New-York tribune., 1910-07-18
GERMAN BANKING LAWS
How Order Was Brought Out OF
Confusion.

! tains an introduction written py Dr. H.
Koch. who only recently resigned as gov
ernor of the Imperial Bank. ana mas loii6
been considered the foremost mohetalS
authority in Germany The laws iiiCior ~
the original bank act of March H. 1910
which brought unity out or the hetei
.oroo,,s mass Of notes and systems OF dlI-
ferent types in Germany and the suo9e
nuent laws by which the charter OF tll0
| IuneriaI Bank has been amended at inter-
walls of ten years. Among the latter d
included the law of June l. l9oS' "hlo'i
res,,Ited from the special inquiry institut-
ed by the German imperial government -"
1ooa Dr Koch in his introductory re-
.;o1,, oP those laws declares that the con-
ditions which prevailed in Germany not
rnucb more than a generation ago with re-
gard to circulatiou-coin. paper money
.nd afforded a striking p1cI-
IRE of our political confusion Efforts 10
secure uniform coinage system by CO.
oneration among the German states. III
Guiding Austria had brought no sauSIdc-
tory results Paper money had been IS
sued by the governments OF several OF tIle
states, which became known as WIG DlllS'
which could be passed beyond the limits
Of the states which issued them only Win
difficulty and loss.
Paner which was more acceptable, al
though not considerable in amount, was
issued also upon special concessions Dy
railroad companies. municipalities anu
other corporations. Practically in Prussia
only we're conditions tOlerable, where the
Bank of Prussia which was vested Win
rho unlimited right of note issue IN 1856.
had been able TO render great services 10
German commerce in the crises of 1891,
T,-A 1ny-o
central note bank for the greater part OF
Germany. There were still. however. nine
prfvate note banks in the old provinces OF
Prussia. and other German sovereigns
made liberal use of their authority OF
granting the privilege of note issue, and
often on 81 scale exceeding the amount re-
ouired by the extent of their states The
effort of Prussia to protect herself by for
bidding the circulation of these foreign
notes was unsuccessful. especially In mid
die Germany. because of the varied and
changing business relations of the terri
tories The circulation uncovered by bull
ion. excluding Bavaria. increased, accord
ing to the monthly records, from about
100000 marks (s3.575.000) at the be-
ginning OF the SOS. TO an average of co.,
296, 900 marks in 1857, and to 4oO,2S4,OOo
marks 1895. O00 OO0) IN 1873.
brought about the political union of Ger
many soon brought them TO realize that
such conditions could not be longer en-
dured. Already the constitution of the
North German Confederation of July IS.
1867. had provided for subjecting such mat
ters to the supervision of the confederation.
Further issues of notes by the states were
suspended. except with the authority of a
federal law. The coinage reform was taken
up preliminary to the unification of
the banking laws BY the law of July s.
1873. the gold standard was adopted and A
coinage provided for all Germany uniform
in character and denominations. although
permitted in some of the states to bear the
distinctive stamp of the local sovereign.
Establishment of Reichsbank.
The coinage having been unified. the gov
eminent set about the reform of the bank
ing system on lines which suggest in some
respects the financial history of the United
States. Provision was made for reducing
the circulation of government paper and
committee was appointed 10 investigate
the subject of uniform and more careful
restrictions on the banks. The issue of
notes below so marks (S12) was prohibited
after July 1. 1875. and the banks were re-
qulred to publish monthly reports. 4 bill
including =
duty of per cent on uncovered notes above
certain amount. was submitted to the
Reichstag on November 5, 1874 The dis
cussions on the subject however. com
PEELED recognition of the general desire for
an imperial bank TO be established in tho
public interest. So strong was this sen
tlment that the discussion was adiourpe4
unth bill could be prepared esta bIisb
ing the Relchsbank and providing for its
gradual absorption of the note-issuius fIInc-
uon throughout Germany. This bill became
law on March Ii. 1915. and. with some mod
ihcations in 1889. 1899 and 1909 is stiu +hu
fundamental banking law of the empirs
Th1s act rested, according TO the anIv-
SIS or DIR. Koch. on a compromise oS +ba
central bank system with the system OF
piurality or banks, which latter had its
ioot III the existing conditions. First of all |
II created ror number OF years a tran
sltona stage, freed from the most ,ras !
ing evils, in order that uItin,a+e1,- -,
ence would lead to the adontio,, - -
equate uniform system New nota MI,
leges could be granted only bv tr,nart,,
legislation The ReichsbanL Thus .r,,,
'houSh IN moderate sense as ths ,e,,,, /
note bank of Germany
me economic and political positior On /
WHICH Its special rights and duties ros. =
not only In the classification Of i4s
puohc duties. but also In the close ,o,rll,
''oi itolcated by its name with +bo irs,, !
'u'iohs or the empire. Its uaraso,os'. |
must not De governed solely. or evap ,hils,. /
Dy considerations of gain. Tbus o0.,re- -
-'S capital and the network of hrap.ta@' y
Hsii ~ GU from the Bank of Prussia. in ,.irt,,.
''-e authority given 10 il bv the hanI-
act which secured the imnedi.ta s,,.|'NA De''lN
60 wiole empire, the Reichsbank sor,,,.
- IN bad times, the stronpboId g..
e.lo 'reuit OF the country. II aids tha 49,
cha,a eNchange not only by the mr.
- VI snort time bills and other Da,,o,
- aiSo ny ITS collection. deposits ana a.,
easement ~uiSeineht business. and chiefly b., a.
,rIIi' .''''us'V developed transfer Operations
according to the narrative of r.
tha germany passed through somaub,t
ba,,e. transitional stages as ara ro,-
r.na7. discussed In the United States cvu
,r.to, ISSUED by great variety og 49,,
IonS' which were not co-ordir,,a ~-,,,
tho o'her IN such a manner as 70 -.
Lad - ssure or crisis and whose conat,to
80. the demand for more drastic r'
anay. oS the imperial governman,
d,r.n,,. 70 me grant or genera, roy..r-
g.. ''h over the money naarks, 70
great Institution. 70 single