Full resolution (JPEG) - On this page / på denna sida - VIII. Money and Banking
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of giving necessary elasticity to the issue the
government may permit a temporary additional issue of 10
million marks. For all excess the Bank must have
either gold, or foreign exchange, or credit with foreign
correspondents, or bonds of the class which is always
marketable on foreign Bourses. Silver, either in bars
or foreign coins, is excluded according to the last
regulations. The Bank shall, however, always have at
least 20 millions of real gold in hand. Not only notes
but all money deposited on demand must be reckoned
as issue which has to be covered in the above-stated
manner. This system has some resemblance to the
English Bank Act of Sir Robert Peel passed in 1844,
in so far as it allows a certain amount of note-issue
for which no covering of gold is needed, but its details
render it much more elastic, and also more elastic
than the German system and its imitations which
place a heavy tax on a larger issue of notes. An even
more important change is that the Bank, instead of
tying up its resources as was formerly the case, is now
buying foreign and inland bills of exchange, which
mean regular returns with short periods, at the same
time that it is lending on perfectly marketable paper.
The Bank is somewhat stricter than private banks. It
does not like renewal of bills, nor financial bills which
are not a part of real commercial transactions. It
lends less than formerly on paper, and, compared to
the other banks, less on stock than on bonds. Since
1875 it has ceased to lend directly on real estate, and
also prefers to leave loans on merchandise to the other
banks. It has continued to establish branch offices, of
which it has now fifteen. Local committees are formed
at each branch office for granting discounts and loans.
To understand the Finnish banking system it will
be necessary to speak here of the private banks
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