Readings in Money and Banking Part 63

Q. What is the relation between this bank and other banks, such as the Deutsche and the Dresdner--that is, as to the character of business transacted? Are you not compet.i.tors?

A. It may be said that the Reichsbank is more restricted by law. At a private bank the rate of discount may be much cheaper than at the Reichsbank. The private banker knows his clients, and he may be willing to accept from them a bill that the Reichsbank would not and could not accept.

Q. Then there is to some extent compet.i.tion?

A. Yes; but that compet.i.tion is not large. It is not felt that the Reichsbank is a compet.i.tor of other banks, but it is a public inst.i.tution. The Reichsbank has its official rate, which is higher than the private rate. A bank will take bills on its own account running three months or more and hold them, and in case of need will take bills running ten days or less to the Reichsbank for discount. The Reichsbank pays no interest and acts as agent for transfer of currency and credit to all parts of the Empire without charge.

Q. Has there been any feeling that your branches were supplanting the private local banks in small towns?

A. There may have been some instances where a banker may have been dissatisfied at the Reichsbank opening a branch in his locality, but as a rule the banks at such a place are quite pleased to have the Reichsbank open a branch in order that they may have the benefits of its facilities.

Q. The government deposits are received and treated exactly the same as the deposits of farmers?

A. Yes. The business for the Government and its departments is handled the same as for others, and no interest is paid on deposits. There is, however, one exception; every private inst.i.tution is required to keep a minimum balance to its credit, but not so with the departments of the Government. The Empire keeps in the aggregate sufficient to compensate.

Q. Do you always charge a higher rate of discount for bills when you have a large amount of taxed notes outstanding?

A. No. On occasions the Reichsbank has not increased its rate of discount above 5 per cent. At times we have discounted even at 3 per cent., when we have had to pay a tax of 5 per cent.

Q. It has been suggested to us as a matter of policy in times of stress that it would be better for you to add the 5 per cent. tax to the rate of discount.

A. The Reichsbank must be considered in the first place as a public inst.i.tution which has to take care of the public interest, and secondarily as a money-making inst.i.tution.

Q. Is there any restriction as to the percentage of silver in your reserve?

A. No; but there is another law, the coinage act, by which the amount of silver coined depends upon the population. They do not coin more than 20 marks per capita.

Q. What steps do you take to increase your gold reserve or to protect it?

A. We always have a large amount of bills of exchange payable in foreign countries, payable in gold. We also increase the rate of discount. We consider that the latter measure is the only effective one. We also make advances without interest to importers for the time the gold is in transit; we do that even in times when the ordinary gold import point is not reached. Then we may raise our tariff for the purchase of foreign gold coins, as the Bank of England does.

Q. Do you take any steps to prevent exports of gold? We have been told that it is the habit of the Reichsbank, in case of large exports of gold from Germany, to suggest to the other banks that it is not agreeable to have the gold exported.

A. It has never been the case and never will be the case that any such suggestion has been made by the Reichsbank to anybody.

KoNIGLICHE SEEHANDLUNG

(ROYAL SEA-TRADE SOCIETY)

INTERVIEW WITH HERR GEH. OBERFINANZRAT LOTTNER, DIRECTOR OF THE ROYAL SEEHANDLUNG, PRUSSIAN STATE BANK[192]

Q. When was this bank organised?

A. In 1772.

Q. What is the capital of the bank?

A. One hundred million marks.

Q. By whom are the shares owned?

A. There are no shares; the capital is owned by the bank, which may be regarded as a juristic person, an independent legal subject.

Q. Who invested the money?

A. The money was originally invested by stockholders in the time of Frederick II, but afterwards the shareholders gave up their stock, for which they were paid. The shares were mostly owned by the King and by his a.s.sociates, and they handed them over to the bank, so the capital is really owned by the bank itself. The proceeds in excess of all the expenses are paid to the Prussian State.

Q. Who is responsible for the conduct of the business?

A. The president.

Q. Has he a.s.sociated with him directors?

A. No; he is personally responsible.

Q. By whom is the president appointed?

A. By the King of Prussia for life.

Q. What are the particular functions of the bank?

A. In the first place, it is an organisation to help the State of Prussia. The princ.i.p.al part of the business is to finance the loans of the State. It may undertake the loans alone, but as a rule it heads a syndicate of the large banks.

Q. Do you compete for deposits from merchants, manufacturing concerns, banks, etc., with the Deutsche Bank or the Dresdner Bank?

A. Yes, to some extent. It is not our intention to do so, but of course we practically compete in some ways. Our rates on deposits are less favorable than those of these banks.

Q. Do you take real estate mortgages?

A. No.

Q. You are known as the sea-trade (Seehandlung) society. Why is that?

A. Frederick the Great founded the Seehandlung to promote Prussian trade, especially the oversea trade. At one time this company had a salt monopoly and a wax monopoly. The salt which came into the different ports of Prussia and the wax which came from Poland were bought up by the Seehandlung. At one time the Seehandlung also had mills, spinning and weaving plants, iron foundries, and river steamers. We still own two industrial establishments, the flour mills in Bromberg and a linen spinnery in Landeshut in Silesia.

Q. A large percentage of your funds is loaned on the stock exchange?

A. Yes.

Q. And your discount business is comparatively insignificant?

A. Not insignificant, but small compared with our loans on the stock exchange.

Q. Do you receive promissory notes from customers?

A. No.