SCIENCE AND INDUSTRY. 
between fair and unfair dealing, but in any case these associations left 
no stone unturned to eliminate all interference with their business, and 
no newcomer was tolerated, either in their own or other lands. 
It is in no way clear when the German Government first realized 
how huge was the national asset that was growing up in the country, 
but once this realization was arrived at the industry was fostered and 
supported, in no half-hearted fashion, by the imposition of import 
tariffs and the granting of exceptional facilities for carrying on export 
trade, and, it is said, also by financial arrangements through the large 
national banks. It has been said that each of these great factories is a’ 
“potential arsenal,” but how great that potentiality is was not realized, 
at least by other nations, until the happenings of the last five years 
established it in no doubtful fashion. In the face of such facts as have 
been established, no nation in the world, if it values its permanence, can 
afford to ignore the fact that the position of its chemical industry is the 
foundation upon which the whole fabric of its being is built up. If 
that foundation be ignored, the structure is unstable so long as force of 
arms is left as the means of settling international disputes or may be 
employed as a meaus to satisfy a nation’s avarice. 
It is frequently stated that the facilities offered to manufacturing 
concerns by the German banks are much greater than can be obtained 
from English banking institutions, but it is seldom that one can find a 
statement of the essential difference between the practice in this respect 
of the banks of the two countries. It may be useful, therefore, to indi-. 
cate briefly what the German system is, and to show ‘how its application 
has affected the growth, not only of the chemical, but of all German in- 
dustries. Essentially, our banks concern themselves with investments 
or the financing of short-term loans on the most easily realizable 
security, and, though ‘it is possible to obtain loans on collateral securi- 
ties from them, these must always be of the most easily realizable 
character, and business over-drafts are always covered by raw or 
finished goods in which there is an open market. This arises essentially 
from the fact that the greatest proportion of the banking business is 
carried out on moneys deposited with the bank and not with the. actual 
subscribed capital of the bank itself, and consequently liquidity of in- 
vestments is essential to security. The position in the case of German 
banks is markedly different from this. It is to be noted at the outset 
that the cartel system is as prominent in German banking as it is in 
industry, even the largest of the banking concerns nes in Vs to 
their mutual advantage. 
These groups further organize themselves into eetiowts to deal with 
special types of financial propositions which may be concerned with 
countries or industries, and large group will work in association with 
large group in order to handle specially large loans, their practice here 
being similar to that of the spread of large risks by fire insurance com- 
panies. It might be said here that such a system cannot be so safe as 
that of the English banks, and, for our banks, the risks would certainly 
be too great to carry; but the capital of the German banks is so much 
greater in proportion to their liabilities than is the case in England 
that their practice is as sound as our own. Whereas some of our 
largest banks show a proportion of capital to liabilities of only 5 per 
cent., the ratio in German banks is no less than 45 per cent., and ata 
II2 
