d. To negotiate collections for the account of individuals, institutions and governing boards; and upon security, as before mentioned, to furnish payments, and make orders or conveyances on the branch banks or on correspondents.

e. Upon prior security, to buy in behalf of outside parties, effects of all kinds, including the precious metals; and after delivery to sell the same.

f. To receive moneys in circulation or on deposit, with or without interest; but the sum of interest-bearing deposits must not exceed that of the capital stock and reserve fund. g. To accept the custody or other management of objects of value."

The Imperial Bank was further placed under obligation to receive and make payments, without compensation, for the account of the empire or for any of the German states. It was permitted to issue notes on condition that it hold at least one-third of the quantity in circulation in cash, and the other two-thirds in discounted bills maturing in not less than three months and signed with the names usually of three, but at least of two solvent persons; and on condition that it pay a tax of five per cent. per annum to the government for all issues in excess of an amount equal to its cash holdings plus a fixed sum, later placed at 250,000,000 marks.

The Bank was permitted to establish branches in every part of the empire, and required so to do when directed by the federal council or the Imperial Chancellor.

With regard to the thirty-two other banks of issue in existence at the time, provision was made for their continuance as independent banks under existing regulations or as parts of the Imperial system. Banks which chose to remain outside of the Imperial system were forbidden to establish branches or agencies or to circulate their notes outside of the state in which they were located. Banks which chose to enter the Imperial system were forced to conform in regard to their issues to substantially the same

regulations as those imposed upon the Imperial Bank, and the amount of uncovered issues were fixed for each bank. The empire also reserved the right to deprive each bank of the privilege of issue upon giving one year's notice, January 1, 1891, or any tenth year thereafter. It agreed, however, not to exercise this right except in the interest of the unification of the banking system of the empire or as a punishment for the violation of law.

As was contemplated by the framers of the act, its effect was gradually to bring about the monopolization of note issues by the Imperial Bank. Before the close of the year 1877, fifteen of the thirty-two original banks of issue had given up their right and the quota assigned to the Imperial bank increased by the same amount. In 1886 another bank ceased to issue, in 1887 still another, in 1889 two more, in 1890 one, in 1891 four, in 1894 one, in 1902 two, and in 1905 one leaving only four in the entire empire.

The growth of the Imperial Bank has been as rapid as could have been expected. Its capital has been raised to 180,000,000 marks. Its branches, which numbered at the beginning about two hundred, had increased by 1899 to three hundred ten, by 1900 to three hundred thirty, by Jan. 1, 1903 to three hundred fifty-four, and by Jan. 1, 1910 to about five hundred. The magnitude of its business in all lines has increased and it has become in every sense of the word the center of banking operations in the German Empire. Its authorized untaxed note circulation previous to 1899 had been raised to 293,400,000 marks by the renunciation of the right of issue by other banks, and by a law passed June 7, 1899, it was still further raised to 450,000,000 marks. Since that date it has been raised to 472,800,ooo marks by the renunciation of the right of issue by three other banks. An act passed June, 1909, provided that beginning with 1911 the untaxed issues might be increased to

550,000,000 marks with a supplement of 200,000,000 marks additional at the ends of March, June, September and December when the pressure upon the bank is greatest, the aggregate uncovered circulation to be limited to 618,000,ooo marks, when the tax-free issue is at the former figure and to 818,771,000 marks at the ends of the quarters when the tax-free issues are raised to 750,000,000 marks.

Next in importance to the growth of the Imperial Bank, and the gradual disappearance of most of the other banks of issue, is the concentration of most of the purely commercial banking business of the country in the hands of nine large institutions. Five of these were in existence when the period opened, and the four others were very soon after established, the Deutsche Bank with a capital of 15,000,000 marks, and the Commerz and Disconto Bank with a paid capital of 15,000,000 marks in 1870; the Dresdner Bank with a paid capital of 9,600,000 marks in 1872, and the National bank für Deutschland with a paid capital of 20,000,000 marks in 1881. During the first three years of the period there were also established a large number of other joint-stock banks,** but the crisis of 1873 revealed the weakness of most of them and marked the beginning of the process of concentration which has continued to the present day. The nine institutions just mentioned possessed the vitality and power requisite not only to withstand the force of the crisis, but to take advantage of it by absorbing their weaker brethren. Between the years 1873 and 1879 they grew enormously in influence and resources while at the latter date only one hundred twenty-seven of the two

*The Bank für Handel and Industrie, the Disconto gesellschaft, the Berliner Handelsgesellschaft, the A. Schaffhausensche Bankverein and the Mitteldeutsche Kreditbank.

**The Deutsche Ockonomist v. XXIV, 1906, p. 35, places the number established between 1871 and 1873 at one hundred thirty-two. Cited by Diouritch p. 29.

hundred and two banks in existence at the end of 1872 still survived as independent institutions. *

In the decade 1880 to 1890 the financial center of Germany was transferred from Frankfurt a/m to Berlin, and these banks made the Imperial city the center of their operations. From here they proceeded to extend their influence over the entire empire and into the German colonies and foreign countries by the establishment of branches and agencies, by the purchase of controlling interests in provincial banks, by the creation of banks independent in form but actually controlled by them, by the establishment of a community of interest between themselves and other banks in other ways and by connecting themselves in a vital manner with the rapid industrial and commercial development of the country. They thus became the heads of eight groups of banking institutions controlling between them about 80 per cent. of the banking capital of the empire.** Of these groups those headed by the Dresdner Bank, the Dresdner Bank and the A. Schaffhausenche Bankverein (consolidated), the Disconto gesellschaft, and the Bank für Handel und Industrie are much the largest, their combined capital and deposits in 1906 amounting to 8,231.47 millions of marks out of a grand total of 9,565.64 millions for the eight groups, and of 11,394 millions for all the banks of the country.

4. Mortgage and Coöperative Banks.-Besides these commercial banks there have developed in Germany a considerable number of mortgage banks and a large number of coöperative banking associations. These institutions exist primarily in the interests of classes not served by the commercial banks such as landowners, peasants, artisans and small tradesmen, and they also extend credit to small towns

*Diouritch p. 30.

**Ibid, p. 37.

and other small political corporations. The mortgage bank secures funds mainly by the sale of bonds, and lends them on real estate security or to small towns or other local political corporations, putting up the mortgages and the securities it receives as well as its own capital as security for its bonds. Some of them lend primarily to owners and dealers in city real estate, and others to farmers and owners of large country estates. Still others lend considerable amounts to small towns and other local political corporations.

The coöperative societies differ considerably among themselves in minor particulars, but they are all based on the principle of mutual responsibility of each member for the obligations of the society. The most popular of these are the Schulze-Delitzsch associations so called because they were first organized in a town called Delitzsch by a Doctor Schulze. The earliest of these date back to 1848 and were organized for the purpose of purchasing merchandise such as sugar, coffee, grain, wines, cigars, etc. Others were afterwards organized for production as well as sale, and later still others for the purpose of stimulating saving and extending credit to their members. These latter constitute at the present time an important group of banks for the people. Members are required to purchase one share of the capital stock, the amount of which varies between different societies, and in most societies each member is responsible to the full extent of his property for all the debts of the organization. A law was passed May 1, 1889, permitting the limitation of the liability of members to a fixed sum, but few societies have availed themselves of it. During the early years of their history most of the funds lent to their members were borrowed from outsiders but, as they became more popular, their deposits increased, and at the present time many of them find difficulty in investing the funds