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MN ALDRICH




BANK

0

.NG L AND

4

(1)

- hen *us the 3ank of Thclana foundedf.

(2)

-hen does your present c7lorter ex-ice`.

( ) ':1-lat is to par value and present selling rrice of e (,nr shares':
(4)

ho. ma. y stockholders have you?

(5)

Is the stock fully paiC

(6)

'aye your shareholders DY-T liabilities in adlition to the ownership of shareo

(7)

Is there c_ny limit to the nutber of shares which may be held
by any one person, and. is z7oar arTruval required before a transfer of your stook can be made':

(8)

To\, orten do your shareholaers met

(9)

Does every shvre have a vote at shareholders meetin

(10)

C.

lent and conhat control have Vie shvreholr'sers over tl.e r':tmare,
allot of tile bus moss

(11)as the (•overnment any voice in the mana-oent of the brink or any
interest in it tlaiouft the ownership of shares
(12) Toscribe t e or anization and mv.na:-ement of the hank, statini the
number of officers and directors wit their espective functions, and for what periods and by whom are V'ey 01ected
(1L) Is ;t cuotomary to ro-elect directors at the e:::riration of their
terms%
(14) Is there any custom restrictinc
tors :.ay be selected
(15)




.0 class from .111:!1-, the direc-

-:. freouently do the directors meet'

2
(16) :ow many branlhes have
(17) -ow are yLur branches managed.?
names the manacers of bran&les%

(18)

70
Thcs ffl. control or t, business
!
(19) Ilave the mnntL-ers of t'!- e bran,
in grtintin: 11counts, et; if not, what discreton is
usur- ay given tilem
l
(20) Have you any 'ystem of distribution o4* rroritp anonp the manr_rers of branches
(21) Are all your branches of the svme cir, or hrve you main and
subsidiary branches':
(22) Is the bucine7s conducted at your branches of the same class
as at your main o file in London
th Trprol)5nts far(23) Do your brImches have businoss relations
mers, and all clusres of reorle in their -k-ecrective

(24) Flow frequently are you reired by law to publish statments
of nonljtion
(2.F.) How freciuently is it your cuctom to publish
Arartirent et any time
(26) Is either your issue or your
e.
.inefl by the ovornment, or in any way under its surervisAon
(27) That loctal or conerl taxes ere paid by the ]ank?
(28) rc. I

ank of Frgland a member of the T.onion

ousei

- n the sixitement of your Towle Department 7:ou show




iabilities
_etnr.; if.sued

Aspots
,ts
Government aol
nther securities
coin
bullion

5:3,64,621-T

11,015,100
7,4:
-4,900
.4 91A 6/15

(29

hat is the law overninc your note iS2UOS,
issues liffitea and hov: secured%

ani

how are no

ill you explain t'e items "::overnment qebts" and "CAher securities" in the statoert, and give the reasons for the
chances in amount since 1844?
(Z1)
(2)

That extent are your notes lei.7a1 tener in Great Britain
hat other banks have the right of issue in E. land

("3) Arc the notes of other issuing banks secured, and if so, how?
That is the total amount of their outstandin' iorues
(35) Are the notes of other bnnks

tendrr%

(36) Is there any discrimination betlen the noted of other banks
and. your notes in thc puhlic estirrdation, or do all cir,
culate freely tIlroaout the conntr'
(77) Do yo:1 rfl,17 the ovornnent in the form of txes or otherrise, either directly or inirct1:1!, for :1!our privIlcre
of note issue?
(7n) Do other issuing banks ray for tr. privilee of note
,

%

;(1
iz1, you acciaired the ri,ht of issue from any other banks,
and upon v:hat terms%
(40) To viat do you attribute the veekly f:nd seasonal fluctuations
in the amount of outstanding notes, and are these fluetuntions constant from year to year%
(41) Are you
to inform ur as to the exrenses of note issue
and the profits doliivea therefrom%
(42) Under v.hat conditions or terms has your capital been Increased
from tine to time
(43) Have the obligation:- of tau
to the nullic or to the 'overnent boon cl-anged from time to time'




•••1.

4
(44) A. e

.
req- 1iroti by
te invest your capitaT,Qr any part
ef it, in any partilulr se,
If so, in wIlat
3uritics
class tInJ to 171at mount

(45) Dees the 11/ rer!uire that lefore 7N11 distribution of profits
,
you shall a:!lumulEte and maintain a cort!In amount of
rest (Surplus), and / you required to invest this in any
.
.c)
parti culr.r 17:ay?
7eferring to the weekly statement of your "''ariking Department,
dated Aug. 12, 1908, you. S1107 1:‘111)11C Deposits, ;5,145,638.
(4(;) A.11 you exriain the character of these lerosits, stating in
general from what ')ervrtments they tire received?
(47) Does the government hbve ac,!ountc with othor hanks"
(48) Do you atl.ow interest uron those

erosits"

(49) Are you required to rarnish E;ecurity for
(50) Aprro.7:1!qately to vTh.at extent do the public acnosits finctizato
groin tirre to tie during the year, and omi the e:c.tent of
these fluctuations be predicted?
(51) You show "Other de-osits, 445,546,992". Till .:ou tell us in a
gener!,1 way from whom these deposits tire received. Do they
include deposits received from hsnks, merchants and indivicirivis
(52) Do you el , . interest upon tny of these derosits
C- 7)
0
'40

Are they suject to consifieraLle fluctuntionr, aml s re these
fluetuatlonr, recularl recurrent':

(54) Are all of these aar osits rvable on Jemand
,
(55) pc you rt any time allow interest on m-eclni depositn
(56) -111 2fou deroribe the item '-ev(-1 doy an

other hills":

(57) In the statenent of assets, That contitutes the ito
ment securities 415,f- 2,29:
k
.



Jr

"overn-

5
2
(58) T$ it your custom to carry in y .ur 7 ark1ll:7 riernrtment
ti c amount rin fovornrient
(59) Mat rroportion or the iter, "thc.r cocurities, ;27,T-- 7,982",
represets bills licoantel, :7,n4
-Arorortion rer
.esents lono on collteral
at, if any, other;ecut_iitie:,
-the iteei

(60)

,
1.:;ept these are inclulod in

(612 Can ziou state arrro.ylmately th avere lc,nn-th or tie tn(71.
average size of bills dicounted by you
(62) Is the chc,rtictcr of your dIscounts or lotms re;711.1ated or restri ,lted by li?v, or fixed by -f,*(E) statutes of the Eank
ill you ct&tc the class of biL_r usually dicounted by you,
givinfj the num1A-r of names roquifd, the miniun size,
and the maximum lene;th of: time t(

(6.L.;

(64 \ - hat claso,es or collaterta nre aco,ertod by you for
ill .ou sttite unrroyit(ly the average lergth or time
,
and the avcrr-e size of 1o9ne on oollatera]*

(65'

(66) 7"rvt IP the
stinction betv!con what arc known RS
and other
(67) no

(68)

•

diL.count emy but :ri;lc
-

Is the usuvl differonoo in the rate charced by you It-non
a prime bill ard for
clatls loan secured by collateral havin the27-1c neriod to run

(69) 'That IL the difference botv.oen a trrde bill and a fdmnce
bill
To tho rte
sam(, or: each c.
(70) Do you (11socul,t to :fl: consdlcraLlr, acont eirectl,y for individuolo and merchants




It your custom
employ yv surplus funds in the -lurcharlo
of bills from dicount
you rediscount hills for t' e joint otc13: or other banks?
If

6
(n)

,
hat changes have taken 'lace from tiirto to tie. in ,Lc chracyou &ccopt for diLcount from discount
,
ter of the billf;
houser, end what was tho purpose and effect of the chtinc:ts

(74) Is thL rtc :Cor dicount nt your branches for cur:toners' raper
same ns ct the central office':
rLnd •1. or rie '.1 i1
s governing the purc;
,
.ase by you of foreign

(76)

:
ill you ex1ain the distInotion ,iet- cen a foreign and a domiciled bill'i

(77) Is it your eu.tc
countries

to diccount any bilis payable in fofel)-m

(70) Do you sometimes . 11rchase prime bills in the mtirket at a lever
rate thtn the bank rate
(79) -eu1t1 you clarce a merchnt hpvi.cli a ccod account with you the
:
bank rate or trc market r:.te for rrime
(80) ic w':Et e7tent (loec te
transpctiont

rate covorn your discount pril

(01) Ir thc amount of nclommo:7Wton extentted by yoiz to discont
houses or othro
upon 1.1.e amount and charLotr
of balances carrio, with you, or governed by the necossl1
tics of the concral cituvtion'i
(82) Do you at timeo discount hi lic for Irties hr.vin:- no rlount
wit"1]. yeu%
(K) Are n convidera'ae mentor of your loans on call
(fl4) Do you allow overdrafts, or do you make any advances or te
kind made by the :.-cotch b(4.11:s called "cash crelits'?
yoa receive account: flrot. corTorn(85) in vi. cv. of the fact
tionc, merchants on InlividutUr, and di count for' then,
rtro you not in n measure p oorrotiter for business v:ith
joint ctock banks
,
.
(86) Is the ),E,tbrouCh its branchenomrloyel by other b[A Cks tc rny
concidorable extent for the transfer of funds from one city
to another?



(87)

t

pecif1c cervien itre rerdered by the
to t'.-11 . -overn'
-,)cn In connotlon l th t-he mannerent of 4 .e ru1ic del;t,
,
and as a aerositary of publio funs?

(3o) Loe

an1

er_leive any correncntion for mulh servIles

You show in :our ra tz14 oLont, " otes, 423,8Z8,85.5, CoLl
'
6
snvor ccin,
fr
your derrit
5°1
bilities.
(89) Is there ary grieral rule of the 7ank vith referenle o Vle
.norcertne: of cash rezIcrve held in the
-7
.nkin Dorti.rtcnt aErzinrt
k

(9() Do tk

banks of 7.11,f710, :cotland. ana Ireland have briones
with you, ana re thor'o Twlances r;r.ardea as a very im7ortant pf7.rt of toir oas,- renomet?

(91) Can you ectirTte thc 1.)erconttze of cash (coin and notes), to
aerorit liabilites in all tl e bv.n1
,
of 1:nglnn(1, inliAain
thc 3arkin 'Ocrartment of ho 7ark of Enjandi
(2

iOW ana by 1::k-,on is the bun, .1.!:t

(9Z) -hen an

unler what o-n(lltions is tl'e hank rate &i.ane;ed

(94) Ts any notco gtven in mivance of on intoroled o'nunr:e'i
(95) Do you rccard rrorrt nnl adeoute in3rens in tic bank tent°
a2 the no:A offect:ivo measlIrn to protc:flt the Tar'e reser7er
(96) Does thr ralciTv; of the Lank rate ever
pcur-r r)('

-1.1 to tAt- orct gold and
:

(97) How r.lo you po3ount for the fact tHt at i;ir;es 6 hi:Thor bank
rate in l:nrjand fnJls to nttrct goll from the Thntinent
lovmr rte rrevli there
(98)

r;

of t' c' hank rt.tr' rore er-feetivo In nontrcll'nc
;
-01 7 moverentc no tnr. ct tl'_P tine
the lrst vusPonsion o' the Tani: Lot in 18C6

(99) To what do :.-eu attribute this




rlcre!,pecl.

8
at eA:ect dia radsin
1907, to Jannry,

(1C0)

.
the rate In the period free: H3tober,
have upon the &.n.'S c;o111. supply

;
(101) Yrom ho; many- countries dia the .fink receive gold as a rei.lt
of th inoreuvc at that tireci
(102) if the maximum .rte of
floient to zIttr.ot
increuseari

rixeJ by the Park had not been sfoil, ou1 the rate liv,ve been further

(10 ) be you t; e other stops in sdilition to raisine: the bank rate
to rroteot cola in times of a cri2is?
.
(104) is it cu:: tomary at such times to -dv—le money without interest to importers of col(1 to cover ti'. e time required
trarsrortation

n

(10f)) Ts It the Pra:A)ce of the 741.nk in times of stres to disc(-,unt
bills of fi satisfactory chnracter for its customers frcly
it

(106)

t.hc 'fink to dic(7,rir%inr.tc v.Lainst finance
policy
billy in times of fintincifil crises':

(17) Does the unAerstood policy of the rink of iv-1::nd to tiavanco
bank rtes rarialy !Ina at the salo time to extend liberal credit in times of r,erioar financil trouble, neot
gonertll w-v.roval in busiref: and br.1111.7111

(1:13

clonetict:1 borfow money in the open mrket for
'Jle purpose of rasing t.e murl:et rate

Does theank

(1C9) Do ziou cometHies sell ,;onsols for the sem° purvcwe
(110) 'That are t c Provisions or
,
of t*:oll by the ''ankr:
ctt iE the usued

(111)

th rel'erone ti the rurchnse

paid by the Tank for [-ell purc'zisea

unaer come con:Iltons aalince
(11) ioos the
purchtses

(12.

l'or

UnThr Crivt nircumstnces an to wl ,at extent does 1.1(1 P,ank
• ierriipp; for 2()11 bullion or eorein ooin
charge




-old

C)
(114) T . thc c;o11 purchased by the 7ank vent to the A.nt, or :lcrofAtea in the
3.uo Derartent and notec issqea against it?
(11) Ts '.onon the only free market for F7olci in
(116

iirope%

Do the joint stook ana other banks rely upon tho rescrves of
the 7ankini7. Derartnent of the Bank of ;r1-inA
ultirte reseurce in °use of trouLle%

(117) Do you ravc.t
ftivor

n inorense in the fiquciary note circilltion%
i2pue of on

(119) If not, What i. the reason
(120) Does the prolicEltion for
twproval%

pou
or

notes

our oNection%

cecomiary gola reserve meet - lth
c

(121) Is iteti.esirFble that bank re' rvri Lonerf,111y shoula be
ctrencthene(i
1122) 1T1f3 te eyr.erience of the Jnite6
vith refere—::c to
no -tx ivsues unler the legiviation of .W/:4 ana 104f. been
stitisfactor
(12,7) 71th recrect to the fonoroly of note iPsue, rro arcy modificationr, or amenamentc to the bank acts ouggestea, ana if
so, wbet iv 1. le mture of the proposals
;
(1:A) .c there any substantini demtnd for vthrt we in AmericPcli
"treater c1a3ticit.7" in. volumn of c)irreno:: (notes and
)
coin; to ansv;cr burAne -, aonandsti
(125)

there tin jnclinatdon to adopt the ermrnysyPtem of ted.
issuer; for ocrrenies or some molificvtion of it

(126) •A there any tenlencz to r.rtilrn tn the sz-sten of note issue
,
in oistionao prior to 1044%
(127) Is there any contention in bnnhir2 or cconomio circlec trt
it is noces2ar to restore or e7tend the right of im:Aze
to bt:nks othi:r than the ,E121k or liglbna, to en
e thom
to Inorot)Bu tl:ejr own rfoflts or to cffora elec.lulte facilities to bormvers or to Etet legitimto business derlanas'i




•

...••

10
(128) :-.as the ranidly inreasing .tze of chocks, billo of e:zcbrInp.e,
and other intruments of credit mid cicarinc houce facilities, rendereJ the enlflred employ ent or hank note
unneceary
(129) That, if any, artificial moans are taken by you to secure
chan(ros in the volume of currency (notes an6. coin) to
make it respon2iv to businosE deln1E7
(10)




effect has
mar' rl increase in tile commercial and inftw7trirl activities of -r.ot hAitain on the volume of
note isF:kes

-.•

•••

t•

• It

ekt,
you give ,abrief history of ii4or 14w$414-tnti-on
, stating
whether it originated in London, or in the coun
try,
whether its business to-day is confined to London
or is
also conducted through branches in provinciai citi
es and
In snail towns?
How many branches have you?
In the main have they been created by you or
have they been
formed from the absorption of independent bank
s.
That is the par value of your shares?
What dividends do you
pay?
:That is the present market price of your shar
es?
How many stockholders have

ou?

Is the stock fully paid?
If not, what additional payments
can be called for the develorment of business
, and what
in case of liquidation?
Does the law require that before full dist
ribution of profits
you shall accumulate and maintain a certain
amount of
surplus (reserve fund), and are you required to
invest
this in any particulnr way?
Is there any limit to the number of shares whic
h may be held
by any one person, and is your approval requ
ired before
a transfer of your stock can be made?
How often do yvilr shareholders meet?
Does every share have a vote at shareholders'
meetings?
Describe te organization and mana,
:
-ement of the Bank, stating
the number of orficers and directors with thei
r respective functions, and for what periods and by whom
are they
elected?
Is it customary to re-elect directors at
the expiration (f
their terms?
How frequently do the directors meet?
How are ;our branches managed?
Who appoints the managers of branches?
have the managers of the branches fu:L1 cont
rol of the business
in granting discounts, etc.; if not, what
discretion is
usually given ,hem?




•

2
Have you any system of distribution of profits among the managers of branches?
Are all your branches of the same claas, or have ycqi main and
subsidiary branches?
Is th,: business conducted at your brLnches of ''
6 r
as at your main office in f.ondon?

sate clss

Do your branches have business relations with merchants, farmers, and all classes of people in their respective localities?
rlow frequently are you required by lat, to publish statements
of condition?
frequently is it your custom to publish them?
What local or general taxes are paid by the bank?
State the distinct:on between current accounts and deposit
accounts?
Do you pay interest upon either or both?
If so, does the
rate vary uron different classes of accounts?
Does the rate vary tis betceen London anl the country?
so, what is the usual difference in percentage?

If

What governs the fluctuationsin the rates raid?
That percentage of your deposits are payable on demand?
Explain in general the arrangement made by you with your customers for the acce-ptance of drafts drawn by them, stating
the usual length of time, whether they are secured, and
the custonry charge for sch service'
Describe the characr of your assets constitutinc the item
"oney at call and shoiA notice"?
Is it customary to confine your investments in securities to
Awernment and public securities, or do you purchase
stocks and bonds of railways an] othcr inaepenlent corporations'i
Are you rec aired by law to invest your cw,ital or aily nart of
.
:
it in any parUcul9r securities?
If so, in what class,
and to v:hat amount?
Is it your practice to invest an amount equal to your capital
in securities, and if co, in what general class of secnrities?




Describe the general character of your
bills discounted, including their average size, their averag
e length of time
arA the number of names required'
.hat is the Hinimum size and what is the
maximum length of
time to run for bills discounted by you.
That classes

f collateral are accepted by you for
loans?

Will you state approximately t",.]e averag
e length of time and
the averal7e size of loans on collat
eral?
What is the distinction betwGen what
if-e known c,,; "prime bills"
and other bails':
Vat is the usual difference in the
rate cha
a prime bill and for a high clasH lcm rL ed by you upon
n secured by collateral havinp: th€ sare period to run
?
What is the difference betTeen a
trae bill and a finance bill?
Is the rate the s!':e on each':
Do you discount to any considerable
amount directly for individuals and merchapts?j

i
Is it your custom to
'y your surplus finds 144r-turt purchase
of bills f)444A-44,ee.iiii4—platallayes
'i
A
::ould you charge a merchant having a
good account wit
bank rate or the market nite for prime
billo?

c

you the

To what extent does the Bank rate gov
ern your dicoant and
loan transactions?
-

,/ 7
--

the amount of acommodation extended
by you to iittelmotrt
hotaetioeP—t4491tT'siidiot'e4q the amo
,
unt and character
of balances carried with you,
t4retsedgw.
Do you at tiLer, discount bills for par
ties having no alcrint
with you%
Are a considerable number of your loa
ns on call?
Do you allow ovcrdrafts, or do you mak
e any advnnces of the
kind made by the Scotch bunks called
"cash cre.lits"?
Is there any general rule in your
bark with reC(!renee to the
percentage of cash and balances in the
Bank to the
deposit liabilities
Can you estimate the percenta e of cas
h, (Coin and notes) to
deosit liabilities in all the banks
of England, ineludir,c the :ankinc i)epartment of the
yank of England
Do you regard prompll and adequa
t increase of the'.:ank rate
as the most efflective measur to
prot et the At-r!iT's re,



LA4
I
Af_eee
/
1
1.1.• APP.
"1-;;)

serves?
Does the raising of the Bank rate ever fail to attract eold and
change the course of exchanges?
How do you account for the fact that at times a higher Bank rate
in England fails to attract gold from the Continent/when
lower rates prevail there?
Is the raisinL. of the Bank rate more effective in cont olling
gold movements now than at the time of the last
spension
of the Bank Act in 1866?
To what do you attribute this iLcreased efficiency?
What effect did raising the ate in the period from October,
190,toJannary,1908have upon the Bank's
11 supply?
What other steps are taken/in addition to raising
to protect the outfl* of gold in times of a

he ?ank rate,
risis?

Is it customary at sch times to advance money wi hout interest to importers of gold to cover the tim required in
transportation
Is it the policy of tl,ie Bank of England to discrinate aainst
finance bills ii timesof financial crises?'
Does the understood policy of the Tank of England to dxance
bank rates rapidly and at the same tie to extend liberal credit in times of serious financial trouble, meet
with general approval in business and banking circles?
Is London the only free market for gold in Europe?
Do the joint stock and other banl:s rely upon the reserves of
the Banking Departent of the Bank of England as their
ultimate resourse in case of trouble?
Do you favor an increase in the fiduciary note circulation?
Do you favor the issue of one pound notcs?
If not, what is the reason for your objection
Does the propos,ilion fo
tec9ndarys,glold Trerye me
.e.4 („tA
,,
4* i----try,
approval? eK ,
..ND a/—

ith
-V

Has the experience of the United Kingdom with
17::::e to
note issues under the legislation of 1844 and 1845 been
satisfactory?




respect to the monopoly of note is:Ate, are any modifications or amandments to the bank acts suggested, and if
so, what is the nature of the proposals?

4:4

"

Is there any substantial demand for 1,7at
we in America call
"greater elasticity" in volume of curcency
(notes and
(Join) to answer business demands?
Is there any inclination to adopt the Thrman
system ef taxed
issues for emergencies or sore modification
of it?
Is there any tendency to return to the system
of note isue
in existence prior to 1844?
Is there any ontention in banking or econ
omic circles that
it is ncces..;ary to restore or extend the
rig t of issue
to banks other than the sank of ngland,
to enble them
to increase their own profit or to affo
rd adequate facilities to borrowers or to meet legitimate
business demands?
atIS

the rapidly increasing uze of checks, bill
s of exchange,
anl other inctruments of credit and clea
ring house fcilities, rendered the enlarL:ed employme
nt of bank notes
unnecessary?
effect has a marked incr(.ase In the comm
ercial and industriF1 activities of Trreat riritain on
the 'volume of
note issues?

1




REPORT of the condition of "The
\'t
A.......

,in the State of...

1 ,1.3iness on the • • • • • •.

• 6 ••

VT

,at the clot.° of

day of

1.

RESOUIC
r-oans and Discounts (see schoehae)

2.

C,verd.rafts, secared,,

4.

ecrities, etc., including premium on sr.ne
(cee schedule)
'',ankin:.
• ''arnit71re and -ixtures

5.

Otk r real Tetr.te oned

6.

Dne fron

7.

Due from State ard ..rivate ?}Folks and T)-ankors,
Conrnnies, ana
ivings7amks

8.

7 hocks and otr Cask Ttem8

9.

; unsec

Exchanges for Clearlv House




Cakth on hand

(Gola Coin
(Gold Certificates
(ilver :ollars
(Silver Certificates
(Subsidiary and minor coins
(77,eal-Tendor :otos
(National 741n7-7. - otes

TOTAL

1- 7!TYT 171 Trq
takJ

1.

Calf,ital Stock paia in
2,urrlus fund
individe:1 refits (including arounto, if fl:T,
Bet aside for s: cil purpo:2es, except Ttem 17.
ens Current T:acrenses, interest, and Ya:zes paid

4.

Due to 3tationa1

5.

Duo to State and rivate 7anks and rianIzers,
Trust ompanies an Savings :41nks

C.

::)iviCiends un-raid

7.

Tndly'dual Deronits sub:ect to 'heck

8.

Savin2 T)e.osits and Derosits in interest dopartert

9.

.erind :ortificr,tos of 7 enosit

10.

Tie Dee27Its including Time ..7ertificates of De7ocit
Payable after tTlirty drys

11.

Truct Deposits

12.

Cort1fiod. Cii001:2

•7:reasurer's and
14.
15.
16.

asier's (Mocks outstandng

on,is - orrowed
iotes an

ills rediscounted

ills payable, including 1ertificrted 07 Doro:At
rerresenting monc:Y borrowed

17.

Teserved For Taxes

19.

f.ccrue

19.

A.:. bilities other than those above states




Interest

TCTAL

eJ

CLASTFIC'TION OF LOA1TS AND DISOUNTS.
••••••••••••••••..."....1111,111111

A.

On demanl, paper with one or more indivi:lual or firn
names

B.

On qemand, soc;Ired by stoc77c, bonds, and other personal
secilrities

0.

On time, paper with tv:.c or more individual or firm names

•,

On time, single naPe rc- er (ore person or fir,.:) w7It'out
,
other cocurity
time, secured by ctockc, borii, an other Y'orsccilal secilr
itlec
Secured by real estate mort aes or othe, r lioni nn realty
TOTAL

•

NNW

••••

OM

IOW

(Tten 1, .7esourser)
ON

um

ow

4.

ow

•••

Gap

OLASFIFTCATTOr OF' '..ECtirTTTES
.
1

As.

an•

mot

mom

nor

•••••

••••••

- • 4

DoLnE-;t1(_; Securities:
United States ;'onds
State, County, nna un1ciral Bonls
Eailroad Bonds
7
,onds of other rublic servi.ie cnrrorctions
(includin street ana intmtrbn
(e) Other bonds
(f) Stooks
(a)
(b)
(0)
(d)

2.:orcin




(a)
(b)
(e)
(d)
(c)
(f)

ecuritics:

(;ov -rnment - onds
StLte, County, and 'uniciral LonIs
Railroad 3onda
Bol-Ce of other public service corporations
Other :::onds
toks

bonTh




Rxqmin;Ltion of 1.1, Getorgem

CynopzIr. of'

ai tam,

';overnor of the Bank of ',t- pcnes,
BY
c:.ation=1.1 'onotary 0.o)1 : ioX,

of

ConoietAn7 of
York,Vice-'!hairD2an,

• • Vr. ::1311:!

• • Crytrritr-et, of Imti:,n;41
ct;o7)anii1, of Vi" inia,
,
amorundum mad,- by Mr. Ovorstret,
1 r,Yruncv,

A::ust 24th, 190 -1.

12,000,0007, divided

ireliank of Franco

Thy napit;41 t

r%rfq of 1,000 1? cadho hel'' by rl- al. rbolOert5 rombering betweeX
wwl rcYluwed in 1897 an• d expires

T)'_11

60,000.

r‘OP

:xotion In

ILAcr t0 rrovicion Vic ParIlr

in

•

1r:11, Lac.;

A Golr!rnor

flc chArt-r out.'

lotwo indotry u. • ,
;t.1 two Viess.Ocvernws 0.re propcmed by t) . , inirt
,
I.ovorncr one of t',zt Vicv rirerstorn

In t'oc ab:vnex
rvp Qcnt

hUn.

rtho ar
throc nem-lore, ,

of Xklf,XX ro -entu

two hunelrol Iar7,!.mt f'r,AruholAcr:„ of

./

0

,
(Moron ar:.,A':.1.1 4

Thc qoyernt mvi•t

3i7tnk.

(J(irt of rol.Patt and censors meets

y,onts t;Arty :thio.cr, each.

of v. ry1:1- duties.

,
It it. (Iivided into cr - Itto

oaoh

i:roT,pFor1 by t'.0. •1vorno. hrri

c;;Allk r. •r
idithow

VNY:

ri•'!!VriHy

!ofi from
a now 7n.0-

ID;c: maxilan flotb

-vvornor.

1nith.thoriy.od 1

outrtnndIng trrhl
crop rnovinr: roriod.
reflod.

liar:k of Prance.
n :94de
h,
Lyonsis,

,
Ti e

freque'itly, 111, IL alwvr grA7atemt at the

no ww-

un/o.ble

T! ere arr no 1!..,n1'

.any year 1-we paroled

roy K eltr-0

The

1FtOO,OOO,000

7.
actuK1 note it..e on Au!!:-umt 2itth wa- 4,e60,000,000

1 ti'ut

zweepted

.
onurt(o.: boarci of Dirvetorn),

e*!Jnge by

ur1:11 ellancer

t116

Vice-Goycr'corn fifty Kharas,wft: file re-

hunrirofi

own on

Bank c3!:17,s

ri!ounr;e1

court or :•4.-

T

in t';e method of itime.

ilifforoi:oe in the
than the
any ruivcEtion has
-uption
Tr lmrt atu -,

faLhar-in-law of the prunelit manarer or the CrOit
ho p opoue

in Parlimtint a law orgninm note irwue to 0004ft
,/f




It met with liLle ravoc thot.

petition.

No payment 19 made to the Govcrnmeat for note imeu- or any
Thu taxes, howevor, arc conFiderablo o

IdAvilege.
.1* oxim

•:1y 1

0

on cirfv,ilio
L 1(:
-

sent of the profits of thr Bank, inclitdinr inter-

pe

ca:11 Yeserve, camputin7 it at t:rlt

est on

H 1,000 it).

When

(,)1(nter.

Bank, they arc not eanelled, bt ar
are in proper condition.

Thv tax
cafil in

notek; are concidered in

cireulation wh,'n paid o-- TT4

The 13ank radeova it

Bank rate.

1,000 F. and the tax on

20 C.

Bart

i,f:lountinr, to

eceived at the
lont7 kt'e. they

a -in paid out

Thc

life of a note i

tLI- 0;?

notes under tno law in specie(eitIe: 7old or

Bilver), but since 1880 rodamption has loe(!n prasticajly in rold.
The f;Ei...,e rule is followed at the

The BalA,howevei, determines this.

Sometimes the Bank offers rold ror silver at

several branches.

a pemium, wri an alternativo.
Independent banks fiametimes kcep on depordt with t7le :Rank of
21ranee thui

n:plus finds, but 07old will not bc r:!ceived for special

defoflit upon agrevit to pay in kind, but must bc tread 11.•- all
othrw cloomits, by taking credit on

books for th

dcpolit-all

depositors thereby being on an equality.
Anyone can open an act-ow.t
th:; minimum being 500 F.

r der,ovit who ir known to the
Afte

an acc:ount if; olce opened

d7ofiitor way oiscouitt paper as lo4. as
all othe. requite.

No promisso'.y notes ar - used, but
.

the debt iP evidenced by bills and loLLorm
on billr cannf)t exeeud three months.
refluircd.
the sinuturu of
neyer. pay

5 Po p provided it meets

Of

exehanre.

Three nic.cs

The time
endorsers

About eir,ht! percent of the pal er now held bears
ii:!c. bank as ow: of the three endorsers.

The Bank

interest on diaosits.

The use :if chocks iv the country is not rencral, a/A there
in no tandeney to incrcase such use.
does ri,s;t retard their
coin, and there i

The revenue t,tamp on cheeks

materially.

no fientil.tunt f,)

The lowest d(womination i. 50 F•

Notes are used mon' than

a lower note than now in use.
Hoarding of money is ll'aeticcd

les!: than fo.merly, but is still ccnsideruble, especially -old.
The total rold of xxn Muck= lilranee is eLitimated at 6,000,000,W)0,17.
The Bank of vrance holds 3,225,000,000 F. ani the reminder is in tl-A

4
poet office

rt,;(1 1);:.anehes is 1,278,000,000 F.

been fin oteration

,ct

1882,- the private L;avin!.:

2[1,s
inc;. 1815.

The growth of the portal bank greatly injures th(1 vowt
h cr
private savinrj; banks.
There iF limited liability of sllarcholders in join,
.
tock
nks, thr limit bein. Van amount of the shar
e.
art, not limitmd in liability.

Private bankri

Noticem for withdrawal

are controlled by a variety of c,ler,l-nts, ineludin

funds
Int,

ani rencral charast r o: 1,,,t; account.
ir no examination by the Goveramert ol joint
lYti.ok
tynkes cxecipt to ascert_in t
T' L.

if. QC

poper

the stall') duties.

Tcneral ixmin. tion by t; , Government of the iank of

France, but the Ministry of FinExce is privileed
to a:k
riation from tine to time.

or infor

Apnu31 statc!ments of both the indepemd

,!nt hunks and the Bunk of Frames arc made,
but the Bank of Franse
ifuer, a bulietin of balances each TITIr
mdEV.
Neither the loverno

nor Vice-Governor- iv rermitied to be a

mber oi eit i.ei body of Parliment.
tH.e

claim that politics enters in iJay degree into Lhe
manarip-

mont 0: Cie 3ank.
no 1cTiEi1at1on

Excetin
th

th

'rtcwal of

Tiv.nk has lpon had

no so,.tiw:!nt for any cH.,n

charter in 1897,
ince 1857.

in bank nothoth

lef!;.:61ation.




r 'tcle

aidinr or favoring c!ither po1itic .1 party. Tere
is

Revel* any

Theru t

No chi-Axg. ha r - -er h
..e

.UNN

(al

ENACTITNTr.

Srctiol Y1, of Bank Act (Vict.

ANA

Cp. 29)

F IiO2.

nacted that the total amoun. of notes

in circulation sl.o1d not excecd the amount of unirwaired paid- ip cilaita
l.

This

Sectinn was rt,pealed by
Section 61, of sank Act (7-8 Ed. Chap. 7), 20th July, 1908




and banks are now per-

mitted, during the season of moving crops (say, from 1st October to 31st
January)
to issue notes to an amount not exceeding _15', on combin_ed_kaid7 up_ capita 1 and
.
. .
..
reserve.

Interest on . mount in excess of pi-id -up capital is charged by the

Minister of Finance at a rate not
circulation from di-y

day.

reatr than 5'1., calculated on actual excess of

The rut() of interest until further notice was

determined by the government, November lbth, '06, at
The only banks to avail themselves of the excess circulation
to 31st October
last were the followinr:
Paid-up Capital
Home Bank of Canada
Banque Nationale
Banque Provinci-le
Tletropolitan Bank
Union Bunk of Canada

Ciro ulut,).on

t 913,662.
1,800,000
1,000,000
1,000,000
3,200,220

968,340.
2,1o, 1127
1030,743
1,124,115
3,263,293

$

NOS OF THE CHARTERED _B/1g7 p_r CANADA
CIRCUT A;T.011
i
.
ON _LAST DAY OF :-:Apri /.10;..rfH FROM
to OpTOBER 1_908.

1907
January
February
:arch
April
May
June
July
August
September
October
November
Decorto r

1908

t68,219,71p
70,547,759
76,346 1013
72,840 1909
70,741,113i
75,,- to 4o2
72,9421 781
76)562,811.
.
79,455 loop
84,289 1983
84,452,899
77,q)4,398.,

6,871,376

68,548 1075
69,o47,892
66,712,899
67,77o,o1P
681 153,994

66,697,255
70,389,897
76,246,232
83,056,762
41.1D

,m0

wi0

7o

DOMINION GOVEMITNT NOTES IN CIRCULATION
1.

On.
.304LJune

end of fiscd ;rears:

1901
2

3
4

5

*27,671,452
321 780,387
39,006,199
41,574,7b3

471 334,222
49,941,427

On . ._.s1.. ITurr-}i, end of fisctil year:
37
1907

2.




.1.5541794,597

On lust day of
_

190y
.
January

1906

:56,476,282,60il:5::,,:,
t
i
7

Februar:.'

56,O34,884

59,537,564

March
April
May
June
July
Aurust
September
October
November
a comber

56,121,104

59,114,447
60,4551 991.
61,767,448
62,664,837
63,058,125
66 1606,953
721 714,683
76,378,442

57,020,249
56,086,331
581 316,531
58,316,531
60,518 1531
61,917,157
63,491,544
63,784,400




•

Ok)'4
/7

(

'UNITED STATES SENATE
PUBLIC DOCUMENT

.,

FREI




A

Af.

1.

Will you give a brief history of your institution, stating
whether it originated in London, or in the country;
whether its business to-dtv is confined to London or is
also conducted through branches in provincial citie2 and
in small towns`

2.

.hat is the par value of your shares?
That dividends do you
That is the present market price of your shares?
pay?

V •

How many stockholders have you`

4.

Is the stock fully paid?
If not, what additional payments
be called for the development of business, and what
can
in case of liquidation?

5.

Does the law require that before full distribution of profits
you shall accumulate and maintain a certain amount of
surplus (reserve fund), and a;e you required to invest
this in any particular way

6.

Is there any limit to the number of shnres which may be held
by any one person, and is your arproval required before
a transfer of your stock can be made

7.

How often do your shareholders meet?

8.

Does every share have a vote at shareholders' meetings

9.

Describe the organization and mtinagemnt of the '3ank, stating
the number of officers and directors with their resrec-_,
tive functions, and for what periods and by whom are they
elected`

10.

Is it customary to re-elect directors at the expiration of
their terms?

11.

How frequently do the directors meet`

12.

How many branches have you`

U.

In the main have they becn created by you or have tiiej b(en
formed from the absorption of independent banks`

14.

how are your branches managed?

15.

,ho appoints the managers of branches, and are they usually
selected from among subordinate officers in the same
branch?

16.

Have the managers of the branches full conlrol of the business
In granting discounts, etc.; if not, what discretion is
usually given them?




2
17.

have you any system of distribution of prof
its arJong the managers of branches?

16.

Are all your branches of the same class, or
have you main and
subsidiary brenches

19.

Is the business conducted at your brv,nahcs
of the sme class
as at your main office in London?

20.

Do your branches have busines relation
s with merchants, farmers, and all classes of people in their resr
ective

21.

How frequently are you required by lnw to publ
ish stateents
Of condition

22.

how frequently is it your custom to publish
them?

23.

Should more frequent and fuller bank returns
be rublished
V;Ilat local or general taxes are paid by
the bank?

24.
25.

State the distinction betwven current accounts
and deposit
accounts?

26.

Do you pay interest upon either or both
?
If so, does the
rate vary upon different classes of accounts

27.

Does the rate vary as between London and the
country
so, what is the usual difference in percentage?

26.

.11Ett governs the fluct-eation

If

in the rates pa -A.?

Vi'clat percentage of your deposits are payable
on lemand
30.

Explain in general the arranc-er ,ent made by you
with your customers for the acceptance ot: drafts drLwn by
them, stating the usual length of time, whether they cre
secured,
and the customary charge for such service?

31.

That is included under the item "Cash on hand
" in your statement

2.

IP._•C• •

,I•

Describe the character of your assets constitu
ting the item
"::oney at call and short notice"?
Ts

Are




it customary to confine your investments in
securities to
'overnment and public securities, or do you
purchase
stocks nnd bonds of rnilv..as and other inde
pendent corporations
c)11 recluired by law te invest your carital
or any part of
it in any particular securitie
If so, in what class,
and to what amount

-

Is it your rractice to invest an amount ecual to your capital
in securities, and if so, in what General class of securities?

36.

Describe the general character of your bills discounted, including their average size, their avert-;:e length of tire,
and the number of names required?

37.

_hat is the minimum size and what is the maximum length of
time to run for bills discounted by you.

38.

"“hat classes of collateral are accepted by you for loans?
'::ill you state approximately tile average length of time and
the average size of loans on collateral?

40.

-That is the distinction between what are known ns "prime bills"
and other bills?

41.

What is the usual difference in the rate charged by you upon
a prime bill and for a high class loan secured by collriteral having the same period to run?

42

That is the difference between a traae bill and a finance bill?
Is the rate the sane on each

4'Z.

D' you discount *0 any,,
,eonsiderable amounI- ai'Ve2ta,z,lor—inf
.AiviluaIs and m.etchants?
Is it your custom to employ your surplus funds in the purchase
of bills from discount houses?
Do you frequently employ surplus funds in loans on call to
decilers in securities
ould you charge a merchant having a good account with you the
bank rate or the market rate for prime bills?
To what extent does the Bank rate govern your discc,unt and
loan transactions?

48-1t

Is

the amount of accommodation extended by you to discount
homes or others predicateC1 upon the amount and character
of blances carried with you, or governed by the necessities of the general situation?
,.;ou at times discount bills for parties having no account
with you?

rfitt-Sc fase a considerable number of your loans on call?
5()

Do you allow overdrafts, or do yo, make any advances of the
kind male by the Scotch banks called "cash credits"?
Is there any general rule in your bank with reference to the
percentage of cash and balances in the Bank to the
derosit liabilities?




4
5a.0' Can you estimate the persentage of cash, (Coin and notes) to
denosit liabilities in all the banks of England, including the Banking Department of the Bank of England?
543

5it
56

Do you regara prompt and adequate increase of the Bank rfite
as the most effective measure to protect te Bank's reserves?
Does the raising of the Bank rate ever fail to attract gold and
chan:e the course of exchanges?
how do you account for the fact that at times a higher Bank
rate in England fails to attract gold from the Continent
wen lower rates prevail there'
Is the raising of the Bank rate more effective in controlling
gold movements now than at the time of the last suspension
of the Bank Act in 1666?

I

To what do you attribute this increased efficiency?
..f.-.
..
..
.
,
effect d
raisine tile' t
A t110 perio from
I
lanu.se.y, 1908
S C
-urOi,the. R
907,.
c1
,
PO

f.11

,

l

/

dt'he
ells:/ are taken in;adcti 11, on to raising the BanO-Kiie
i
to p o ipt ithe outflow of gold, in times of a crisis?[-l
,
,,,
>....
y
/Ps'
itcusiptgatAiA, supla --4 igires to ,
, Vance oney.withOut . . )
b
_ s tereSt.i,
r....,of'‘,,g441.d.
4P0 tlge,..eime, * liatedAin
trapuhrtetion?

.,i hat
\

-

4*.Is

Is it the policy of the Bank of Encland to discriminate against
finance bills in times of financial crises?
444-.1

Does the understood policy of the Bank of England to advance
bank rates rapidly and at the same tin,e to extend liberal credit in times of serious financial trouble, meet
with general approval in business and banking circles?

'ft.'

Is London the only free market for gold in Europe?

rer6-1- 6/ Do the joint stock and other banks rely upon the reserves of
the Bankin Department of the Bank of England as their
ultimate resource in case of trouble?
%o you favor an increase in the fiduciary note circulation?
'614°Do you favof the issue of one pound notes?
(44,If not, what is the reason for your objection?
,
ic
, --'Does the proposttion for a secondary gold reserve meet with
C79,
your approval?




5
Has the experience of the United Kingdom with reference to
note issues under the legislation of 1844 and 1845 been
satisfactory?

56r:ti f17;ith

respect to the monopoly of note issue, are any modifications or amendments to the bank acts su Tested., and if
so, what is the ntture of the proposals?

4Is there any substantial demand for what we in America call
"
greater elasticity" in volume of currency (notes and
coin) to answer business derands?
s there any inclination to adopt the qerman system of taxed
Issues for emergencies or some modification of it?
there any tendency to return to the system of note issue
in existence prior to 1844?
-4
4), T
its there any contention in banking or economic circles that
it is necessary to restore or extend the rif-ht of issue
to banks other than the Bank of England, to enable them
to increase their own profit, or to afford adequate facilities to borrowers or to meet legitimate business demands?
'
7.4r:Thflas the rapidly incret:sing use of checks, bills of exchange,
and other instruments of credit and clearing h use facilities, rendered the enlarged employment of bnnk notes
unnecessary?
AVhat effect has a marked increase in the commercial and industrial activities of flreat Britain on the volume of
note issues?
4: o
\
446That, in your (Opinion, is the effect of branch banking and
the amalgamation of banks:
(a) Upon the amount of cash held by the banks?
(b) Upon local bank rates?
(0) Upon the prosperity and development of communities?







(v)

The later

History of the Riksbank

As already stated, the Riksbank was put on a new footing
in 1830, when the circulation of the bank's notes at 37i per
cent of the silver represented by their face—value was author—
ised.

Its capital was fixed at 4,400,000

bank

dalers,

6,600,000 dalers currency, the balance of an advance to
State for war purposes in 1608.

On the resumption of

or
the

specie

payments in 1834, it was found possible to provide a capital
—
fund of 7,500,000 dalers currency, which was

increased

to

15,000,000 from 1st January 1645 by a transfer from the reser
ve
fund whicA had been accumulated in the meantime.

In 1864 the

capital reached 25 millions, 30 millions in 1679, 35 milli
ons
in 1882, in 1885 40 millionL, in 1890, 45 millions, and
it was
fixed at 50 millionf,,which it had reached in 1893,by the
law of
1897.

The fixed reserve fund remained at 5 millions from 1873,

when it was first reached, till 1900.

At the end of 1902

a

special fund of 14 millions was constituted out of
reserved
earnings for a special class of loans and p by the end of
1908,in
addition to a reserve fund of 10,419,000

kronor,

an

almost

equal sum in surplus-- not definite12 assigndd to the reser
%
vc
fund—was able to be shown in the balance sheet.

Thus a sum of

83,323,708 kronor (say P2,220,000) represents wAat in priva
te1y-

'
0




owned banks, would be proprietors' funds eTployea in the ausi—
neSS.

This has been accumulated entirtay out of profits, and

that in .spite of the constant payment of a large share of those
profits to the public funds.

Thus ,ofthe net profits of

the

years 1065-39 the National Debt Office received 70 per cent,
though of those of the following

years it received none. For

1844-47,and again tor idol-- 6,and for 1660-65 2it received
very large part of the profits, while for 1867 it received the
whole oi
While the t)o.flii ,7radua1ly struggled to accumulate thecapi—
tal of 25 millions oriO.nally contemplob,tea in 1050, and on1

at—

taining it in 1864, the reserve—fund originally intended not be—
("4
Pea at 1,4L

e:3 •

ing attained for ,,nother decade, the National Debt Offiue was
assi6Aaa 24 millions of profits to the 14 millions reserved
for adding to the pankis capital.
74, 11 oL,,

o

1

In the next 10 'cars 3.(55.-

millions of net profits were assi,'ned to the

National Debt Office; in thc 10 ytars,1,-,1.—o4, the Bank retain—
ed 16 millions
14 millions;
1ion

i:ational Debt Office was assigned over
nd in the 10 years 1..:J5—cJ4, of nearly ..44 mu-

of net profits th

brf

lloed to retain only

about

The Laost recent years show zimilar figures. For
ti

o;i.::ars

during which the note monopolo has been enjoyed by
'

the RiksbJ..nk, *;4hilt just over 6 million

have 1)ri Added to tie

rebourc-Js of the Bank, the National Debt Office has,
in those
year,;, receivd 24 million kronor of bank—pro
,
Cits. Now that an

3




adequate capital and reserve has been accumulated, the payment
of a large share of the ample profits to the State is not open
to the criticism naturally directed againl-A that course when the
bank was building up its resources out of the yearly gains. In
75 years, the Eational Debt Office has received, of the profits
of the bank, a sum of over 30 million dollars (U.S. currency).
Allowing for the value of the pretnises and bank furniture, not
assigned any money representation in the bank's balance—sheet,
it may be said that approximately 55 per cent of the net profits
have been paid over to the State.
Rules limitingtheproportion between cash holdings and cii
culating notes were framed in 1830, requiring the provision of
a cash fund not less than five—eighths of the circulating notes
.
In 1834 this was modified to a two—fifths proportion, but
even
this could not be maintained, and in 1643 the cash fell
to only
one—third.

Under the influence of the English Bank Act of 1844,

new regulations were substituted for the old in 1845.
tion of holding at least 10 million

On condi—

dalerse, currency in cash,

a fiduciary issue of 30 millions was permitted, a
regulation
much more easily observed.

The regulations of 1830 had fixed

the minimum cash holding at 8 million dalers currency
(2 millions
silver), so that the requirement of 10 millions was a
raising
of the limit.

Moreover, in lowering the proportion of the cash

at its minimum to the circulation, there were inclu
ded in the
latter, not merely notes, but also the amount due
on depoLi :An

4




which no interest was at that time paid.

The balance of credits

granted, but not drawn out, being a demand obligation, was also
included.

Thus the change was not calculated to induce so weak

a position as appears at first sight.

Notes in excess of the

fiduciary 30 millions, and the 10 millions against coin
and bul—
lion held in Sweden, might be covered by metal en route
from
abroad, by funds of the bank on deposit in Hamburg or
Altona,and
by bills on Hamburg or Altona at not exceeding 67 days
currency.
Later the currency of bills available as cover was
extended to
90 days, and Berlin and London included as plac
es at which they
might be payable, vitailt.t in 1d66 foreign bills
generally were
admitted. This provision of bills of exchange
as cover for cir—
culation was used in 1857 as a means of evad
ing the strict inten—
tions of the law. Though there was no run on
the bank, its cash
decreased very rapidly between the and of 1855
and the middle of
1857, owing to remittances abroad. It had
stood at about 19
millions in 1850-52 and from that had incr
eased to 52 millions
at the end of 1655.
By the middle of 1857 it had fallen to 25
millions, and, though the rapidity of the
fall was checked in
1856, fell further to lei millions at
the end of 1859. The
funds of the bank being, to a large
extent, tied up in long
period loans, the reserve could not be
replenished, or the pro—
portion of cash assets to obligations
increased, by the process
of callinz in these loans. Commercial
;
loans had to be restricted
if the limit of issue was not to be
exceeded, and the strain of

5

the restriction was severely felt,

An association was formed

among certain members of the Exchange for mutual assistance, and
they drew bills on a Swedish merchant residing in Hamburg and
presented these bills for discount tQ the Riksbank.

As the

process oi advancing notes against these bills did not touch
the fiduciary issue, the bills themselves being legal cover for
the notes, funds were thus provided to meet the need, and a
State loan of 12 million dalere being raised abroad at this time,
the difficulties of the situation were met, bankruptcy averted,
and the losses of the bank due to the crisis kept down to a
modest amount.
The difficulties arising out of the fact that the Bank was
controlled by the legislative authority, without the right of
supervision on the part oi the executive, had formed, naturally,
the suoject of numerous discussions.

The old plan lof bringing

in the interest of private shareholders to exercise more effect—
ive control, was discussed anew.

The constitution imposed an

obstacle in the way, which was ingeniously avoided in the pro—
posal of an important Committee, whose report was made in

1860,

to divide the bank into two parts, following the general lines
of the division of the Bank of England in 1844.

The Issue De—

partmentl retaining the name of the Bank of the Estates of the
Realm, would fulfil the terms of the constitution in
remAning
under the control and guardianship of the Parliament
solely.
The banking business proper was to be assigned to an
institution




II

6




in which it would be possible, if desired, to join private
capital with that of the State.
This proposal, however, was not accepted and realised,
though the discussion of the situation had its influence on the
legislation of 16(54 for Enskilda Banks.

In 1872 the use of bills

on foreign places as cover for demand obligations was discoa—
tinued, and the balances of credits granted but not fully used
were excluded from the sum.againstwhich cash cover was needed,
though current account balances remained a part of that sum.
The cover available from that time was, in addition to the

ac—

tual metal in hand, precious metals held abroad, or in transit,
for account of the bank, ::4nd balances due from bankers and mer—
cantile houses abroad.

The value of silver coin, after 1873,

was required to be taken only at 90 per cent of its face value,
and of silver metal at rates to be determined by the managerl
of the bank, and, naturally, related to the current market value
of silver.
The strict provisions of the law were overstepped, in
regard to the minimum metal reserve, in 1869 and in 1870.

In

the former year it fell below the 10 millions in 26 weeks, and
W&8 at one time just under

4 millions.

In 1870 there were

two weeks when the metal reserve was under the 10 million legal
minimum.

The note—issue exceeded the legal maximum on one oc—

casion, namely On the weekly account of 30 September 1373, but
was already 31i millions under the legal maximum in the followi
ng

7




week.
As means of defending the reserve, the bank's managers
were instructed to undertLke the following lines of business:—
dealing in gold and silver.

nc in foreign bills of exchange,

and the purchase and sale of Londs and the debt—obligations of
Governments.

The right of raising loans abroad was also an im—

portant element in this connection, a right which had been in—
cluded in the regulations of1845, to the amount of 12,000 1
daiers.

0

or such a lean, the guarantee of the State followed

on the approval of the Executive Government, wit_lout further
formal approval of th

Parliament.

In the preceding, the ef—

fect of a loan in 1857L-8 has been noticed.
From let January 1880 the minimum metallic cash holding
was raised from lu

to

lu millions, and the maximum fidi,ciary

issue to 35 millicns,whil

the limit of the foreign credit

just referred to was raised from 12 to 17 millions.

The aboli—

tion of tne o kronor note of the Enskilda _banks was closely con—
nected with these measures for facilitating an enlarged circu—
lation.

It should also be stated here that the old notes of

1 krona had no longer been issued after the end of 1875, and
the old iractional notes were gradually being withdrawn as they
were presented for redemption.

Till 1849 notes below the value

of 1 kron, even as small as a quarter of a krona (6.7 cents)
were issLed.
In 16o7 a further mouification in the regulations was

8




made, in that the balances abroad available as cover for notes
were now required to be current account balances, while inter—
est—free deposits, and the bank post bills outstanding of which
an account has been given above, were now excluded from the to—
tal determining the legal amount of cover to be held.

Thus the

regulations were made somewhat more stringent.
The fiduciary

issue

was also increased, subject to an in—

crease of tho metallic reserve.

This reserve, four—fifths of

which was required to be gold, in coin or bers 3 was in no case
to iall short of 13 mi1lion6, as before, out, should it exceed
this amount, an increase of the fiduciary issue was perilitted,
not exceeding in all 10 millions, making the maximum 45 mil—
lions.

The condition on which any part of this additional 10

millions of fiduciary issue might be allowed was ,that thc:: me—
tallic reserve should exceed 15 millions by 30 per cent of the
amount by which the fiduciary issue exceeded 35 millions.

Thus,

with a cash holding of 15 millions, consisting of at least 12
millions gold and the remainder of legal silver coin taken, so
far as that struck after 1876 was concerned, at 90 per cent
of its face value, the issue might amount to 50 millions plus
the amount of the foreign current account balances: with a cash
holding of 18 millions (not less than 14.4 millions gold) the
total issue might amount to 63 millions plus the amount of the
foreign credit balances.

For greater issues, the usCess was

9




required to be completely covered by the metallic reserve in
excess of 18 millions.
means fully used.

The actual rights of issue were by no

In 1376 and 1879 the total outstanding notes

fell even below the per-pitted fiduciary issue, partly owing to
the withdrawal of the old small notes.

With the cessation of

tAe 5 kronor notes of the private banks from the beginning of
1880, the outstanding circulation of the Riksbank increased,
but even in 1890 the lowest of the monthly figures (end of April
and July) were a little less than 40 millions.

From 1892 on—

wards the circulation increased rapidly, and in 1399 the maxim
um
and minimum were 56.4 millions (February) and 75.2 millions
(December) respectively.

In these seven years the average cir—

culation of the Riksbank increased by 50 per cent, and the to—
tal note circulation of all the banks by 40 per cent.
After various efforts to arrive at a satisfactory solut
ion
of the problem of centralising the business of note—issue
las
already related a law was passed in 1397 by which the matte
r
was arranged.

The fact that the new constitution thus given to

the Riksbank was effected, not by •the use of the royal
preroga—
tive but by an act oi the regular legislative authoritie
s, the
Parliament and the King in association with one
another, is it—
self a notable point.

Previously the legislation had taken the

form or royal decrees, which were not always
in close agreement
with the legislative proposals framed by the
Parliament.

The

new constitution rests on an Act of Parli
ament duly assented to

10

by the Crown, and thus, though the control of, and respon
si—
bility for, the Riksbank was still assigned to the Par
liament,
modifications of its constitution must be effected
by combined
action of King and Parliament, since they involv
e changes of a
law resting on their combined authority.
The notes oi the Riksbank retain the character
assured
tJ them by the constitution, of leg
al tender, and the Bank iz) re—
quired to redeem them on demand in gold coi
n at its Head Office.
The capital of the Bank is fixed at 50 millio
n kronor




(13 1400,000 dothrs) exclusive, as had bee
n the case previous—
ly, of bank premises and furniture.
The metallic reserve is defined as con
sisting of all the
domestic and foreign gold coin and
gold bullion, the property
of the Bank within the country. Silver
coin is thus excluded.
The metallic reserve is to be not les
s than 25 million kronor
at all times.
The note—issue remains partly fid
uciary, partly covered
by cash. As cash may be reckoned the
metallic reserve as above
defined; gold coin or bullion dep
osited abroad or in transit
therefrom and covered by insurance
; and the current account
credit balances of the bank with banks
and mercantile houses
abroad. The fiduciary issue must
be covered by easily realis—
able foreign Government bonds; bon
ds of the Swedish Government,
of the General Mortgage Bank o and
of other Swedish enterprises

11




which are quoted on forein Stock Exchanges; and bills of ex—
ch_Lnge, domestic or ioreian.
The maximum of the fiduciary issue was fixed in 17
100 million kronor, cut any excess of the fiduciary issue over
60 millions was made conditional on a mdtallic reserve exceed
inc, the minimwa of 45 tail1iori

b. 30 per cent oi the amount by
)

which the fiduciary issue oxceed4 50 millions.

Thus the full

100 uillions of fiduciary issue cam only be reached when
the
netaiiic reservewis at least 6? nillion kronor.
By

moaification of the law, paused on 3rd May 1901
,

these limitations 01 the note—issuing rights unde
rwent import—
ant moaifications and extensions.
On the one hand, the cash coverin, so far as
it consists
of fore in credits, is now defined as the amou
nt of such credits
aftc:r deductioq of corresponuing debit a::lo
unts, net instead
L;ross credit balances.

further, the words "mercanrile houses"

are replaced by "punkin:- '1ouLes".
,

The minimuta metallic reserve

is raised to 40 million kronor, and the
fiduciary issue (which,
unaer the 1697 law,
this metallic reserve, would reach,
but not exce.,:d 100 million kronor) ma. i
. cxceed its assigned
amount oi 100 million kronor by the a:nout
i

11)

.:hich the metal—

lic reserve ,xcet:ds its minimulA of 40
millions.
With ;1
-eater strinency in certain resp
ects, the expansion
oL the fiauciary issue to any requ
ired extent is thus provided
for.
With these extensions 01 note—is:lues
, the capital of the

12




bank was raised a year later by setting aside a sum of 1 1 500,000
kronor as a special fund for the class of loans repayable by
instalments at fixed periods.

The amount devoted to this pur—

pose had pcevioudv formed part of the ordinary funds of the
bank, from which it has now been separated.
loans catIno

The fact that these

b

called in to meet an emerency renders them un—
c.4E
suited as investments of the general funds of a noe—issuing
bank, and this difficulty was avoided,in 167 by limitin

their

aggreate amount and from 1903 by separating the fund from
which
they were made

from the general funds of the bank.

It may be noted, before passin :7 to the provisions of the
r
law wruc:1 restrict the operations of the bank, that, at the
close of 1908, the outstanding notes were, in round
figures,
201,500,000 kronor (55,750,000 do114rs).

The faetallic reserve

was 78 millions, and the net foreign balances 30
millions.
would appear, fro.i th

It

figure of the total rights of

issue l t- at trie i'orein balances available as cover
J
for notes
must have been 24 millions onl'.

Thus the legal fidtwary issue

was 136 minions, and the issue covered by
cash and net foreign
iRA-cr-+-1(
sv
credits on current account 104 millions,a total
of 242,500,000,
leaving a balance of rights of issue avail-1,1.::
b<cflid those
actually used of 41 millions.

The outstanding notes exceeded

by one—third those of the Riksbank and the
Enskilda Banks
gether a decade previously.

to—

It might be supposed that this

growth woula be accounted for 1);,' the fact
that, now that the

13




rights ot note—issue are no longer enjoyed by private banks,
these latter find it necessary to hold, as reserve, a large
amount of the notes of the Central Institution.
tne

notes held by

The amount of

Lie sevral banks is not stated separately

from the fractional currency and theircredit balances (on
called "giro" accounts) at the iiiksbank.

sa—

The total of these at

the end of 1908 for the 17 surviving Enskilda Banks was 19.2
million kronor, or little more L.:Ian 6 millions in excess of the
corresponding total at the end of 1898.

Thus but a small part

of the increase of issues is capable of being accounted for by
the substitution of notes for gold as reserves held by the Ene—
kilaa Banks.

On the other

tne

olu neld b

he Enskilda

Bur.icL, was steadily inorkeing durio_ the nineties.

At tji,

of lea6 it reached 9 millicr kronor, while at the tnd of 1906
it was less than the fiftieth part of that amount.

The gold

held by the Riksbank 111 1 meanwhile, increased by over 43 mil—
lion kronor, or nearly five times the amount b
by Enskilda Banks decreased.
1.:;nt of comethinb iik
outstanding(

which that held

It tque appears. thatthe equiva-

twa—thivds of the/increase of to 4 a1 noes
.

the ten years ending with 1906,yhas been,s
a_

result of the centralisation of the note—issue in the middle of
that period, added to the gold reserves of the country, while
those reserves are now wholly centralised under the control of
the Riksbank.

From the point cl view cf those who believe that

a stronger gold backing for the circbl,...ting medium was desiraide,




regarded
and indeed necessary for safety, the result must be
as eminently satisfactory.

It is impossible to believe that,

lda Banks,
had the note—issue remained in the hands of the Enski
substan—
the addition to the gold reserves would have been as
As an example of the trend of events we may take the

tial.

figures for the end of 1892 and compare them with those already
used for the end of 1898.

In that interval the aggregate not

issue increased from 101.9 million kronor to 150.1 millions.
The total gold held increased from 24 millions to 40.2 millions.
Thus but a trifle over one—third of the increased nota—issue is
represented in the increase of gold holdings.

The outstanding

notes of the Riksbank amounted to 44 millions at the end of
1892, and to 70.8 millions at the end of 1698.

Its gold re—

serve at the same dates was 16.8 millions and 31.2 millions
respectively.

Thus somewhat over one—half of the increase in

its notes outstanding was devoted to strengthening the reserve.
The Enskilda Banks had increased their outstanding notes from
57.9 millions to 79.3 millions, and their gold reserves from
7.2 millions to 9 millions.1

Of the 21.4 millions increase in

notes, only 1.8 millions were devoted to increasing the

gold

The highest figure ever reached for Enskilda Bank
notes outstanding was 83.6 millions at the end of March 1901.
Their gold holdings at that date amounted to 9.5 millions.
1

15




reserve, the proportion of which to the notes outstanding was,
in fact, decreased in the interval considered.
It appears, therefore, that both in the years more immed—
iately preceding the final arrangement of the centralisation of
the note—issues, and subsequently, the policy of the Riksbank
has been directed towards the strengthening of the metallic re—
serves on which the preservation of the soundness of the credit
of the country rests in substantial degree.
that the monopol

It is also clear

of note issue has conferred on the Central

Institution greater power to attain this important end.
Of the principal other features of the revision of the law
under which the Riksbank operates, three claim
notice: (a)

more particular

The safeguards provided against the decrease of

banking facilities as a consequence of the cessation of
note—issuing privileges of Enskilda Banks: (b)

the

The limitations

imposed on the kinds of business which the Riksbank may under—
take: (c)
(a)
laid down.

Changes in the bank's constitution.

In reference to the first, two lines of action were
On the one hand, the number of branches of the Riks—

bank was required to be so increased that there might be one in
each of the 24 districts into which Sweden is divided for local
government purposes, excepting that immediately adjacent

to

Stockholm, for which the Head Office in the Metropolis may suf—
fice.
1903.

The last of these was opened in the course of the year

On the other hand, as a partial compensation for the loss
as: note—issuing privileges, the Enskilda Banks were assured
important financial support from the Riksbank on condition that
they maintained all the offices which were in operation at the
opening oi the year 1896.

Those banks which abandoned their

own issuing privileges Lathe five years' interval preceding their
legal cessation on December 31st 1903 (as has been seen all of
them actually did so), were entitled, subject to the condition
mentioned, to the grant of

an open credit, against approved se—

curity, at 2 per cents under the current 3 months' discount rate,
(provided that the charge should not fall below 2 per cent) and
without the usual additional charge proportionate to the maximum
limit of such credit.

This limit in each case was to be

one—

half.the amount of the outstanding notes of the bank in question
on 1st January 1396.
to rediscount

In addition, such banks were to be entitled

pproved bills of exchange at the Riksbank at a

rate not exceeding two—thirds of the rate charged for the same
accommodation to others.

The limit of these rediscounts was

also to be one—half the outstanding notes on 1st January 1396.
From 1st January 1904 till the end of 1908 these privi—
leges were to be modified, and all the Enskilda Banks were to
be entitled to rediscounting privileges on the above—named terms
up to an amount equal to 40 per cent of their notes outstanding
on 1st January 1696.

This advantage was subject to the condi—

tion that none of the offices, of any bank thus privileged,




17




which were open on let January 186, should be closed while the
privilege continued.

Should an: office he closed, however, the

Crown was to detr-JincA in what de L;ret:, if dt all, the privi—
lege in ,„:).estion should be continued, the importance of

the

office or offices thus closed forming the basis of such a deci—
sion.
The provik_ion made for the period of transition to the mono1. :oliLed note—issue was subsequently 'nodified by
,

law of 3rd May

1901, which substituted the folloainL for what has just been
set forth.
The time for ahandoning its note—issues having been settled
by arrangement between an Enskilda Bank and the Riksbaak, and
on condition that none of the offices open on January 1st 1896
should be closed during th.. trA-1 covered 1-,
„

the arrangement,un—

less with Lhe permission oi the Crown on the recommendation of
the Mank;ers of the Rikelnk lte Ensk.ilda Bank

::it be granted,

a'it ,i,i)roved collatral, loans not exceeding 65 per cent of
its notes outstandinL71 on 1st January 1901, and
not exceeding 10 per cent of the sawe dlount.
cnare

n open credit
The interest

on tnese loans and advances to be 2 per cent below the

3 months' disco-L.:nu rate of the Riksb,ink, tiou i,h not in
case lower

4

aqy

per cent, ana the usual extra car:t fDr

open credit being retA.tted.

he

Further, rediscounts up to ;:,ti per

cent of the notes outstanding on 1st January 1901 might

be

13




granted at a ra1,,.. riot exceeding two—thirds of that otherwise
oy the Hiksbank.
At the end oi each year, beginning with 1903, the amount
oi the maximum limit of each of these special privileges is de—
creased

ono—cihth of its oriLinal amount, so that they lapse

efitir,--ad at the and of 1910.
For batiks which had already given up their note-issues be—
fore 1st January 1901 (there was one such bank) the outsta.nding
circtaatiori of 1st January 1896 was taken as the measure of t}le
advnces at special rates in place of the circulation of

1st

J1J,,ry 1901.
change effected by the law of 1901 was one distinctly
advacus t() the Enskilda Banks.

It gave them direct loans

in place of open credits, thus making them more effective agents
in putt in; notes of the Central Instit,ution into circulation
under conditions under which the
own.

previously issued their

It 1,A:t a sufficient open credit to serve as the basis of

draits on the Riksbank

in the form of bank post bills; and

s'abL:tritial rediscounting privils at special rates, the
latter, 1ik
int() th

te direct loans:, putting notes of the Riksbank

hands of the Enskilda Banks.

Further, the substitu—

tion of the 1st Januai%, 1901 for the 1st January 1396 as the
)
date, thL: outstanding circulation at which served as the measure
of the advances at special rates, practically increased the
maximum of the special advances, up t

f 1903, by about

19

40

per cent.

The st4WAitution of a period of seven years,

baginninL with 1904, in 'wvich the special ildwinces gradually de—
creased from beir

about

ai

times as great as under the arrange—

ment of 1697 to fin6.1 disappearance, for a five—year term dur—
ing whic-A the rnaximuoi o): the special advances remained fixed,
was also a great Icidition to the coreession made to the
vate banks, nearly damblin

pri—

the value of the concession after

Jarluary 1904.
As ht

been seen, the valu

oi the concession

by the Enskilda Banks adequate to justify

ias deemed

the resignation of

their ri6hts earlier than the date fixed in the law fpc their
defini , cessation.
ve

Banks which becarna entitled to the privi—

le :es above—nail-led did not lose them if, in place of re,r:ain1n7
subject to the law of unlimited liability, they becalaw
joint stock banks, or wer,:: nerd in , uch banks.
s

ordinary

About 26 per

cent of tne loans and advances under the arrangement were, at
the end ol 1906, m....de to such joint stock banks, five of
were benefitin t- by tlie special terms, as representatives of the
ten Enskilda lanks, which bv
(b)

ceased to exist as Enskilda Banks.

The 6rant of tile monopoly of note—issue to the l'Aks—

bank was accompanied by a stricter reulation of the nature of
the business conducted by the Central Institution.

The purpose

directly in view was, doubtless, the more effective pliarantee
of the solidity and realisability of the assets of the note—is—
suin




autdo:I.j.

Incidentally, however, it resigned to other




institutions certain classes of business, and though the former
note—issuing banks have necessarily to compete for this business
with other Joint Stock Banks, the competition of the privileged
central institution is removed.
The business assigned to the Riksbank

falls under the

following heads:
(1) Purchase and sale of gold and silver.
(2) Purchase and sale of bills of exchange, drawn on
foreign firms or persons, and with a currency of
not exceeding six months, such bills being payable
either abroad or in Sweden.

Other foreign short

term paper of not exceeding six months' currency,
may also be acquired and afterwards disposed of.
(3)

(a)

Purchase and sale of Swedish bonds, and

of such obligations of foreign governments as are
quoted on foreign Stock Exchanges and are readily
realisable.
(b)

Taking over by arrangements other than

those for purchase, or Swedish Government bonds
and readily realisable obligations of foreign
governments.
(c)

Acting as agents in effecting the purchase

and sale of Swedish Government bonds and the
bonds of the General 2lortgage Bank.

If

21




(4)

(a)

Discounting accepted inland bills or ex—

c'aanE,e payable within six Trionths.
(b)

ioans arainst stock Exchar.,7e collateral

rapay_ble within six months (fixed terill) or on
not exceedin

three months' notice.

7n the

case 4 colilmunal authorities and other corporations
of similar status, the note of the borrowing cor—
poration may be accepted as sufficient security
without ()tiler collateral.
(c)

Loans a,,,inst T!1,::rchandise in a public wart
--

house or deoLited in Criarge of an independent
trustwcrthy person who ii

bound himseli to hold

them at tie diepositaon at the Riksbar.k, such
loans to

lor lixed teri.as not exce6dinr, six

months.
(d)

urant or credit on current account for

terms not excee.din

t:.elve months, against col—

lateral consisting of bonds, shares,or a lien on
real estate l and also ar-ain:.;t personal c urantees.
,
.
Ihe maximum —1,1ount ol thc: funds of the bank v,Ilich
t any time be advanced in this way shall
not exce(,d 15 rr.illion kronor (4,000,000 dollars,
30 per cent of the bank's cauital,) not including
in this sum the credit to be op:::nbd for

the

22




National Debt Office, the amount of whi
ch is
fixed not to exceed 1,500,000 kronor.
(e)

On similar security to that named in the

preceding paragraph (d) there may be gra
nted
loans repayable by instalments at fix
ed inter—
vals.

The aggregate amount of such loans
was

fixed VI the law of 1897 not to exceed
one quar—
ter of the bank's capital.

Five years later, a

law of 14th May 1902 set aside the sum

of

12,500,000 kronor for such loans as
already
stated, the capital remaining unchan
ged and the
fund in question being provided fro
m the accumu—
lated surplus.
(5

Deposits for fixed terms or repayable
on demand

to be received without charge and sub
ject to no interest
payment.
Current accounts ("giro" accounts) to be
kept free of in—
terest or charge, and the bank to make
the necessary arrange—
ments in connection therewith fur eff
ecting the bus4.ness of
the clearing house.
Firms, other than banking firms, whi
ch have a discount ac—
count at the Riksbank, may receive
interest on current account
balances.
The bank is required to receive the
Public Revenue and tu

23




make payments on account or the State without charge.
The bank is required to accept at any of its offices de—
posits of money and to issue sight drafts on the Head Office
in Stockholm for the amount thus deposited without deduction or
foe.
Arrangements for the receipt of sealed deposits are
also to be made at the Head Office, and at branches as may be
determined in the regulations made from time to time.
Foreign loans may be raised, and accounts opened with re—
liable foreign banking and mercantile houses with or without
interest.
Beyond the business included under the above heads, and
the manufacture of paper and conduct of the necessary printing,
the Riksbank

is

prohibited from carrying on any other class of

business whatever.

It may not own real estate beyond that need—

ed for its offices, paper manufactory and printing works.

To

protect the bank from loss, it may buy in real estate on which
it has a lien when such property is sold by auction, but

it

must be sold again on the occurrenceofasuitable opportunity,
and in any case when the sale can be made without loss.
It will be observed that the Riksbank,in being excluded
from paying interest on deposit accounts, leaves an important
line of business to other

banks.

It is also not under the same

pressure to find investments' for its funds when the attraction
of interest is lacking to draw to it a large deposit fund.

AS

24

a matter of fact, as already noted, this item
has practically
disappeared from the balance sheet since 1897
.

Current accounts

with interest on the balance to credit of the
client, though
allowed with certain reserves (see above) have
, in fact, not
been developed.

At the end of 1908, the resources of the Rike
—

bank included capital and reserves and outstand
ing notes amount—
ing to three—fourths of the whole. Of the
remainder, nearly
one—thira was due to the business conducted by
the bank for the
National Debt Office and%the balance of prof
its held for account
of the State.
The element corresponding to the deposit and
current ac—
counts of American banks amounted to some 14
million dollars
out of a balance sheet total of 94 millions.
This item is,
doubtless, largely affected by the balances
necessary for the
conduct of the clearing. It represents, at
any rate, actively
operated accounts, as the average turn—over
on these accounts
per weeknearly amounted to the average bala
nce to credit. The
Riksbank has, to a very large extent, ceased
to derive its re—
sources from those relations with the public on
which other banks
are dependent. Its note issues are the over
whelmingly most im—
portant debt to the public.

At the date named, the seventeen

remaining Enskilda Banks had fixed deposits tota
lling nearly
122 million dollars, and the 28 "limited" join
t stock banks with
a capital exceeding a million kronor (268,000
dollars) held
fixed deposits to a total of 12




illion dollars.

Besides the




fixed deposits, the other accounts ordinarily included in
America under the terms "deposits and current account balances"
amounted to 34 million dollars for the Enskilda Banks and 70
alillions for the limited banks.

In all,therefore, these other

banks disposed of over 350 million dollars of funds placed in
their hands by the public, their proprietors' funds amounting
to about 142 million dollars, and the balance—sheet totals ag—
o- ezating nearly 615 million dollars.
There has thus developed a situation in which the Riksbank
and the other banks operate in fields almost wholly distinct so
as the sources or their available funds are concerned.

In

the matter of investments the dominant item in the accounts of
the Riksbank iS inland bills of exchange, amounting to 44 mil—
lion dollars at the end of 190b.

The other banks to which re—

ference has been made had, at that time, rediscounted bills to
nearly 37 million dollars, of which a substantial part at least
may be assumed to have been negociated with

the Riksbank.

or exchange formed over 46 per cent of the assets of the

Bills
Mks

bank, and a little over 23 per cent of those of the other banks.
Loans on securitj of various kind, on the other hand, form
a relatively s;nall part of the investments of the central in—
stitution, amountin. to little over 10 million dollars at the
,
6
and 01 190t, or under 11 per cent of the assets, while such
loans amounted to no lees than 362 million dollars in the
accounts of the other banks, or not far short of 60 per cent

If




of their total assets.

The proportion of loans on real estate

to total loans on security was, at the date nalled, but little
over one—sixth for the Riksbank and alTiost one—tMrd for the
other banks.

Stock Exchange securities do not figure heavily

as collateral in either case.

As already stated, the cash item

for the Riksbank is large, gold coin and bullion

nd other coin

amountin6 to 23 per cent of the assets, while the other banks
held only 13 million dolIrs, or a little over 2 per cent, al—
most exclusively in notes of the RikEbank and in balances with
taat institution.

Other items should be included, such as checks

and drafts payable at sight or within a short time, if the mea—
sure of the readily available assets were required ) but what has
been stated will suffice to show that the investments of the
Riksbank differ from those of the other banks notably in those
features which are related to the ability of the bank to meet
demands promptly.

In confining itself to such investments, the

central institution goes far towards leaving the other banks in
possession 01 the most profitable part of the field of opera—
tions,

thus removing what might otherwise have been a reason—

able cause of objection to the grant to the Riksbank of the mono—
poly of note—issues.
(c)

One of the features in the position of the Riksbadk

which had been made the subject of repeated criticism and many
proposals for alteration) was the fact that the control of the
bank rested witd trie Parliament alone, and that niter in the

%4

27
ecutive Government nor in any independent body was there any
power to influence the discretionary authority of the Parlia—
ment.

In truth, the difficulty presented by this peculiar fea—

ture of the constitution was perhaps rather apparent than real.
Bevorthaless the proposals of the most recent Committee of In—
quiry, that of 1890, included the Association of Appointees of
the Crown witn those of the Parliament on the Managing Committee
of the Bank, to the extent of one—third of the whole number.

The actual change made fell con6idsrabl:i short of that proposed.
The kanaging Committee which formerly consisted of seven Parlia—
mentary representatives, has, by the Act of 1397, been made to
consist of a Crown-appointed Chairman and six representatives
of the Parliament.

To the extent indicated by this change, the

Executive Government has been admitted to a share in the control
over the bank.




Substitutes are appointed to act in case

of

the absence, or incapacity from sickness or other cause, of any
of the

naging Committee.

The Committee of seven appoints

three (from 1373 to 1698, two) of its number to act as Managing
Directors of the bank, each having charge of certain departments
of its operations.

The jealousy of interference on the part of

the Crown finds an expression in a Section of the 1897 Act re—
lating to occasions when a representative of the Executive
Government may be sent to confer with the Managing Committee of
the bank.

The Committee is forbidden to decide the question

in hand 80 long as the Crown's Agent is present with them.

28




The,

are thus reserved opportunity for private discussion,

and independent action.
The more detailed provisions of the regulations approved
by the Parliament for the conduct of the affairs of the Bank
need not be set forth here.

They include,of course, the nu

ber and status of the bank's officers at each office, and th
scales of salaries for each grade.
The law of 1.897 provided for the publication, in additi
to the detailed annual statement of the bank's affairs, and a
monthly summary of a weekly statement of the metallic reserve
)
and of the gold held abroad or in transit and foreign credits,
of the outstanding circulation of notes, and of the excess of
legal rights of issue over the actual circulation.




SUGGESTIONS FOR DIGEST OF STATE BANKING LATS.

1st.

Terms of incorporation.
(a) Minimum oapital.
(b) Maximi_m capital.
(0) Surplus.
(d) Dividends.

2nd.

Liability of.
(a)Stockholders.
Uuht names of stockholders be published?
May other corporations hold the stock?
Extent of rescrve liability.
(b)

3rd.

Directors.
In case of impaired capital.
In case of insolvency.
Must directors own bhares, and how zian?
lay officers engage in other businatis?
,
Must lik„bilitieL of directors to 1);.rik bc 3ublished?

Supervisfton.
Renorts.
Ho'.r often required?
,
What items included?
(b)

7xi_aa1ntltions.

How often reql:ired?
By whom made?
4th.

Reserve requirements.

5th.

Discount Etnd loan restrictions (to be stated separately where
possible).
(a) As to aggregate amount.
(b) As to amount to individuals.
(c) As to character.
Can loans be made on real estate?
Can loans be made to oil leers and directors of
the bank?

6th.

Investments.
What restrictions as to investments in
(a) Real estate?
(b) Bonds?
(o) Stocks?
Can a bank hold stock in other banks or other
corporations?
Must such investments be published in detail?

2
.

7th.

Branuhes.

8th.

Anr provisiocis as to joint occupation or the same builaing
by (Afferent l'nkinL, firms?

9th.

Peutaties fcr

Ho; far allowed?

Ar.1:ci,mt1on oi Ls .bove stted.
. .

•

These items should be E iv=
:
.
for Sti_le




eo far

Trust CompLnies, tuld Si..vings Banks.

as

pobsinle,




REPORT.
SHARING OF PROFITS BY PUBLIC SERVICE COMPANIES IN EUROPE.

GREAT

BRITIAN.

Gas companies, under the provilons of the so-called
"sliding scale" divide with their consumers increases or decreases in profits.

Under the sliding scale a standard price

per thousand cubic feet is fixed, and also a standard rate of
dividend.

When the plan was first introduced the standard

rate of dividend was usually fixed

by Parliament at lel but

more recently, when the 111e of new capital hl‘s been author..
ized, the rate has been fixed at 7%.

The standard price has

usually been established after taking into consideration local
conditions, and at present it would probably be between three
shillings ($0.75) and five shillings (;1.25) per thousand feet
in different localities.

The sliding scale clauses provide

that for every decrease or increase of the standard price of
gas by one penny per thousand feet the maximur rate of dividend
allowed shall increase or decrease by one-quarter of one per
cent.

For example, if with a standard price of four shillings

($1.00) and a standard rate of dividend of lag the price falls
to three shillings fourpence (0.83) the dividend may be le,

or

if the price rises to four shillings eightpence ($1.16) the

dividend must not exceed e.
It was found in practice that the sliding scale clauses
were practically inoperative owing to the repeated issue of
new capital at par to the shareholders, and Parliament then




adopted the "auction clauses" which require the sale of new
shares at auction, the premium received being carried to a
premium capital account, on which no interest is to be paid.
Since the adoption of this modification the slicing scale has
worked satisfactorily.
Many gas plants are owned and operated by municipal*
-mot.of-Lities, and in England the profits,are applied to the reduction
of general taxes, the gas consumer thus pay]ng a special tax
for the benefit of the public at large.
The statutes permitting Scotch municipalities to
operate gas works provide that after allowance for interest
and sinking fund requirements any further profit:, must be applied to the reduction of the price of gas, in this way relieving
the consumer of any extra burden in the shape of proflts on
gas for the reduction of general taxes.
Tramway companies make no payments in money, but have
the usual requirements as to paving and maintaining streets.
A number of municipalities own but do not operate the tracks,
and the rental of these are often placed at high figures.

In

London the County Council has bought certbin tracks, and leased
them to the North Metropolitan Tramway Company at a fixed rental of £45,000 ($225,000) annually,

1/e on the cost of exten-

sions made by the Council and four-fifths of the profits beyond
W on the share capital.
In Dublin the Tramway Company has recently (June,
18971) made a contract with the city, under which, in consideration of being al/owed to introduce electric power, and the

OM • t ii•
a,

extension of the franchise for forty years, the company agrees
to pay to the city £500 ($2,500) annually for every mite of
street occupied, the mimicum payment to be £10,000 ($50,000)
annually.

FRANCE.
Al]. agreerents as to payments are inserted in the
contracts made between the ccmpanies and the municipalities, and
maintenance of streets add charges for service are fixed by the
contracts.
PARIS:

The gas company, under the terms of the

contract of 1871, pays to the city a fixed sum of f.200,000
($40,000) per year as rental for the ground occupied by the
street main..

After the payment of all expenses, ordinary

taxes, interest on loans and amounts necessary for the amortization of bonds and shares, the company takes of the net
profits f.11,200,000 ($2,240,000), being 13 1/e, on the share
capital.

This capital is fixed by the contract at f.84,000,000

($16,800,000), any new capital required being obtained by the
issue of bonds.

After deduction of the f.11,200,000 the bal-

ance remaining is divided equally between the company and the
municipality.

In the year 1896 the share of the city was

f.8,800,000 ($1,760,000).
The price of gas is very high, 30 centimes per cubic
meter ($1.68 per thousand feet), but reducttfts in price must
be approved by the municipal council, and this, although desired
by the company, has been repeatedly refused by the council.



- .4--

The General Omnibus Company controls the omnibus
traffic and most of the tramway lines in the city, and pays a
license fee of f.2,000 ($400) on each omnibus, and 1.1,500
($300) on each tram car annually.

ProvIsion isaso made for

an equal division of any profit in excess of e on the shares
betweon the city and the company, but this amount has been
very small, amounting in all since the signing of the contract
in 1860 to only 1.380,000 ($76,000).

The share capital is

fixed by the contract at 1.29,750,000 ($5,995,000), but there
is now a bonded debt of about f.100,000,000 ($20,000,000).
The heavy charges /aid on the company for the maintanance of
paving and amortization of shares and bonds, together with the
requirement by the municipal council of the establishment and
maintenance of many unprofitaboe lines, make the return to
the shareholder about 6
%.
WIRR:

The tramway company has recently concluded a

new contract allowing the introduction of electric power ,
under which it is obliged to pay to the city 2 1/2% of the
gross income, with a minimum paymont of 1.18,000 ($3,600). But
it is also provided that until the recoiprs of the road are in
exCess of 1.60,000 per kilometer ($19,200) per mile) the
minimum payment shall be f.10,000 ($2,000) until this latter
rate of earnings is reached, when the minimum of 1.18,000
comes into force.
ROUEN:
he

The tramway company is to pay On all lines

after built, during the first five years of the contract,

1.250 per kilometer ($80 per mile) , for the next ten years
1.300 kilometer ($96 per mile, ) , for the next ten years 1.350




...._..5 •."

pdr kilometer ($112 per mile), for the next ten years f.400
per kilometer ($123 per mile), and for the last ten years of
the concession f.500 per kilometer ($160 per mile).

Provision

is made that all lines existing at thetime of signing the con..
tract shall, as now, pay f.300 per kilometer ($96 per mile)
for a period of twenty years, after which time these lines pay
at the same rate as those built under the provisions of the
contract.
GERMANY.

All contracts provide for maintenance of street, and
in some also a fixed charge for rental of the street is in—
cluded.

Al). contracts, gas, electric and street railway, fix

the charges to be made for service, and in the case of gas and
electric light companies there is usually no requirement of a
money payment.
BERLIN._

The contracts between the city and the

str-Jet railway companies have recently been revised, and the
concessions extended, allowing the introduction of electric
power.

This new contract, which presupposes the consolidation

of tne two largest street railway companies, requires the pay—
ment of e on the gross earnings, and after allowing le on
the capital now invested, and 6r, on the new capit-11 necessary
for the electric installation, regnires the surplus to be divided equally between the city and the company.
these two companies, Die Grosse Berliner




The larger of

Pferde Eisenbahn




Action Gesellschaft, is now paying 15% dividends.
The gas business is now divided between a municipal
plant and the Imperial Continental Gas Association of London,
which owns many works

on the Continent.

In Berlin this

company pays a sum which is based on the payment of M.400,000
,
($100,000), with a sale of about 23,000,000 cubic meter:
(805,000,000 cubic feet), and increases

or decreases as the

sales of gas to private consumers for light rise and fall from
this figure.

The price of gas sold to private consumers is

15.2 pfennig per cubic meter ($1.08 per thousand cubic feet)
for light, and 10 pfennins per cubic meter ($0.71 per thousand
cubic feet) for conking and heating, when soid by
meter.

separate

On this gas no payment is made to the city.
The electric light company pays under the terms of the

concession a percentage of its gro.:,s income, and in any year
when the profits exceed 6% on the capital stock a further pay*
merit is made of

2.5% of

the excess beyond

.
:
Aix -T.A...qwEitqq...

6%.

The gas company pays to the city

2 pfennig per cubic meter (14.2 cents per thousand cubic feet)
on all gas sold to private consumers, but if gas is sold at a
reduced price for heating and cooking, and measured by a separata meter, the amount paid is only one-half as much.
BREMEN.

The tramway company pays to the city ode'w

quarter of the profits in OXCE183 of 5% on the capital.
BRESLAU.

The tramway company pays to the city one-

third of the profits in excess of M.85,000 ($21,250).
COLOGNE.

The tramway company pays to the city from

1889 to 11393 M.5,C,00 ($1,400) annually, from 1894 to 1902




• 7,1+4

M.11,200 (32,800) annually, and from 1903 to 1816, besides this
payment of M.111200 (32000), le, of the net profit so soon as
these exceed 25% on the capital stock .

DANIZIG.

The traroway company pays during the first

fifteen years of the concession e of the gross income, during
the next ten years 2 1M, and during the last tan years 3%.
wpARA

Beginning tan years after the date of the

contract the tramway company pays 2e) of the excess of profits
over 6% to the city.
Dresylpfl.

This tramway is operated by gas.

The tramway is operated by electricity,

which, b y the terms of the concession, must be taken from the
municipal electric station, and the company is obliged to pay
lag depreciation on the electric machinert used to supply
current, and must also pay 24 of the profits over and above a
fixed percent to the city.
DussELDoRxt
.
.

The tra.mway company pays

3% of

its

gross income to the city, and also a charge per car, starting
at M.500 (3125) and rising to M.2,000 (35OO) in the last years
of the conce3sion.
ELBERFELD.
profits equal.V

The tramway company divides its net

withthe city.

The Barmen-Elberfeld line pays

e on the gross receipts.
ERTUnt

In addi:ion to tne payment of a gross sum of

M.1,600 ($400), the company also pays during the first ten
years 1

1/e, of

the gross receipts, during the next ten years

3%, and during the last fifteen years 4 1/e.

FRANKFORT AZNIT.

The gas works of the Imperial

Continental Gas Association of London
makes a payment to the
eft/ on the quantity of gas sold to
private consumers, varying
on a sliding scale.
At the present time this payment amou
nts
to about 2 1/2 pfennig per cubic mete
r (17.7) cents per
thousand cubic f3et).
The electric light works are owned by
the city, but
their operation is leased.

This rental is, for the first

year 5% on the cost to the city of the
plant, for the second
year 7%, for the third year 9%, and for
the fourth and succeed1n6 years le. This rental must fir
st be paid from the receipts, then the expenses of the less
ee with 14 added to represent management charges are taken
out, then e is carried
to a reserve fund until this fund
reaches le, and the balance
Is divided equalLy between the city
and the lessee. Ext.m*.
ion are made by the city.
The tramway company pays 61 on the gross inco
me to the
city, and also before the declaration of a divi
dend the following amounts in cash:-

For the first two years of the concession

M. 30,000 ($7,500) annualLy, for the next three
;ears M.40,000
($10,000), for the next five years M. 50,000 ($1
2,500),
tria4-Hreift-tiv-e---y-e•ar-s--46-4.0 .00441-2--;SOO)
1

for the next five

years M.60,000 ($15,000), for the next five year
s M.70,000
($17,500), and for the last five years M.80
,000 ($20,000 annually.







-9

After le is paid om the full shares and af, on the
Genussactien (Actions de jouissance) the city takes one-half
of the excess.
full shares and

As soon as the profit is equal to 16% on the

le on

the Genussactien, that is, when lag

Is paid on the full shares and e, on the Genussactien, the
City

is to take two-thirds of the excess.
The phrase Gennussactien, or Actions de jouissance, is

untranslatable into English as the thing itself does not exist.

Under the operation of the scheme of amortization the

shares are drawn

and paid off at par.

In their place is is-

sued a Genussactie, or Genussarhein, which represents the
premium on the ordinary share;

this form of certificate then

continues to receive dividends so long as the company continues to pay in excess of 5:g on its regular shires, the amount
paid being the excess of the actra dividend paid on the full

shares over sg.

Of course, when the concession has expired and

all the shares have been amortized tic, remains no vale in
these Genussaction, since the plant becomes the property of
the city free of cost.
HALLE.

The tramway company pays e of the gross

income to the city.
tramway.

Halle also has a municipally operated

10-Beginning five ycJar3 from the date of the contract
the city gets

24 of

the excess profits above .6;: on the shares

until the company's profit amounts to
7%.

When the dividends

reach 7 1/4 to e the city gets 30% of the exce
ss, from 8 1 4
/
to
W of the excess, from 9 1/0 to 10%, 401 of the
I
,
excess, and from 10 1/4% upwixds, 50g of the

9%,

excess.

HANOVER.

The gas company pays to the city 2 1/2

pfennig per cubic metir (17.7 cents per thousand cubi
c feet)
for all gas sold, excepting that to public lamp
s.
gas sold, omitting

that

When the

used for street lighting, reaches

12,000,000 cubic meters (420,000,000 cubic feet
) annually, the
payment becomes 3 pfennig per cubic meter (21.3
cents per
thousand cubic feet).
The tramway company pays 1 lie on its gross rece
ipts
up to M.1,000,000 (250,000),
2% to M.1,250,000 ($312,500),
2 1m, to M.11 1)00,000 ($375,000), 4 to M.21000,000 ($500,00
0),
3 1M to M.3,000,000 ($750,000), qnd 4% when the receipts
excoed M. 3,000,000.
ISAIRCIQUESIt

The tramway company pays to the city

one-gparter of the profits in excess of 6Y) on the
stock.
The electric light company pays to the city

40:7:

of the net profit of the company above 6% on the
shares.

When the dividends reach 77: the city takes 5e,
of the excess,

8%, 6e of




the excess,

gg, 66 2/e, of

the excess.

The tramway company pays to the city

2% of

its gross

receipts during the f.rst five years of the concession, and
this rate increases by lg each five years during its life.
MAGDENBURG.
MO"

The two tramway companies each pay

3 1/4 of their gross income to the city.
MUNICE.

The gas company paid during the first six

years of the concession M.13,700 ((3,425) annually to the city,
for the second six years M. 20,00 (o,150), for the third
six M. 27,400 (t6,850), for the fourth M. 34,300 ($8,575), for
the fifth M. 41,100 (t10,275), and for the sixth M.48,000
(tl2,000).

This contract expires Oct. 31. 1899, and at that

time the city will assume the operation of the works, having
recently bought out the property of the company.
The tramway company pays to the city gg of the gross
receipts up to M.1,000,000 ((250,000), 2 1/2% on the next M.
500,000 ((;125,000), and e on all receipts in excest; of this.
On excess earnings above 6% and up to 8% on the stock the city
takes 25% of the excess.

The tramway company pays to the city

2 ve of the gross receipts.

In any event lf is to be paid,

but if there is not sufficient profit to allow a dividend of
e on the stock the payment of the other 1 ve remains in
abeyance, but is to be made up later so soon as the stock rem
ceives 4. After 1902 the city is to receive le of the
•
excess profit over
on the stock.




cg

AUSTRIA HUNGARY.




••••1111M

VIEtNA.

The tramway company pays to the city

f/.21220

per kilometer ($1,400 per mile of track), and when the gross
earnings exceod f1.3,500,000 ($1,400,000) it is to pay 3

1/e,

on the excess above this amount.
The recent concession

for an experimental electric

line also contains a provision for the payment of 50 Kreutzers
(20 cents) per year for each pole located in the streets.
BUDAPEST. The surface streot railway in Budapest pays
amounts to the city beginning in 1899 as follows:-

If the

gross income exceeds n.2,000,000 (t800,000) the company shall
pay

of the gross, and on each increase of f1.500,000

(200,000) the rate shall increase and shall be on the surplus
over 1'1.2,000,000 as follows:-. On the first f1.500,000
the next, 41;",, the next, 5%, the next

7%, the

next le, the next

le, and on exces:- es above f1.51000,000 ($2,000,000) 16%.
After 1907 the proceeding seven years are taken, and
after throwing out the best and the worst year, if the average
profit exceeds 10% on the capital stock the city and company
share in the excess

This is to be done each year there-

after.
The underground road pays for the first twenty years
of the conces ion nothing, for the next ten years lg of the
gross earnings, increasing 1% each ten years during the life of
the contract, which is ninety years.




mssibmi4 00.1.M
.

ITALY,
MILAN.

A new contract has recently been closed with the

tramway company, which provides

that the municipality shall

lay and own the tracks and shall receive ohl the income.

The

city pays to the company 7 1/2 cents per car mile, and for
all extra cars put on after 1901, 8 cent:; per car mile, for cars
put on after 1906, 8 lA cents per car mile.
city pays 2 cents per car mile.

For trailers the

The company makes a payment

to the city for maintenance of track.

Pt the end of the year

the city deducts from the gross receipts the payments made to
the company and the cost of maintenance, and divides the bal—
ance.

HOLLAND.
AMSTEI:DAM.

The tramway company pays to the city

5% of the gross receipts, and the company iv, allowdd a
dividend of

eg.

For every increase of dividend above

eg, 1/2%

additional of the gross is to be added to the payment, of cor—
responding fractions for fractional increa.;es.
increase of dividend beyond

10',

For each percent

lAg more of gross receipts

is to be paid to the city.
The gas company is to pay as soon as two works are
completed and in operation 4.03 cents (Dutch) per cubic meter
(47 cents (American) per thousand cubic feet) on all gas sold
in excess of 13,000,000 cubic meters (45h,000,000 cubic feet)

annually.

When a third works is built and put in operation the

payment is to be made only on the excess above 21,000,000
cubic meters (375,000,000 cubic feet).




(
4'

e•mr.•'31

711.07.1
0= ANALYSri Ov FOREIGN BANKING SYSTEM'
OTTARAC= OF PRIVII-47GF: 07 CnR'ER:
7:hethor monopoly of issue or not.
Duration of privilere and opportunitios for revi
sion.
Brief statement of changes in charters in recent year
s.
ORGANI:ATION AND GOVERTIMPT:
Amount of capital.
Character of ownership, whether public or private.
?riviloces of shareholders.
l!ethod of vppoirtin

i-overnor and Deputy Govornoro.

Control of the (lovernment over managencnt.
MRACTER 07 !TOTE ISSUES:
Secuvity for :Jote ir:sues, 'llother rietallic money,
seclrritios or commrc:Lal popar.
Charactef and limitation

of met:Illic reserves.

T?rovisionn for omercency issues.
7acilitios and mothodn of redemption.
Denominations of notes.
Actual character of .11 circulation,
4

i.ether

silver or noton.
CFARAC7.T.OF 13trIn:SS Dom:
Whether by discountin4- comercial paper, by loans on
securiticc, or by c.ricultural loans.




Lens th of maturity of commercial paper fixed by law,
ilequiremntL3 in ro;ard to such paper.

Actual maturities ollon by statistics (usually less than
legal maturities because of re-dincounts).
Tr3;11
.'21011

TO TIT 1..7.7.:7171"7I0ITAL TIOTTEY MAMET:
Yow tho

old movement is controlled,

by changing: the

discount rate or otherise.
ethod of fixing discount rate.
Number of chanes in flucl rate.
Statistics of animal and averae rates.
Other methos of influencinF tT_e mrket, as by "borrowing from the market" or sellinv securities.
RELATIOM 70 OT= BAN7S:
nethods of re-discount, Yith conCitions imposed.
.?.elative bn.rainy strerv,
th of roto-iscuinr in:Inla-3 and
.
stock banks.
Accommodations extriMed to trade in emergencies.

7..-2.LATIors

TO "Y7

OTTR.inr-

Whother or not

the bank per -orm trip ,overnment business

Permanent or temporary credits to the Treasury.
Manacemnt of the public
TAX




aobt.

PAID:
ecial taxes on circulvtion.
Division of profit.
Taxes on discounts above i fixed rate.
Recent char -es in such laws.

"COPE 07 =POST':
Tho above facts f3.
1-.ou1d be ;, iven for the follerinc
institutions:
Bank of 17
.'1E:land.
Scott
'ch
of ; co.
- .ran
ormal.v.
Austro-Hun:arian
Ban!: o-(
'
:Ls.tnk of Belk:,1-,:r.a.
:
Bank of the

herlzoids.
:;:r

on.

f3c71.3 ITat>trlif
Ba9o d of
l
C ana

.7 •

..c

TiC

7?Kr,
'

Mexican Banking :,yotern.
It rn.y not be necessar:y-

o

lye allLne facts for all
.1 "

of ALheoe banks, but there is mach 1nt
erclot14 e- erionce even rith
.:T
the soc11e.7 on
and ineluiinc those of the Balkan flt
ates and. other
countries, to 7thich occasional refere
nce niilt be made.
such a statement as recommended v-ould
be as brief and
corTact a por.oiblo v:i4 1:out L3acrifi
,
cini- accuracy, perhaps
-t.1- irty or forty printed parcE in
-!
public document form.




4

+AP.

LIAT7RI

S

aex. jel liar t..ew York)
P.A.IjCS AIM LAX 2AILUr-1,73 from the 17 th century to
the present time;[:.:ivinr; dal,es I details,..11eged causes and reputed'
losses.
II.'L11"TJTURE OF GOLD. he

r :sent and pr.bable future production

offl Gold and the Prucesses and
IT • ,/ •••
ea•

-••• - •

evices for winning it from the earth.

,
AD P. APE:a CI1t LA1'I01.: OF TH'21 201.7
.:ERCIAL WORLD from 1829

to 1908 sho . .rin:• the gradual improvement and substitution of the lato
.
or the for
IT.

'iL.:CU,ATIOIr 02 .3 CO:

at intervals from

the 16th -entury to the present time.
. 171C,001

011
;

0.=,PA6'.2 21).

2T.2",j.a.E. .;omputations show1

ing the comparative velocity of noney,or the frecuency wit:: which
-oney circulates in 'reut

ritain,the jnited states of :JraJrica and

some other countries; also a comparison of the past and pf(Jset and
probble future velocity of money in those countries.
VI. T:E YUTU.:iE OF IT7.152."he

urrent _-bate of

est 'or

o',

-arious countries and in the money markets of the - orimerial
world,frola the earliest times to the present:the constituents of
given rate of interest: reviww of its past cuv,'ent rate: its
rec;3nt and present tendency: and its probable future course.
VII. CL.J,CJLATIO.:.. 02 LO:.:7,Y in each of the followinr countries l at
short int:31 7Lds from the 16th centlry to the pr-sent time t ?ompiled
from the estima8

observat.1.,ns

contamporanoo,,s

torians and economizts, and An .cent periods from of°icial
England lnd



ra; 1ritain,Jni 4ed

i.gdom, 'rance

I

one tarv
tal y Jpain, , tr.lc;al,

_ o thuT1 and.s,
E73a,

ndia and.

he

4

;iit

•

•1 ven

-

„ ,,ly
nu
from

1775 to the present :ear,and s4ow.Ln7 separately the coins,ro-ern:
ont no tes,1 ,ank no tes 1 to tal noney,to tal pa pul a

on ;and total money

per capita year by ;ear.
.

•

ssa- showing the sum
a

•

of.atonal _ealth, to tal annual product,total 1)ou1at,Lun, and tot
money of the United ,inr,dam,a
the united

shoL %.

tats decennially

n ervals since 16. and of la
7 JO •

0

e

,--f— 1^1
'

Lurt

titative rolal,ions be twoen capital,incone ,noney,and nopul,..v_on.
7l
aU.AASIL

02-.0 A GI

31.

.1 :0.i

o f who.

ever materials it consisted) fron the earlio ,; times to the present.
2




7ATIO:AL 2=7= CO=ISSIO:1 110UOTIZAPHS=--"The Swiss Barl:ing Law."
Washinoton, :larch

••••

The folle:rinc matter furriOlea

/.--Editors:

by the liational Monetary Mommission must he held urtil released, which
probably will be for Morring Papers of

- Tarch

Charles S. Daehl,
AcsiFtvrt 7terteral Maragor,
The Associated Press.
FOR

moRrirc

PAPERS.

rote by the ::onetau Commission:-The following story im is aistirct
to be
from that o4 the same gubject/released for afterroon papers of xxxkur
goacizirimgm

, March --LesterdaZ i ard Is furrished so al. not

to duplicate the previous story.

In the issue of thin7nuttermx the

advance notices of these monographs, the effort is to alternate the
precedence between the morning and nfterroon papers.
ftirnedt
Secretary.

-:ed next time, so that first
A. B, 2.!-This form would be chan:




article would be released for nornirg Papers, and
second for afternoon papers of the
would then read:
FOR AFTERNOON PAPERS.
(and would read accordingly).

we Clay.

rotice




Pertinent Extracts from the Letters from Officers of Banks
)
,
Accomp nying formal Answers to the Inquiries.

9

VI




Memorandum In Re
RAILROAD BON:DS AS .
SEC3URITIES FOR Pp1-31,I_. DEPOSITS.
.
.
.
C
•
•

The railroad bonds at present accepted by the Secretary
of the Treasury in this connection are those which form lerral
investments for Savings Banks in New York and Lassachusetts,
the laws of these states governing the investment of Savings
Bank funds being considered the most stringent.

Under this rul-

ing, two hundred and twenty-five bonds forming legal investments
in the State of New York are available, a total amount of
$1,257,848,000,

and $809,269,000 2 the total amount outstanding

of two hundred and eleven bonds in which the Savings Banks of
Massachusetts may invest.
In view of the fact that many National Banks are experiencing much difficulty in furnishing the required securities, it
has been suggested that the situation would be somewhat reliev
ed
by including in the list of railroads accepted as securi
ty for
public deposits those whose bonds are eligible for Saving
s Banks
in Connecticut and New Jersey.
At the present time the number of railroad bonds
legal
for New Jersey banks is four hundred and rortyeight, aggrerrating $1,800,734,000, while the bonds in which
Connecticut Savings
Institutions may invest total three hundred and
eighty-four, an
aggregate of 0.2654,334,000.

-2•




To recapitulate.

The total amount of bonds which are

legal investments in several states is as follows:
rew York. OOOOOOOOOOOOOOOOO

$1,257,648,000.

1assachusetts•••• OOOOO ••..••.• •.•.•

809,269,000.

Connecticut OOOO OO .••••.• OOOO O • • • • • • 1,654,334,000.
rew Jersey

1,800,734,000.

Many of the bonds which form a legal investment for banks
in New York and Massachusetts are eligible also in New Jersey
and Connecticut.

Eliminating those common to the four states,

we find that should Connecticut and New Jersey securities be
accepted, there will be a further contribution to the available
supply of 089,26b,000.
At first glance, the amount of over $2,000,000,000 at
present acceptable, would seem to be ample to meet all requiremcnto, but it should be remembered that the savings banks alone
absorb more than 4354,000,000 of these securities, while far
larger amounts are taken up by National Banks, Insurance Companies, Trust Companies, and other fiduciary institutions,
as
well as by holders of trust funds and individual investors.
With this tremendous draft upon the available bond
market, it is
not surprising that the floating supply is totally inadeq
uate
to meet the needs of the National Banks.

Acceptance of the

additional $589,000,000 rendered available by inclusion
of
Connecticut and Nev: Jersey securities, would minimize
the difficult:, at present felt in providing suitable
collateral, while
still upholding sedulously most carefully
the character of se-

curities held for public deposits.

Appended is a brief comparison of the legal requirements
for Savings Banks in the States under discussion.







Brief Co:Iumrison of the Leaal Requirements for
Savin0-3 ranks Investments in
:ew York, TAssachusetts
1
falit

...A

• •I
•

Connecticut and Yew Jerse_y.
•

A short coparison of the requirements of the vari
ous
states may be of interest.

Briefly, New York, Connecticut

and ::ew Jersey insist that the "issuing corporation"
shall have
paid dividends of not less than four per cent. upon
all outstandinr capital stock ror a period of five years.

For Massachusetts

the ten-year dividend record is in most case
s of obligation.
In nearly all instances the security must be
a first mortgage
bond or of an issue to retire the company's
entire bonded debt.
Connecticut, in coilnon with Massachusetts,
limits investment
to the bonds of railroads located in certain
states, and also
shares with that state and New York the
provision that capital
stock must be at least one-third of funded
debt.
New York and
fassachusetts allow a certain amount of
leniency towards corporations of the home state, but Connecti
cut and New Jersey
treat all companies alike.

Confid;htial

T. J. R- ssell.
,
ManaL,3r,
London & Wastninbter Ban<.
Thibe was ',he first purely London Joint StOCK
first place for a lon

and hild

of a.mbagamation and

time until the

extansion to the provinces WU6 stz-,rtad by its com2aitore.
The big London Joint Stock Banks ma::T3 divided into three
classes, of which the following ar1 mu-, las:(1)

London (')c Westminster Bank, with 36 3ranches, doing a purely
London Business and having its branches within the London radius
,hose occ,Arr
where the changes in trada conditic)ns are mainly ,
in the Metropolis.

(2)

London & County 3anKina Co.Ltd. with 263
.
...s of 5) mile.
or within a radi,

rancl-es in London

Here th-3

tra(t:a

conditions are influJcad by wider CUUB36 than in (abe af
but the banking accoin b a:iart from those of London cAstuNers
are, generally speaking, those of :,rivat: irdi7louals or retail

(3)

_r5anKi-12: Com:Jany, 169 Brancnas.
London Cit:/ & Midland Bank, 336
Ilods Bang., 527 3ranc:es.
conractions ir all part e of Eric:land and
are therifor4 affectad more directly than those in (1) or (2)
by C

ir the man.)facturing,

ariculural districts.




mining and

Con": dentiak
.

T. J. Russell.
Manager,
London & Westrinsta' Bank.
This was the first purely London
Joint Stock Bank and held
first pl.'.ce for a long ti-1(2 until
the policy of amalgamation and
2xt2nsion to the Provi3
3.t,rted by its competitors.
The big London Joint Stock Banks
may be divied into three
classs, of which the followinc;
are examples.() T.::1.J London & Westminster Bank with 36 Bra
nches doing a purely
London business, and having its 1)72
7itTlin the London radius
where the changes in trade conditios
ne ia1ly tho;le occurring
in the Metropolis.
London & County Banking Co. Ltd.
02

within a r -Idius of

He

263 Branches in London
t7-1

chane

in trade

conditions are influenced by wider ca
us thin in case of TTol
but the banking accounts apart from
tho,! of London austollers
are, generally speaking. those of privat
e individuals or retail
stores.

(3)

Parr's Banking Co:' any, 169 Branches.
London City & Midland Bank, 336 Branches.
Lloyds Bank, 527 Branches.
These Banks have connections in all parts of Englan
d and

are therefore affected more directly than those in (1) or (2)
by
changes In the nanufActurin, s:A.)inc
), iining & agricultural




distrits.

Managel.
London & West inster Bank
This was the first purely London Joint Stock Ba.ik, and
11.1d
first t ln-ce for a ionc, tine until the policy of alala auatio
n and
extension to the Provinces

s started by its co_

Aitors.

The big London Joint Stock Ranks may be divided into three
classes, of which the following are exa:ples.(1)

The London & Westninst r Bank with 36 Branches doing a purely
London business, and having its branches within the London -0.,dius
where the changes in tr.de conditions are 71:-tinly those occurri
ng,
in the Metropolis.

(2)

London & Couty Banking Co. Ltd. with 263 Branches in London or
within a radius of 30

17.s.

Here the change in trete conditions

are influenced by wider caus,2s than in case of No.1, hut the
banking accounts apart fron those of London customers are.
generally speaking
(3)

thosu of private individuals or retaii stores.

Parr's Banking Company, 169 Branches.
London Citi & Midland Bank, 33; Branches.
si
Lloyds Bank, 527 Branches.
These Banks hay,: connections in all parts of England ,;nd

are therefore affected nore directly than thos

in (1) or (2) by

changes in the :laucturing, shipping, iining &
districts.




Confintial

T. J. Russell.
ManaL;cr.
London & 17strAlnstr Bank.
This was the first purely London Joint

tock Bank, and held

first place for a loiv, tine until the policy of a. algam
atien and
extension to the Provinces was started 1)y its
competitors.
The big London Joint
classs, of 'ihich th

•-tock Banks 7- ay be divided into three

follJil-k; are examples.-

(1) The London (c 7151st .ins
9

Bank with 36 13

London businss, and having its - tranches

riches doinf a purly
ithin the London radius

where the changes in trade conditions are mainly
those occurring
in the Metropolis.
(2)

London & County Banking Co. Ltd, with 263 Branches in Londo
n or

within a radius of 50 miles.

Here the changes in trade conditions

are influenced by wider causes than in case of

ro.1,

but the

banking, accounts apart from those of London customers are,
gener . A.ly speakinc, those of private individual: or retail stores.
(3)

Parr's Banking Co- i
. )any, 169 Branches.
London City 1 Tad14nd Bank, 336 Branches.
Lloyd

Ban. .27 Branches.

Thse Banks have connections in all parts of England and
are therefore affected more directly than those in (1) or (2) by
changs in the manuf7'cturin, shipping, mining and aL;ricultural
districts.'




T. J. Russell,
London
This vrar

Manager,
Testiinster Bank.

first ijaroly London Joint Stock Bank, and

first place for a long tille until the policy of amal
gamation and
exnsion to the Provinces was started by its
coi)Jtitos.
The big London Joint Stosk Banks may be divided
into thr.
class:is, of ,
77lich the following are
(I)

The London & Westrinster Bank with 36
Branches doing a purely

London business, and having 'its branches ,
.rithin the Lond(xl.radius
the chang

in trade conditions are mainly those occurrin
g

in the Iletro,)olis.
London & County Banking Co. Lt'. with 263 Branches
in London or
within a radius of 50 riles.

He7o tho changes in trade conditions

influenc•,.1_ by wider causes than in case of No.1
, but the
banking accounts Apart fro:1 those of I_Jodon custor
s are,
generally

(3)

Sp

.1king, those df private individuals or retail stor;Js.

Parris Bankin

Co

any

139 Branches.

London City ,c;; Midlnd Bank. 336 Branches.
Lloyds Bank, 527 Branches.
These Banks have connections in all parts of England and
are therefore affuct,)d more directly than thos:) in (1) or () by
changes in the manufacturing, s'hip2ing, :lining and ,iv,ricultural
districts.




Confidential

T. J. Russell.
ManaL;sr,
Loncion & Wastminster Banx.
This

Nas the first purely London Joint Stock Bank and held

first place for a long time until the policy of amalGamation and
extInsion to the Provinces was started by its competitors.
The big London Joint Stock Banks may be divided inlo tare3
classes of which the following are examples:(1) The London & Westminster Bank with 36 Branches doing a purel
y
London business and having its branches within the London radiu
s
where the changes in trade conditions are mainly those occur
ring
in t'ne :Atropolis.
(2)

London k County Banking Co.Ltd. with 263 Branches in London or
within a radius of 50 miles.

Here the changes in trade

conditions are influenced by wider causes than in case of No.1
1
but the banking accounts apart from those of London customers
are,generally speaking, those of private inaividuals or
retail
stores.

(3)

Parrs Banking Company, 169 Branches.
London City & Midland Bank,336 "
Lloyds Bank, 527 Branches.
These Banks have connections in all parts of England and
are therefore affected 113re directly than those in (1) or (2)
by changes in the manufacturing, shipping, mining and
agricultural
districts.




4e*

Conl'idential

T. J. Rissell.
Kanager,
London & West:-inbtar
This was the first plArely Landon Joint S%ock Bank and held
first place for a long time until :he policy of amal6amation and
extension

o the provinces is stztrted by its competitors.

The big London Joint Stock. Banks may be divided into three
classes, of which 1.7qe following are exam .1es:(1)

London & Arstminster Lank, with 36 Brances, doing a purely
London business and having its brancl,es within the London radius
ahere the changes in trade conditions are mainly those occurring
in the Metropolis.

(2)

London Ar Coun%y Banlcinc Co.Ltd. with 263 Brances in London
,
or githin a radius of 50 mills.

Here tie changes in trade

conditions are influenc3d by widar causes than incase of 1;0.1,
but the bunking accounts apart from

1,hob .:

of Lonuon customers

are, gels rally s;)eaking, those of privat-: i!
-Adividuals or retail
stores.
(3)

Parr's Banking Comlany, 169 Eranches
London City &Midland Bank, 336
Lloyds Bank, 52? Branches.
Thes3 Banks have connections in all parts of England and
are t'- erefore affected more dir,ctly than those in (1) or (2)
by changes in the manufacturing, shipping, mining and
agricultural districts.




Confiamtial
T. J.
,0n,lon
7

Manager,
Vistminster Bunk.

This was the first purely London Joint crock Bank and held
fir

:ce for z-t
1,3

•

3

tire until the i)olicy of amalgamation and

:,rovincas was started by its comi)e%itors.

,
I 3 big Lordon JGint S*.ock i3:-tnke mk-ty b3

into three

clabs3s, of w:iich the following ari 3xam:1es:(1)

London & W3stminster Bank, with 36 Branches, doing a purely
radius
Lonaon bubineue and having its branches within the London
where

the

changes in trade conditions are mainly t17.08., occurring

in the Metropoli.
(2)

on
London !), County Banking Co.Ltd. with 263 Branclles in Lond
or within u

of 50 miles.

Her: the c%anges in ',rade

,
,Lenced 'oL wider causes than in case of No.1,
conditions are infl,
rners
,
but t1-11 hanking accounts apart from thos 1 of London custo
are, ge-era.1:: speaking, those of i,r1va3

,
!ividuals or retail

stores.
(3)




Parr's Banking Company, 169 Branelles.
London City ?r. Midland Bank, 336
Lloyril:. Bank, 527 Bran&-les.
M3.99 Banks lave connections in all parts of England and
or (2)
are therefore affectied more directly than those in (1)
and
by charges in t.'.3 7anItfacturing, shipping, mining
agricultural districts.

jf

,Ar:t

eaa

Cal
--/Case 19.

j7071

u4

A large proportion of the checks deposited by this firm are

checks which they have cashed for customers.

The proportion of checks in

their deposits, therefore, is very IIE:14
The following extract from a letter received from the firm, ,
rhich is located
In one of the cities of the first class, explains the conditions:
Ke cash
a greet many teachers' and other city employees' checks, a very small
proportion of which anrlies to payments of accounts or for merchandise.
cash e great many checks for our customers,
convenient than going to a

EIS

7e also

it frequently is much more

bank for their funds.

Many lady customers who

receive a monthly allowance for house expenses obtain their funds from us,
applying whatever might be due ur on their account.
great many employees of manufacturin
same in our establishment.

It is customary for a

concerns, who are paid by check to cash

Again many cash customers will make a :-nrchase

of a few dollars and draw a check for a larger amount, when they desire some
currency.

As we have a great many cashiers all over the house, and each one

receives checks, it is impossible when they come to the counting room for us
to determine whether they have been applied in whole or part

on purchases.

I presume that the Opove conditions prevail to a very much
larger extent in our retail establishment than in a majority of other concerne.

V

You will readily see from the points enumerated that the amount of

This is undoubtedly the case.

checks we receive and deposit bears no relation in any way to the volume of
business done, as a very large amount of the checks would he considered as
'accommodation banking'.
4(
The proportion of currency in our bank deposits is very small,
as our heavy pay rolls are paid from currency receipts, also all other
necessary currency disbursements.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102