Page:EB1911 - Volume 11.djvu/849

FINANCE] These figures show how natural it was to desire to relieve the states by increasing the direct imperial revenue.

Meanwhile, in spite of the “matricular contributions,” the calls on imperial finance had steadily increased, and up to 1908 were continually met to a large extent by loans, involving a continual growth of the imperial debt, which in 1907 amounted to 3643 millions of marks. The imperial budget, like that of most European nations, is divided into two portions, the ordinary and the extraordinary; and the increase under both heads (especially for army and navy) became a recurrent factor. A typical situation is represented by the main figures for 1905 and 1906 (in millions of marks):

The same process went on in 1907 and 1908, and it was necessarily recognized that the method of balancing the imperial budget by a regular increase of debt could not be satisfactory in a country where the general increase of wealth and taxable capacity had meanwhile been conspicuous. And though the main proposals made by the government for new taxation, including new direct taxes, resulted in a parliamentary deadlock in 1909, and led to Prince von Bülow’s resignation as chancellor, it was already evident that some important reorganization of the imperial financial system was inevitable.

Currency.—The German empire adopted a gold currency by the law of the 4th of December 1871. Subsequently the old local coinages (Landesmünzen) began to be called in and replaced by new gold and silver coins. The old gold coins, amounting to £4,550,000, had been called in as early as 1873; and the old silver coins have since been successively put out of circulation, so that none actually remains as legal tender but the thaler (3s.). The currency reform was at first facilitated by the French indemnity, a great part of which was paid in gold. But later on that metal became scarcer; the London gold prices ran higher and higher, while silver prices declined. The average rate per ounce of standard silver in 1866–1870 was 60d., in January 1875 only 57d., in July 1876 as low as 49d. It rose in January 1877 to 57d., but again declined, and in September 1878 it was 50d. While the proportion of like weights of fine gold and fine silver in 1866–1870 averaged 1 to 15.55, it was 1 to 17.79 in 1876, 1 to 17.18 in 1877, and, in 1902, in consequence of the heavy fall in silver, the ratio became as much as 1 to 39. By the currency law of the 9th of July 1873, the present coinage system was established and remains, with certain minor modifications, now in force as then introduced. The unit is the mark (1 shilling)—the tenth part of the imperial gold coin (Krone = crown), of which last 139 are struck from a pound of pure gold. Besides these ten-mark pieces, there are Doppelkronen (double crowns), about equivalent in value to an English sovereign (the average rate of exchange being 20 marks 40 pfennige per £1 sterling), and, formerly, half-crowns (halbe Kronen = 5 marks) in gold were also issued, but they have been withdrawn from circulation. Silver coins are 5, 2 and 1 mark pieces, equivalent to 5, 2 and 1 shillings respectively, and 50 pfennige pieces = 6d. Nickel coins are 10 and 5 pfennige pieces, and there are bronze coins of 2 and 1 pfennige. The system is decimal; thus 100 pfennige = 1 mark, 1000 pfennige = the gold krone (or crown), and 1d. English amounts roughly to 8 pfennige.

Banking.—A new banking law was promulgated for the whole empire on the 14th of March 1875. Before that date there existed thirty-two banks with the privilege of issuing notes, and on the 31st of December 1872, £67,100,000 in all was in circulation, £25,100,000 of that sum being uncovered. The banking law was designed to reduce this circulation of notes; £19,250,000 was fixed as an aggregate maximum of uncovered notes of the banks. The private banks were at the same time obliged to erect branch offices in Berlin or Frankfort-on-Main for the payment of their notes. In consequence of this regulation numerous banks resigned the privilege of issuing notes, and at present there are in Germany but the following private note banks, issuing private notes, viz. the Bavarian, the Saxon, the Württemberg, the Baden and the Brunswick, in addition to the Imperial Bank. The Imperial Bank (Reichsbank) ranks far above the others in importance. It took the place of the Prussian Bank in 1876, and is under the superintendence and management of the empire, which shares in the profits. Its head office is in Berlin, and it is entitled to erect branch offices in any part of the empire. It has a capital of £9,000,000 divided into 40,000 shares of £150 each, and 60,000 shares of £50 each. The Imperial Bank is privileged to issue bank-notes, which must be covered to the extent of 1s. 3d. in coined money, bullion or bank-notes, the remainder in bills at short sight. Of the net profits, a dividend of 3% is first payable to the shareholders, 20% of the remainder is transferred to the reserve until this has reached a total of £3,000,000, and of the remainder again a quarter is apportioned to the shareholders and three-quarters falls to the imperial exchequer. If the net profits do not reach 3%, the balance must be made good from the reserve. Private note banks are not empowered to do business outside the state which has conceded them the privilege to issue notes, except under certain limitations. One of these is that they agree that their privilege to issue private notes may be withdrawn at one year’s notice without compensation. But this condition has not been enforced in the case of such banks as have agreed to accept as binding the official rate of discount of the Reichsbank after this has reached or when it exceeds 4%. At other times they are not to discount at more than % below the official rate of the Reichsbank, or in case the Reichsbank itself discounts at a lower rate than the official rate, at more than % below that rate.

The following table shows the financial condition of the note-issuing banks, in thousands of marks, over a term of years:

The total turnover of the Imperial Bank was, in the first year of its foundation, 1 milliards pounds sterling; and, in 1899, 90 milliards. Eighty-five per cent of its bank-notes have been, on the average, covered by metal reserve.

The total value of silver coins is not to exceed 10 marks, and that of copper and nickel 2 marks per head of the population. While the coinage of silver, nickel and copper is reserved to the state, the coinage of gold pieces can be undertaken by the state for the account of private individuals on payment of a fixed charge. The coinage takes place in the six mints belonging to the various states—thus Berlin (Prussia), Munich (Bavaria), Dresden (in the Muldenerhütte near Freiberg, Saxony), Stuttgart (Württemberg), Karlsruhe (Baden) and Hamburg (for the state of Hamburg). Of the thalers, the Vereinsthaler, coined until 1867 in Austria, was by ordinance of the Bundesrat declared illegal tender since the 1st of January 1903. No one can be compelled to accept more than 20 marks in silver or more than 1 mark in nickel and copper coin; but, on the other hand, the Imperial Bank accepts imperial silver coin in payment to any amount.

The total value of thalers, which, with the exception of the Vereinsthaler, are legal tender, was estimated in 1894 at about £20,000,000.

—Cotta, Deutschlands Boden (2 vols., 1853); H. A. Daniel, Deutschland (1896); J. Kutzen, Das deutsche Land (Breslau, 1900); Von Klöden, Geographisches Handbuch, vol. ii. (1875); G. Neumann, Das deutsche Reich (2 vols., 1874); O. Brunckow, Die Wohnplätze des deutschen Reiches—auf Grund der amtlichen Materialien bearbeitet (new ed., Berlin, 1897); Handbuch der Wirtschaftskunde Deutschlands (4 vols., Leipzig, 1901–1905); Gothaischer genealogischer Hofkalender auf das Jahr 1907 (Gotha); A. von W. Keil, Neumanns Ortslexikon des deutschen Reiches (3rd ed., Leipzig, 1894); Meyer, Konversations-Lexikon (1902 seqq.); Brockhaus, Konversations-Lexikon (1900 seqq.); J. Kürschner, Staats- Hof- und Kommunal-handbuch des Reiches und der Einzelstaaten (Leipzig, 1900); P. Hage, Grundriss der deutschen Staats- und Rechtskunde (Stuttgart, 1906), and for Statistical matter chiefly the following: Centralblatt für ''das deutsche Reich. Herausgegeben im Reichsamt der Innern (Berlin, 1900); Die deutsche Armee und die kaiserliche Marine'' (Berlin, 1889);