The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1899-01-10
BANK OF SPAIN. !
Surprise That Its Resources Stood
the Strain Of War.

9ANA Ok SEAxNs
Surprise That It's Resources Stood
! the Strain Of War.
| One of the greatest fears Of the finan-
cial world during the war was that the
Bank Of Spain, which has been the
sole anchor Of the Spanish Government
| in many times Of financial extremity,
would be unable to stand the enormous
strain on its resources Some we'll in
formed European financiers insisted all
along that the resources of the bank
were limitless, and the promptness with
which it met all of the Governments
urgent calls for funds apparently has
borne out this high estimate Of it's
standing.
Owing to the advances made at the
call of the Treasury Department Of
Spain, the circulation of the bank in
creased from 909. 67S,275 pesetas at the
close of 1894 to 1,206, 275, 500 pesetas at
the close Of 1897. and on August 9th of
this year the circulation had reached
1,440,955, 425 pesetas. The cash hold
ings of the bank on this date We're
25S, 95S GAO pesetas in gold and A.
| 7O5, $50 pesetas in silver. A COMPARE
son of the advances made by the bank
the former year 217, 255, 900 pesetas had
been advanced. the figures in 1897
reached the total of 397, 49,, 6W pesetas.
The Bank of Spain was founded in
1929, under the name of the Bank of
San Fernando, and there are many in
stances in it's history in which the
Government has been compelled to
make liberal concessions in return for
the aid rendered to the country in its
financial straits. In 1856 the name was
changed to the Bank of Spain. A spe-
cial Act of the Legislature of January
l, 1856, prescribed that there should
be only one bank of issue in any COM
mercial city. Issues of the new banks
were limited to three times their capt.
tai, and they were obliged to keep a
coin reserve of at least one-third Of
the circulation. The minimum denom-
ination of the notes was fixed at 100
reals $50. While these were regarded
as very liberal provisions, the Spanish
legislators impaired their liberality by
giving to the Government alone the
power to appoint the executive official
of the Bank of Spain and the Commits
sioners to manage the independent
banks.
The commercial operations of the
Bank of Spain are conducted largely
through its fifty-eight branches, though
up to 1863 the bank had only two
branches-one at Valencia and one at
Alicante. On December 81, 1862, the
banks report showed a circulation Of
2OS,39O,9O1 reals (S1O, 4O0,O0O), a coin
reserve of 1O7. 39S, 201 reals and deposits
of 235.063, 731 reals
In 1896 the charter was extended for
VT
ty years. On March 10, 1874. law
was passed comforting upon the bank
the exclusive privilege of issuing notes,
and Increasing the capital from $780,
100000 reals $4,000, OOO) to 100, 900 900
pesetas ($2OOOO,000). This, naturally,
made a radical change in the provin-
cial banks, then eighteen in number,
which We're ordered to liquidate their
circulation, and transfer it to the Bank
| of Spain
Increases in the capital of the Bank
! of Spain are in some cases coincident
with the demands made upon the in
stitution by the Spanish Government
The bank is not State institution, and
the State does not share in its profits,
but in 1874 the Spanish legislators
passed an Act that required the bank
to advance 125.0O0Q00 pesetas (S25,-
oOO00OD upon appropriate guarantees.
In return for this the notes of the
bank were made legal tender, and lin
tied to five times the capital: the capt.
tai was increased to 80, 100000 pese-
tas ($30, 1900 00), which extended the
limit of circulation to $50 600. 600 pc
setas ($15O,O00,O0O).
On July 14th the Spanish legislators
were again forced by financial distress
to extend the charter of the bank to
December 81, 1921, and to authorize an
issue of notes to the amount of 1900
100000 pesetas $500 600, 00O), against
a cash reserve of one-third. at least
half of which was required to be kept
In gold. AS a payment for this privi-
lege the Bank of Spain had to surren-
der to the treasury 5OO00,000 pesetas
annually for three years, without in
terest or right of reimbursement until
the expiration of the charter.
So the Government has continued to
draw on the bank for funds whenever
the finances of the country needed prop
ping up, and several times during the
war between the United States and
Spain the gloomiest fears regarding the
resources of the bank developed The
appeals of the Government caused the
fate Of the bank to be more and more
bound up in that of the State. and
many European financiers breathed
easier with the declaration of peace
IL ~