GERMAN EXCHANGE 1. The Berlin market.—In recent years, the ex change market in Berlin has become of the first im portance. This is due to the remarkable expansion of German foreign trade, and the considerable devel opment of German branch banking thruout the world. The former glory of Frankfurt as the financial cen ter of northern Germany has paled before the ascend ancy of Berlin.
2. Money.—The monetary system of the German Empire as respects the use of gold and silver is not so exclusively gold as that of the United Kingdom, nor is it charged with so much silver as that of France. While adopting the gold standard there are vestiges of the former silver standard in the form of the thaler, but these are not nearly so numerous as the five-franc piece in France, and are, moreover, being withdrawn.
The monetary unit is the gold mark of .39824 grammes 900 fine or .35842 grammes of fine gold. It is represented in the circulation by coins of 10 marks and 20 marks.
A kilo of fine gold will produce in coin 2790 marks. The six German mints accept foreign coins for recoin age but charge 6 marks per kilo of fine gold for ex penses in addition to some minor charges.
The Reichsbank will buy foreign gold coins at the following rates per kilo: sovereigns gold coins of the Latin Union and of Austria M. 2504.208, coins of the United States M. 2505.60.
Silver coins are of 5, 2, 1 mark and 50 pfennig (% mark) . The silver mark weighs 5.555 grammes 900 fine.
Bank notes in denominations of 1,000, 100, 50, 20 and 5 marks, are issued by the Reichsbank. The Reichsbank is authorized to issue notes in any amount provided the issue is covered by metal (which includes gold and silver) treasury notes and the notes of other banks. It may issue notes also if % is covered by metal, and the balance secured by bills, but the total issue must not exceed 541,600,000 marks.
Notes of four other banks, one each in Baden, Bavaria, Saxony and Wuerttemberg, in denomina tions of 100 marks are also in circulation. There are also governmental treasury notes, the amount of which is said to have been increased enormously after August, 1914.
3. Stamp duties.—Checks are subject to a tax of 10 pfennige each, irrespective of amount, and bills of exchange must pay 50 pfennige for each 1,000 marks or fraction. The stamp tax can be avoided on checks by writing after the name of the drawee bank "Pay against this check from our credit balance." For quotation purposes the stamp duty is reckoned at of 1 per cent or .05 cent per 400 marks. Drafts drawn in dollars are stamped on the basis of 4.25 marks per dollar.
In order to avoid German stamp duty, American exporters, instead of drawing sight drafts on their German customers, instruct the latter by formal letter to pay the amount of the purchases to the American bank's German correspondent.
These are called Letters of Delegation and are sold quite extensively. They are usually accompanied by bills of lading only, to be delivered on payment of the amount involved. Sometimes, however, the other shipping documents are attached as in the case of documentary drafts.
The Imperial Reichsbank of Germany transfers money from one branch to another free of charge for clients who carry satisfactory balances. These are known as Giro conto transfers. Outside of conven ience to the customers the practice evades the stamp duty on checks.
As money can be transferred by the Giro conto sys tem to any city in Germany where a branch of the Reichsbank is located, premium or discount on ex change between different German cities (as in the case between New York and Chicago or between Canada and the United States) is unknown.
4. Interest rates and commercial 'usages.—Interest is calculated on a basis of four marks to 95 cents, and 360 days to the year and 30 to the month. There are no days of grace.
Documentary acceptance bills are generally dis counted at the open market (private discount) rate and documentary payment bills at the Reichsbank discount rate.