New-York tribune., 1918-02-10
Gold Holdings Of
Austro~Hungarian
Bank at Low Ebb
Loans to Dual Monarchy During
War Exceed l3,O0O,OO0,O0O
Crowns

Gold holdings of the Austro- Hunga-
rian Bank have shrunk from 1869 ,9OO,-
600 crowns to 264 100000 crowns since
the beginning of the war, according to
report issued on Dec mber 7 last,
following the first general meeting the
bank has held since the outbreak Of
the war. At the normal rate Of ex-
change the Austrian crown is worth
$o.2O26. When dealings ceased in
Austrian exchange in this market, on
the entrance Of the United States into
the war, crowns were quoted around
1Oh cents, or at q discount of almot t
80 per cent from par.
The report which was published in
"The British Board of Trade Journal"
gives many particulars of the activities
of the Austro- Hungarian Bank during
the war, and also in regard to it's
present position.
The first call made upon the bank
during the war by the two govern
ments was indirect, the bank issuing
two-year treasury bills to tho amount
of 950,0O0,000 crowns austria 6oo,-
100000, Hungary 35O,000,0OO) to a con-
sortum of bankers which obtained the
requisite cash from the bank itself on
the security Of these same bills. The
first direct call upon the bank was base ID
upon an agreement of August Ia, 1914;
the two governments took up 2O0O,-
O00,O0O crowns against deposit of
treasury bills to the amount of 2,G66,-
0OO,OOO crowns, redeemable in gold and
bearing interest at per cent. A sec
ond agreement, made October 7, 1914
allowed the governments to borrow not
more than 2,000,000,000 crowns (Aus-
tria 1,272,0o0,000, Hungary 72s,0OO,-
UOO) against promissory notes; and a
supplementary agreement of April l2
1919, placed a further 100000, 900
crowns at their disposal on the same
terms.
War Financing Policy Outlined
In the middle of 1915 the govern
ments again had recourse to the bank
and this made it necessary for the
directors to take a general decision
with regard to the whole attitude and
Pollcy OF the bank toward government
a refusal of their applications would
have driven the governments to obtain
money IN ways less beneficial for the
pubic finances and the general eco.
nomlc life OF the monarchy, especially
ny the issue of state paper money
while the only alternative to such re.
1usal was to place the note credit OF
the bank at the disposal of the gov
ernments to an unlimited extent.
Inc directors were not prepared to
take the responsibility of a refusal
winch would have undermined the
"nole currency system of the mon.
afchy. Ihey gave their consent to the
government applications, on condition
that recourse should be had to the
bank only when no other method OF
obtaining money was practicable. and
tnat measures should be taken to
place at the disposal of the govern
ments the surplus money flowing into
the larger financial organizations.
len further agreements have ac-
cordlng!y been made at various dates
from July 10, 1915, to November "a,
1917, under each of which the govern
ments have been authorized to borrow
l,5oOo00,coO crowns against promis-
sorry notes, the definite ALLEGATION of
which is to take place not later than
SIX months after the conclusion of
peace. The amount actually borrowed
IN virtue of these agreements by De-
cember z, 1917, was 13,200,000,oO
gary, 4,200,000,000). On all these occa-
sions the bank subordnated the in
terests of its shareholders to those of
the monarchy, fixing the rate of in
terest res az at | per cent for the first
6,300000,000 crowns of the debt and
reducing it for the remainder
without waiting for any request from
the government) to one-half Of l per
cent. The maintenance of these rates
was, however, made conditional on the
shareholders receiving q dividend of
| at least .1O5 crowns. If the revenues of
the bank do not otherwise allow such
a dividend, the interest on the state
debt is to undergo such an increase as
viii make possible the distribution of
this dividend, provided that the in
terest shall not under any circum
stances exceed a per cent.
Banks Present Position
At the end Of July, 1914, the bank
ne!d 1,094, 100000 crowns in gold, 54 :
100000 crowns in gold bills upon for
elen markets and 100000 crowns in
ether foreign bills, credits and notes. a
/
and other means of foreign payment
The holding of actual gold now
amounts to 264, 4,2o0,O00 crowns (show-
ing a decrease of S3O,70O,OOO crowns)
in addition to which the bank has
claims to gold repayments amounting
to 7s,200,00O crowns The holding OF
foreign bills reckoned as part Of the
metal holding has been maintained
for some time past at the same leve1
as previously, i. e., 6O,O0OOOO crowns
Finally, the bank holds foreign Sc.
curities and credits to the amount Of
6T,700,000 crowns All together
therefore, the holding Of gold ane
other means of foreign pavmen,
amounts now to 10S0. 100000 crowns
as against 1,269,9000 900 crowns at the
outbreak of the war.
The note circulation of the bank a.
the end of July, 1914, amounted t.
somewhat more than 100000 .OOC
crowns, at the end of 1914 to 5,1OO.
100000 crowns, of 1915 to- 10000 ,OOt
crowns, and of 1916 to 10,e0O.OOO ,Oot
crowns. On December z, 1917, j
amounted to no less than 17,70O, 900 ,OO(
crowns. The increase has, therefore
been far more rapid during 1917 thar
during previous war years. Since Apr
~, 1915, the bank has maintainee
I without alteration ratio of < NAY oo,A