The Credit Registration Centre and efforts to organise credit registers in Czechoslovakia in the first half of the 20th century

The Credit Registration Centre and Efforts to Organise Credit Registers in Czechoslovakia in the First Half of the 20th Century Jakub Kunert KEY WORDS: Economic History— Czechoslovakia— First Republic— Credit Registarion Centre— Central Banking An advanced credit system is akey precondition for the development of the economy as awhole, as lending intermediates the allocation of free funds to economic sectors. An excess or shortage of credit significantly influences the macroeconomic variables of the economy, because credit affects demand and, in turn, production of goods and services. Sufficient credit is essential to the development of the entire economy, as it enables entrepreneurs to innovate, boosts circulation and maintains sufficient effective demand. However, excessive credit availability carries with it the risk of overlending by lenders optimistically granting credit to everyone who applies for it. Overuse of credit may therefore lead to acredit crunch caused, by contrast, by alack of credit as the total amount of funds for lending is exhausted. In acredit crunch, however, funds lent during the “credit euphoria” very often prove to be unrecoverable as, in turn, lenders themselves get into trouble as well.1 1 Cf. the entries Úvěr and Krize úvěrová, Jiří Novotný (ed.), Finanční slovník, Prague 1973, pp.250–251 and 555–557. Regarding credit and the lending process in Czechoslovakia between the wars, cf. e.g. Jiří Novotný— Jiří Šouša, Bankovní úvěry arozvoj průmyslu vČeskoslovensku 1918–1938. In: Československo 1918–1938. Osudy demokracie ve střední Evropě, Prague 1999, pp.328–334; Vlastislav Lacina, Změny vbankovním systému afinancování průmyslových podniků po vzniku samostatné Československé republiky, Hospodářské dějiny— Economic History, No.20, 1992, pp.87–99; Jiří Novotný— Jiří Šouša, Úvěrování průmyslových podniků Národní bankou Československou vletech 1926–1938, AUC, Philosophica et Historica 3, Studia historica L, Prague 1998, pp.191–200; Jiří Novotný, Úvěrové podmínky apostupy Živnostenské banky vmeziválečném období, Hospodářské dějiny— Economic History, No.20, 1972, pp.101–111; Jiří Novotný— Jiří Šouša, Kúvěrování textilního průmyslu Živnostenskou bankou vmeziválečné ČSR, Disertationes Historicae, No.2, 1994, pp.195–205; Jiří Novotný— Jiří Šouša, Úvěrování československého průmyslu bankami vmeziválečném období: Živnostenská banka ajejí klienti. In: Československo astřední Evropa vmeziválečném období, AUC, Phil— Hist 3 (5), 1994, Studia historica, pp.93–105; Jiří Novotný— Jiří Šouša— Désirée Verdonk, Beziehungen von Banken und Industrie am Beispiel der Živnostenská banka und des Wiener-Bank Vereines. In: Alice Teichová— Herbert Matis (ed.), Österreich und die Tschechoslowakei 1918–1938. Die wirtschaftliche Neuordnung in Zentraleuropa in der Zwischenkriegszeit, Wien— Köln— OPEN ACCESS 20 WISOHIM/ESHP 26 One way to prevent overlending is for lenders to work together on the basis of joint registration of borrowers. This enables them to prevent overuse or misuse of credit by individual borrowers. During 2002, the Czech National Bank launched asystem of registration of business sector borrowers called the Central Credit Register. However, such aregister is by no means new in the Czech lands. The first attempts to establish one were made at the end of the era of the Austro-Hungarian monarchy. The beginnings of the credit registration system that started to operate in Czechoslovakia in the second half of the 1930s can be traced to the period shortly before World War I.At that time, it became clear that all over Austria during the 1900s, like in the 1870s, business was booming excessively and groundless speculation was going on. This caused aseries of businesses that had been using credit as the foundation of their existence to go bankrupt.2 Many firms were using credit in aspeculative or even fraudulent manner and relying on banks not to inform other banks about the details of their credit relations for reasons of competition.3 The situation in the banking system of the Czech lands reached crisis point in late 1911, when banks started to experience substantial shortages of funds, exacerbated by massive withdrawals by depositors. The lack of mobile funds led to amajor credit crunch in 1912.4 One of the ways in which banks decided to address the problem was to set up aCredit Registration Centre in Prague in late January 1912. However, this organisation was apurely private enterprise run by Czech banks. According to all sources, its job was solely to record liabilities arising from invoice loans.5 The efforts to broaden the protection of lenders against borrowers took anew form following the establishment of the Czechoslovak Republic, when the creation of anational credit register, this time on the basis of the bank of issue, was incorporated into the Act establishing the National Bank of Czechoslovakia of 14 April 1920. Article 33 of this Act dealt directly with this issue, stipulating that: “In the interests of proper credit provision, the Bank shall have the duty to bring about nationwide credit registration and conduct it so that credit misuse is prevented where possible. The Bank shall be entitled to request documents and reports from anybody for this Weimar 1996, pp.235–252; Jakub Kunert, Průmysl abanky. Archiv České národní banky jako fundament pro výzkum historie českého ačeskoslovenského průmyslu 19. a20.století. In: Průmysl— město— archiv. Archivy adokumentace průmyslového dědictví, Prague 2013, pp.125–150; Jakub Kunert, Archivní fond Živnostenské banky jako pramen pro studium dějin českého ačeskoslovenského průmyslu. In: Jana Kleinová (ed.), Věda atechnika včeských zemích mezi světovými válkami, Práce zdějin techniky apřírodních věd, Vol.39, Prague 2014, pp.13–30. 2 Cf. Stav národního hospodářství, Obzor národohospodářský, Vol. XVIII, Prague 1913, p.44. 3 Cf. Břetislav Palkovský, Národní banka Československá anáprava měny, Prague 1925, p.155. 4 Cf. Horák Josef, Přehled vývoje českých obchodních bank, Prague 1913, p.113. 5 Unfortunately, the archive documents give no details about how the Centre actually operated. Cf. e.g.: Archive of the Czech National Bank (hereinafter “ACNB”), archive collection Živnostenská banka (hereinafter “ŽB”), ŽB-SI/c, Protokol výkonného výboru z30. ledna 1912, book No.4, pp.205–206, box No.6/100, and cf. ACNB, archive collection Česká banka (hereinafter “ČB”), ČB/15/72, Protokol výkonného výboru z13.12.1912, book No.15. OPEN ACCESS jakub kunErt 21 purpose.”6 According to the explanatory report for this Act, it was envisaged that the new bank of issue would receive monthly reports from credit institutions on the size of loans provided, process them in the form of astatistical register and then inform the participating institutions about what loans the customer had and from how many institutions. To avoid violations of banking secrecy, however, the National Bank was not expected to specify which banks customers had borrowed from.7 Therefore, the job of the future National Bank was not to examine borrowersʼ creditworthiness or to convince lender banks to reject loan applications submitted by overleveraged customers, but merely to enable lender banks to obtain abetter picture of their borrowersʼ liabilities to other banks.8 Despite the provisions of the Act, the credit registration centre was not created automatically upon the establishment of the National Bank of Czechoslovakia on 1 April 1926, even though voices calling for its establishment had already been heard during the existence of the Banking Office of the Ministry of Finance. Efforts on the part of banks even occasionally led to the establishment of credit registration centres. One was established in Plzeň as early as 1923, headed by the director of the Plzeň branch of the Banking Office of the Ministry of Finance.9 It was formed by mutual agreement between banks operating in the Plzeň region10 following long discussions during the preparatory phase. One of the key questions was which of the participating banks was to maintain the register. An offer by Spořitelna města Plzně to take on the running of the register proved contentious. It was strongly opposed by Plzeňská banka, which had long-running disputes with Spořitelna města Plzně and threatened not to participate in the registration centre in such case. As this would basically have relegated the centre to insignificance, the banks decided to seek an administrator outside the circle of competing banks.11 They chose the local branch of the Banking Office of the Ministry of Finance. Jaroslav Preiss, Managing Director of Živnostenská 6 Zákon č.347 oakciové bance cedulové ze 14.4.1920, Sbírka zákonů anařízení státu československého, Vol.1920, pp.859–876 and cf. Břetislav Palkovský, Národní banka Československá …, p.155. 7 Cf. ibid., p.155. 8 Cf. Deset let Národní banky Československé, Prague 1937, p.226. 9 ACNB, ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, file Plzeň, Dopis centrály Živnostenské banky na filiálku vPlzni z6.2.1922, box No.64/2201. 10 The centre had the following member institutions: Agrární banka československá, Anglo- -československá banka, Banka československých legií, Banka pro obchod aprůmysl (former Länderbank), Banka stavebních živností aprůmyslu, Česká banka, Česká eskomptní banka, Česká komerční banka, Česká průmyslová banka, Moravská agrární aprůmyslová banka, Občanská záložna vPlzni, Plzeňská banka, Pražská úvěrní banka, Řeznicko- -uzenářská banka, Spořitelna města Plzně, Všeobecná bankovní jednota and Živnostenská banka. Later on, bank branches in Klatovy, Mariánské Lázně and Domažlice (including Spořitelna města Domažlic) joined the Plzeň registration centre. 11 ACNB-ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, file Plzeň, Dopis filiálky Živnostenské banky na centrálu ŽB z19. ledna 1922, box No.64/2201. OPEN ACCESS 22 WISOHIM/ESHP 26 banka, discussed this proposal with Karel Kučera, Deputy Chief Executive Director of the Banking Office. However, Kučera in fact only supported the registration of bill credit based on rediscount with the Banking Office.12 When it became clear that the Banking Office was not really interested in patronage of the credit registration centre and that its vision of credit registration did not go beyond bill rediscount, the Plzeň region credit registration centre was initially set up in test mode, headed by the Director of the Banking Office in Plzeň Jaroslav Pospíšil, who ran it as anatural person.13 It was maintained in this form until 1945 despite the creation of the statutory Credit Registration Centre in the 1930s.14 Loans of all types— even those provided outside Plzeň— exceeding CZK 5,000 and granted by the centre’s regional participants were subject to registration under the agreement between the participating institutions. Registration pertained to both covered and uncovered loans, with the exception of loans granted on the basis of full coverage by securities.15 The register was updated once ayear and the members filled in questionnaires stating only the name, line of business and address of the customer to whom they had granted the loan. The overview thus did not include data on the size, coverage and drawdown of the loan. After comparing the records received, the registration centre informed the individual members about their borrowers’ credit relations with other members of the credit association. In addition, each bank could request information about the customer’s liabilities to other lenders before granting credit to anew borrower. It was an undeniable advantage for the participating institutions that they immediately received information whenever someone who had borrowed from them was granted new credit. This enabled them to take flexible action against borrowers and, where appropriate, request further guarantees for the credit they granted.16 This procedure also prevented the participating institutions from interfering unduly in negotiations between aborrower who had borrowed from them and another financial institution before an application for new credit was dealt with. In 1923 there was also an attempt to establish acredit registration centre in Bratislava, as the members of the regional settlement association agreed that the complicated situation in Slovakia necessitated one. They proposed to send reports on the size and drawdown of loans by individual firms to the local branch of the Bank12 ibid., file Plzeň, Dopis filiálky Živnostenské banky na centrálu ŽB z13. prosince. 1922, box No.64/2201, and cf. ibid., Dopis Bankovního úřadu ministerstva financí na Živnostenskou banku z27. února 1922, box No.64/2201, and ibid., Dopis filiálky Živnostenské banky na centrálu ŽB z3. března 1922, box No.64/2201. 13 ibid., Dopis filiálky Živnostenské banky na centrálu ŽB z16. ledna. 1923, box No.64/2201. 14 It was maintained because it registered loans exceeding CZK 5,000, whereas the thres hold for statutory registration was CZK 100,000 (cf. below). ibid., Dopis filiálky Živnosten ské banky na centrálu ŽB z6. května. 1944, box No.64/2201. 15 ACNB, archive collection Česká průmyslová banka (hereinafter “ČPB”), Filiálka Klatovy, pořad. č.15, složka č.671, Evidenční ústředna úvěrová při Bankovním úřadu ministerstva financí, Opis zápisu oschůzi místních peněžních ústavů, konané 30. ledna 1924. 16 ACNB-ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, Příloha zprávy pro ředitelství ve věci Zřízení evidencí úvěrových ufiliálek Národní banky československé z6. února 1931, box No.64/2201. OPEN ACCESS jakub kunErt 23 ing Office every month and to receive reports back containing the identity of firms which had also borrowed from other institutions, along with their total debt.17 However, the plan was not implemented— the Banking Office shelved the matter in 1923 stating that “negotiations are under way on the establishment of such aregistration office for the Czechoslovak Republic as awhole in Prague”.18 Asimilar unsuccessful attempt was made in the Karlovy Vary area the same year. The member institutions of the Union of Czechoslovak Banks asked the local branch of the Banking Office to maintain acredit register in the form of reports containing only the names of their borrowers. However, the Banking Office also rejected this initiative without giving areason.19 17 ACNB-ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, file Filiálka Bratislava, Dopis filiálky ŽB vBratislavě na centrálu ze 14. února 1923, box No.64/2201. It is surely noteworthy that in this letter the branch asked the headquarters why asimilar credit registration centre had not been established in Prague, where “negotiations about its establishment allegedly took place without results”. 18 ibid., Dopis filiálky ŽB vBratislavě na centrálu z6. dubna 1923, box No.64/2201. The reference to “negotiations […] on the establishment of such aregistration office for the Czechoslovak Republic as awhole in Prague” was probably based on information from the headquarters of the Banking Office of the Ministry of Finance. On 28 April 1923, the Banking Office sent adocument to the Union of Banks for discussion, expressing its willingness to take on loan registration: “unless financial institutions prefer an independent institution, to introduce credit registration in the interests of sound credit provision”. The proposal contained an outline of the registration system based on quarterly reports from banks to branches of the Banking Office giving information about their borrowers and the size of their debt. This data was then to be processed by the branches to create regional lists, which would be sent to the Banking Office headquarters in Prague. The headquarters would compile acentral list stating “where, with how many institutions and in what amounts the firm has obligations”. The list would then be sent to the branches, which would inform the participating financial institutions of the results. Loans exceeding 500,000 crowns [currency: Československá koruna], and later even 100,000 crowns, were considered for registration. The proposal was discussed by the Executive Committee of the Union of Banks on 2May 1923 but did not win sufficient support. The Executive Committee disagreed with the Banking Office maintaining the register, as the Union had envisaged from the start that it would be maintained by Zemská banka (“the plan was the most agreeable to the Union banks”). At the same time, however, Zemská banka was against taking on this role, as it was overloaded with other work. The Banking Office abandoned this plan, probably because of the negative reaction from the Union of Banks, so it did not even reach the agenda of the meetings of the Banking Committee at the Ministry of Finance. ACNB, ŽB/3941/1, Hospodářská skupina “Soukromé bankovnictví”, Prague, file 3 Svazová režie ačlenský příspěvek Zpráva pro ředitelství oschůzi výboru SČB z3.5.1923 and opis dopisu Bankovního úřadu ministerstva financí na Svaz československých bank z28. dubna 1923, box No.3941. 19 ibid., file Filiálka Karlovy Vary, Dopis filiálky ŽB vKarlových Varech na centrálu z6. srpna 1923, box No.64/2201. Interestingly, however, the headquarters of Živnostenská banka failed to notice that the registration centre had not come into existence, as it asked its branch about its experience with the local credit register as late as 1938. Cf. ibid., file OPEN ACCESS 24 WISOHIM/ESHP 26 The establishment of credit registration centres was again considered during 1925 and 1926, when aprivate credit register headed by the director of the local municipal savings bank was created in Chomutov. The banks were obliged to provide information about loan size only, not the actual debt balances of their customers.20 Similarly, Anglo-československá banka asked for acredit registration centre to be created for Žatec and repeatedly tried to persuade the local branch of the Banking Office to manage it.21 Bank branches in Ústí nad Labem also supported credit registration, based on aproposal made by representatives of Česká průmyslová ahospodářská banka. However, during the preparatory work, which was done by an elected committee of the banks’ representatives, it became clear how different the individual institutions’ ideas were. First, the proposal that the registration centre should be managed by the local Banking Office was rejected, as according to some representatives its director was too closely linked to the group around Česká průmyslová ahospodářská banka. Furthermore, opinions differed on the geographical reach of the register, as the importance of firms from Ústí went beyond the narrow scope of the region. An understandable demand was therefore made to extend it to the land level or the Czechoslovak Republic as awhole, where it would be managed by Zemská banka. However, the banks’ differing views ultimately prevented the registration centre from being set up.22 That the establishment of acredit registration centre was indeed one of the key issues in the work to organise the credit area is also evidenced by proposals made by Minister of Finance Karel Engliš to create anationwide credit registration department, as reported in the press at the time. However, he envisaged the credit register being run by anewly formed institution— Jednota, revizní adůvěrnické sdružení československých bank vPraze.23 The Ministry of Finance returned to the idea of acredit registration centre in 1928, when it asked the National Bank of Czechoslovakia to apply strictly the 1920 law on its establishment, and specifically Article 33 Filiál ka Karlovy Vary, Dopis centrály ŽB na filiálku ŽB vKarlových Varech z30. března 1938, box No.64/2201. 20 ACNB, archive collection Anglo-československá banka (hereinafter “ACB”), ACB/15/182, Protokol pražského výboru z1. března 1926, box No.15. During the 1920s, acredit registration centre was established in Jablonec nad Nisou, but the basis on which it operated is unknown. ACNB-ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, file Moravská Ostrava, Dopis centrály Živnostenské banky na filiálku ŽB vMoravské Ostravě z1. prosince 1930, box No.64/2201. 21 ACNB, ACB/15/148, Reservátní protokol pražského výboru z1. února 1926, p.2, box No.15. 22 ACNB, ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, file Ústí nad Labem, Dopis filiálky Živnostenské banky vÚstí nad Labem na ústředí ŽB z26. května 1925, box No.64/2201. 23 ACNB, ACB/1/30, Protokol správní rady z22. září 1926, box No.1. The fact that Minister of Finance Karel Engliš was not alone in feeling that acredit registration centre was needed is also illustrated by acontemporary article by ajournalist named Beneš in Národní listy advocating acredit register modelled on that of the former Austro-Hungarian Bank (see footnote 40 for how this register was maintained). See Beneš, Evidenční ústředna úvěrové činnosti bank, Národní listy, 1 April 1925, No.90, Vol.65, p.6. OPEN ACCESS jakub kunErt 25 on credit registration. However, the narrower bank committee of the bank of issue turned down the request, stating that aprescriptive approach to credit institutions in this area would only cause animosity towards the central bank.24 Anglo-československá aPražská úvěrní banka played amajor role in the next stage of the attempts to establish acredit register. Its branches initiated the creation of some other local credit registration centres in 1930 and 1931, probably in an effort to find out how many customers were borrowing separately and secretly from the formerly independent banks from which this new financial institution had been created.25 Subsequently, the National Bank of Czechoslovakia also took up the initiative in some regions. Negotiations were held in the “banking districts”, i.e. the regions administered by the National Bank’s local branches in Brno, České Budějovice, Uherské Hradiště, Hradec Králové, Jihlava, Košice, Liberec, Olomouc, Moravská Ostrava, Pardubice, Teplice and Ústí nad Labem.26 However, as it continued to be organised only on the basis of mutual agreement between all the participating financial institutions, the preparatory work on the centres was delayed and in some regions even ground to acomplete halt. This happened for several, often recurring reasons. One of them was the non-participation of major local institutions, as was the case in Jihlava and Ústí nad Labem.27 Another major reason was the requirement of the National Bank of Czechoslovakia that certain penalties be specified for non-compliance with the credit registration agreement and that inspections of the participants’ accounts be possible.28 Banks in Brno opposed the centre also because they did not want to register loans granted to customers from the Brno region by their headquarters and other 24 ACNB, archive collection Národní banka Československá (hereinafter “NBC”), NBC/21/1, Protokol užšího výboru bankovní rady NBČ z14. ledna 1928, pp.13–14, box No.21. 25 On the merger between Pražská úvěrní banka, Anglo-československá banka and Česká komerční banka, cf. Jaroslav Pátek, Anglo-československá aPražská úvěrní banka. In: Zdějin českého bankovnictví v19. a20.století, AUC Phil. Et Hist. 5, 1997, Studia Historica XLVII, Prague 2000, pp.109–123, and Jaroslav Pátek, Anglo-československá aPražská úvěrní banka. In: Vencovský, František (ed.), Dějiny bankovnictví včeských zemích, Prague 1999, pp.314–315. 26 ACNB, ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, file Filiálka Ústí nad Labem, Dopis centrály Živnostenské banky na filiálku ŽB vÚstí nad Labem z6. února 1931, box No.64/2201. Of these, Anglo-československá aPražská úvěrní banka initiated the creation of centres at the branches in České Budějovice, Jihlava, Košice, Olomouc and Pardubice. Cf. ACNB, ŽB-SXV/c-32, Evidenční ústředna úvěrová apobočky Národní banky Československé, file České Budějovice, Jihlava, Košice, Olomouc aPardubice, box No.64/2201. Extraordinarily, following its experience with the credit register in Plzeň, the headquarters of Živnostenská banka called upon every branch to sign up to the register. Cf. ibid., Evidenční ústředna úvěrová apobočky Národní banky Československé, box No.64/2201. 27 ibid., file Ústí nad Labem aJihlava, box No.64/2201. In Ústí nad Labem this concerned alimited partnership from the group of Lipzing Allgemeine Deutsche Kreditanstalt, the bank Wolfrum L. & Co., which had significant positions in local German industrial circles. 28 ibid., file České Budějovice, Jihlava, Košice, Olomouc aPardubice, box No.64/2201. OPEN ACCESS 26 WISOHIM/ESHP 26 branches.29 So, after long negotiations, credit registration centres were established only in Liberec and Teplice.30 The idea of anationwide credit registration centre was revived in the early 1930s in the context of the preparation of new banking laws, at atime when it was becoming clear that the measures taken to stabilise the financial sector in the 1920s were not enough.31 Negotiations to include provisions on credit registration in these new banking laws started in late 1931. The proposal came from the Ministry of Finance, specifically the then Finance Minister Karel Trapl. During December, he invited the Governor of the National Bank Vilém Pospíšil to ameeting and informed him that he ‘would like to implement the organisation of acredit registration centre’. Pospíšil was not against the proposal but pointed out that although the law on the bank of issue mentioned such acentre, the National Bank of Czechoslovakia had no effective enforcement tools to make banks provide information about the loans they granted.32 Trapl therefore suggested that credit registration be performed by Jednota— revizní adůvěrnické sdružení československých bank, as proposed earlier by the former finance minister, Karel Engliš. However, Pospíšil opposed this categorically, stating that it would have an adverse effect on private law entities if the credit register were to be run by abody subordinated directly to the Ministry of Finance. In his opinion, another disadvantage of such aregister would be its sole focus on joint-stock banks. Therefore, the governor of the bank of issue recommended to the minister of finance that the new banking laws should only define the duties of banks in the spirit of Article 33 of the 1920 law. Financial institutions would thus have the duty to submit to the National Bank monthly global reports on their deposits and loans, and the relevant bodies of the National Bank would become entitled to inspect their audit reports.33 Subsequently, the Union of Czechoslovak Banks together with interest groups of “people’s financial institutions” lobbied for an amendment to this effect.34 The final talks on the new banking laws took place during January 1932. The four ministers co-responsible for banks eventually agreed to the central bank’s request 29 ibid., file Brno, Dopis centrály Živnostenské banky na filiálku vBrně z18. prosince 1931, p.3, box No.64/2201. 30 Cf. ibid., file Liberec aTeplice, box No.64/2201. 31 Cf. Jiří Novotný— Jiří Šouša, Krize bank za první republiky, In: Historický obzor, No.1–2, Vol.13, January–February 2002, pp.2–14. 32 “I(Vilém Pospíšil— author’s note) pointed out that the bank of issue does what it can in times of plethora, but that it was hampered by the fact that in times of plethora it does not have enough influence over banks to be able to bring the mechanism of the said reports to life, as well as by the fact that the law on the joint-stock bank of issue merely stipulates ageneral duty of the bank of issue to bring about nationwide trade credit registration, but that the relevant provision contains no sanctions, so the bank of issue cannot impose mandatory measures here.” ACNB, NBC, NBC/385/3, Protokol bankovní rady NBČ z21. prosince 1931, p.6, box No.385. 33 ibid., p.7. 34 ACNB, NBC, NBC/31/2, Protokol užšího výboru bankovní rady NBČ z14. ledna 1932, p.31, box No.31. OPEN ACCESS jakub kunErt 27 to be given the tools it needed to maintain acredit register.35 The new Banking Act No.54/1932 Coll. was adopted on 21 April, and Article LIII thereof was devoted to the establishment of aCredit Registration Centre at the National Bank of Czechoslovakia.36 Under the Act, the Government was tasked with issuing detailed regulations implementing Article 33 of Act No.347/1920 Coll. For the first time, the Act laid down penalties for failure to submit the loan documents and reports requested by the National Bank of Czechoslovakia. Likewise, penalties were specified for the submission of incorrect data. Those who failed to submit documents would be penalised by their district authority for an administrative offence, with fines ranging between 1,000 and 10,000 crowns [currency: Československá koruna], and those who submitted incorrect or incomplete data would be punished by acourt and face ajail sentence of between three days and three months or afine of between 5,000 and 100,000 crowns. On the other hand, penalties were also defined for clerks of the National Bank who breached the principle of secrecy when performing registration. They would face jail sentences of between one and fourteen days or afine of between 50 and 10,000 crowns.37 Although the relevant statutes were not issued until 1936, the National Bank of Czechoslovakia began to prepare for the launch of credit registration soon after Act No.54/1932 was issued. The Board decided that banks would report to the bank of issue every three months, on 28 (or 29) February, 31 May, 31 August and 30 November. Banks were expected to provide information on all loans amounting to 1% or more of their shareholders’ equity. The central bank envisaged registration initially pertaining to joint-stock commercial banks and later being extended to people’s financial institutions. It then also considered the most appropriate way of linking the new register with the existing fragmented ones run independently by banks on aprivate basis. At the time, the National Bank wanted the register to include bill credits, overdrafts, mortgages and guarantees.38 During 1934, the preparations for the issuance of agovernment regulation on credit registration neared completion and the issue also started to be discussed in the Advisory Committee for Financial Matters. Two approaches to the operation of the centre clashed in the debate. The first was aliberal one, according to which the centre would only have to inform lenders if they asked for information. According to the second approach, conversely, lenders would have the duty to ask the centre about the 35 ACNB, NBC, NBC/41/1, Protokol bankovní rady NBČ z25. ledna 1932, p.26, box No.41. 36 Act No.54/1932 of 21 April 1932, amending the following Acts: Act of 9 October 1924, No.237 Coll., establishing aspecial fund to mitigate losses arising from the post-war situation, Act of 10 October 1924, No.288 Coll, establishing ageneral fund of financial institutions in the Czechoslovak Republic, and Act of 10 October 1924, No.239 Coll., on deposit books (certificates) and on audits of banks, and specifying some conditions for businesses and joint-stock companies, see Sbírka zákonů anařízení, Vol.1932, Prague 1932, p.253. 37 See Gustav Švamberg, Ozdravění našeho peněžnictví. Mravní hospodářské— odborné, Prague 1932, p.119. 38 ACNB, NBC, NBC/20/3, Protokol bankovní rady NBČ z20. prosince 1933, pp.61–63, box No.20. OPEN ACCESS