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1026 XIV. CREDIT AND INSURANCE ESTABLISHMENTS OF SWEDEN.
a statute of 1846. Endeavours to replace these banks by Provincial
Banks without the right to issue notes but supported by an advance
from the State Bank not having met with satisfaction, new law
decisions were made in 1864 for private banks of issue, which decisions,
with regard to the issue of paper-currency and some other points, were
changed through the Royal Ordinance of 1874. This latter remained
valid to the end of 1903. The most important provisoes of the ordinance
of 1874 were the following.
The partowners, the number of whom must, at least, be 30, were conjointly
responsible for the liabilities of the Bank. At least 60 % of the subscribed capital
should be invested in easily realized securities (mortgages or bonds) of undoubted
safety; these so-called capital securities should be placed under public guard. Snch
banks had the right to issue notes to an amount corresponding to: a) the amount
of capital securities placed in public guard; b) so large a part of the bank’s
assets from the public as corresponded to half of the subscribed capital, on
condition that the bank at its head office should hold gold-currency to an amount of
10 % of the subscribed capital; and c) the bank’s remaining supply of coined and
uncoined gold at the head office. The smallest note should be 5 kronor (raised
in 1879 to 10 kronor). Such a bank was authorized to deal in anything bnt
gold and silver, home and foreign bills of exchange, and bonds bearing interest;
it was not to possess any other real estate than that which the bank needed for
its own use; nor to raise money on their own shares or those of other private
banks. These banks were placed under the same public inspection and control
as the now existing conjointly responsible private banks mentioned below.
As mentioned, this Ordinance ceased to be valid with the end of
1903. Herewith a type of bank disappeared which, during a period of
70 years’ existence, had been of great importance to the economical
development of our country. The change also was not brought about
through discontent with the management of these banks. It should be
mentioned that out of the 28 private banks of issue having existed, and
of which 27 at the time of the new legislation still were at work, only
one became insolvent, but that even in this case the solidarity was not
called upon. The payment of the notes has also invariably taken place
without disorder.
Bank Reform of 1897.
Before as well as after the Royal Ordinance of 1874, criticism was
aimed against the currency system, more especially against the private
banks, on account of a disproportion between the amount which the bank
had right to issue and the metal stock. One hesitated long to make a
change because it was feared that only the right to issue notes made
it possible for the private banks to organize a number of branch offices
in small places that much needed their presence, and to which the
State Bank could not extend its work. The Royal Committee appointed
in 1881 to examine these questions held to the opinion that certainly
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