Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-03-30
YOUNG PLAN BANK
HASLARGE SCOPE
International Institution Ex-
pected to Be Big Dealer in
Foreign Exchange.
BY PRESTON S. KRECKER.
Special Dispatch TO The Star.

Special Dispatch to The Star.
NEW YORK, March 29-Provisior
for the creation of the Bank of Inter.
national Settlements, under the So
called Young plan, was probably, next
to the settlement of the German repa-
rations question itself, the most strik-
ing achievement of the commission
headed by Owen d. Young, brilliant
chairman Of the General Electric Co.
The primary function of the bank
Of course, viii be to collect and dis
tribute the reparations It's operations
at the start, and presumably for some
time thereafter, will be restricted rather
closely to that work The institution
however, has other important powers
which eventually will be exercised ex-
tensively. Some of them should be OF
particular interest to Americans.
Foreign Exchange Operations.
One of the most important of those
corollary functions will be operations in
foreign exchange The Bank for Inter
national Settlements will find 1t neces-
sary, in the process of collecting pay
ments of reparations from Germany
and transferring them to the cred
itors, to buy and sell foreign exchange
operations it in time will probably at
tain position of great influence in the
foreign exchange market. It's efforts,
naturally, would be along the line of
Stabilizing rates, in order to facilitate
the necessary transfers of reparations
AS an outcome, the influence of the
Bank for International Settlements will
be in the direction of stabilizing inter
national commerce, which is always af-
fected adversely by violent fluctuations
In exchanges. The potentialitieS of the
bank in that direction, therefore, are
OF immense Importance to a great and
growing American foreign trade
The Bank for International Settle
ments also has the power to buy and
sell gold, either for its own account or
for account of central banks. 1t also
may hold gold for its own account in
central banks or, vice versa, accept gold
Of central banks for deposit under ear
mark. These functions offer the pros
pect Of interesting possibilities in the
9leld Of international finance.
/. The possibility of the international
bank carrying on deposit gold reserves of
various central banks suggests the trans
fer Of such gold by book credits and
earmark from one account to another,
with resulting saving in cost and risk
Of shipping actual gold as is now done.
This has been avoided In comparable
ways by the Federal Reserve system.
Funds Immune From Seizure.
The security Of any gold treasure
which In future years may come into
the custody of the bank for interna-
tional settlements has been assured by
an article In the charter, which ex-
pressly declares that all funds in the
custody of the bank shall be immune
from confiscation, requisition or seizure
In case Of war. As the nations which
co-operated in drafting the charter sur
round Switzerland, which is the seat OF
the bank, their agreement safeguards
the banks assets as well as is humanity
possible.
The possibility of the Bank for Inter
national Settlements becoming stab
ilizing power in the worlds money mar
kets Is suggested both by its potential
influences over the foreign exchanges
and by the authority 1t possesses 10 In
vest; In securities. The bank will at
tract long-term deposits, which will
ind their place in international invest
ments, including American securities
and bank acceptances. Such invest
naents will tend to relieve credit con-
Regtion wherever it might occur. Thus,
should credit tighten in the Unlteo
states and rates of interest soar, as they
did last year, those high rates would
attract international bank funds 70
this country, where their presence
would help TO alleviate conditions.
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