utile et plus profitable au public.” Article sixty-one ordered that the greater part of the account current balances could not be attached by legal process. Article sixty-three urgently recommended to the civil and military authorities, especially to the Amsterdam Town Council, “the protection and the security of the Bank as well as the defence of its privileges and preferences.” Article twenty-seven exempted the loan deeds from all taxes, with the exception of the Edition: current; Page: [232] stamp duty. Each shareholder also enjoyed special privileges. In case of increase of capital, the shareholders had the first claim to subscribe for new shares (Art. 14). In regard to loans and discounts, they had precedence over the non-shareholders, up to the amount of their holdings of stock (Art. 16). The shares could be seized only in case of the execution of a valid judgment, or on the failure of the holder (Art. 18). They were to be taxed at their nominal value for the succession duty as well as for all other duties and taxes (Art. 19).


Most of these privileges—except the monopoly of the issue of bank notes—were not renewed by the decree of August 21, 1838, and the few which remained were: (1) The right of precedence of shareholders in the subscription to new shares in case of increase of capital (Art. 12); (2) the exemption of loan deeds from registry duty (Art. 20); (3) the exemption of receipts, quittances, assignations, bank notes, and books of the Bank from stamp and registry duties (Art. 48); (4) the special obligation of the civil and military authorities, especially of the Amsterdam Town Council, to protect the Bank (Art. 50).

The orders concerning the operations of the Bank most conclusively show progress as compared with the organization of the former Wisselbanken, though a certain reticence, especially in the decree of 1814, is still observable. The decree of March 25, 1814, fixed the scope of the Bank’s activity in the following way: The Bank could (1) discount bills of exchange (Art. 20, No. 1); (2) grant loans on stocks and merchandise (Art. 20, No. 2). Loans could be granted on security of entries in the Dutch Great Ledger and on certificates thereof having the visa of the Great Ledger affixed, on home stocks, and on merchandise lying in Holland (Art. 23). Loans on the shares of the Bank (Art. 17), on real property, on ships, and on foreign stocks were not allowed (Art. 25). Loans were granted up to the amount which the directors deemed advisable and for a period not exceeding three months (Art. 23); they had to be confirmed by a notarial deed (Art. 26), which was only subject to stamp duty (Art. 27). The rate of interest fixed was, at the outside, at five per cent. per annum (Art. 24). (3) The Bank could buy and sell specie and bullion and have it coined and recoined (Arts. 20 and 28). (4) It could receive on account current money of the Government or public authorities (Art. 20).

The Bank was not allowed (1) to buy, to barter, or to acquire any merchandise or stocks (Art. 21), except unredeemed pledges, the buy