Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1911-10-19
GERMANY'S "GREAT" BANKS
Interesting History by Monetary
Commission.
W describes Their Formation anJ
Concentrntton--How the Famous
CnrtcIs Were Or
ganized.

Inc national monetary commission ha,
lust issued a translation of a now and es
pecially prepared edition of Riesser',
Tile Great German Banks and Thei,
concentration. Dr. Jacob Ricsscr. tn,
author, is Judge in the German courts
and honorary professor in the University
Of Berlin. and the volume of which thl,
is revision and translation has been
known to scholars in the original text foi
several years, and has been altogether
rewritten and brought down to date for
the use of the commission. 1t presents a
comprehensive review of the growth and
influence of the great private banks of
germany in connection with the indus
trial history of that country from 1913 to
the present, and dcvotes but little atten-
ton to the Reichsbank and the semi-ofl-
cial institutions. Or. Riesser calls attcn-
ton to the enormous Industrial develop
mont that has occurred in Germany dur
ing the last 90 years and to the striking
concentration Of various German indus
trial and banking institutions that has
taken place during the same time. lie
analyses the situation resulting from con-
centration, the advantages and dangers
future.
In the year 1915 Germany was Just
arising from the foudal system. The con-
dition of the country may we'll he illus
tratcd by the postal system There were
no less than L different independent pos
tai administrations Postage stamps wers
introduced only in 1880, and the number
OF letters received per capita was only
Is annually in 1912. Among the most inn
portant banking houses of the time were
the SchaaffhHuscnschcr Bankverein OSiSl.
the Disconto-Gesollsch GS5D, the Bank
fur Handel und 1ndustrie OS53), the Nit
teldeutsche Credithank CS5G) and the
Berliner Iandclsgeseschaft dS56).
During the first years of impctuuus
growth. some of the banks ike the Credit
Mobilier, became interested too extern
eively and too rapidly in railway and In
dustrial securities and enterprises. though
thereby they doubtless rendered great and
permanent service to the nation" Dur
ing this period many of the banks made
the mistake Of paying excessive dividendS
of 10 per cent. and upward. However, DR..
Riesser thinks that, despite their mis-
takes. the banks greatly aided the de-
velopment of German industry during the
period of lS4S-lS7O. The industrial and
commercial advance of Germany was
even more rapid after the formation of
the empire in 1871 than during the pre-
cedinS period
One of the most important factors
which influenced the development of in
dustry and banking in Germany was the
formation of "cartels." These are "as-
tain periods of time of independent en-
terprises belonging to kindred branches
of industry. or of branches of industry
with nearly identical interests, the In
dividual members of the association re-
tanning their Independence, but Joining
for the purpose of regulating production
and sales according to the common point
of view and in the common interest" DR..
Riesser says that trusts are to be dis
tinEuished from cartels because the for
mer represent permanent and organic
combinations OF undertakings which have
sacrificed their Independence. and do not
always belong to the same branches of In
dustry, nor possess common interests"
The German cartels were formed prin-
Cpally in branches of industry producing
staple articles in large quantities. like the
mining and chemical industries. The
number of cartels increased in the period
from lS9o-19C0 from $50 to about 400 DR.
Riesser describes in detail the influence
Of various industrial combine tons upon
banking interests, and shows that con-
currently with the development Of indus
trial combinations there have been bank
ing combinations. During the last "
years a number OF banks. among which
the DeUtsche Bank was the leader. ex-
tended their business to oversee and
foreign operations by means of the estab-
liShment of subsidiary companies. This
was another cause for the extension and
consolidation of great banking groups.
Among special causes working for con-
CentratiOn in banking he enumerates: %
The liquidation of banks after panics; CO
mistakes of legislation, such as the stamp
and stock exchange laws.
DR. Riesser enumerates five great COM
binations of German financial institutions
each headed by Berlin great" bank
The largest of these is the group Of the
Deutsche Bank which has a combined
capital and surplus of about 500 200, eoO
Other groups are those of the Disconto-
Eesellschaft. with a capital and surplu,
with S0coo,Oo0; the Schaaffhausenschel
Bankverein, with s7OG0o)o, and the
Darmstadter Bank. with $75,0O000l
DIR, Riesser summarizes the present sit
uation In banking as follows: "Out of g
large number Of Independent banks there
have developed fve powerful groups.
comprising in all Al banks. in this field
however, the process of concentration has
by no means ended. 1t will in All prob.
ability not stop before 1t has come nearer
its goal than to-day by developing the
smallest number Of bank groups prac
ticable, each embracing the largest posi-
bile number of banks Until the group,
of banks shall have reached a point O
fairly equal strength, so that each on,
will respect the others domains we can
not look to a halt in the movement OF
concentration
Among the advantages Of this develop
e1ncnt DIR. Resser enumcratcs the follow
ing: THE possibility OF carrying ont uni
sform extensive policies the fact that tn,
| administration of the great banks is faI
: more subject to control by the press ant
! the public than that of a large number
! of small banks; and the fact that larg,
banks can be of more aid to the govern
ment than small banks. Great banks, OF
the other hand, themselves derive i'm
portant business advantages from con
centration. Among these advantages ar,
q wider and safer market, an enhance
ment OF credit by an extension of curren
banking business, the development of AZ
extensive bureau Of information. wid'
exchange and check business, an elastic