The Evening statesman. [volume] (Walla Walla, Wash.) 1903-1910, 1910-03-16

and fro between these places without
the slightest economic necessity. The
situation was aggravated by the cir
cumstance that banks located in the
smaller towns, but equipped with large
note issues, sought investments for
that part of their issue which they
could not use at home in such great
business centers as Basel, Zurich, Gen
eva, and ST. Gall, and by their offers
of money often depressed the bank
rate of these towns.
1t was not until the year 1893 that
% of the then existing So banks de-
cided Ito keep the discount rate at
an appropriate level in order to pro-,
tect the stocks of cash in the country"
and committee, consisting of of
the largest banks, was appointed to
deal with the question of fixing a gen.
eral official discount rate which shou d
serve as basis for all discount trans
actions. With the introduction of this
uniform and official discount rate there
set in decided tendency toward the
betterment of conditions. Very soon,
however, this agreement proved made
quate. -
Nearly all banks of issue, with the
exception of the. bank of England.
consider their official rate not as a
minimum, but as a maximum rate.
The Swiss banks of issue, which were
subjected to very keen competition
in the discount market on the part of
the powerful credit institutions of
Zurich, Basic, and Geneva, were of
necessity obliged to maintain a pri-
vate discount rate also. An effort to
reach AN agreement on this private
rate failed in 1894 because of the
refusal of six banks to concur Not
until March, 1898, did the banks of is
endeavor a second time to arrive
at mutual arrangement on this sub
ject; but already in 1900 the regula-
tions that had been laid down had to
be modified, soSthat the minimum of
the private rate Of discount, as estab-
lshed by the committee, was not to
be binding for any particular bank;
the established minimum was to be
te.egraphed to the banks, and each
bank was then to be at liberty to judge
to what extent it would be governed
by this rate. The agreement contain
ed the proviso that each particular
bank was only obligated to maintain
this minimum limit "as far as posi-
ble,' and that it had the right to dis
count up to one-fourth of 1 per cent.
below the fixed minimum rate bank
acceptance, or first-class' commercial
papers, or for the purpose of keeping
it's holdings of bills up to the amount
prescribed by it's rules and regula-
tons.
In the years 1891 1900 these regula-
lions seemed to- be effective. The
great demand for money which was
experienced in these years toned down
the competitive fight of the banks Of
issue on the discount market. But
even of the 20 banks that had at first
entered into the understanding, some
were unable permanently to subject
themselves to the control of the dis
count committee, and they announced
their withdrawal, in consequence of
which the competitor against the al
led banks on the discount market was
greatly increased The position of
those banks that had remained faith
full to the agreement became SO diff
cult that a new revision of the regu-
lations was decided upon, which should
give the various banks greater free
dom of action. This plan of compro-
mise was, however. frustrated by
large number of banks showing their
dislike of the agreement, and in the
general meeting of the banks of issue
on November %, 1891 the stipulations
respecting the minimum rate of dis
count were entirely abolished, and the
old state of freedom from all rest1ic-
ton was thus reestab ished. Archie:
attempt, in 1905, to bring about coop
Grafton secured the assent of only 20
of the So banks ard by the law Of
October of tina. year Switzerland fl
nally sought refuge from the discord
of Independent banks OF issue without
common leadership, in the system of
a central bank
DDnDT lint OF ND TME