Evening star., 1940-04-14

Western Democracies Prepare
To Launch 500, 900 Bank
Proponents See Plan for InterAmerican Institution
as One Way to Protect Republics From
Economy of Dictatorships
R~p cLn~IT C<ok..
By Richard L. Stokes.


Although little has been heard about
1t, indications are that there will soon
be launched an institution. Of extreme
importance to the Americas-the pro-
posed Inter-American Bank, with $780,.
000,0 900 Of stock, headquarters In WASH
ington and branches in all the sister
republics Of the Western Hemisphere.
Through striking an equilibrium Of
commerce between creditor and debtor
peoples and enlarging the employment
Of capital, the new establishment, ac-
cording to its champions, may teach the
world . practicable way Of protecting
the free democratic order against the
closed economy Of the relationships. OPP
ponents charge that it will prove an
instrument Of foreign policy casting the
Export-1mport Bank into the shade and
far overshadowing the latter's recent al
locations of $5,00O,000 to Colombia and
100000 to Brazil.
On the floor Of the House, Representa-
tive Crawford, Republican, of Michigan
went SO far the other day as to protest
that a scheme is involved for perpetual
Ing the Mexican subsidy which was in
itiated by this country's foreign silver
purchase program. Though the idea of
the bank was broached in 1890 by James
G. Blaine, Secretary of State, at the first
Pan-American Congress, and was re-
vived in 1888 by Mexico, Colombia and
Nicaragua, Crawford undertook to place
responsibility on Mexico alone.
Crawferd's Charge.
Having espoused the doctrines OF
Moscow" he declared, Mexico is actually
seeking to finance the Bolshevist philos-
ophy through aid from the American
republics, with benevolent participation
by the United States"
Generally speaking, loans defaulted to
United States investors in the sum of
three quarters Of billion dollars have
slammed the door of private credit in
Latin Americas face. It is contended
that the Inter-American Bank designs
to throw open to these countries the
credit of the Federal Treasury and
eventually, perhaps, its stocks of gold. In
hostile quarters, mutters of executive
usurpation" saluted an announcement
by Secretary of State Hull.
The Government of the United States,
he said. having studied the project in
question and not finding any fundamen-
tai objection" is prepared to sign the pro-
posed convention, believing that the
establishment of an Inter American
Bank would be step of major impor-
tance in the development of inter-Amer-
ican financial and economic co-opera-
tion.''
Advocates of the bank demur that the
legislative branch will have three oppor-
tunities to review the undertaking. The
convention authorizing the institution
is regarded by the State Department as q
foreign treaty, requiring ratification by
a two-thirds majority of the Senate.
Since it is thought undigntfied for an
international corporation to be subject
to regulation by a mere State. like Dela-
ware the plan Is to seek a Federal
charter at the hands Of Congress.
Though funds could possibly be borrowed
as last resort from the Reconstruction
Finance Corp, Congress will first be
asked to implement with an appropria-
ton the capital contribution of the
United States.
Five Nations Needed.
The project may get under way, ac-
cording to the rules, with the adherence
of only five of the twenty-one nations
concerned. There are said to exist pri-
vate assurances that from four to six
countries will be ready soon to express
favorable attitudes. In addition, four
republics to date have proclaimed pub
hcly their intention Of signing the con-
vention-Brazil, Colombia, Mexico and
the United States. They represent an
tnitial aggregate subscription of 165 out
Of proposed total of 1000 shares OF
stock. This is to have an opening par
value of 100000 a share, which must be
betrayed in gold or United States dollars,
The minimum first subscription of the
United States is so shares, at S, ,OO0, 900,
half to be paid down.
The Inter-American Banks only
predecessor on the international stage
is the Bank of International Settlements
at Basle. AS the name indicates, this
Is primarily clearing house. The Inter-
American Bank is to exercise that func-
ton and service In addition as a de-
posit, commercial and capital bank, with
a portfolio of short-term, intermediate
and long-term securities. The presence
Of the last feature may as likely as
not be due to the fact that the moving
spirit of the enterprise, north of the
Rio Grande, has been Adolf A. Berle, jr.,
Assistant Secretary of State.