surrendered their privilege, and there remain only five banks, including the Reichsbank, which still issue bank notes. The other four are situated in Bavaria, Saxony, Württemberg and Baden. The total note-issue was fixed by the law of 1875, a proposal being assigned to each bank. Any part of this issue assigned to private banks which might be withdrawn from circulation, owing to a deficiency in the legal reserve funds, was to be transferred to the Reichsbank. The result has been the tendency of the latter gradually to absorb the whole note-issue. By the law of 1906 the Reichsbank was authorized to issue 20 M. and 50 M. notes. Treasury notes (Reichs-Kassenscheine) for these amounts were no longer to be issued; but the state reserved the right to circulate notes of the value of 5 M. and 10 M.
The organization of the imperial post-office was carried out with great success by Herr von Stephan (q.v.), who remained at the head of this department from its creation till his death in 1897. Proposals were also made to Bavaria and Württemberg to surrender their special rights, but these were not accepted.
The unification of the railways caused greater difficulties. Nearly every state had its own system; there was the greatest variety in the methods of working and in the tariffs, and the through traffic, so important for the commercial Railways. prosperity of the country, was very ineffective. In Baden, Württemberg and Hanover the railways were almost entirely the property of the state, but in all other parts public and private lines existed side by side, an arrangement which seemed to combine the disadvantages of both systems. In 1871 three-quarters of the railway lines belonged to private companies, and the existence of these powerful private corporations, while they were defended by many of the Liberals, was, according to the national type of thought, something of an anomaly. Bismarck always attached great importance to the improvement of the railway service, and he saw that uniformity of working and of tariffs was very desirable. In the constitution of the empire he had introduced several clauses dealing with it. The independent administration of its lines by each state was left, but the empire received the power of legislating on railway matters; it could build lines necessary for military purposes even against the wish of the state in whose territory they lay, and the states bound themselves to administer their lines as part of a common system. In order to carry out these clauses a law was passed on the 27th of June 1873 creating an imperial railway office (Reichseisenbahnamt) for the purpose of exercising a general control over the railways. This office has done much in the matter of unifying the systems of various railways and of regulating their relations to the military, postal and telegraph organizations; it also took a leading part in the framing of the international laws regarding goods traffic; but the imperial code of railway law which it drafted has never been laid before the Reichstag. It effectively controls only the privately owned lines in Prussia. Yet, in setting it up, Bismarck had in mind the ultimate acquisition of all the railways by the empire. He found, however, that it was impossible to carry any Bill enforcing this. He therefore determined to begin by transferring to the imperial authority the Prussian state railways; had he been able to carry this out the influence of the imperial railways would have been so great that they would gradually have absorbed those of the other states. The Bill was carried through the Prussian parliament, but the opposition aroused in the other states was so great that he did not venture even to introduce in the Bundesrat a law empowering the empire to acquire the Prussian railways. In many of the state parliaments resolutions were carried protesting against the system of imperial railways, and from that time the preservation of the local railway management has been the chief object towards which, in Saxony, Bavaria and Württemberg, local feeling has been directed. The only imperial railways are those in Alsace-Lorraine.
The result of the legal reform and other laws has been greatly to diminish the duties of the state governments, for every new imperial law permanently deprives the local parliaments of part of their authority. Generally there remains to them the control of education and religion—their most important duty—police, all questions connected with land tenure, local government, the raising of direct taxes, and, in the larger states, the management of railways. The introduction of workmen’s insurance, factory legislation, and other measures dealing with the condition of the working classes by imperial legislation, was at a later period still further to limit the scope of state legislation.
Meanwhile the government was busy perfecting the administration of the national defences. From the war indemnity large sums had been expended on coast defence, on fortifications and on replacing the equipment and stores Army organization. destroyed during the war. A special fund, producing annually about a million pounds, was put aside, from which pensions to the wounded, and to the widows and orphans of those who had fallen, should be provided. It was also desirable to complete the military organization. It must be remembered that technically there is no German army, as there is no German minister of war. Each state, however small, maintains its own contingent, subject to its own prince, who has the right and the obligation of administering it according to the provisions of the treaty by which he entered the federation. Practically they are closely tied in every detail of military organization. The whole of the Prussian military system, including not only the obligation to military service, but the rules for recruiting, organization, drill and uniforms, has to be followed in all the states; all the contingents are under the command of the emperor, and the soldiers have to swear obedience to him in addition to the oath of allegiance to their own sovereign. It is therefore not surprising that, having so little freedom in the exercise of their command, all the princes and free cities (with the exception of the three kings) arranged separate treaties with the king of Prussia, transferring to him (except for certain formal rights) the administration of their contingents, which are thereby definitely incorporated in the Prussian army. The first of these treaties was arranged with Saxe-Coburg Gotha in 1861; those with the other North German states followed at short intervals after 1866. The last was that with Brunswick, which was arranged in 1885; Duke William had always refused to surrender the separate existence of his army. Owing to the local organization, this does not prevent the contingent of each state from preserving its separate identity; it is stationed in its own district, each state contributing so many regiments.
In 1872 a common system of military jurisprudence was introduced for the whole empire except Bavaria (a revised code of procedure in military courts was accepted by Bavaria in 1898); finally, in February 1874, an important The Septennat. law was laid before the Reichstag codifying the administrative rules. This superseded the complicated system of laws and royal ordinances which had accumulated in Prussia during the fifty years that had elapsed since the system of short service had been introduced; the application to other states of course made a clearer statement of the laws desirable. Most of this was accepted without opposition or debate. On one clause a serious constitutional conflict arose. In 1867 the peace establishment had been provisionally fixed by the constitution at 1% of the population, and a sum of 225 thalers (£33, 15s.) had been voted for each soldier. This arrangement had in 1871 been again continued to the end of 1874, and the peace establishment fixed at 401,659. The new law would have made this permanent. If this had been done the power of the Reichstag over the administration would have been seriously weakened; its assent would no longer have been required for either the number of the army or the money. The government attached great importance to the clause, but the Centre and the Liberal parties combined to throw it out. A disastrous struggle was averted by a compromise suggested by Bennigsen. The numbers were fixed for the next seven years (the so-called Septennat); this was accepted by the government, and carried against the votes of the Centre and some of the Progressives. On this occasion the Fortschrittpartei, already much diminished, split up into two sections. The principle then established has since been maintained; the periodical votes on the army have become the occasion for formally testing the strength of the Government.
