The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-02-17
NEW LAW IN BRAZIL
FOR GOLD STANDARD
Convertible Note Issue With
Retirement of Paper Money
in Proposed Bill.
Special Co,respondencc 10 THE sly

Rio pE JANEIRo. Feb 5.-Dr. Sampalo
Vidal. formerly Minister OF Finance OF
the Brazilian State of Sac Paulo. and
the States representative in the Brazil
ian Congress, has proposed law for
the establishment of a new national
bank OF issue and discount for the
country. The proposed measure in
wolves the gradual adoption of a gold
standard through convertible note is
sued backed by a one-third fund OF gold.
and the gradual retirement OF the
present irredeemable paper money.
The plan calls for ffty year charter
stock bank to be called the Bank OF
Brazil with a directorate OF nine mem
bers, including the president. who
would be appointed by the Federal
Government three directors TO be
chosen by the commercial banks with
Brazilian charters and stockholders and
Ave directors elected by the stockhold-
ers of the proposed bank.
The bank would be capitalized at
100. 900 contos OF reis-equivalent TO
about S54,600, 900 in United States cur
rency. which will be divided into $780,
900 shares. The institution which will
have the exclusive privilege Of note Is
que payable at sight in Brazilian minted
gold currency would be limited TO a
note issue OF 100000 contos (about
S327 900. 000) to be guaranteed by metal
lie fund OF Brazilian or foreign cur
rency to the amount Of two hundred
thousand contos (about s1o9,200. 000)
The remaining sum will be backed by
bills OF exchange maturing within 90
days and having three signatures. one
of them a bank
In case of necessity. for emergency
increase the bank would be empowered
to issue beyond the limit named above,
but would be taxed s per cent. for the
excess.
The Government would deposit the
100000 contos OF gold, being author
lied TO make an arrangement with
the State OF Sac Paulo for the sale of
coffee held for valorization, also to put
into the fund the holdings of the present
conversion fund.
An obligation to redeem the present
paper money In compensation for this
gold deposit at the rate OF ten thousand
contos a year IS per cent. on fund.-
would be assumed by the bank and the
redemption would be accelerated by an
nual payments representing half the
excess profits OF the bank. above 10 per
=.
hale of this excess would go to increase
the metallic fund OF gold.
A permanent revolving fund of ten
thousand contos, approximately $500
900, would be established by the Fed
eral Government without interest and
another ten thousand contos at 3 per
cent, receiving per cent. on all credit
balances.
The bank would have special powers
for the control OF exchange. Its bust
ness would include all ordinary banking
transactions and accounts. also extraor-
binary operations in aid of agriculture
special agricultural loan department
, would have control OF two hundred
| thousand contos Approximately S10s..
| 200 .000) OF the total note issue to lend
on mortgage and float debentures, which,
! would be issued against It. In order to
prevent the abuse of this privilege loans
would be made only to farmers and
stock raisers specially registered In the
| Register OF Farmers and Stock Raisert
OF Brazil after the examination OF
their properties by the executives oil
the various municipalities.
II enacted the law would authorize
the executive power to negotiate with the
present Bank OF Brazil an agreement
by which II would become the new bank
of issue failing in which negotiations
he would be empowered to contract will
some other bank.
The proposed law. which is not a
| new project has been under discus
sion In Brazil for the past two years
II is n concrete legal measure which
has been sklfully worked out by the
financial geniuses OF Brazil and involves
an entirely new banking and currency
system,