Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-13
RESERVE GOVERNOR WILL ACT
FORU.S. ON PREPARATIONS BANK

bank of issues control over its own
money market. and to insure protection
of the banks of issue ANY employment
of funds or other operation in any
money market should be performed only
through the bank of issue in that
market or consistently with its policy.
These four points are cited as ex-
amples of how the bank may be utilized
to further 1.-The cooperative principle
among central banks, which, while
making some Roadway in recent years.
is still short of the demands of the in
ternational situation"
Commercial Operations.
"The resources of the bank, if ade-
uuate. would doubtless be OF important
use in stimulating world trade. In this
connection, however, safeguards should
be established to insure that the spe-
cial position of the bank In respect to
taxation and otherwise did not estab-
lish undue competition with private
finance"
1t is stated that 1t would be desirable
! to surround the extension OF certain
credit with all safeguards, requiring
such loans TO be guaranteed by the
government of the country in which
| the work was to be performed. Provi-
! SlOll Is llhtN loS uldOC III SdSC Vi OCIoulls
This concludes section of the draft
of the bank.
Section 8. Capital and profits of the
International Bank.
Introduction The Bank of Inter-
national Settlements may favor repa-
rations settlements not only in acting
as trustee but also in improving the
! possibilities of conversion of various
| CurrencieS among themselves and re-
/ lnfiOnS hotuapn short 1nnn
! markets.
To fulfill these functions 40 linked
with the development of world credit,
1t is necessary for the bank to have
at its disposal capital resources suffi-
GENTLY large to enable it to be used as
an international clearing house.
In view of the part which the
bank will have to play in the general
interest, it is advisable to place con-
troll OF its management in the hands
of the central banks since these are the
organizations responsible in each mar
ket for the convertibility of the ma
tional currencies and the control of
credit. - ..
AT the time of the banks consti-
tuition the capital should be geo
graphically distributed in such way
as to associate in the banks working
and in its development all the countries
interested In PREPARATIONS settlement, and
all the financial markets which might
subscribe TO the banks issue or use 1t as
clearing house
The creditor government would par
ticipate i'll the profits of the bank, but
In order that the commercial character
OF the institution may b. maintained
and It's Independence secured. no shares
cohierring the right Of management
would be issued to them.
might also ha DroyidaI chat 80
government account should be opened
at the bank, but that the latter should
credit to each central bank the pay
ments made by the Reichsbank on be-
half OF the German government for the
government OF the country of the CEN
tral bank. The central banks would
credit their respective governments
with the equivalent value In the ma
tional currency of the amounts COL
lected, with they would hold on deposit
at the bank until they disposed of them
otherwise"
, A. Share capital.
l. IL Is provided that the banks
authorized capital shall be the equiv
alent OF $lOO,O00,O00, with the board
VI directors having The power to in
crease this amount
z. The shares shall carry no voting
| rlght; but voting rights correspond
ing 10 the number of shares issued in
each country shall be exercised by
the central bank of that country In
general meetings attended by repre-
Sentatives of those banks, taking the
place OF general meetings of share
holders"
| 3. The capital is to be expressed IN
the currency of the country in which
the bank is dCmiciled. The shares
snail likewise be expressed in that cur
Tehcy, ana at par in the currency of
the country in which they are issued
Ihey shall be registered and shall re-
main registered, but may be freely
negotiated. Transfers of shares after
issue shall not, however, affect the vot-
ing power reserved to the central banks,
4: The shares shall be entitled to
participate in the profits Of the bank.
Entire Capital To BE Issued.
5. "On formation of the bank. the
whole authorized capital Of 500. 600 OO0
snaH be issued, but only rs per cent
OF each share shall be called up until
the board decides on further call"
o. The shares, when issued, shall be
issued in each participating country
through the central bank Of that coun
Try, or other agency approved by the
central bank.
Z. In the seven countries to which
the members OF the present committee
Delons ISSUES or ALLEGATIONS of shares
snail always be made in equal amounts.
The central banks of these countries
or groups formed by them, shall guar
antee the subscriptions Of the whole of
the first issue of $1OO, 900 600"
| IL Is provided that with the agree
ment OF the central banks of other par
ticipating countries, an amount of the
nrSt issue not exceeding $4,000. 600 for
each, nor $44,OO0,000 in total, may be
issued In these other countries.
y: Should the capital be increased
ano more shares issued, the distribution
OF them among the countries shall be
decided by two-thirds majority of the
directors, following as closely as pos
Slole these principles. I'm particular. the
percentage of the total shares issued in
the seven countries first mentioned
| above shall not fall below S."
8. Apart from the countries inter
ested in reparation, only countries hav-
ing currency on gold or gold exchange
basis may participate
b. OTHER CAPITAL AND RE-
SOURCES.
10. 1t Is provided that any balances
IN the hands of the agent general for
PREPARATIONS payments, when he winds
up MS accounts, shall be transferred
into the international bank.
Plan for Certificate Issuance.
II. Should the German government
and the creditor governments agree that
q portion of the .annuities to be paid by