GIPE-PUNE-OIIOI2 - DSpace@GIPE

34 THE RE-MAKING OF THE REICHsBANK
need be observed that since 1875 they have always been
accepted as, such, even without a legal compulsion.
The Act of 1875 placed, theoretically speaking, no
restrictions on' the amount of ,notes circulated by the
Reichsbank. But a practical limit was imposed. For.
it was under obligation to pay a taX of 5 per cent per yeaI'
on alluI:lcovered circulation exceeding 550.000,000
Minks.
Although the circulation was unlimited the law imposed
restrictions on the kind of business that could be
conducted by the Reichsbank. This Note-Bank was not
to ~nter into competition with the other banks in the
commercial ~rid.1t was; therefore, practically
imp~ssible for thi~ credit-institution to create the medium
of circulation in the form of bank-notes in unlimited
quantities ac~ording to its own desires. The Reichsbank's
power of circulating the notes was thus unlimited within
the limited 'field of its business operations. The nature
of 'the businesses, besides, rendered it virtually
impossible for the Reichsbank to tread on dangerous.
grounds so that there was hardly any likelihood of its.
losing the p~wer' to cash the notes ..
No Cover. No Noles
The cover was ~xplicitly enjoined by the law. 5 The
Reichsbank had lo' have at least one-third of the notes
in circulation guaranteed or pledged for in one of' two
forms. It 'might'be the Gfrman money including the
R"idchsk,assenscheirie (Imperial Treasury Bills). Or gold
. J. CE."Die, deut.che Gel