$5, $20, and $100, do not entirely exclude those of the Colonial Bank.' In British Honduras a bank was established at Belize in 1903, known as the Bank of British Honduras. United States currrency is the standard and the government had in circulation in 1906 its own notes to the amount of $136,642.2

The French Colonial Banks.

The banks of issue of the French colonies in America were authorized by laws of the republic passed in 1849, which put them under the supervision of the home government and under certain general regulations. These banks were authorized to issue notes no smaller than 25 francs ($5) until 1874, when the law of June 24th reduced the limit to five francs ($1). The circulation was limited to three times the metallic reserve and the liabilities were not permitted to exceed three times the capital. The French colonial bank's have a common agency at Paris under the supervision of the Minister for the Colonies. The Bank of Martinique and the Bank of Guadeloupe were each established in 1853, with a capital of 3,000,000 francs, while the Bank of French Guiana was founded in 1855 with a capital of 300,000 francs, which was increased in 1864 to 600,000 francs. The two older banks have loaned largely on the growing crops, which has brought them difficulties and losses in years when the crops have failed, but has contributed greatly to the convenience of the community. The Bank of Guadeloupe had a circulation on June 30, 1906, of 7,399,720 francs and a metallic reserve of 2,623,940 francs. The Bank of Martinique had a circulation of 5,687,655 francs and a reserve of 2,112,595 francs. The Bank of French Guiana had a circulation of 2,429,150 francs and a reserve of 1,018,157 francs. Discounts at the Bank of Guadeloupe were 1,654,000 francs; Bank of Martinique, 2,204,000 francs; Bank of

'Chalmers, 138.

2 Statesman's Year Book for 1908, 304.

3 Courtois, 190-94.

French Guiana, 3,819,000 francs. It was advances on the crops, however, which constituted the largest item of resources at the two insular banks, the amount of such advances at Guadeloupe being 5,152,000 francs and at Martinique 2,548,000 francs.'

1 Économiste Européen, August 2, 1907, XXXII., 138.

CHAPTER XIX.

BANKING IN AFRICA AND OCEANICA.

Part Played by English Capital in Developing Africa and the Islands of the Pacific-Creation of the National Bank of Egypt-The State Banks of Algeria and Morocco-The Imperial Bank of Persia-The Banking System of Australia-English Banking in South Africa-French and Portuguese Colonial Banks in Africa and the Pacific.

THE

HE banking experience of the continents of Africa and Asia and of the great islands of the Pacific offers much that is of interest to the monetary historian, in spite of the comparatively recent creation of some of the banking systems. It is of peculiar interest, among other things, because it has put to the test certain economic theories under conditions which could not have been found under the complicated and conservative financial management of European nations. Several of these will be discussed more fully in the next chapter, dealing with exchange in the Orient. It is proper here, however, to point out the large part played in banking in the undeveloped countries by banks managed from London, which have only recently encountered serious rivalry from French and German institutions.

There are two classes of banks having offices in London and doing business outside of Great Britain,-thirty-two colonial banks and thirty foreign banks. The former group includes many of the Australian banks, those of South Africa, several institutions of British India, and two Canadian banks. Of this group almost the entire capital is furnished in Great Britain. This is true also of many banks of the second group, like the Imperial Bank of Persia, the Hong-kong

and Shanghai Banking Corporation, and the National Bank of Egypt. It is not true, however, of the Great French and German joint-stock banks, which have established offices in London in order to control the exchange business with their own countries. Eliminating these institutions, the paid-up capital of the colonial banks at the beginning of 1908 was £37,570,505, and of thirteen foreign banks owned in England and Scotland £11,549,700, making a total of about £49,120,000 ($239,500,000). Deposits and current accounts were £250,876,431 in colonial banks and about £100,000,000 in these foreign banks, making a total of about £350,000,000 ($1,707,000,000),' which was nearly equal to the individual deposits of all the national banks of the United States as recently as 1896. While these deposits are by no means concentrated entirely in London, but are scattered in fact over distant quarters of the earth, they give to English capital the control over exchange operations which made London throughout the nineteenth century the clearing house of both the commercial and financial operations of the world. It is of these institutions in Africa and Oceanica that this chapter treats.

The National Bank of Egypt.

Egypt was without a bank of issue until the reforms of Lord Cromer had put the financial organization of the country upon a sound basis aud rendered commercial banking possible. The National Bank of Egypt was founded with foreign capital, of which Sir Ernest Cassel was the representative of the British portion. The bank derived its authority from a Khedival decree of June 25, 1898, to which was appended a copy of the statutes, providing for a capital of £3,000,000 sterling, fully paid up.' The bank was created as a private institution, governed by a council of twenty-two members, of whom four sat at London charged with special functions. The government, however, was allowed to name

1

These figures are from the Loudon Economist, May 23, 1908, LXVI., 1089, and Supplement.

2 Statuts de la National Bank of Egypt, Art. 10.

two commissioners with supervisory powers and to ratify the nominations of governor and deputy governors made by the council. The term of the governor, first fixed at ten years, was ultimately made five years. The chief office of the bank is at Cairo, with a principal branch at Alexandria and agencies throughout Egypt.

The National Bank acted from the first as banker for the Egyptian Government, but in 1907 a closer relation was proposed by which the bank should increase its capital by £500,000 and hold the government funds as a matter of right. The conduct of the bank in obtaining the necessary funds to handle the big cotton crops of 1906, in the face of monetary stringency in Europe, caused much gratification in Egypt. A severe crisis due to the abuse of credit and the issue of new securities broke out in 1907, however, considerably in advance of the crisis in America. The attempt of the bourse committee to fix minimum prices for securities was naturally abortive, but had the tendency to relieve the market to some degree by the exodus of securities to Europe.' The necessity of a more concentrated control of the market and of greater freedom of note issue were among the influences which led to proposals for a more direct share of the government in the National Bank, but as finally presented to the shareholders in the summer of 1908, the degree of government control did not go as far as was first proposed.' The Bank of Egypt participated in the creation of a bank in Abyssinia in 1907.'

The difficulties of the bank were enhanced in Egypt in periods of pressure by the fact that paper currency was almost unknown and that it was necessary to meet demands

1 Économiste Européen, June 28, 1907, XXXI., 812.

According to an authorized statement in the Egyptian Gazette, it was first intended to give to the government a large share in the bank's affairs, but under the arrangement finally proposed the government agreed to use the bank as long as satisfied with its administration, reserving the right to give notice of withdrawal if it became dissatisfied.-London Economist, March 28, 1908, LXVI., 673. 3 U. S. Consular Reports, April 19, 1907.