The policy of limiting the profits of shareholders was adopted by the law of 1900, in conformity with the policy adopted at about the same time by France, Belgium, Germany, and Austria-Hungary. The shareholders first receive dividends of six per cent. Of the excess, ten per cent. is added to the reserve funds, and the remainder is divided equally between the state and the shareholders; but after the portion of the shareholders has reached ten per cent., three-quarters goes to the state.' The note circulation of the bank has expanded with the expansion of Norwegian trade, but the increase in discounts and deposits has been shared to some extent with other institutions. The extent to which the permission to keep the reserve abroad has been availed of is indicated by the fact that on December 31, 1905, the total reserve was 37,779,045 crowns and of this amount 13,442,432 crowns was on deposit with foreign banks. By the close of 1907 the amount on deposit abroad, including 3,531,035 crowns in the Banks of Sweden and Denmark, was 21,083,922 crowns. The following figures indicate the variations in some of the principal items of the accounts in recent years 2: 1 Bulletin de Statistique, October, 1901, L., 437. 2 Statistisk Aarbog for Kongeriget Norge, 1906, 83, and prior years; for 1906 and 1907, Économiste Européen, April 10, 1908, XXXIII., 476. The National Danish Bank. The National Danish Bank was founded in 1818 and has a capital of 26,752,400 crowns ($7,000,000). The bank was the successor of the State Bank (Rigsbanken), which had been created by the government in 1813 to restore order to the demoralized financial system of the country. A decree of July 4, 1818, transferred the privileges of the old bank to the new for a term of ninety years. The government was free at the end of this period, in 1908, to extend the privileges or revoke them. The capital of the National Bank is in private hands, but it was collected by an enforced levy upon real estate, and the landowners became shareholders in the bank for the amount of the tax paid. The bank assumed the obligations of the State Bank and was unable to pay dividends until 1845. The dividends since that time have averaged about seven per cent. A decree of 1873 fixed the limit of circulation not fully covered by specie at 27,000,000 crowns, but this was increased by a decree of November 5, 1877, to 30,000,000 crowns. The metallic reserve was not permitted in any case to fall below three-eighths of the face value of the notes, and at least 12,000,000 crowns was required to be in gold coin or in bullion which had been actually delivered to the mint for coinage. The other portions of the metallic reserve may be in gold bars or foreign gold coin and in foreign silver to an amount not greater than one-third of the entire fund.' By a decree of 1886 net balances in favor of the bank at the Bank of Norway and the Royal Bank of Sweden might be counted as a part of the legal reserve.' The notes are legal tender and the amount varies considerably with the seasons. The charter of the bank, with the exclusive privilege of note issue, was renewed by a law of July 12, 1907. The proportion of reserve required was increased to fifty per cent. 1 1 Comptroller's Report, 1895, Report of Minister John E. Risley, 77. A History of Banking in all the Leading Nations, IV., 382, of notes outstanding, and it was provided that the bank should from its profits first pay 750,000 crowns ($200,000) into the public Treasury and also pay into the Treasury onequarter of the profits remaining after the distribution to the shareholders of a dividend of six per cent.' As banking is comparatively unrestricted in Denmark except in the matter of note issue, the National Bank has encountered active competition from joint-stock banks and private bankers; but its circulation and general accounts have gradually increased in volume. The average issue of bank-notes was about 50,000,000 crowns for the five years ending with 1871; 69,000,ooo crowns for the five years ending with 1881; and 78,000,000 crowns ($21,000,000) for the five years ending with 1891. The balance sheet for July 31, 1907,―the end of the bank's fiscal year, showed circulation of 121,675,000 crowns ($32,830,000); a gold reserve of 95,069,000 crowns ($25,600,000); and commercial discounts of 35,581,000 crowns ($9,550,000). The National Bank took an active part in allaying the tendency to panic which followed an important bank failure in the winter of 1908. The pressure in Germany reacted upon all the Scandinavian countries, and especially upon Copenhagen, by the withdrawal of foreign capital from Scandinavian enterprises. The result was the suspension on February 6, 1908, of the Freeholders' Bank (Grundejerbank), followed by a run on several institutions and a serious fall in the value of bank shares. The Retailers' Bank (Detailhandlerbank) in particular suffered a drop of twenty points in its shares and fears were entertained for its safety. Accordingly, on Sunday, February 9th, a meeting was called by the Minister of Finance, at which the National Bank and the four other leading banks were represented. It was finally decided that the Treasury and these five leading banks should jointly undertake a full guarantee not only for the liabilities of the suspended bank, but also for the Retailers' Bank. The guarantee was unlimited, but as a Économiste Européen, November 8, 1907, XXXII., 602. preliminary step a fund of 20,000,000 crowns ($5,360,000) was subscribed.' An administrative committee, presided over by Falbe Hansen, the eminent economist, was appointed to supervise the management of the two banks which had become involved in difficulties. 1 London Bankers' Magazine, March, 1908, LXXXV., 440. CHAPTER XII. THE BANKS OF SOUTHERN EUROPE. Development of Banking in Switzerland-The National Bank of the Swiss Confederation-The Bank of Spain and its Entanglements with the Treasury-Similar Situation of the Bank of PortugalThe Banks of Roumania, Bulgaria, and Servia-The Greek Banks and the Effects of Specie Suspension-The Ottoman Bank. B ANKING in Switzerland had its earliest development at Basle and Geneva, which were long noted for the skill and wealth of their bankers, but banks of issue were not established in either city until 1845. The first Swiss bank of issue was established at St. Gall in 1836. The cantonal bank of Vaud and the Bank of Basle were established in 1845, the Bank of Commerce at Geneva in 1846, and the Bank of Geneva in 1848. The incorporation of banks of issue rapidly spread among those cantons which contained a considerable number of merchants, and in 1863 eighteen banks had been established, with forty-two agencies or branches. The aggregate circulation of these banks on December 31, 1862, was 18,468,122 francs ($3,600,000), the cash reserve was 19,380,922 francs and the current accounts, representing deposits, 49, 166,405 francs ($9,800,000).' Eleven of these eighteen banks were established with the help of the cantonal governments and the remainder were established by private funds. The Swiss banks preserved until 1875 a purely local existence and their operations and circulation rarely extended beyond the limits of the canton in which they were estab 1 Courcelle-Seneuil, 350. |