Readings in Money and Banking Part 62

[190]Q. When were the first of your co-operative societies organised?

A. In 1848. They were organised on a voluntary basis and for philanthropic purposes. They developed very rapidly. The first form which developed was for the purchase of means of subsistence, such as sugar, coffee, grain, wine, cigars, etc. Then they bought agricultural machinery, threshing machines, etc., which they would rent to small farmers in the country who could not purchase such machinery. They also formed societies to build houses for peasants and working people. There might be six or seven with different purposes. Later on Schulze-Delitzsch came to the conclusion that it would serve working people and small tradesmen to have co-operative societies founded simply for the purpose of extending credit to them. That was the last development in the system.

Q. How many kinds of co-operative societies are there in Germany?

A. It is very difficult to cla.s.sify them. The Raiffeisen societies are confined to Prussia. There are other organisations in Saxony, Bavaria, and different States in Germany.

Q. The att.i.tude of the Reichsbank is the same toward them as toward any other bank?

A. Yes; and their bills are frequently offered and taken by the Reichsbank as from other inst.i.tutions.

Q. Do they carry their reserve with the Reichsbank or with the Dresdner Bank?

A. Princ.i.p.ally with the Dresdner Bank, because they get interest upon it.

Q. Do they pay interest on deposits?

A. They pay an average of 4 per cent., which may be considered as an almost permanent rate. The money they get is in most cases money for a long period. They have to compete with the savings banks.

Q. Are the small societies at all in compet.i.tion with the Reichsbank, where they have a branch?

A. No. There is no compet.i.tion. They do a business which the Reichsbank would not do. They give credit to people who would not suit the Reichsbank, because they could not give the guarantee.

THE REICHSBANK

INTERVIEWS WITH HERR DR. VON GLASENAPP, VICE-PRESIDENT, AND HERR DR. VON LUMM, DIRECTOR, OF THE REICHSBANK[191]

Q. By whom are the shares of the Reichsbank owned?

A. It is all private ownership. The shares are held mostly in Germany and Holland, and distributed in small lots.

Q. Would the bank discount a bill drawn by one merchant and accepted by another?

A. Yes. The Reichsbank is not only a bank for banks, but for the commercial and industrial enterprises of the Empire.

Q. If a railroad finds it necessary to make improvements and wants to borrow money could they get money at the Reichsbank?

A. Only on collateral acceptable by the Reichsbank. The railroad would probably in such a case go to private banks to be financed.

Q. a.s.sume that there is a manufacturer in Bremen, making well-known articles, which he ships to a merchant in Berlin and draws a bill against that merchant, would it be a satisfactory bill to the Reichsbank?

A. Yes; but in that instance also the merchant would probably go to the private bank, where he would get a better rate of discount.

Q. If there were a severe money stringency, would he still go to his bank?

A. Yes; that would probably be the case, and his bank might afterwards take his bills to the Reichsbank.

Q. What is the smallest bill the bank will discount?

A. We have no minimum. We discount bills as low as 10 marks.

Q. Upon what kind of a bill does the farmer secure an advance from the bank?

A. He sells his produce, draws a bill upon the purchaser, and takes the bill to the bank as any other man would do, or a bill might be drawn upon a farmer and accepted by him.

Q. When he borrows money in the spring with which to buy seeds, how does he secure the cash?

A. He goes to his own bank for that. There are co-operative societies for this purpose, which are a great factor in Germany.

Q. Will the manager of a branch of the Reichsbank renew a farmer's three months' bill if desired?

A. Yes; an exception is made for the farmer. Other bills are not renewed.

Q. The bank rate is 4 per cent. Does that mean 4 per cent. is charged on three months' bills?

A. The Reichsbank has only one rate of discount. There was a time when the Reichsbank did a similar business to that which the Bank of England does now, _i. e._, that they would purchase in the market prime bills at a more favourable rate, but in 1896 it was decided to have but one rate for everybody.

Q. Please state the reason for the change of policy.

A. The most important reason was that it was thought that a great central inst.i.tution like the Reichsbank, with its tasks and duties to the whole of the community, ought not to make a distinction of any cla.s.s, or make an exception in favour of any one. It is the policy of the bank to serve all alike.

Q. Is the Reichsbank disposed to favour every application for discount or loans if the character of the offering be satisfactory?

A. It is their duty to listen to every one who comes for accommodation, whether he has an account or not. The principle of the Reichsbank is not to serve a part of the community, but the whole. The Reichsbank is for everybody.

Q. Are your deposits subject to check?

A. The money is drawn against check. There are two kinds of check--white and pink. The white is for withdrawing cash over the counter, the pink for making transfers.

Q. Have you different cla.s.ses of deposits?

A. No.

Q. Do you pay interest on your deposits?

A. The Reichsbank does not pay interest on money deposited with it. It receives money on deposit and for transfer. Most large houses keep an account with the Reichsbank. The Reichsbank does a large transfer business for them.

Q. Is it the custom for banks in Berlin and other important centres to carry balances in the Reichsbank as a part of their reserve?

A. It is the custom for the banks to keep a large part of their cash with the Reichsbank. They keep only a small amount of cash in their tills.

Q. Is that true of banks in other cities than Berlin?

A. Yes.

Q. Does the Reichsbank pay the same taxes that the other banks do? For instance, income tax and other taxes?

A. No; we are free from the government income tax, and the license fees, but we must pay the real-estate tax.