The Origin of the Joint-Stock Banks. The Joint-Stock Companies Act
of 1848 brought into being banks with limited liability, but without the
right to issue notes. The first joint-stock bank was opened in 1863. It
was not till 1886 that the joint-stock banks were brought under special
legislation, whereby their activity was subjected to legal restrictions
similar to those in force respecting the “Enskilda” banks. The Act of
1886 was superseded by the Joint-Stock Banks Act of 1903, which Act
in its turn was rescinded by the Banks Act of 1911. Altogether, 98 Joint-
Stock banks have been established in Sweden; 63 of these are still in
existence.
The Banks Reform of 1897. The value to the Swedish industrial community
of the services performed by the “Enskilda” note-issuing banks
were indeed generally admitted: they were useful as credit-providing institutions,
more especially as by their ramifying network of branch offices
they served the needs of a great many and even quite small places, thus
greatly facilitating the collection and utilizing of the savings of the public.
Nevertheless, as the nineteenth century drew towards its close, it was felt
that the time had come to bestow on the country the benefit of a central
bank in the proper sense, enjoying a monopoly as regards the note issue. It
was generally agreed that the bank which w&s to be invested with that
monopoly must be the Riksbank; on the other hand, people were not In
accord as to the organization best adapted to fit the bank for its special
mission. Two Committees (1881—83 and 1889—90) brought forward proposals
on the subject, but it was not till the 1897 Riksdag that the measure
of reform was actually carried into effect. Pursuant to the resolutions
then adopted, the Riksbank was still to have the Riksdag at its back and
remain subject to its supervision, private stockholders continuing to be excluded.
Laws affecting the Riksbank were to be enacted by King and
Riksdag conjointly, the King being accorded besides some influence in
the constitution of its governing body. The Riksbank was to exercise the
monopoly of note issue from and after 1904 (though, as a matter of fact,
the note-issuing rights of the,“Enskilda” banks lapsed on August 1 1903).
Present Administration and Business Activity of the Riksbank.
The principal stipulations respecting the administration and business
activity of the Riksbank are to be found in part in the Eundamental Laws
of the Realm, in part in an Act of the Riksdag passed May 12, 1897; the
latter has been to some extent modified since by amending clauses being
added, the last dated Aug. 31, 1914. Consequently those principal stipulations
are the result of the joint legislative work of the Riksdag and the
Government. There exist, however, supplementary stipulations respecting
the more detailed organization of the Riksbank over which the Riksdag
alone exercises oontrol.
The Court of Directors (Styrelsen) consists of seven members who bear
the title Bankofullmaktige, Riksbank Commissioners. One of their number,
the Chairman, is nominated by the King, the others by the Riksdag in
accordance with the recommendations of an ad hoc selecting committee.
The Court of Directors elects from among those of its members chosen by
the Riksdag three Delegates (Deputerade), to act as the managing directors
of the Bank. A member of the Bank Court is not permitted to be on the
board of directors of any other bank unless it be a savings-bank or the
Post-Office Savings-Bank.
The capital of the Riksbank is fixed at 50 million kronor. At least
10 per cent of the annual profit is to be passed to the reserve fund, until
the latter has become equal to 25 % of the capital (since 1909 the reserve
fund has been 12-5 million kronor). Otherwise the Riksdag has the right
of disposal of the annual profit. >— The Riksbank’s note issue is restricted
in the following manner: it is allowed to issue notes to the extent of:
a) double the amount of the gold held by the Bank (which in case of a fall
below 75 million kronor must be restored to that minimum as soon as may
be), and b) 125 million kronor beyond that amount. To this, however, the
condition is attached, that the notes issued beyond the amount of gold held
shall be backed by: (1) readily negotiable Government Securities, (2) bonds
issued by the General Mortgage Bank, The National Town Mortgage
Bank of Sweden, or other Swedish bonds quoted on foreign Bourses,
m gold deposited at some place abroad or in process of conveyance
therefrom, (4) bills of exchange payable within or without the oountry,
(5) a credit balance at some' bank or accepting-house abroad maturing
within six months, or (6) money advanced against securities or bonds
mentioned in (1) and (2) above. The bank-notes, which on presentation
are redeemable in gold at the head office of the Riksbank, are legal
tender throughout the country. Under ordinary conditions the five-kronor
note is the smallest note issued by the Riksbank.
Chiefly to enable the Riksbank to increase its covering for its notes,
the Bank is entitled to avail itself of foreign credit to the extent determined
by the Riksdag in its Bank Regulations (at present 20 million
kronor). The same purpose is answered by the provision that the Bank
shall hold readily negotiable foreign assets to an amount at least equal to
the_reserve fund.
The Banking Business of the Riksbank. The Riksbank is entitled to
buy and sell gold and silver, Swedish bonds,, and readily negotiable foreign
government securities quoted on foreign Bourses, while in virtue of another
agreement it is authorized to take over Swedish Government bonds
and easily negotiable foreign Government securities as well as to negotiate
the purchase and sale of Swedish Government bonds and the bonds issued
by the General Mortgage Bank. The Riksbank is furthermore empowered
to discount, or buy and sell, domestic and foreign bills with
at most six months to run; to make loans for at most six months on bonds,
shares, and other paper securities and commodities; to make loans on