GIPE-PUNE-OIIOI2 - DSpace@GIPE

3'0.
THE RE~MAKING .OF THE REICHSBANK
The recons.tructed Reichsbank began its first year
(1924) as follows:
Average circulation in percentage
Amo~nt' of the ligure Maximum
for 1876 circulation
Minimum
circulation
R.M. 1,068,465,000 156 R.M. 1',741,440,000 R.M. i.4B4,249,OO()
One is here reminded of the figures for 1896.
Paper-Maney Vs. Bank-Notes
Bank-notes constitute paper~money and are issued
by the authorized banks while making payments fQr large
suIp.s. As substitutes for gold which. they possess and
preserve in their. vaults, the; circulate promissory paper;
Bank~notes, then, are. really documents of debt contract­
~d by the banks and. are covered in theii' entirety by
corresponding amounts of precious metais.
The states, hQw,ever, have allowed the Note~Banks
to issue notes. beyond their metallic cover in order to add
to. the medium. of circulation. Down to 1924, the Ger~
man practice consisted in the Drittelsdeck,ung, i.~., cover'
to .the ~xtent of one~third.· The Note-Banks considered
it to be safe enough to have a third of all the circulated
notes cqvered by gold and possess at all times the same
!imo~t of this metal for cash payment if need be.
The old custom may in gene~al terms be described
as follows. The Nole~Banlts kept gold for one~third of
all their: ncites~;';TEe' other two-thirds were covered "iii
two . ways .. Erst,' ih'ey tried to possess good securirf~~
such !is' could 1 be, sold forthwith& should it haye been
..._ , . ., .. .) ..... . . .." ...' . ._ . ,I. ....
necessary. And secondly, they kept ... bills;