Vol 5 2001 - Article

Financial Institutions in Hungary in Central-European Comparison, 1873-1931

Béla Tomka, PhD
University of Szeged
Department of History
Egyetem utca 2. H–6722 Szeged
Hungary
Tel.: +36 (62) 544–806 Fax: +36 (62) 544–464
E–mail: tomka@hist.u–szeged.hu

Although comparison is a well-established method in international financial history (1), up till now the comparative approach has scarcely been present in Hungarian research. This largely results from the fact that financial history was very late – only from the mid–1980s – to gain ground within Hungarian historiography. Since that time the development of the discipline has been indicated by several works, which made up for the losses of many decades in certain sub–fields, but hardly undertook to make comparisons (2). The works of the international financial history that are partly or entirely aiming at investigating comparative aspects do not discuss the development of the Hungarian banking system either (3).

In this paper we are making an attempt to study the Hungarian financial system in a comparative way. It is not possible now either to make a comprehensive comparison embracing all significant aspects in financial history, just because of the rather great gaps that are still existing in some areas in Hungarian research. Thus, we concentrate on the examination of a couple of selected areas, which are to be discussed as follows. In spite of this shortcomings, we hope that the comparative perspective, will shed light on important features of the Hungarian financial development, furthermore, it also makes it possible to correct a number of findings in respect of the evolution of the Hungarian financial system. Besides, the comparisons may contribute to the understanding of the history of universal banking systems and the role fulfilled by the financial sector in the industrialization of the "latecomer" countries.

The developments of the financial institutions in Germany and Austria serve as the major target subjects of comparison. In some cases, however, we will refer to the evolution of the banking in other national economies as well with the purpose of clarifying the characteristics of the Hungarian system. Special attention is to be paid to the German and Austrian banking system because – as to be seen later – they were universal banking systems, from several viewpoints similarly to the Hungarian one. What is more, the research in both countries attributes – though not without debates – a characteristically positive role to the financial institutions in the process of industrialization. This particularly applies to the German banking system in the second half of the nineteenth century, which is frequently presented in the economic history writing as a textbook example of the growth promoting banking system, in contrast to, for instance, the British one (4). In addition, Austria and Hungary belonged to the same empire and had the same currency till the end of the First World War, therefore it could be illuminating to see in relation to one another how their banking systems evolved under similar political–financial conditions.

The period under examination ranges from 1873 to 1931 – the temporal boundaries of the research are of course approximate because processes in economic history are usually difficult to bind to dates. It was by the time of the 1880s that the modern financial system came into being in Hungary, which until the First World War functioned basically in accordance with the same principles, but this structure did determine the Hungarian financial system even afterwards, until the 1930s. Nevertheless, during and after the war the conditions of the operation of the banking system changed considerably, thus this phase had not only similar characteristics but also differed from the former one.

Within the period between 1873 and 1931 the paper focuses on some three decades before the First World War, the most flourishing period of the history of the Hungarian financial system, since it is in this period that the works of economic history exploring the subject traditionally attribute great role to the Hungarian banking system in economic development, often considering it simply the most developed sector of the Hungarian economy, in line with railway transportation (5). In this first, lengthier part, the paper investigates above all the business policies of the Hungarian banks on the basis of an approach which is regarded as widely employed in banking history research – that is, the degree and the features of the specialization of banking. After this several other important structural/institutional characteristics will be introduced (degree of concentration, branch networks, mergers–concentration). Finally, we will be surveying the most important forces affecting the formation of the Hungarian banking, paying particular attention to those (capital market–capital supply, the role of the state and the central bank), which researchers assign an especially great role in the formation of universal banking systems. The second part of the paper analyses how the most important international trends of the development of financial system were represented in Hungary in the one and a half decades after the First World War.

I. The development of financial institutions before the First World War

1.

Universal and specialized banking systems

One of the most fundamental features of banking systems is the degree of specialization of banks (division of labour between the banks). On the grounds of this there can be differentiated universal and specialized banks and banking systems. According to the definition of modern banking–business administration "the universal bank is one that (...) does not know any limitation while doing its business, either in quantitative, or local/regional, or inter–branch, or qualitative respect, or in relation to the groups of its clients." (6) There exist of course other definitions as well. In another draft of the same author the universal – or mixed – bank "performs all banking business concerns except for banknote and mortgage–bond issuing." (7) The 1930 definition of Georg Solmssen says that the mixed bank is "a credit institution which unites the credit business and money trade functions with the emissions and the Gründungsgeschäft." (8) Similarly to the definition given by Solmssen the modern economic history writing, regarding universal banks, also stresses the importance of the issue of securities, and of the Gründungsgeschäft – that is, the foundation of joint–stock companies – which supplements the short–term businesses. The industrial investment business is particularly emphasized, by which the mixed banks were able to gain important roles in generating the economic growth. On the basis of this the universal or mixed banking system consists of banking institutions that combine the deposit bank activity, that is, the short–term crediting with the business of the investment banks, that is, the long–term investing (9).

As opposed to this in the specialized banking systems the banking institutions are specialized in different ways, though in the first place in accordance with the business types, and thus the long–term (investment) banking activity comes to be separated from short–term crediting.

In the decades preceding the First World War the backbone of the financial system was made up of universal banks in, first of all, Germany, and several other Central European countries like Austria, Switzerland, Italy and those of Scandinavia (10). On the other side – as a standpoint of the literature of the subject, which has up till now been taken as the most characteristic in spite of the debates (11) – the British banks, did not engaged in long–term transactions which were often regarded even at that time as speculative, "not bank–conform" (12). To put it more precisely, in England there was not a legally regulated specialization of the banks that rested upon tradition: a dominant part of the credit institutions were engaged in short–term credit and deposit business ("commercial banks", "deposit banks"), while the rest specialized in the issue and trading of securities ("investment banks", "brokers"), international transactions ("merchant banks", "overseas banks") (13). The banking system of France and Belgium was characterized by a transition between the specialized English and the universal German types. Although the long–term financing of the industry set out from just these countries through the Société Générale, the Banque de Belgique as well as the Crédit Mobilier, the banks of these two countries – after their failures – gave up the most of these business activities, and it was only after the First World War that universal banks came into being again (Crédit Commercial, Banque Nationale) (14).

In the period under investigation in Hungary several features of universal banking systems can be observed. As it will be discussed in detail below, the majority of banks – moreover, of savings banks – did not or only to a lesser extent employed preliminary quantitative, local, inter–branch, client–group related or other qualitative limitations in their business policy. A most characteristic example is the statutes of the Hungarian General Credit Bank and the Franco–Hungarian Bank, both founded in the 1860 s. At the time of their foundation these banks were authorized to, among others, the following business activities: establishing industrial and commercial enterprises and participation in them; supporting them by any means, through advance or down payment, bank loan or in any other way; rail– and waterway construction; making an advance for all kinds of products and produces; real estate trading; discounting; the increase of deposits (by way of current account and treasury note), as well as all sorts of stock exchange transactions (15). This broad range of business activities did not at all mean that the banks performed all of these transactions parallelly either, or, above all, with equal weight. It indicates however that in principle the banks were allowed to do any kind of banking business activities. If the statute of every bank was not so ambitious, in the decades preceding the First World War the business regulations of most of the banks equally included the short term loans, establishment, securities trading, and what is more, the foundation of enterprises as possible fields of banking activities.

The characteristics of the Hungarian universal banking system. The business policy of the banks

As a matter of fact, the Hungarian banking system differred from the specialized ones, but as compared to some mixed banking systems it had its peculiarities not to be neglected either. First of all, from a certain point of view – taking into consideration the degree of specialization of the banks and the legal and institutional framework of their operation – the Hungarian system was even more universal than the German and Austrian one. On the one hand, in the latter countries the savings banks separated from the mixed banks. Since from the 18th century onwards the foundation of savings banks had mostly charitative/social welfare reasons, thus the German and Austrian savings banks were communal institutions, and for the most part they maintained connections with the less wealthy customers. This also explains that the savings banks as public institutions enjoyed tax advantages. Besides, they did not function in joint–stock form and did not take the responsibility for their obligations with their share capital but with the community (town or county district) standing behind them (16). Nevertheless, the difference between the savings banks and the big joint–stock banks was reduced as well in these countries from the end of the nineteenth century on. Since at that time – for instance because of the appearance of the state in social welfare policy – the savings banks began to lose their former welfare functions and become the banks of the middle classes, or, rather, as regards the clientele as well the dividing line between them and the big mixed banks was fading. In Germany this process was manifested in the fact that the savings banks were authorized for the passive cheque competence (passiv Scheckfähigkeit) and the right to keep current– and giro–accounts (17). The separation, however, did not cease entirely to exist at this time either for it was only in 1921 that savings banks were entitled to assign securities trading into their spheres of business activities. In Austria by the turn of the centuries the legal difference between the joint–stock banks and the savings ones was also reduced, as the latter ones lost their advantages in the area of taxation (18).

As opposed to this, in Hungary the dividing lines between the savings and the joint–stock banks came to be blurred very early, and very strongly in the years after the establishment of the first credit institutions, in the middle of the nineteenth century. The philanthropic feature of the savings banks stopped and they set out to work in a profit–oriented way, in a joint–stock–company form, that is to say, as deposit banks. This could not be changed considerably by the efforts of the Austrian government, though in 1852 the so–called "Regulativ" was provisionally initiated, which was to regulate the working of the Hungarian savings banks, keeping in view the model of the Austrian philanthropic savings banks (19). Later however, the legislation itself did also promote to make this integration tendency complete, since the savings banks of communities were under almost equal regulations as the big joint–stock banks. Article 8 of 1909, for example, classified the community savings banks into the same taxation categories as the companies obliged to render their accounts in public. There was only a few savings banks that retained their original philanthropic particulars such as those of Nagyszeben and Brassó, obviously as a consequence of the fact that in the towns inhabited by Saxons the German pattern was strongly taking its effect as early as at the foundation and afterwards as well (20). Although their number was not low (Table 2), in Hungary the role of the non–profit–oriented industrial and agricultural credit associations was far less significant than in Germany or Austria before the First World War (21). By the end of the nineteenth century the significance of private bankers in Hungary was being reduced to a minimum, however, it is also true in Germany and Austria (22).

In practice of course the proportions of the certain business branches of the institutions were not the same, for instance those of the lesser provincial savings banks and the big Budapest banks. The differences, however, were not in the first place the outcome of either legal limitations, or even restrictions in the statutes, but resulted from the daily business opportunities.

The blurring of the division between the types of credit institutions was also increased by the fact that the mortgage businesses also gained ground amongst the activities of several Hungarian mixed and savings banks. While in the case of the savings banks it could be observed in Germany and Austria as well, the biggest mixed banks did not take part in these activities (23). In Hungary the Hungarian Commercial Bank of Pest – that was as early as before the World War one of the two biggest Hungarian banks – for instance, ran a separate mortgage–loan department, and its mortgage–loans amounted to the 55.6 per cent of the assets in 1900, and its 48.3 per cent in 1913 (24). Amongst the leading banking institutions the United Savings Bank of Budapest achieved a similar proportion, and the mortgage business was also considerable at the Hungarian Discount– and Exchange Bank. Moreover, from 1856 onwards the central bank did also have a mortgage–loan department, which was a unique phenomenon in the circle of the European central banks (25).

Thus, in Hungary until the First World War, as compared to other universal banking systems as well, there was an institutionally less differentiated financial system, and the specialization of the bank–types was moving on a small scale. In this sense the Hungarian banking system could be considered completely universal. The picture is shaded if it comes to investigate the other aspects of business policy and structure of credit institutions. Within this particular attention should be paid to the (industrial) investment banking activities that are accompanied by short term ones, since, as it has been seen, research regards these functions above all as the most characteristic feature of the universal banking system in the last decades of the nineteenth century. The proportion of investment businesses in the case of the Hungarian universal banks was – obviuosly – substantially smaller than that of the German and Austrian mixed banks.

There occurred promising attempts in the reseach to compare business policies in the banking development of the nineteenth century made by means of employing the ratio of various balance–sheet items (26). One of the latest experiments was carried out by Daniel Verdier, who does not only separate the universal and specialized national banking systems from one another, but also measures the degree of universality and specialization. Taking the finding as a starting–point that the riskier investment businesses demand greater liquidity, he considers universality or specialization as a function of liquidity. He applies two ratios to measure the degree of liquidity: the ratio of the equity capital and the total liabilities as well as that of the equity capital and the deposits (with the exception of the current account ones) (27). Verdier's calculations confirm what we have acquired so far, since according to his result there appeared two well–defineable groups among the national banking systems he examined, that is, the specialized Anglo–Saxon type, where both ratios were small (UK, Canada, USA), and the universal type, where, on the contrary, both indices were high (for example Germany, Italy, Austria). (See Table 1)

Table 1. Two indicators of the liquidity of assets in different countries

*1896
**Austria and the Czech Crownlands.
***1893
Source: Verdier op.cit. (1996), Appendix. Table 1. For Hungary: data of the five largest banks and savings banks; own computation based on the different volumes of Magyar Compass (See the method of computation in the text).

We have made these calculations concerning Hungary, though we are aware that employing the above mentioned method raises several problems (28). On the basis of our results the liquidity of Hungarian banks in the chosen period could be taken as low. It especially applies to the ratio of equity capital/liabilities in 1913, the 13.3 percentage value of which fell behind that of all the countries – except for the United Kingdom – which were admitted in the table. The ratio of equity capital/deposits was quite moderate around 1890 as well, but the index of 0.43 in 1913 situated rather in the middle ranks of the table. It is particularly conspicuous that the liquidity of Hungarian banks was on a scale so much under that of the German and especially the Austrian banks. If we accept the above calculation method, this indicates that the Hungarian banks' degree of universality was low and considerably lagged behind the mentioned German and Austrian banks.

Because of the indicated methodological difficulties of this quantitative comparison qualitative researches concerning business policy and structure are important for us as well. These basically confirm that investment activities – amongst them the industrial ones in particular – were of lesser significance at Hungarian credit banks than at their German and Austrian counterparts, though, as far as dynamics are concerned, they were clashing with, to some extent, the results of the above calculations.

As it is widely known, after Belgian precedents it was the bank named Credit Mobilier established in 1852 in Paris that first placed the foundation of enterprises into the centre of its operation (29). In Germany and Austria the 1850s saw the birth of joint–stock banks engaged in investment transactions, which were one by one transformed into mixed banks acting with the short term businesses as well (30). In spite of controversies concerning the subject, most economic historians agree that in Germany an especially close contact was to be formed between the banking sector and the industry. The mainstream of economic history research attributes a great significance to the investment actions of German universal banks in the economic growth of the country, and mainly in the industrial growth in the last decades of the nineteenth century and after the turn of the century as well (31). As it has formerly been referred to, it is in comparison with the investment activities of British banks that the German universal banking system could present itself as one of the major factors of the successful economic performance at the end of the nineteenth century (32). The majority of economic historians also find the industrial investment activities of Austrian banking important, (33) especially in the period between 1895 and 1914 that is to be called "a second Gründerzeit". Moreover, Eduard März even states that "the big banks never played such a determining role in the economic life of any country as in the Austrian–Hungarian Monarchy." (34)

In Hungary it was in the 1860s that the first banks announced the project to join in investment and some of them did really set about large–scale business enterprises of this kind (35). The early freshening did only affect a few bigger banks and lasted only for a short time. After the 1873 crisis the banks became rather cautious as regards investment matters. It was particularly true in the case of the relationship of banks and industry, which for a long time onwards was merely characterized by traditional credit relations, what is more, even they could just slightly be felt. For example, one of the two biggest banks of the period – the Hungarian Commercial Bank of Pest – rendered 0.44 per cent of their current account credits payable to industrial joint–stock companies in 1892, which totalled not more than 0.08 per cent (!) of its assets (36).

The increase of the industrial Gründungsgeschäfts of the banks, mainly of the Budapest big banks, is noticeable from the middle of the 1890s. The fundamental element of this was maintained by the rapid development of industrial joint–stock companies, the number of which grew from 131 to near a thousand between 1880 and 1913, but the rate of the increase of their share capital was even higher than this. It grew from 118.5 million Korona (Crown – Hungarian currency) up to 1,023.7 million (37). In Hungary – similarly as in Austria – a great role was played in the process of the big banks opening up towards the industry by the fact that the volume and profitability of the financial operations of the state decreased (38). In addition, the competition between credit institutions intensified more and more. They did not manage to reduce the deposit interest rates, thus the margin was narrowing in the traditional deposit businesses.

Spectacular signs of the relationships built up with industrial companies were provided by interlocking directorates in Hungary as well (39). Their scope was similar as in the case of the Austrian big banks. In 1913 at the Hungarian Commercial Bank of Pest the members of the directorate and the supervisory board, managers and deputy managers possessed 115 seats of the directorates and supervisory boards of 74 domestic industrial joint–stock companies. The members of the directorate and the supervisory board of the biggest Austrian bank, Creditanstalt in 1917 had 194 interlocks at various joint–stock companies (40). The biggest German bank, that is Deutsche Bank owned 78 supervisory board memberships at 73 industrial firms in 1913 (41). The extensive presence of banks in the directorates and supervisory boards, however, could not mean in itself any bank dominance in Hungary, in the first place because in most cases these interlocks were not – no matter how surprising it is – completed with credit and capital connection (42). The vast majority of industrial companies maintained only occasional financial contacts with the banks. The biggest Hungarian industrial companies (the Rimamurány–Salgótarján Iron Works, the Manfred Weiss Works, the Salgótarján Coal Mines etc.) were all in all independent of banks financially and in their business strategies in our period, it was only occasionally that they were bound to apply for their services (43). It is of course unquestionable that there were companies where the banks laid out a considerable capital in proportion to the size of theirs. This was however a relatively small, well–definable circle of companies. The total sum of the capital floated out into the industry by one of the two biggest Hungarian banks, that is the Hungarian Commercial Bank of Pest – short–term credits and long–term investments altogether – added up only to the 3–4 per cent of its assets in the mid–1900s, but – through the more intensive growth of the second part of the decade – ran only to a near 10 per cent value before the First World War (44). That is to say, the banks in Hungary, apart from a short period between 1867 and 1873, did not only start industrial investment relatively late, but also these activities, even at the end of the period, just preceding the World War remained on a relatively low level as opposed to the deposit businesses. A strong specialization in the branches of the industry – peculiarly dominant in the case of the German and Austrian giant banks cannot be observed in the relationships with the industry either (45). The exception to this was the Hungarian General Credit Bank, which obtained strong positions in the sugar industry (46).

This results suggest that the banks did not fulfil such a relevant function in the Hungarian industrialization, which was attributed to them by Alexander Gerschenkron and others in other Central European countries like Germany and Austria (47). The investment activity of Hungarian banks did not even play such a role as that of their Austrian and German counterparts, if we take into account that the Hungarian banks were interested in financing various other, in the first place transport (railway) companies at least to a similar extent as they were financing their industrial partners, even in the period immediately preceding the World War as well (48).

2.

Some other characteristics of the Hungarian financial system

With the knowledge of the great number of the credit institutions in Hungary, the lack of concentration, or at least, the lingering of the concentration process, was a remarkable feature of the Hungarian banking system. This fact is particularly interesting, because in a number of European countries a strong concentration process was going on. In the decades before the First World War, the concentration process was the most rapid in the English and German banking. In England in 1844 more than 2,000 minor joint–stock banks were functioning, in 1913 however, this figure was only 43 (49). Lloyd's Bank alone merged in 50 banks between 1865 and 1914, and as another typical episode of the process, in 1896, from the merge of 20 private banks a new bank, Barclays Bank came into being. In Germany, between 1895 and 1924, especially in the circle of the joint–stock banks a strong concentration process can be observed (50). Until 1911 the Dresdner Bank had merged in 25, the Bank für Handel und Industrie had merged in 19 banks (51). In 1913 half of the financial institutional assets was concentrated by the 5 biggest Berlin banks (52). In Austria in 1913 the 12 leading Viennese banks owned 64.7 per cent of the total bank assets (53).

In Hungary the big banks owned only a significantly smaller amount of the total bank assets than those in Germany or Austria. In 1913 the 5 biggest Hungarian banks had 25.7 per cent of the total assets (54). Although this meant an increase as compared to the beginning of the 1890s (1890: 18 per cent ), the contemporaries who were examining the topic already discovered the signs of deconcentration as well beside the signs of concentration (55). The 15 biggest banks had 38.6 per cent of the total equity capital in the average of the years between 1900 and 1904, while in the average of the years between 1905 and 1909 37.2 per cent, the data of the two boundary years (38.7 per cent, and 35.2 per cent) mark an even faster deconcentration process (56).

While in Germany and in other countries with developed bank systems mergers were important factors of concentration, in Hungary, like in Austria, these were practically unknown. The biggest financial institutions (Hungarian Commercial Bank of Pest, Hungarian General Credit Bank, First National Savings Bank of Pest) did not merge in any banks in the pre–World War decades. It can also be considered typical, that although a bank cartel came into being similarly to Germany and Austria, but unlike these countries, it could not strike root permanently, which also decreased concentration (57).

All over Europe constructing the big branch networks, which often covered the whole country, was an important means of becoming big banks, and an accelerator of concentration. Until the First World War it were the French and the English banks that had built the largest branch systems: the Société General had 668, the Credit Lyonnais had 415 branches in 1913. In the same period, in England nearly each of the big joint–stock banks ran several hundreds of branches. E.g. the Midlands Bank ran 689 in 1913 (58). The construction of branch networks started in Germany as well, but with a more moderate result than in France and England: in 1911 the six biggest banks had 98 branches altogether (59). In Austria the ten biggest Viennese banks opened 127 branches until 1913 (60).

The branch network of the banks in Hungary remained rather small, its size can best be compared to those of their German and Austrian counterparts. Among the big financial institutions the First National Savings Bank of Pest and the Hungarian Commercial Bank of Pest were the first to take to creating their branch network. They did it relatively late and on a small scale, as although the First National Savings Bank of Pest opened a few branches in 1868, these were only in the home city, Pest. The Hungarian Commercial Bank of Pest opened its first Budapest branch in 1886 too, and its first branch in the country in 1902. In 1913 this bank had a total 15 branches in the capital city and 11 in the country, and it was a unique network in the circle of the Hungarian big banks (61). This is why it was called – with a great amount of exaggeration – the "Hungarian Crédit Lyonnais" by the contemporaries. The Discount Bank opened a branch in Budapest in 1890, the Credit Bank did it only in 1905 – nine at once though – and all in the country. The Hungarian Bank started building its branch network as late as in the middle of the 1900 decade too (62).

Concentration, geographically speaking undoubtedly succeeded. The dominant role of Budapest was a characteristic feature of the Hungarian banking system. In 1913 each of the fifteen biggest financial institutions – whose equity capital exceeded ten million Koronas – were working in the capital city. The outstanding role of Budapest is evident even if its share was decreasing within the total equity capital of the Hungarian credit institutions: in 1894 it was 54.3 per cent, in 1909 it was 49.6 per cent. A similar decrease can be seen in the fields of the savings deposits and the mortgage–loans, although in the latter one the proportion of the Budapest banks was still over 50 per cent. At the same time the holdings of bill of exchange and current accounts of the Budapest banks grew on the national level (63).

In this period such processes took also place which extended the significance of the biggest banks. Besides the above mentioned limited expansion of the industrial interest network, the increase of the number of the so–called bank affiliations, – i.e. interests – was the most important one. As a result of this process, after the turn of the century bank groups were formed around the Credit Bank, Commercial Bank, Discount Bank and Hungarian Bank, consisting mainly of institutions in the country. The smaller institutions, tried to ensure their own liquidity, need for capital, in this way taking up even a sort of subordination. The savings banks in the country, being in a rather instable situation as a result of the large–scale mortgage–loan business, were in a strong need for a supporter of solid capital. So the system of interest networks was similar to that of Germany – the big banks meant a crystallization point – and it was different from the French one, where two major groups came into being on regional basis: one in the country and one in Paris (64).

The time, when the Hungarian Commercial Bank of Pest and other big banks were mainly affiliating, did not coincide with the crises, as it was typical, for example, in Germany. This could also be the reason why – as has been seen – the big banks rarely merged in other banks. The Commercial Bank for example affiliated only with the Máramaros Savings Bank and the General Savings Bank of Kassa (Kosice), through reorganizing them (65).

In the foregoings we have been striving to introduce the important peculiarities of the Hungarian banking system with the help of international comparisons between the years of 1873 and 1913. The low degree of specialization, together with the relatively moderate level of investment businesses even in the case of the biggest banks, that is, the presence of peculiar universal banks, the great number of financial institutions, and their relative stability, as well as the lack of concentration can all be listed among these most important characteristics. In the following we will be discussing what factors could lead to the formation of these peculiar features. Primarily, we are exploring two important factors by which the characteristics of banking systems are interpreted in the international economic history, that is, the capital supply and the role of the state and the central bank. Since investigations into this subject regarding the Hungarian banking sytem has not at all been done so far, our remarks will often be sketchy and hypothetic.

The explanation for the characteristics of the universal and specialized banking systems that has so far most widely been used in economic history research is based on the change of the scale of capital supply. Perhaps the most typical and widely known representative of this argumentation is A. Gerschenkron, who states that the British industrialization was marked by a self–financing of the industrial companies, while those of the latecomers of the industrialization process, that is, the more backward countries were not capable of self–financing, because by that time the capital demand of the industrial investments had already increased, which could only be covered by accumulating and concentrating capital. Gerschenkron finds that this – depending on the scale of backwardness – was financed by either investment banks/universal banks; or, it could even happen that the state set out to intervene and carried on financing the industrialization itself by means of bringing in foreign capital and redistribution by taxes (66).

In the case of several countries, however, doubts were raised concerning the existence and the degree of the capital shortage. In the past most researchers referring to the early stages of the German industrialization thought that the capital shortage was beyond doubt, and the only thing they found to be disputed was whether the shortage was due to the low level of capital accumulation or to the inadequate allocation of the disposable capital (67). These days a significant part of economic historians trace the small–scale capital mobilization of the early phase of the industrialization back to the modest capital demand of the industry, whereas they also acknowledge that in certain periods – such as at the end of the boom of the 1850s and in the 1870s – the shortage of capital came to be even an impediment of the economic growth (68). Everything points to that the shortage of capital as a decisive factor in the development of the universal banking system does not hold as an explanation either referring to Austria, more exactly the Cisleithanian territories of the dual Monarchy: as it was also admitted by Gerschenkron himself in one of his late works (69).

In the Hungarian historiography of the recent decades the shortage of capital and the capital import in its wake was manifested as the key issue of the Hungarian economic transformation of the age of the dualism. Thus, it obtained a crucial role in explaining the formation of the banking system (70). However, – as has been shown above – the intensity of the investment businesses of Hungarian banks was moderate, which makes it obvious that the Hungarian banking system did not respond to the shortage of capital, according to the Gerschenkron–pattern either, even if the shortage has existed in fact. Hereby the significance of capital shortage in the development of the Hungarian banking system becomes relativized from the outset, and the shortage of capital brought about by the industrialization could only give an incomplete explanation for the peculiarities of the Hungarian financial system.

In our opinion, on the other hand, the existence of a large–scale shortage of capital is not duly proved in the age of the dualism in Hungary. It is to be mentioned of the demand side that in the growth process the role of the capital–intensive industry was probably less significant than it has formerly been assumed (71). Hungary – only from this point of view – had a lot in common with Denmark: in both countries a rapid economic progress was made at the end of the nineteenth and at the beginning of the twentieth century, without, however, being really capital–intensive. Furthermore, as has been seen, a considerable scale of self–financing can be assumed in the case of the firms being active in capital–demanding branches. On the other hand, – taking notice of the capital–supply – we are referring to how advantageous potentiality the single capital market of the dual Monarchy could provide for Hungary, with the help of which – in a way widely known – the transfer of the Austrian capital was taking place, improving the scale of the capital supply significantly (72).

If the capital shortage could not be the key issue in the development of the Hungarian financial system, it can be feasible that just the relatively good capital supply was one of the reasons of the low–degree universality of the Hungarian big banks. This assumption, however, is contradicted by the dynamics of the banking development. Since approaching the First World War – as it has also been discussed – the universality of the banking system was not decreasing, but intensifying, albeit the shortage of capital clearly was not growing as it is indicated by the reduction of the relative significance of capital import (73).

The peculiarities of the financial system can be expounded by other factors outside the sphere of economy, a part of which are connected with the role of the state. Within these factors, recent research assign a great significance to the influence of the state (state structure) on the capital market and the policy of the central bank (74).

It was expressed as one point of these interpretations that in the corporatist states (like Austria–Hungary, Germany, Italy) the state support of the non–profit and the local credit sectors, made them survive in an artificial way. This is the reason why the capital market came to be fragmented, which was an important factor in the development of universal banks. Primarily, it was a strong enforcement of agrarian and local–regional interests that was reflected in the state intervention. The support was maintained by subsidies; exemptions from various taxes; government–guarantees for bonds; as well as territorial protection against market competition, such as limitation on the establishment of new joint–stock bank branches. Thus, the joint–stock banks of the centres – to compensate for the deposit business falling short through the fragmentation of the deposit market and the rising cost of their operation – were forced to join in the much riskier but more lucrative industrial investment businesses. In the pluralist states (UK, USA, Canada), on the contrary, market forces were absolutely free to make their way, therefore the banks were not at all prevented from possessing a large network of branches, collecting local deposits and ousting the savings banks and other kinds of non–profit banking institutions from the market. In this way the non–profit credit system withered away. Here the investment business was left over to specialized investment banks, that is, a specialized banking system was born (75).

This exclusively politically dimensioned explanation of the development of the Hungarian banking system does not seem convincing. Although in the dualism of the pluralist and corporative systems Hungary stood by all means nearer to the latter, the non–profit financial sphere did not receive state support. As has been mentioned, the savings banks got transformed into deposit banks partly just because of the lack of their privileges. In addition, the fact – which has also been seen above – that a considerable part of the mortgage–loan businesses was performed by the profit–minded corporative and savings banks, indicates that this segment of the credit market was not priviledged by the state either. Consequently, a state–controlled capital–market fragmentation is out of the question.

In the banking history research of the recent years the role of the state was also emphasized in another aspect, that is regarding the regulation of the central bank, especially in the German case. According to this interpretation in Germany the private Notenbanken were annulled and a state issuing bank was established definitely in favour of the aristocracy – but also taking the interests of the high bourgeoisie into account –, enabling since these groups to attain to credits more favourably (76). The foundation of the central issuing bank – that is, the Reichsbank – in the middle of the 1870s helped the joint–stock banks, on the one hand, by making it possible for them to use its extensive network of branches to handle their payment turnover. On the other hand, and even more importantly – the Reichsbank practically provided a liquidity guarantee for them ensuring great discounting opportunities. This guarantee – as opposed to, for instance, the English banks, which had not any of the kind at their disposal – found a way for the German banks to handle large–scale, long–term investment ventures (77).

From this point of view, "the bank of the banks" in Hungary, that is, the Austro–Hungarian Bank shows several similarities with the Reichsbank. It particularly stands for the years from 1887 on, when several important alterations were made in the statutes of the central bank. The previous rigid regulation of the 100 per cent precious metal reserve, referring to the issue of banknotes of over 200 million Forints was to be changed since it caused serious liquidity problems to the bank on several occasions. The minimum of the reserves was fixed at 40 per cent for the note–issue, and up to the value of 30 million Forints the foreign bills of exchange (foreign currencies) were also included in the reserves. Besides, the bank came to be entitled to issue notes even of an amount over 200 million Forints in case of financial troubles, if it pays a 5 per cent tax after this. The greater degree of mobility and the stability gained in this way made it possible for the bank to avoid superfluous reserve–keeping (78). This change, followed an amendment of the statutes of Reichsbank a couple of years before (79).

On the grounds of this, John Komlos refers to the post–1887 discounting policy of the Austro–Hungarian bank as "aggressive" (80). The big Hungarian banks did in fact have a considerable credit limit at the central bank, which undoubtedly increased their liquidity. However, this opportunity was only to a lesser extent taken advantage of in investment banking businesses. The big banks did not usually exploit their credit limits, but the issuing bank floated loans primarily to savings banks dealing with the personal credit business (81). Thus, the discounting policy of the central bank did not prove to be as strong determinant as that of the German one was in shaping the financial structure.

All things considered the question is how the peculiarities of the Hungarian banking system, in the first place its ambiguous universality, could be explained. To answer it obviously needs further investigations to be done, since it seems much more complex than in the case of a good number of other countries, where the capital scarcity, the policy of the state and the state–governed issuing bank could mean an adequate explanation. In any case the influence from abroad appears to be an important factor in the establishment of universal banks. On the one hand, it is found as a direct influence: the business of "credit mobilier–type" banks came like a blast in the 1860s, directly on foreign influence and based on patterns from abroad, first of all intermediated from Austria. The formation of a high comparative financial ratio could have been considerably promoted by foreign, in the first place, Austrian capital. On the other hand, the demonstration effects could be felt as a result of the close personal and business relationships between Austrian and Hungarian banks (82).

In addition, the research in the future should pay a greater attention to the significance of cultural factors in the field of Hungarian banking history. Above all it could be the low level of human and social capital that prevented the non–profit–oriented institutions from gaining ground, and thus the major reason why the communal savings banks were withering was the fact that the local communities were rather underdeveloped. This at the same time explains the relatively great number of joint–stock financial institutions as well, which could be one of the factors that gave rise to a low level of concentration and universality. The popularity of banks based on ethnic principles contributed to the fragmentation of the capital market. The lack of modern business management techniques was presumably instrumental in the low degree of concentration and the branch network of big banks.

II. The development of financial institutions after the First World War

As opposed to all its diversity the development of banking in European countries after the First World War did show a few general characteristics. In the 1920s the instability of banks was increasing all over Europe and – partly in consequence of this – the banks were going on merging. There were various forms of state intervention emerging, in addition the competitive advantages of the rivals of the big banks were growing, as a result of which they got strengthened as against the former ones (83). In the following, we will be examining what tendencies came forward in the development of Hungarian banking in the period between the war and the 1931 financial crisis.

The concentration continuing during and after the First World War similarly to the foregoings was especially vigorous in Great Britain and Germany. In Great Britain the "Big Five" came into being in 1917–18, possessing more than 75 per cent of deposits, but the number of institutions were further decreasing from now on for the five biggest banks were merging in the small and medium banks one after the other (84). Here the concentration of banks did not reach the level of Great Britain, but the rapidity of the concentration process is indicated by the fact that between 1914 and 1925 the Deutsche Bank absorbed 21, the Discontogesellschaft 29, the Bank für Handel and Industrie 36, and the Commerzbank 42 banks, (85) furthermore, there were several of even the biggest banks that merged with one another (for instance, in 1922 the Darmstädter Bank and the Nationalbank für Deutschland or, in 1929 the Deutsche Bank and the Discontogesellschaft). As opposed to Britain, in Germany the concentration was going on in the second half of the 1920s (86). Austria had a similarly remarkable scale of concentration. Although during the post–war inflation the number of corporate and private banks doubled as compared to the 1913 value of 175, but by 1927 it came close to the pre–war level again and in the following years it dropped below that. Merging was a typical means of handling the crisis (87).

In Hungary the number of banks substantially increased in the post–war years of inflation. A great number of the newly founded financial enterprises were kept up only by way of speculations and profit opportunities created in the inflation boom. Most of them did cease to exist after the stabilization. In the second half of the 1920s the number of financial institutions was decreasing further down, but only to a lesser extent. The Hungarian banks and savings banks totalled 1838 in 1928, which exceeded the 1913 number of the institutions operating on the corresponding part of the pre–Versailles–treaty territory of the country. The banks in Budapest, for instance, amounted to 282 in 1928, which was a third more than the 1913 level, though at that time Budapest had been a centre of a prosperous money–market of a country of double the post–war population (88). (The disproportion was somewhat reduced if it is taken notice of the substantially more bankruptcies and liquidations in process in 1928.) In this period the development of banking was primarily characterized by a strengthening of medium–sized institutions. As compared to the pre–war period, by 1927 the assets of the biggest banking houses increased in relation to that of all the banks, but decreased in relation to the medium–sized banks. In 1913 the six leading banks possessed 62.6 per cent of the assets of the 13 biggest banks and the Post Savings Bank, and in 1927 this percentage was slightly reduced to 61.5 per cent. In Hungary there was no question of a quasi–monopoly taking shape like in Austria, where the Creditanstalt rose much higher above all its competitors (89). The great number of banking institutions – moreover, with a more and more widening network of branches – as well as the slowness of the concentration process kept on characterizing the Hungarian credit system further on.

In the period after the First World War it is the growing instability of the banks that is to be observed all over Europe. Germany was most heavily hit by the crisis, but Austria did also belong to the countries that went through the greatest difficulties. It was the universal banking system that was found responsible already by the contemporaries for the severity of the financial krach, and this view can be considered as accepted up to the present–day (90). The relative stability of Hungarian banks felt during the crisis was at least partly due to the fact that following the growth during the war, in the years of the inflation the economic role and the mixed–bank activity of Hungarian banks – as a result of the losses of their assets and the abundance of money – was reduced again (91). Although the industrial business activities of the banks were moderated as compared to their height during the World War, mainly in short of a business policy deliberately furthering industrial participation, but some of the banks – for example, the Italo–Hungarian Bank – consciously made strong efforts to wind up or, at least reduce their interests in the industrial sector. In addition to the sluggishness of the concentration of banking – which increased the margin of industrial companies – this was also brought about by the fact that the industrial enterprises became even more self–financing than they had been before (92). According to the calculations of István Varga, the proprietory share of the biggest Budapest banks in the share capital of industrial companies was 143.4 million Pengő in 1925 and 176 million Pengő in 1937. This growth, however, seen in the proportion of the assets covered a significant decrease in fact: the 15.7 per cent of 1925 diminished to a percentage of 9 in 1937 (93). Considering the phenomenon from the point of view of industrial companies an even deeper decline is to be touched upon (94). Calculations of this kind, however, have to be addressed proper criticism – also because in the latter case it was only the number of industrial companies that was taken for basis. Since however subsequent calculations which had been ignored so far have not yielded substantially different results, (95) the conception that the influence of the banks onto the industry was remarkably growing during and after the depression as well does not seem appropriate (96). Thus unlike to Belgium or Italy, in Hungary the type of universal bank was not liquidated by the enforcement of law after the crisis.

Nevertheless, the Hungarian banking structure did not remain unchanged after the First World War. In accordance with the international tendencies one can observe a certain shift between the significance of the traditionally structured and functioning banks and the banks with specific operation areas and licences, which were mostly founded commonly by the state and the private economy, and this is shifting, of course, in favour of the latter ones (97). These institutions performed in the first place specific tasks (Central Corporation of Banking – 1916; Central Credit Co–operative of Manufacturers – 1920; National Industrial Mortgage–loan Bank – 1928; Hungarian Liability Insurance Bank – 1931; etc.) and simultaneously they can also be taken as direct agents of the strengthening state intervention in the banking life. As a new bank–type the building societies/housing credit co–operatives came into the forefront in Hungary as well (National Building Society – 1930; National Small–Apartment–Building Co–operative), and there also appeared the banks that were to meet the credit demands of specific social groups. They worked either in joint–stock or co–operative form. In spite of the formation of specialized banking institutions the small–scale specialization went further on being a characteristic of the Hungarian financial system (98).

The growing state influence was one of the most strongly marked features of the banking of several European countries between the two World Wars. It was not otherwise in Hungary, either. In the period ranging up to the 1931 financial crisis the role of the state was somewhat more moderate, while in the subsequent period – in relation to the credit crisis, and, as a consquence of the growing importance of the state in other areas of the economy – the economic activity of the state was considerably stronger already. The major means of state interference into the banking system were legislation, state supervision and extension of the state–quasi state sector encharged with special tasks.

In Hungary – similarly to Germany and Austria – the state had already intervened directly into financial processes even during the First World War (99). It did not stop taking up this role when the war ended either, so much the more as the transition from war–time economy to a peace–time production called forth many problems. In 1922 the once repealed system of foreign exchange restrictions was introduced again, the controlling centre of which was the Clearing–House for Foreign Exchanges (100). The demands for foreign exchange were centrally ranked, giving preference to the purchase of raw materials. Through the restrictions – like for example the compulsary delivery of foreign exchange – it was possible to succeed in preventing the double currency system from spreading, and the Korona as a means of payment from losing ground totally. Simultaneously, these measures strongly impeded the currency and foreign exchange trading of the banks.

While before the First World War only one–fifth of short–term credits were insured by the central bank and the rest had to be raised by the banks themselves, in the inflationary economy the newly established bank of issue, the Public Note Institution covered a great part of the credit demands of the economy. The banks themselves were laregely dependent on the inflationary financing of the central bank, which indicated the moderation of the economic significance of the big banks mentioned above (101). The increase of state interference into credit affairs is well illustrated by the activity of the Central Corporation of Banking, also performing the classic bank–supervising tasks. The Central Corporation was only established provisionally for a period of five years in 1916 and it was authorized to make a controlling at only a financial institution which took up a loan at the Central Corporation, or, asked for the control itself. In most European countries the comprehensive bank–supervision was introduced only during the depression (for example, in Germany in 1931, in Belgium in 1934/1935, in Switzerland in 1935 and in France in 1941). However, in Hungary following the 1920 reform of the the Central Corporation it was on the one hand included in its duties to contribute to satisfy the government's credit demands, and take part in enterprises of public interest, on the other hand, its scope of supervision authority spread now over every member in the Central Corporation the share capital of which did not exceed 40 million K, as well as over bigger branches outside the centre of the institution. Besides, from 1921 on it was only the members of the Central Corporation that were entitled to accept deposits for savings passbooks, or to handle public funds. At these companies the Central Corporation did obligatorily make a controlling (102). There were other regulations, which were though of lesser significance, but of similar sense – for instance, the regulation of the drawing–up of balance–sheets – did also affect the business policy of credit companies.

It can also be expounded by the early state interference or the measures taken by the bank–supervision, the government and the central bank that the Hungarian banks as compared to their Austrian or German counterparts survived the crisis with relatively little losses (103). There were not spectacular share–capital reductions, reserves–exhaustions, writing–offs. Besides, it is to be included in the causes of the relative solidity of Hungarian banking institutions that the leading companies had modest business policies, with a strong emphasis on liquidity. The Hungarian banks did not take part in large–scale speculations as for example their Viennese counterparts did, and they had not got as vast capitals frozen in the industry as for example the Creditanstalt had (104). Thus the state – as opposed to Austria or Germany (105) – was not bound to dive deep into its pocket to aid the banks, and there did not occur even provisional nationalizations either. Legislation measures proved sufficient to put restraints on the consequences of the credit crisis.

Summary

In the paper we have been examining the Hungarian financial system between 1873 and 1931 in a comparative way. During the analysis, the developments of German and Austrian banking served as the major bases of comparison. First of all we have been investigating the specialization versus universality of business policy of banks before the First World War. The Hungarian banking system at that time was characterized by a peculiar universality. On the one hand, it can be taken as even more universal than the German and Austrian one, since the specialization of financial institutions was of a low degree and there was only a slight legal–structural difference between them. The dividing lines between the savings and the joint–stock banks came to be blurred very early, because the former ones took over the profit–oriented joint–stock–company form, and they were setting out to work as deposit banks. The differences between them in the proportions of certain business branches can be taken as a function of business opportunities. The boundary between the individual types of credit institutions was also fading as a consequence of the fact that several Hungarian banks and savings banks inserted the activities of the mortgage–loan banks in their business activities that were traditionally separated in an independent mortgage branch from the banking activities in Germany and Austria.

However, the Hungarian banking system can only be considered as universal in a rather formal sense: legally, and concerning the degree of specialization of banks. If the investment banking activity accompanying the deposit businesses is taken as the major criterium of universality, then the Hungarian financial system is to be seen considerably less universal. Both the the analysis of balance–sheet items and other features of business policy signify that the investment activities of Hungarian banks – especially in the industrial sector – were though growing in the period preceding the First World War, but were of substantially less significance than in the case of the German or Austrian banks.

In the years before the First World War the Hungarian banking system was not characterized by concentration as it could be seen in Germany and Austria. Mergers were almost entirely unknown, which partly must have been due to the relatively small number of bankruptcies, that is, the relative stability of credit institutions.

Of the factors affecting the formation of the Hungarian financial system, one of the most common rationale the level of the capital supply does not explain the peculiarities satisfactorily. On the one hand the low degree of universality makes it obvious that the Hungarian banking system did not react upon the scarcity of capital – even if the shortage has existed in fact – in the same way as the German or Austrian banks did, which, as a matter of course relativizes the incidental significance of this factor. On the other hand, the universality of the banking system, approaching the First World War, as the capital endowment was improving did not decrease further on. Thus, the dynamics of the banking development clashes with the view that it is perhaps the relatively high capital supply (due to Austrian capital transfer) that gives explanation for the peculiar features of the Hungarian banking system. The role of the state, an other rationale found in the research of Central European banking, does not seem determinative either, since differently from Germany or Austria, it cannot be observed that the state is striving to regulate the capital market, by way of, for example, privileging certain agents of its. Although the central bank maintained a liquidity guarantee for the banks, however, – in contrast to Germany again – it was not enough instigating force for them to be able to start investment activities on a large scale. Consequently, the peculiarities of the Hungarian banking system are to be assigned to other, so far less explored factors as well (foreign demonstration effects, cultural factors etc.).

In many respects the post–First World War development of Hungarian financial system also deviated from the international trends further on. Although there were new bank–types that came forward, but it remained typical of the Hungarian banking system further on that the specialization of institutions was of a low degree. Besides, the number of institutions remained great, and the concentration process slow. The various forms of state interference came forward relatively early. It can at the same time be seen peculiar that the credit institutions were relatively stable, the bank crisis in Hungary was not so deep as in Germany and Austria.

Endnotes

(1) Referring only to a few comparative works in this field: A. Gerschenkron, Economic Backwardness in Historical Perspective, (Cambridge, Mass. 1962). R.E. Cameron (ed.), Banking in the Early Stages of Industrialization, (New York 1967). R.W. Goldsmith, Financial Structure and Development (New Haven 1969). R. E. Cameron (ed.), Banking and Economic Development, (New York 1972); K.E. Born, Geld und Banken im 19. und 20. Jahrhundert, (Stuttgart 1977). C.P. Kindleberger, A Financial History of Western Europe, (London 1984)
Most recently: C.H. Feinstein (ed.), Banking, Currency, and Finance in Europe Between the Wars, (Oxford 1995). D. Verdier, "Gerschenkron on his Head: Banking Structures in 19th–Century Europe, North America, and Australasia", European University Institute, Florence. Working Paper SPS No. 96/3., (Badia Fiesolana 1996);R.H. Tilly, 'Banking Institutions in Historical and Comparative Perspective: Germany, Great Britain and the United States in the Nineteenth Century and Early Twentieth Century', Journal of Institutional and Theoretical Economics 145 (1989), pp. 189–209.; P. Hertner, "Das Vorbild deutscher Universalbanken bei der Gründung und Entwicklung italienischer Geschäftsbanken neuen Typs, 1894–1914", in F.–W. Henning (Hg.), Entwicklung und Aufgaben von Versicherungen und Banken in der Industrialisierung, (Berlin 1980), pp. 195–281.

(2) G. Ránki, "A Magyar Általános Hitelbank a 20–as években", in idem, Mozgásterek és kényszerpályák, (Budapest 1983) pp. 286–317. G. Kövér, 'A brit tőkepiac és Magyarország, az Angol–Magyar Bank, 1867–1897', Századok (1984), pp. 486–513. idem, 'Az Osztrák–Magyar Monarchia bankrendszerének fejlődése', Közgazdasági Szemle (1986), pp. 312–324. Á. Pogány, 'From the Cradle to the Grave? Banking and Industry in Budapest in the 1910s and 1920s', Journal of European Economic History 18 (1989), pp. 529–549.
On the Hungarian–Austrian comparisons in the age of the dualism and regarding the banking–industry relationships after the First World War see:>BR> G. Kövér op.cit. (1973). idem, "The Austro–Hungarian Banking System", in R. Cameron and V.I. Bovykin (eds.), International Banking, 1870–1914 (Oxford 1991), pp. 319–344. R. Nötel, 'Money, Banking and Industry in Interwar Austria and Hungary', Journal of European Economic History 13.2. (1984), pp. 137–202.
Some comparative findings can also be found in the following work:
L. Katus, "Magyarország gazdasági fejlődése, 1890–1914", in Magyarország története, 7/1. kötet., (Budapest 1978), pp. 265–401.

(3) Although Austria–Hungary or its equivalents (Donaumonarchie etc.) appears many times as a headword, but also in this case the banking system of the western part of the Habsburg Empire is denoted. See for example:
H. Pohl (Hrsg), Europäische Bankengeschichte. (Frankfurt am Main 1993), pp. 316–332.

(4) R.H. Tilly op.cit. (1989). W.P. Kennedy and R. Britton, "Portfolioverhalten und wirtschaftliche Entwicklung im späten 19. Jahrhundert", in R.H. Tilly (Hg.), Beiträge zur quantitativen vergleichenden Unternehmensgeschichte, (Stuttgart 1985), pp. 45–89.

(5) I.T. Berend and G. Ránki, Európa gazdasága a 19. században, 1780–1914, (Budapest 1987), p. 389. L. Katus op.cit. (1978), p. 369.

(6) H.E. Büschgen, Bankbetriebslehre, (Wiesbaden 1989), p. 30.

(7) H.E. Büschgen, Universalbanken oder spezialisierte Banken als Ordnungsalternativen für das Bankgewerbe der Bundesrepublik Deutschland unter besonderer Berücksichtigung der Sammlung und Verwendung von Kapital, (Köln 1970), p. 6.

(8) G. Solmssen, Entwicklungstendenzen und weltwirtschaftliche Aufgaben der deutschen Großbanken. Vortrag, gehalten in Zürich am 5. Februar 1930 auf Einladung der Deutschen Handelskammer in der Schweiz, (Berlin o. J.), p. 12.

(9) R.H. Tilly op.cit. (1989), p. 190.

(10) R.H. Tilly, "Germany, 1815–1870", in R. Cameron (ed.) op.cit. (1967), pp. 151–182.; M. Pohl, Die Entstehung und Entwicklung des Universalbankensystems, (Frankfurt am Main 1986). idem, "Festigung und Ausdehnung des deutschen Bankwesens zwischen 1870 und 1914", in Deutsche Bankengeschichte. Bd. 2. (Frankfurt am Main 1982), pp. 223–351.; P.B. Whale, Joint Stock Banking in Germany, (London, 1968. Orig. 1930.). A. Gerschenkron, An Economic Spurt that Failed, Four Lectures in Austrian History, (Princeton 1977). R. Rudolph, "Austria, 1800–1914", in R. Cameron (ed.), op.cit. (1972), pp. 29–57.; idem, Banking and Industrialization in Austria–Hungary. The Role of Banks in the Industrialization of the Czech Crownlands, 1873–1914, (Cambridge 1976). J.S. Cohen, "Italy, 1861–1914", in R. Cameron (ed.), op.cit. (1972), pp. 58–90. S.A. Hansen, 'The Transformation of Bank Structures in the Industrial Period. The Case of Denmark', Journal of European Economic History 3 (1982), pp. 575–603. H.C. Johansen, "Banking and Finance in the Danish Economy, 1870–1914", in V. I. Bovykin and R. Cameron (eds.), op.cit. (1992), pp. 159–173.; L. G. Sandberg, 'Banking and Economic Growth in Sweden before World War I', Journal of Economic History 38.3. (1978), pp. 650–680.

(11) On the debates on its role it played in the industrialization of the English banking system see:
M. Collins, Banks and Industrial Finance in Britain, 1800–1939, (London 1991)

(12) On the contraposition see:
A. Weber, Depositenbanken und Spekulationsbanken, (Leipzig 1902)

(13) M. Collins, Money and Banking in the UK. A History, 1826–1986, (London–New York–Sydney 1988). B.L. Anderson and P. Cottrell, Money and Banking in England. The Development of the Banking System, 1694–1914, (London–Vancouver 1974). P. Cottrell, "Great Britain", in H. Pohl (Hg.), Europäische Bankengeschichte, (Frankfurt am Main 1993), pp. 237–249.

(14) R. Cameron, "Belgium, 1800–1875", in idem (ed.) op.cit. (1967), pp. 129–150. H. Van der Wee and M. Goossens, "Belgium", in V.I. Bovykin and R. Cameron (eds.). op.cit. (1991), pp. 113–129. R.E. Cameron, France and the Economic Development of Europe, (Princeton N. J. 1960). R. Cameron, "France, 1800–1870", in R. Cameron (ed.) op.cit. (1967), pp. 100–128.; C. Kindleberger op.cit. (1984), pp. 95–116.

(15) S. Jirkovsky, 'Az 1873–i válság hatása a magyar hiteléletre', Magyar Takarékpénztárak és Bankok Évkönyve (1940), p.174.

(16) E. März and K. Socher, "Währung und Banken in Cisleithanien", in A. Wandruzka and P. Urbanitsch (Hrsg.), Die Habsburgermonarchie, 1848–1918., Bd. I., (Wien 1973), pp. 335–336.

(17) Born op.cit. (1977), p. 208.

(18) März–Socher op.cit. (1973), p. 363.

(19) S. Jirkovsky, Takarékpénztáraink és a Regulatívum, (Budapest 1939)

(20) G. Vargha, A magyar hitelügy és hitelintézetek története, (Budapest 1896), p. 84.

(21) Born op.cit. (1977), p. 230. Rudolph, op.cit. (1976), p. 71.

(22) H. Wixforth and D. Ziegler, 'The Niche in the Universal Banking System, the Role and Significance of Private Bankers within the German Industry, 1900–1933', Financial History Review 1 (1994), p. 102.

(23) D.F. Good, The Economic Rise of the Habsburg Empire, 1750–1914, (Berkeley 1984), p. 68. K.E. Born op.cit. (1977), p. 198.

(24) L. Hegedüs, A Pesti Magyar Kereskedelmi Bank keletkezésének és fennállásának története, II. kötet. 1892–1917, (Budapest 1917), pp. 167–183.

(25) G. Kövér, "Az Osztrák Nemzeti Bank működése és az Osztrák–Magyar Bank alapításának előzményei", in T. Bácskai (szerk.), A Magyar Nemzeti Bank története, I. kötet, (Budapest 1993), pp. 192–194.

(26) P. Hertner op.cit. (1980). D. Verdier op.cit. (1996)

(27) D. Verdier op.cit. (1996), p. 6.

(28) The data received in this way are to be treated critically. On the one hand Verdier himself also points out that his indices indicate the liquidity only approximately and there may be different, more precise indicators of liquidity (the proportion of the bank's assets that can quickly be made payable in cash and its short–term liabilities). On the other hand, the representativity of the data in our opinion is not appropriate in some places. In the case of the most countries Verdier takes the data of only the 3–6 biggest banks for the basis of investigation, while in the case of the rest the analysis is grounded on the data taken from much greater number of institutions. In addition, because of the different balance–sheet drawing practice of the certain countries and of the banks there can be a deviation in the content of the individual balance–sheet items, which may reduce the reliability of the comparison.

(29) R.E. Cameron op.cit. (1960), p. 153.

(30) M. Pohl "Allgemeine Entwicklungslinien", in H. Pohl op.cit. (1993), p. 227.

(31) See for example the view that does not assign any significance to the banks:
H. Neuburger and H.H. Stokes, 'German Banks and German Growth: An Empirical View', Journal of Economic History 34 (1974), pp. 711–731.
On the view that does assign a positive role to the banks see:
R. Fremdling and R.H. Tilly, 'German Banks, German Growth, and Econometric History', Journal of Economic History 36 (1976), pp. 416–424. R.H. Tilly, 'German Banking, 1850–1914, Development Assistance for the Strong', Journal of European Economic History 15.1. (1986), pp.113–152. E. Eistert, Die Beeinflussung des Wirtschaftswachstums in Deutschland von 1883 bis 1913 durch das Bankensystems, (Berlin 1970). W.P. Kennedy and R. Britton op. cit. (1985), pp. 45–89.

(32) P. Cottrell, Industrial Finance, 1839–1914, (London 1980), pp. 187–189.

(33) D.F. Good op.cit. (1984). E. März, Österreichische Industrie– und Bankpolitik in der Zeit Franz Josephs I., (Wien 1968). E. März–K. Socher op.cit. (1973), pp. 323–368.
A more cautious view is represented by:
R. Rudolph op.cit. (1976). A. Mosser, Die Industrieaktiengesellschaften in Österreich, 1880–1913, (Wien 1980)

(34) E. März, op.cit. (1968), p. 372.

(35) G. Kövér op.cit.(1984)

(36) B. Tomka, 'Bankuralom, bankérdekeltség, bankellenőrzés, A magyarországi pénzintézetek ipari kapcsolatai a századfordulón, 1895–1913', Történelmi Szemle 37.2. (1995), pp. 171–207. B. Tomka, 'Das Verhältnis zwischen Banken und Industrie in Ungarn, 1895–1913', Ungarn–Jahrbuch 23 (1997), pp. 173–203.

(37) B. Katona, Magyarország közgazdasága, 1913, (Budapest 1914), pp. 162–163. L. Láng (szerk.), Magyarország gazdasági statisztikája, II. k., (Budapest 1887), p. 276.

(38) E. März op.cit. (1968), p. 301.

(39) Compass Leonhardt, 1913–1914, Bd. I–II., (Wien 1915)

(40) J. Krizek, Die wirtschaftlichen Grundzüge des österreichisch–ungarischen Imperialismus in der Vorkriegszeit (1900–1914), (Praha 1963), p. 101, Footnote No. 84.

(41) K.E. Born op.cit. (1977), p. 325.; C. Fohlin, 'Universal Banking Networks in Pre–War Germany, New Evidence from Company Financial Data', Research in Economics 51 (1997), pp. 201–225.

(42) B. Tomka op.cit. (1995), pp. 171–207. B. Tomka op.cit. (1997: 'Das Verhältnis...'), pp. 198–199.
For interlocks see:
B. Tomka, 'Személyi összefonódás bankok és iparvállalatok között a századforduló Magyarországán', Replika 25 (1997), pp. 37–46.

(43) See: OL (National Archive, Budapest) Z 233. Salgótarjáni Kőszénbánya Rt. Könyvelőség. 41. kötet.

(44) B. Tomka op.cit.(1997: 'Das Verhältnis...'), p.196.

(45) E. März op.cit. (1968), p. 333.; März and Socher op.cit. (1973), p. 358.

(46) Hazai Gyáripar. 1910. dec. 31.; Á. Pogány, "Bankers and Families. The Case of the Hungarian Sugar Industry", in P.L. Cottrell and H. Lindgren and A. Teichova (eds.), European Industry and Banking Between the Wars, (Leicester 1992), p. 81.

(47) A. Gerschenkron op.cit.(1962)

(48) B. Tomka, Érdekeltség és érdektelenség. A bank–ipar viszony a századforduló Magyarországán, 1892–1913. Debrecen,1999.

(49) M. Pohl op.cit. (1993), p. 224.

(50) M. Pohl, Konzentration im deutschen Bankwesen (1848–1980), (Frankfurt am Main 1982), pp. 161–357. H. Böhme, "Bankenkonzentration und Industrialisierung", in H.–U. Wehler (ed.), Sozialgeschichte heute, (Göttingen 1974), pp. 432–451.

(51) K.E. Born op.cit. (1977), p. 123.

(52) R.H. Tilly op.cit.(1986), p. 113–114.

(53) E. März, "The Austrian Credit Mobilier in a Time of Transition", in J. Komlos (ed.), Economic Development in the Habsburg Monarchy in the Nineteenth Century, (New York 1983), p. 121.

(54) S.G. Nagy (szerk.), Magyar Compass, I. rész, (Budapest 1914/15)

(55) On the concentration see:
G. Zsoldos, A bankkoncentráció, (Budapest 1913), pp. 47–60. At the same time Zsoldos himself also points out the phenomenon of the "decentralization of banking": G. Zsoldos op.cit. (1913), pp. 61–66. On the moderation of concentration see: L. Hegedüs, 'A tőkekoncentráció problémái Magyarországon', Budapesti Szemle 1917, pp. 321–339.

(56) Magyar Statisztikai Közlemények. 35. kötet. A magyar szent korona országainak hitelintézetei az 1894–1909. években, (Budapest 1913), p. 51.

(57) B. Tomka, A bank–ipar viszony a századforduló Magyarországán, 1892–1913, (Unpublished Dissertation. Debrecen 1996)

(58) K.E. Born op.cit. (1977), p. 123.

(59) K.E. Born op.cit. (1977), p. 123.

(60) H. Matis and F. Weber, "Kaisertum Österreich – Donaumonarchie", in H. Pohl (Hrsg.) op.cit. (1993), p. 329.

(61) L. Hegedüs op.cit. (1913), pp. 185–186.

(62) Pénzintézeti Szemle, 1905. május 1. p. 154.

(63) Magyar Statisztikai Közlemények. 35. kötet. op.cit., pp. 258–259.

(64) K.E. Born op.cit. (1977), p. 164.

(65) The extraordinary speed–up of affiliatings in the case of the Credit Bank was not resulted by crises either, but rather it can be connected with the business strategy plans of the new director, Adolf Ullmann. See: A Pénzvilág, 1914. május 23. p. 655.

(66) A. Gerschenkron op.cit. (1962)

(67) J. Kocka, Unternehmer in der deutschen Industrialisierung, (Göttingen 1975), p. 65. P.B. Whale op.cit. (1968), p. 10ff. K. Borchardt, "Deutschland, 1700–1914", in C. M. Cippola and K. Borchardt (Hrsg.), Die Industrielle Revolution, (Stuttgart–New York 1976), pp. 62ff.

(68) R.H. Tilly, "Die Industrialisierung des Ruhrgebiets und das Problem der Kapitalmobilisierung", in idem, Kapital, Staat und sozialer Protest in der deutschen Industrialisierung, (Göttingen 1980), pp. 65–76. idem, "Germany, 1815–1870", in R. Cameron (ed.) op.cit. (1967), pp. 151–182. K.E. Born op.cit. (1977), p. 92. R.H. Tilly, Financial Institutions and the Industrialization of the Rhineland, (Madison 1966)