The central banks of England, France and Germany, not to speak of. smaller institutions, have all been quasi-Government institutions. Even as late as 1854 the banks of Spain, Portugual, England, Sweden, Denmark, Russia and Austria became practically insolvent, in consequence of the credit they granted or were obliged to grant to the state. Latterly, of course, the banks have adopted the principle of as far as possible not giving a blank credit to any one, not even the state. The banks became more and more independent of the Government, in spite of the fact that they were the banks of issue and thus gained financial strength. For instance in 1870/71, the Bank of France was able to assist the Government by advances when the Government was absolutely paralyzed, and M. Theirs stated: "The bank saved us because it was not a bank of state." In the European war of 1914 the issuing banks have played a great part in allaying the panic; and if the banks had been institutions of state, very serious financial consequences would have resulted, even in England. While every bank in the country stopped payment of specie or bullion and the Government itself had no time to take measures against the panic, the Bank of England went on paying specie, while on the other hand it was attracting gold by putting up the bank rate. The Bank did not even avail itself of the special privilege of issue which the Government granted it in the first week of the war; as a matter of fact, the public had even more confidence in the Bank than in the Government. The same or a similar situation resulted in France and Germany, on account of the Bank of France and Reichsbank being private institutions, although they were banks of issue.

One has to chose a mean, in the case of issuing banks. In civilized countries with a big volume of foreign trade the idea of a state bank has been altogether given up; but once a state bank has been avoided, care was taken that the influence of the state on the private bank of issue should be limited to general supervision and might never degenerate to making use of its power over the bank towards promoting unsound finance.