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 will be squeezed until it shrieks." He might continue: "It is true we had runs on the Reichsbank and on our Joint Stock Banks; it is true we lost ten millions of gold from the Reichsbank (which we have now got back), but our Joint Stock Banks met all their liabilities, because our currency system is better than yours. We discounted about 120 millions sterling of bills and issued to our banks and the public 120 millions of notes. You could not have done this, because your law prevented you. If you had issued notes based on one-third gold and two-thirds of securities, you need not have had a Moratorium, that is, of course, if you had had the foresight to alter your law before the crisis was upon you." The German financier might further call our attention to what President Havenstein said on September 9 last: "The plans for the financial mobilization of the country, thought out and prepared down to the final details by all the institutions concerned, have proved extraordinarily efficient. There was no breakdown, no leakage, or none that could have been foreseen in time of peace,"

Of what did this "financial mobilization" in Germany, "by all the institutions concerned," consist? The war banks created in all important towns, with capitals varying with the populations, were really all "annexes" of the Reichsbank, and the Government gave them the power of discounting. The discounts or advances were to be covered by different kinds of securities. The majority were to be made for six months (on the presumption, I suppose, that the war would be finished by that time). When the advances were made, special currency notes, different in appearance from the notes of the Reichsbank, were issued for the amount of the advance. These notes were of denominations as low as the equivalents of one shilling, two shillings, and five shillings. Their connection with the Reichsbank was most important, inasmuch as the notes could be paid into that institution to take up the War Loan, or for credits for other purposes. These notes had greater power than Reichsbank notes, because when they were paid into the Reichsbank they formed a part of its cash balance or reserve upon which Reichsbank notes could be issued, thus giving the war bank notes practically the same qualities as gold. The object of issuing Reichsbank notes on the basis of war bank notes was to enable them to increase the issue of Reichsbank notes in case of necessity, and further because the latter had a better status among the people than the former.