Der Deutsche correspondent. [volume] (Baltimore, Md.) 1841-1918, 1916-10-11
GEILMAN wAR FINANCE.
President of the Commercial Uni
versity Of the City of Munich.
(Continuation.)
LOOK WITHIN.

Cnarlly DeBlnS at nome. ana III tney
find 1t easier to begin a little away
fromN home they better turn to
France. In the last days Of June,
1914, the bank-note circulation of
the Bank of France was 6,000,000,-
900 francs (about 81, 1,154, 900, ,000).
Two years later it was 1873 billion
francs, or $3,000,000,000. In the
last week of June, 1914, German
note circulation was "a billion
marks, or nearly $500, 100000. In
the last week of June, 1916, it had
risen to 9,0OO,000,O0O marks, of
which 1,000,000,000 has to be de-
Quoted for the occupied territories,
reducing the total to 00.000,0O0
marks, or nearly 100000 1000. The
circulation per head in France
leaving the occupied districts out of
accounts over SIS; the circulation
in Germany not quite $50. The note
issue in France not covered by gold
has risen from 1885, 100000 $3.50
per hcad) to $2,11700O,OO0 (nearly
$53 per head); the note issue not
covered by gold in Germany has
risen from S270,0O0,000 to $1,40O,-
100000, or from "a to S21 per head.
The rate of increase of tho total
note circulation was greatest in Eng
land. Circulation has risen about
3.3 times in Germany. In England
the pre-war-note circulation had been
$50, 900. 1t has risen to G148,-
100000 bank notes and currency
notes combined, or rise Of 40
times. The circulation per head in
Germany has risen from nearly so to
In,
than S3.16 to over $15. If there is
currency imitation 1t was never
stronger than in England. For the
notes of the Bank of England are no
longer the bank notes of England
AS their issue could not easily be ex-
panded, a new fiduciary issue was
created at the outbreak Of the war.
These are the so-called currency
notes. They are issued to banks up
to 90 per cent. OF their total liabil-
tiles. The banks pay interest on
them. They are small notes and are
accepted as legal tender. They form
today the bulk ofEngland's currency
Whilst &35, 100000 notes of the
Bank of England were issued, more
than three times that amount, G116,-
100000 currency notes, are circulat-
ing. They are convertible in gold,
but the fund provided for the con-
version is not sufficient. 1t is only
rs per cent.
GOLD BACKING.
English critics delight in pointing
out that the German notes are no
longer convertible in gold, whilst the
English are. They rarely mention
the fact that the same holds good for
the Bank of France, though France
ought to be able to get gold from alb
road. At the outbreak of the. war
the Imperial Bank was freed from
the obligation Of redeeming it's notes
in gold. An influx of gold to Ger
many from foreign countries was un-
likely. An efhux or gold had to be
provided against. The notes became
legally unconvertible Whenever
similar measures have been taken in
the past, they have led to an over
issue OF notes; they were considered
the forerunner Of bankruptcy. Gold
was driven from the circulation; If IL
was not exported by spectators it
was hidden. After some time a prem
ium on gold arose, Notwithstanding
all legal enactments, and the stock
that sort has happened in Germany
There was no doubt some leakage of
gold to foreign ountries-stories
cropped up repeatedly OF British
agents collecting gold secretly for
export. Broadly spoken, the coun-
try's gold stock has been retained
1t was merely transferred from the
pockets of the people to the vaults
of the Imperial Bank, which has col
lected almost $250,000,000 gold
since the beginning of the war. The
German people offered their gold for
bank notes, not because they were
compelled to do SO, but because they
had complete trust in the solvency Of
their bank and OF their government.
Even today, when nearly all the gold
has been handed in, small parcels of
gold are brought to the bank and ex-
changed for notes. They are ex-
changed at par; there never was any
premium on gold and there never
was discount on bank notes.
Though the notes are not con
vertible any longer, the enactments
about the gold reserve have been
maintained. At least one-third of
the notes issued must be secured by
cash reserve. Cash reserve includes
silver coins as well as the currency
notes issued by the loan banks. AS
a matter of fact, the notes have al
ways been secured by gold reserve
of more than 33 per cent Even on
June 80, 1916 (the last OF June is
always a very heavy pay day in Ger
man business life and the circulation
of notes is especially large), this was
the case. The gold stock Of the bank
was about 2,500,000,00O marks
($600, 0,000,000). The total note
issue was 7,240,0OO,000 marks
(about 81, 100000, ,000): the gold re-
serve was 34h per cent. A few
weeks later when the note circula-
tion was more normal Gully %,
1870, the gold reserve had risen to
36 per cent.
There is not much object in COM
pairing the German gold reserves, as
shown in the bank statements, with
those of Russia. But it is interest
ing to compare them with those Of
France, a country which has always
boarded gold in great quantities and
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