Is the successor of the Bank of Prussia. The latter was founded in 1765 by Frederic II as a state bank. In 1846 it was reorganized, the state ceasing to be the only proprietor and the public taking up a part of the capital. At that time the state contributed 1,260,000 thalers, the public 10,000,000.

The bank discounted commercial bills, not having more than three months to run, bought the loans of the Prussian government or the provincial corporations as investments, and advanced against these securities. It took likewise money on deposit, dealt in bullion and advanced against merchandize up to 50 per cent. of its value. Its authorized note issue was 21,000,000 thalers.

In 1856 the restriction with regard to the amount of the notes to be issued was done away with, and the bank was authorized to issue its notes to any amount, provided that it always kept them covered in the proportions of 1/3 in bullion and § in bills not having more than three months to run. In the same year the capital furnished by the public was raised to 15,000,000 thalers, the interest of the state in the concern having increased to 1,809,000 thalers.

After the German war of 1866 the capital supplied by the public was again raised by 5,000,000 thalers, the share of the state being then nearly 2,000,000 thalers. The reserve was 6,000,000 thalers, and the profits were divided as follows. At first the bank was under the obligation to pay the state yearly 621,910 thalers until 1925, as interest and sinking fund on a loan of 1856. After providing for this amount 4 1/2 per cent. was given to the shareholders, 3 1/2 to the state, and of the remainder 1/4 was placed to the reserve, § divided among the shareholders and an equal proportion paid to the state.

In 1875 on the conversion of the Bank of Prussia into the German Imperial Bank, Prussia received back its share of the capital (1,906,800 thalers) and half of the reserve. Moreover the new bank had to pay to Prussia a compensation of 15,000,000 reichsmark, and to undertake to pay until 1925 yearly the sum of 621,910 thalers. The shareholders of the Bank of Prussia could either demand repayment of their capital plus their share of half the reserve, or they could exchange their shares against those of the Imperial Bank.

The German Imperial Bank is under the supervision of the government. The capital is 120,000,000 Em. consisting of 40,000 shares of 3000 Rm. each The bank buys and sells gold, discounts bills not having more than three months to run, and not less than three (exceptionally two) signatures; makes advances for not longer than three months on specie, on German government securities up to 3/4 of their value, on non-German government securities up to 1/2 of their value, on bills of exchange up to 90 per cent., or on merchandise up to § of its value. It buys and sells stocks and shares on commission, makes payments and collections, receives money on deposit * and valuables for safe custody. Part of its funds may be invested in German government securities, or German railway debentures.

The bank issues notes (see below) of which 1/3 must be covered by gold or German paper money (Reichskassen-scheine of which the government may issue 120,000,000 reichsmark) and § in bills on Germany of not longer currency than three months. The bank is obliged to cash its notes at Berlin in legal money (gold or Reichskassenscheine) and to issue its notes against gold bars at the price of 1392 Rm. per 1 lb.

The charter of the bank ends in 1891, when the government has the right of liquidating the concern or of buying up all the shares at their nominal price, the reserve being divided equally between the shareholders and the government.

The profits are divided as follows:

(1) The shareholders receive 4 1/2 per cent.

* The total of the deposits on which interest is paid must not exceed the capital plus the reserve.

(2) One fifth of the remainder goes to the reserve fund till the latter reaches 25 per cent. of the capital.

(3) Half of what then remains is divided among the shareholders; half goes to the Imperial treasury till the shareholders get 8 per cent. After that the shareholders get 1/4, and the treasury 3/4.

Should the profit be less than 4 1/2 per cent. it is brought up to this figure out of the reserve fund.

With regard to the issue of notes the law establishing the Imperial bank made the following regulations for the German Empire.

In 1875 there existed in Germany besides the bank of Prussia, thirty-two other banks issuing notes under widely different charters. The law of 1875 forbade the circulation of these notes outside the state which had granted the charter, unless these banks submitted to certain rules, the most important of which were (1) always to keep 1/3 of the notes covered by gold, and 2/3 by three months' bills, and (2), to pay the notes at Berlin or Frankfort. Eighteen banks (exclusive of the Reichs-bank) submitted to these rules and consequently their notes are allowed to circulate throughout the whole of the Empire. The other banks either gave up their circulations in favour of the Reichsbank or continue a local issue.

The notes of the German banks are not legal tender, and the lowest denomination is 100 Rm. The issuing banks are not allowed to accept bills on commission or to speculate in stocks. They must publish their status four times a month, and a balance sheet once a year.

We have stated above that the Bank of Prussia could issue notes to any amount, after having had at first a maximum fixed for its circulation. The new German law has adopted neither of these two systems, but has instead introduced a new principle, the "elastic principle" as it has been called, which fixes for each bank a limit for its note issues without legal cover, and which it can only exceed by paying a tax of 5 per cent. on the excess to the government, a system the merits of which can only be thoroughly tested under circumstances of financial difficulty.

The banks which, issue notes circulating throughout Germany, together with the amounts they may issue free of tax without cover in legal money, are as follows :

In case any bank discontinues the issue of notes, the Imperial bank is allowed to add to its fiduciary issue the amount of notes which the retiring banks used to issue without cover.

The German Imperial Bank has the head office at Berlin, and has the following branches:

Aachen, Altona, Aschersleben, Augsburg, Barmen, Bel-gard, Bernburg, Bielefeld, Bochum, Brandenburg-a-H., Braunschweig, Bremen, Breslau, Brieg, Bromberg, Carlsruhe, Cassel, Chemnitz, Coblenz, Colberg, Coin, Coslin, Constanz, Cottbus, Crefeld, Creuznach, Crimmit-schau, Danzig, Darmstadt, Dillenburg, Dortmund, Dresden, Diiren, Diisseldorf, Duisburg, Elberfeld, Elbing, Emden, Erfurt, Essen, Eupen, Finsterwalde, Flensburg, Forst, Frankfort-o-M., Frankfort-o-O., Freiburg-i-Br., Fiirth, Gera, M. Gladbach, Gleiwitz, Glogau, Gnesen, Gorlitz, Graudenz, Greifswald, Greiz, Griinberg, Guben, Gumbinnen, Hagen, Halberstadt, Halle-a-S., Hamburg, Hanau, Hannover (Linden), Harburg, Heidelberg, Heilbronn, Hildesheim, Hirschberg-i-Schl., Insterburg, Iser-lohn, Kaiserslautern, Kempten, Kiel, Konigsberg-i-Pr., Krotoschin, Lahr, Landsberg-a-W., Landeshut-i-Schl., Lauenburg, Leipzig, Lennep, Liegnitz, Limburg-a-L., Lissa, Liibeck, Ludwigshafen, Liidenscheid, Magdeburg, Mainz, Mannheim, Marienwerder, Memel, Meerane, Metz, Minden, Miihlhausen-i-Th., Miihlhausen-i-Els., Miihlheim-o-R., Miinchen, Miinster, Naumburg, Neisse, Neuss, Neustadt-a-H., Nordhausen, Niirnberg, Offenbach, Osnabriick, Ostrowo, Pforzheim, Plauen-i-Voigtl, Ples-chen, Posen, Prenzlan, Quedlinburg, Ratibor, Rawitsch, Reichenbach-i-Schl., Remscheid, Reutlingen, Rostock, Saarbriicken, Sagan, Schneidemiihl, Schwedt-a-0., Schwelm, Schwiebus, Siegen, Solingen, Sommerf eld, Sorau, Speier, Spremberg, Stargard-i-P., Stettin, Stolp, Stral-sund, Strassburg-i-EL, Stuttgart, Suhl, Swinemmiinde, Thorn, Tilsit, Trier, Ulm (Neu-Ulm.), Wetzlar, Wiesbaden, Witten-o-Ruhr, Worms, Zeitz, Zittau.

Bills of Exchange to be discountable by the Bank must not be longer than three months. The discount deducted is at least for four days on bills on the same place, and for ten days on other bills. The minimum discount on each bill is Rm. 0.60. The bank collects money for g per cent., coupons for 1/4 per cent., commission, and pays money at any place where it has branches against receipt of the amount at another place, charging a commission of 1/3 per mille for the first Rm. 3000, and s per mille for the sum beyond Rm. 3000. If such payments are made by way of delegations, these latter are subject to the German bill stamp (1/2 per mille).

The head office of the bank and the branches at Altona, Dresden, Hannover, and Frankfort, buy of well-known persons or firms, gold in bars or coins, on the following conditions :

1. The bars must weigh at least 5 lb., and possess a fineness of at least 900.

2. The buying price is 1392 Rm. p. lb. payable after completion of the assay. Charge for assaying Rm. 3 p. bar.

3. Sovereigns, Imperials, are bought at Rm. 1275.072, American Eagles at Rm. 1252.104, and Napoleons at Rm. 1251.408 p. lb.

The branches at Bremen, Cologne, and Strassburg, are likewise buying sovereigns, imperials, eagles, aud Napoleons at the above prices. Gold coming from abroad may be sent to any branch, and the amount will be paid by any other branch without charges.