There are, however, a number of exceptions to the general stability. In Argentina the crop-moving season creates, though to a much smaller extent, the same kind of extra demand for currency as in the United States, and tends to make some seasonal variations in discount rates. They vary from as low as 6 per cent. to as high as 12 per cent., but do not normally move far from 8 or 9 per cent.
COMPENSATION OF DIRECTORATE
The German, French, Italian, Spanish, and many of the domestic banks, especially in Argentina and Peru, follow the European custom of compensating the home office directorate by allowing them a fixed percentage of the net profits. The president, manager, founder, and others may also be compensated in the same way. The net profits of the Banco Español del Río de la Plata are distributed: 2-1/4 per cent. to certain specified charities, 1 per cent. to the founder, 12 per cent. to the reserve fund, 2 per cent. to the directors and managers, 2-3/4 per cent. to the fund for employés, 80 per cent. to the shareholders for dividends and dividend reserves; those of the Banco de Italia y Río de la Plata: 1/2 per cent. to charity, 5 per cent. to the reserve fund, 7 per cent. to the directorate, 1-1/2 per cent. to the fund for employés, 86 per cent. to the shareholders. There is apparently no general rule which governs the distribution except possibly that the larger the bank the smaller is the percentage for the directorate and management. In England the directors are more likely to receive a fixed compensation. Whether this plan of having a paid directorate works better than the American method of having a directorate made up usually of some of the larger shareholders, whose payment is purely nominal, is an open question. It is largely a matter of national custom.
CLASSES OF BUSINESS OF FOREIGN BANKS
First. The foreign banks in South America usually start by devoting a large proportion of their energy and capital to operations in exchange.
Second. In this connection they purchase and make advances against commercial bills drawn on importers in the countries where they are doing business.
Third. At the same time the home office in London, Hamburg, or Berlin is probably developing a business in acceptances which involves comparatively little direct expense and allows considerable profits.
Fourth. All South American banks are called upon to handle collection of drafts and sometimes to take care of ordinary mercantile transactions, both on a commission basis.
Fifth. An activity which may be of some importance from the beginning consists of underwriting and selling securities.
Sixth. As quickly as possible the foreign banks build up a local account current and loan and discount business.