New-York tribune., 1922-02-22

ing corporation would be organized
under a special legislative act. There
the several banks viii be referred to
hereafter as Cod Reserve National
Banks The capital Of each would
be in gold dollars and in such amount
as might be decided on by the trustees.
All the capital Of each National Bank
would be subscribed and paid for out
Of funds of the Gold Reserve Bank Of
the United States OF Europe.
Each Gold Reserve National Bank
would be managed by nine governors,
who would be appointed and hold of
fee at the pleasure Of the trustees Of
the central bank. who viii be referred
to hereafter briefly as the "trustees" +"
three of the nine governors OF each
Gold Reserve National Bank should be
experienced bankers. Three should be
selected from among men we'll qualified
By character and pos jtion to represent
the interests of the general public, and
three should be selected to represent
specifically the interests Of agricul-
ture, industry and commerce.
The trustees should appoint an add
tonsi governor of each Gold Reserve
National Bank, who would be the
chairman o. the board but who need
not be citizen Of the country where
the bank is located.
The board of governors of each gold
reserve national bank would elect from
lts members a governor general and
& deputy governor general as the chief
executive officers, in whom would re-
pose such powers as the board of gov
ernors might delegate to them
No Legislation Against
Free Note Circulation
The prerequisites to the establish
mert in any nation of gold reserve
national bank should be:
flrst-An official invitation bv the
government of the country concerned
to establish such bank
Second The furnishing. free of all
expense, by the government of an ede-
quate building, equipped for the pur
poses Of the business, this building and
'he ground upon which it stands to be
gwen the same cXtraterritorial rights
as those enjoyed by foreign embassy.
Ihlrd-An assurance that there will
IN the future be no legislation enacted
10 hamper the free circulation of the
notes OF the gold reserve bank of the
united States of Europe. There must
oe iurther assurance of no Legislation
against the free expectation and i'm
portation Of these notes. against the
making of contracts payable in these
notes or against the opening of deposit
accounts IN these notes in other banks.
IN the making of loans and the re-
celpt OF deposits each gold reserve ma
tonal bank would deal solely with incor-
porated commercial banks and not with
individuals. 1t would make loans only
against collateral to an amount equal
TO perhaps $50 per cent of the loan
made. The collateral must be short
term commercial paper, having not over
sixty days to run, or at most not over
ninety days, arising out of legitimate
commercial transactions and strictly
of a character known as "self-liquidat-
ing" paper.
sharply differentiated from adv advances
of capital. To illustrate: The ideal
type of "self-liquidating" paper is
loan against produce during the period
of its transport from the grower to the
consumer, or a loan against raw ma
terlal during the process of manufac-
ture and until the manufactured goods
are sold. 1t may also be loan against
merchandise to be paid when the mer-
chant sells the goods bought with the
pAONtucS Ol lile lOdll.
No Loan To Be Permitted
Against Government Bonds.
No loans would be made against
stocks, bonds or mortgage collaterals
or against government bonds. But 81
government was engaged in self
llquldating mmercial operations such
as the purchase of grain for resale to
its citizens the paper arising out Of
such transaction, bearing the in
dorsement of bank might be reds-
counted the same as other commercial
paper, If the transaction was on
"self-liquidating" basis.
The trustees would have power TO
direct any gold reserve national
bank against collateral deposit OF
indorsed commercial paper The gold
reserve bank of the United States Of
Europe would have power to issue cir
culatlng dollar notes in such form and
denominations as the trustees should
designate.
1t could make advances on these
notes to the various national banks
against deposits of gold or of gold and
1ndorsed commercial paper The gold
reserve bank of the United States of
Europe must always receive q mini
mum Of not less than 20 per cent of
gold against advances of circulating
notes, and must keep a reserve of at
least 20 per cent gold back Of all out
standing notes.
The rate of discount fixed by the
governors of the various golo reserve
banks must have the approval
of the trustees.
1t is not the design to perpetuate the
American participation control beyond
the time when the European nations
are financially reconstructed and when
they may desire to have the stock
owned either by their governments or
their citizens. 1t would be provided,
therefore, that all stock initialy sub
scrlbed for by Americans and known as
Class "A' stock would be callable hy
lot at 800 Whenever the government