PREFACE TO THE FOURTH EDITION.

T

'HE declaration made in the first edition of this work,

published in 1896, that financial and economic subjects promised to be "the paramount issues of American politics for many years to come," has been verified by events. While the United States have taken some long steps in the direction of a sound monetary system, the question of a proper banking currency still remains unsettled and is at this moment under investigation by a special commission authorized by Congress. It seems proper, therefore, that a summary of the experience of the world in banking should be presented to the public which includes the events of the past twelve years as well as those of earlier times. The fact stated in the preface to the first edition, that there is no work in English covering exactly the ground covered by Modern Banks of Issue, has remained substantially true. One larger and more elaborate work, written by different authors, and a few bald summaries of facts and statistics have been published, but, apart from these, there is no other volume which brings together in connected and accessible form the record of the banking experiences of the world.

Important events have taken place in both banking and political history during the past twelve years. The United States have become competitors for the commercial empire of the Orient to a degree which has justified much more extended accounts than were given before of banking and currency conditions in Oriental countries. The note-issuing systems of Switzerland, Sweden, and Mexico have been completely reconstructed, and important changes have been

made in Russia, Austria-Hungary, Japan, and other countries. In this new edition of Modern Banks of Issue, not only have such events been brought down to date, but more attention has been given than in the first edition to several phases of banking development, notably on the side of discount policy and on that of the division of profits between the bank and the state. In practically every European state, even where there has been no radical change in monetary and banking policy, the opportunity which has arisen to revise the charters of the banks has been availed of, in the case of the great central banks, to narrow the privileges and profits which were originally granted to the shareholders. The facts in this regard are presented in this edition with much greater approach to completeness than in the earlier editions of this work.

The past twelve years have contributed much to strictly monetary as well as to banking history. Questions whose solution was doubtful and disputed have been settled to the satisfaction of intelligent men. The gold standard, which was described twelve years ago as "a conspiracy against the human race," has been adopted in succession within that time by the United States, Russia, Austria-Hungary, Japan, and Mexico. Practically the only country remaining upon the silver standard is China, which is without a national monetary system, and even as these pages go to press despatches from China indicate that the government is planning such a national system to be based ultimately upon gold.

This history of banking is not intended as a treatise on coinage, except so far as changes in coinage laws have been accomplished through banking agencies and have affected banking history. The great banks of the world have inevitably, however, been powerful factors in the monetary changes which have been accomplished in recent years. Especially has this been the case where the new monetary systems have depended in some degree, as in the case of British India, the Philippines, Mexico, Russia, and AustriaHungary, upon the control of the market for exchange. In

this field experience has developed what is practically a new monetary system and has established new principles to govern the issue and distribution of money. The gold exchange system, inaugurated with halting stops in British India in 1893, has been adopted with various modifications in other countries and has stood unshaken the test of a crisis in the world's markets and a local crisis in production in India. Those events it has seemed the legitimate function of this work to set forth.

Owing to the importance of the events of the past dozen years, and the increased space given to the banking systems of Mexico and the Orient, it has seemed advisable to confine the scope of this work to narration. To this end there have been eliminated the three chapters on banking theory which appeared in the earlier editions: "The Theory of a Banking Currency," "Crises and Their Causes," and "The Advantages of a Banking Currency." A more nearly complete and satisfactory presentation of the author's views on monetary and banking theory will be found in the separate work in two volumes on The Principles of Money and Banking, published in 1905, and issued on the continent of Europe in the French translation of Dr. Raphaël Georges-Lévy.

In sending forth this work again to the public in a condition abreast with recent monetary history, the author can only renew the hope that it will contribute in some degree to the diffusion of those sound views of banking whose adoption into law is essential to the economic progress of our country.

NEW YORK, February 1, 1909.

CHARLES A. CONANT.