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BANKING 117 £130,000,000. This amount compares very closely with and pay in the amount of his debt, which is immediately the amount of the capital of the banks of the United remitted, without charge, to the account of his creditor Kingdom, but the deposits do not bear in the least any wherever he may reside. The impetus given to business close proportion to those held by the English banks. The by this arrangement has been very considerable. It deposits, however, are not the whole of the resources practically amounts to a money-order system without of the German banks. The banks make use, besides, of charge or risk of loss in transmission. From Hamburg and their acceptances in a manner which is not practised by Bremen to the frontiers of Russia, from the shores of the the banks of other countries, and the average note circu- Baltic to the frontiers of Switzerland, Germany, for lation of the Reichsbank alone is between £50,000,000 monetary purposes, is thus only one country. The note and £60,000,000. The circulation of the other note- circulation is also a powerful factor of the business of the issuing banks does not appear to be up to the limit Reichsbank. It is governed by the law of 1875 and the allowed. amending law of 1899, corresponding in some degree to A large proportion of the resources of the German Peels Act of 1844, which regulates the note circulation of banks is employed in industrial concerns, some of which are beyond the boundaries of the empire. The dangers £12,500,000, nfo .EnSland- toAn£14,811,450 uncovered limit, increased by theoriginally lapse of of this practice have called forth many criticisms in the issues of other banks allowed to it, has been extended Germany, among which we may quote the remarks of Mr by the Act of 1899 to £22,500,000. Against the notes Caesar Strauss and of Dr R. Koch, the president of the thus issued which are not represented by specie, treasury Reichsbank. Dr Koch especially points out the need of notes (Reichskassenscheine, the legal tender notes of the the increase of powerful banks in Germany unconnected empire -), and notes of the other issuing banks which are with speculative business of this kind. The object of allowed to be reckoned as specie, or discounted bills, must employing their funds thus is the higher rate of interest be held—maturing not later than three months after beiim to be obtained from these investments than from dis- taken with, as a rule, three, but never less than two, good counting bills or making loans at home. But such an endorsements. There is also a provision that at least oneemployment of the resources of a bank is opposed to all third of the notes in circulation must be covered by regular rules of business and of banking tradition, wdiich current German money, notes of the imperial treasury, abstains from fixed investments of any large part of the and gold in bullion or foreign coin reckoned at £69, 12s. resources of a bank. On the other hand, Dr Koch per pound fine. The Reichsbank is bound by law to observes that the risks of the one “ reserve system ” men- redeem its notes in current German money. It is stated tioned by Bagehot are not to be feared in Germany.1 that this may be gold coin or silver thalers, or in bar There are, besides the banks we have referred to, many gold at the rate of 1392 marks (£69, 12s., reckoninoprivate banking firms in Germany which do a considerable marks as 20 = £1)—the pound fine of gold. In practice, amount of business. however, facilities are not always given by the Reichsbank The Imperial Bank (Reichsbank), which is by far the for the payment of its obligations in gold, though the most powerful banking institution in Germany, is managed importance of this is admitted. In the balance sheet for Reichs* ^ tiie Bank Directory appointed by the 1899 the bills held amounted to £54,000,000, and the bank. Chancellor of the empire. The shareholders join loans and advances to *£8,500,000. The notes issued in the management through a committee, of averaged for the year £57,000,000. The gold held which each member must be qualified by holding not less amounted, 31st December 1899, to £23,450,000. If the than three shares. The government exercises complete condition of business requires that the notes in circulation powers of control through the Chancellor of the empire. should exceed the. limits allowed by the law, the bank is The influence of the Imperial Bank now permeates by permitted to do this on the payment of 5 per cent, on the means of its branches all the separate kingdoms of the surplus. In this respect the German Act differs from the empire—the uniformity of coinage introduced through English Act, which allows no such automatic statutory the laws of 1871-73 rendering this possible. The Im- power of overpassing the. limit of issue. Some good perial Bank assists business principally in two ways. authorities consider that this arrangement is an advantage First through the clearing system (Giro-Verkehr), which for the German bank, but recent experience makes it it has greatly developed, and secondly through the doubtful whether the system may not tend to encourage facilities given to business by its note circulation. The reckless speculation. Of late years the excess of issue of Imperial Bank also receives deposits, and cheques are the Reichsbank has been annual and has become large— drawn against these, but in Germany notes are principally more than £6,800,000, on average, in 1899. It remains used in payments for ordinary business. Before the to. be seen whether the increase of the uncovered limit Reichsbank was established, Hamburg was the first, and will be sufficient to obviate the need for an excess of issue for a long time the only example of a clearing in Germany. beyond the limit for the future. This was taken up by the Reichsbank when it established. The amendment to the banking law of Germany, passed its office in Hamburg in the time-honoured building which m 1899, not only affects the position of the Reichsbank, but had belonged to the Hamburg Clearing House. Similar that of the six other note-issuing banks. The Bill of 1899 business had long been undertaken by the Bank of Prussia. diiected an increase of the capital of the Reichsbank, then This was absorbed and developed by the Reichsbank in £6,000,000, up to £9,000,000. Of the £3,000,000 new 1876. Through the “clearing system” money can be re- capital, half is to be emitted prior to 31st December 1901 mitted from any of the 311 places in which there is an office and the other half before 31st December 1905. The of the Reichsbank, to any other of these places, without reserve fund, then £1,500,000, is to be raised gradually charge either to the sender or the receiver. It is sufficient out of surplus profits to a maximum of £3,000,000. that the person to whom the money is to be remitted I he amending Act further diminishes the dividend should have an account at the bank. Any person owing him money in the remotest parts of the empire may go to receivable by the stock-holders of the Reichsbank the office of the bank which is most convenient to him Ihe imperial treasury is bound to pay the State notes in cash at any time when this is required, but an independent fund of cash set apart for this purpose does not exist. Handworterbuch der Staatsul wtr&ge von undDrAR. vfsdtze wissenschaften, vol. v., art. “ Papiergeld,” p. 97, ed. 1893. Jena: nechselrecht, Koch, hauptsdcMich pp. 163-4. aus dem Handels ■ und Conrad and Elster, Lexis and Loening.