Territorial First, an expand ing bank by opening a new branch, or buying some local bank or establishing a community of interest with a local bank preserving some sort, or at least appearance, of local independ ence, in another city has gradually spread a net of offices over a large territory. Out of these organizations have grown up great banking concerns by combination of one of the great Berlin banks with important provincial banks, these great Berlin banks being able to assert their superiority over provincial institutions in consequence of their superior strategic posi tion. Each of these banking concerns consti tutes something equivalent to a Federal state of banking interests which stretches out its power over the whole of Germany. It has been proved by experience that to make such a combination successful for both parties the Question of supremacy must have been settled definitely in favor of the stronger, that means the Berlin bank. It can be stated that these federations are only an intermediary state of things and lead finally to amalgamation. The mergers some of the most important pro vincial banks with great Berlin banks were already the prominent feature of German bank ing development d'uririg 1913-14 (of the Schaaffhausen Bankverein at Coln with $36, 000,000 capital with the Disconto Gesellschaft at. Berlin, and the Bergisch-Markische Bank at Elberfeld with $20,000,000 capital with the Deutsche Bank at Berlin). That process of amalgamation has especially been favored by the war, for instance the Deutsche Bank until the end of 1916 having.extended by amalgama tion of great provincial banks to a stock capi tal of $125,000,000.
The five leading Berlin banks are the Deutsche Bank with $91,000,000 capital and reserve, the Disconto Gesellschaft with $95, 000,000 capital and reserve, the Dresdner Bank with $65,000,000 capital and reserve, the Bank fiir Handel and Industrie with $48,000,000 capi tal and reserve, and the Berliner Handelsgesell schaf t with $36,000,000 capital and reserve. Of these five banks the first three are the most progressive while the Berliner Handelsgesell schaf t is deliberately preserving the type of an old-fashioned commercial bank. The Deutsche Bank commands the largest amount of deposits, while the Disconto Gesellschaft and the Dresdner Bank, for a long time in ferior to the Deutsche Bank, have during the last few years before the war made good head way in equaling it. The figures given above comprise the increase in capital effected in 1914.
Combination Among the Leading Banks. —Among the leading banks as representatives of their banking concerns alliances are fre quently formed for some special purpose of a more or less lasting character, just as between independent states, say the financing of some large enterprise, or the floating of a loan, home or foreign.
Creation of German ((Foreign Banks."— In promoting the commerce with foreign coun tries ((foreign banks)) have been created mostly by one or more of the leading Berlin banks. The most important of these foreign banks with the amount of capital stock and reserve are the Deutsche t/bersee Bank ($10,000,000), operating mostly in South America, the Deutsche Orientbank ($8,000,000), the Deutsche Sildamerikanische Bank ($5,000,000), the Deutsch-Asiatische Bank ($5,000,000), and the Brasilianische Bank fiir Deutschland 000,000).
The growing concentration and expansion'of some large banks have caused a gradual dis appearance of the small banker all over many.
The position of banking toward industry and commerce is very strong. In very many of the important industrial and commercial firms a high official of one of the leading banks is a member of the board of directors or trus tees, and the banks are continually extending their influence, using partly their control of credit, partly their already stabilized control over other firms. Only a few very large indus trial and commercial concerns have been able to preserve their independence or even to dic tate their terms in their relations with the banks. The dividends paid on the nominal capital by the five great Berlin banks in 1913 were between per cent (Deutsche Bank) and Ws per cent (Bank f. Fl. u.). The policy of the banks in fixing the dividends is very conservative and the rate of dividends being only raised above the customary level if it can be reasonably expected that the higher level can be maintained.
Mortgage In North Ger many the credit on rural property is generally provided by institutions of an official or semi official character, the most important of these are the for the landed aristoc racy, founded on co-operative principles. The credit on rural real estate in South Germany . and on urban real estate in North and South Germany are provided by mortgage banks. By the law on mortgage banks of 1899, they are regulated in their scope of business and in the issuing of bonds, and the government is enti tled to exercise the right of control on every mortgage bank at any time. The total amount of bonds issued on real estate property was, in 1912, $4,260,000.000, of this (in 1913) $2,750, 000,000 had been issued by mortgage banks.
Savings Savings banks are mostly municipal institutions and are used by all classes of the people. The amount saved — $4,700,000,000 — and the number of accounts almost 23,000,000—are both striking. The capital is mostly used in buying bills of ex change, in mortgages and mortgage bonds, and by recent legislation the banks are compelled to have invested a considerable part in bonds of the empire and the states.