Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-17

NEW YORK, September 17.-AS an
IA to German solvency, the Bank Tor
International Settlements, 1t is be-
6eved, will be extremely valuable. And
aiding Germany it will react to the
enefit Of Germany'S creditors by OBJ
aiming for them payments in larger
mounts and in a shorter period than
Tould otherwise be possible.
Simplifies Payments.
The International Bank will simplify
he mechanics Of GermanyS payments.
pr. as regards the transfer or repara-
Mons, its operation will be simple
arrying on in international credit the
junction an ordinary bank performs for
is clients.
When set up it will work in CO.
operation with the central banks OF
he world--the Bank of England, the
Bank of France, the Bank OF Italy, the
Federal Reserve System OF the United
States, and so on.
The expectation is that the directors
t those central banks will be directors
md their banks depoSitors in the new
world institution. That would make
possible to simplify transfers OF
honey between Germany and the other
Aations and to avoid unusual disturb
noes in rates of exchange.
According to the scheme as now
Eorked out, Germany will deposit her
inds in payment Of her reparationS
Obligations in the ReichSbank. the GEN.
raj banking institution in Berlin. The
ReichSbank will redepoSit these funds
the international Bank. Then,
Fhen time for PREPARATIONS payment
ONES due, the Reichsbank will draw
hecks against those deposits i'll the
International Bank, TO take care OF the
ebt payments.
Payments to BE Credited.
The International Bank will place the
,lnds, in proportionate amounts, to the
redit Of the accounts of the central
banks of Germany'S creditor nations.
I, out of the funds SO placed, France,
Or example, wishes to make a payment
the United States, France Will give
UGH instructions as are necessary TO
be International Bank. which then will
urchase the necessary currencleS to
hake the transfer.
This is expected to result in mutual
anefits to Germany and her creditors
h time saved, in the equalizing OF in
Irrational credits and in the saving
large sums on both sides to the gen.
raj benefit, savings due to the careful
ratch on world conditions and inter-
ational exchange by the directors OF
he International Bank.
The feeling of security in the Inter-
ational Bank, because of its being
nder control Of the central banks of the
Forld, is predicted upon a feeling of
bnfidence in the central banks. The
riginatorS of the reparations bank
ad this confidence, and they expected
would be shared by the peoples of
he world.
A central bank is not organized for
cof1t but as an agency to stabilize the
hole economic machinery of the coun-
y in which it operates. And its acts
fleet themselves upon all business
thin that nation.
Federal Reserve Is U. s. Central.
In the United States, for example,
Federal Reserve system functions as
central bank. The II Federal Re-
rye Banks which make up the system
e supervised in their operation by the
ederal Reserve Board, of which the
Pcretary of the Treasury is ex-officio
lie head. In each Federal Reserve
ank three of its nine directors are ap-
binted by the Government. OF the six
emaining directors, all Of whom are
ected by the banks IN the Federal Re-
hrve district which go to make up
lie membership. three are bankers and
Tree are business men. The latter,
theoretically at least, represent the Dor
DIVERS rather than the lenders.
fThe Government directors are not
PRINTED to own any bank stock and
bust be disinterested. And the head, |
governor, of each bank also is elected |
nd cannot be director. although he |
5 Is with the directors at their meetings. |
Therefore, under this diversified direc-
on, the people Of the United States
ave reason for confidence In their
entral bank system. The Reserve
anks are not permitted to deal directly |
1 18th the public. They act for their
ember banks as agencies from which |
s clip may be expected when difficult
mes arise.
Fixes RediscOunt Rate.
One of the Federal banks chief func-
ons Is the fixing of the rediscount |
hte-the rate which the banks must
ay for money borrowed. The max
hF of this bank rate is more significant |
han at first appears. 1t affects the