Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-13
Continued From First Page.)

|
the shareholders in sufficient funds tC
provide a dividend of eight per cent or
| their shares third. half the remainder
! CT this 20 per cent snail be allocated t.
| the shareholders in dividend Of IL
per cent.
6. This paragraph recommends the
bank as "a convenient medium for an
! extension Of cooperative undertakings
! between banks OF issue" to do such
| things as: % extend credits TO banks
of issue. lB) receive deposits from banks
OF issl'; Co conduct exchange opera
tons " er. by various currencies may be
Swapps<.
2. 1t is StAted that the bank may pro-
vide neut al ground for approach to
an international gold settlement fund,
where gold can he earmarked outside
of national Custody" thereby permitting
a possible lcSSening of international
movements of gold if it is desirable.
Capital Fixed at $I0O, OOO, OO0.
8. The authorized capital of the
bank will be the equivalent of $780,
100000 but It's capital shall be ex-
pressed in the currency of the country
in which the bank is domiciled. When
the bank is formed the whole authorized
capital shall be issued, but only IS per
cent shall be called up at first.
9. The draft provides that the bank
may further increase its capitalizat ton,
but the shares issued in the seven
countries represented by experts at
Paris shall never fall below SIS per cent
of the total capital.
10 This paragraph states that the
banks resources should be an impor-
tant stimulus TO world trade, with prop
er safeguards to avoid undue COMPETE
ton with private finance
IL. 1t Is stated that the bank, beyond
affordinY non-p0litical trustee for
reparatiOnS settlements, should improve
the possibilities of conversion of va
rious currencieS among themselves and
in the relations between short and long
term money markets.
II. 1t is provided that the total
number OF the banks directors should
be 25. These will include the original
IL of the seven powers here represented.
one additional French and German
director and nine others chosen to
represent other participating countries.
Is. The chief executive officer of
the bank shall be the director general,
who shall be appointed by the board"
1t IS self-evident that the banks direc-
tor general will replace the present
but his duties will be much wider in
their banking aspect and his responsible
tiles far greater.
Draft Virtually Completed.
These are the salient provisions of
the final two sections of the draft of
the bank, but they are Allotted by nu-
merouS other important constructive
steps in the banks formation. All
these provisions are taken directly from
the revised draft of the international
bank. This 42-page bank skeleton has
been drafted and re-drafted many, many
times and Is now considered virtually
complete. Nevertheless, these preced-
ing paragraphs and the following de-
tailed outline of the bank, when they
appear in the experts final report
probably will have slight alterations in
phraSeology and possible minor altera-
lions in substance. 1t is unlikely
however. that the main divisions OF the
draft of the bank will be altered
further, since the bank report has been
set aside as finished-and, in fact, may
already have gone to the printer-while
the experts are concentrating on q last
effort to reach agreement on figures.
Section 2 of the bank plan, which
win shortly be known as the Young
plan, Is entitled. Auxiliary and Per-
miSSive Functions of the International
Bank" It is divided into three parts,
A, B and C.:
A. BANKING OPERATIONS TO
FACILITATE TRANSFERS"
The report STIMULATES that the Reichs-
bank, like other central banks, will
have the right to apply to the bank for
credits, but that this right should be
open at any time and not function
merely when instability may threaten
the German exchange.
Explains Use Of Credits.
The report outlines how the banks
credits may be used by the ReichSbank
would fall into these categories:
!. On application from the Reichs-
bank the bank would be in position to
rediscount appropriate securities or
make advances. Therefore, during a
period of temporary instability. in lieu
Of demanding poStponement Of transfer,
the Reichsbank might utilize an ex-
change credit at the bank while pass
ing the crisis on.
3. Even should poStponement of trans
fer be necessary, 1.-The bank might con-
tinue to make transfers out of its hold
ings of foreign exchange, thus increas-
ing such holdings and increasing its
assets in reichSmarks."
8. THE bank might borrow foreign
exchange partly against the security OF
investments in Germany, and thus con-
tinue payments to the creditors during a
period of transfer postponement."
4. Moreover, the bank, in conjunc-
ton with Reichsbank policy, could al
ways invest in Germany the reichs-
marks currently accommodating in the
Reichsbank. In making such invest
ments IL would be necessary TO assure
that the employment of funds in Ger
many did not result directly or indt-
rectly in payments outside Germany on
private account, and SO aggravate the
condition which the procedure was de-
signed to correct For this and other
stated reasons 1t is regarded as OF 1unda-
mental Importance that these funds
should be so handled as to leave the
final responsibility for and control over
the money markets to the Reichsbank
itself.
q. "a CENTRAL ORGANIZATION
FOR BANKS OF ISSUE.
1t seems possible that this tnterna-
tional organization, with Its broadly
representative control, with its inter
nationally owned capital. its holdings
of many different kinds of foreign ex-
change and its facilities for granting
credits may become convenient me-
dunn for an extension OF those CO.
operative undertakings between banks
of issue which have developed in recent
Years. The following possible functions
, suggest themselves:
/. Credits to banks of issue. the
report points out that such credits eoulo
I be granted in a similar way as previous
" done in case of central bank creoits
to Italy. Poland. Belgium and Rumania
It is believed that such credits Woulo
be safely within the banks holdings OF
foreign exchange.
Receiving deposits of banks oil
issue. These deposits might either be
clearing accounts or investment &C
counts. Whereas the clearing accounts