Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-12-09

III try TO answer:
st John Bull show the world to
reserves and borrowing capacity
in this country. He also noted
the United States Governments
favorable attitude toward waiv.
ing $8l.6 million in interest on
loans due December 81.
One of the principal emer-
gency sources of dollars to which
Great Britain can point lies in
its drawing rights on the Inter
national Monetary Fund, whose
headquarters are at 1918 H
street NV.
go Nations Participate
Participating in the fund are
so nations which have contrib
uted to a currency sterilization
fund valued at about $50 billion,
The United States contribution
of $2.75 billion is the largest and
Great Britain's $1.3 billion is the
second largest.
Britain deposited $236.3 mil
lion in gold and offered the rest
of her quota in sterling. She has
drawing rights which permit her
to borrow dollars against her
sterling contribution as well as
against her gold deposits.
The funds policy has been to
give contributing countries vir-
tually automatic drawing rights
up to the full value of their gold
deposits. Thus Great Britain has
only to ask to get $236.3 million.
The funds board also has
adopted a generally liberal atti-
tude toward member nations
borrowing up to one-fourth of
their quota beyond the gold pay
ment. In the case of Great Brit
ain this amounts to 1925 million
First Tranche
Adding the Is per cent OF
quota, known as the first tranche
or slice. to the $236.3 million
available against gold deposits
would provide Great Britain with
some $561.3 million to tide her
over the critical first quarter OF
1857, when increased dollar de-
due to the Suez shutdown
are expected to be severe.
1t is possible that Britain may
ask for a second tranche of 1925
bringing her total draft
to 1886 million.
Under normal circumstances,
nations have up to three years
to pay back the amounts they
have borrowed. In exceptional
circumstances. five years are al
lowed.
How many dollars Britain will
need to maintain confidence in
the pound is a Judgment for
Britain and the Fund board to
make. ViScount Harcourt is the
British representative. Frank A.
Southland. jr.. represents the
United States.
other nations with men on
the executive board are China,
France. India, Egypt, Belgium,
The Netherlands, Italy, Japan,
Argentina, Australia, Brazil,
Denmark, Ell Salvador, West
Germany and Canada. Voting
power is proportional to quotas.
British reserves recently
dropped below 50 billion, regard
ed as a critical minimum for
maintaining world confidence in
sterling. There is no indication
how many dollars the Fund and
will decide is sufficient
to prevent run on the bank"
Standby Service
The fund offers an intermedi-
ate device for maintaining con-
fldence. 1t is known as a stand
by arrangement" A nation may
ask the Fund to set aside certain
sums for withdrawal on demand.
Last October. for instance,
France made a standby ar
for two branches, or
$262.5 million.
So far France is understood
to have avoided actual drafts
against this amount. But the
mere establishment of a standby
has been a factor
in maintaining world confidence
in the franc.
The INF may decide this week
to offer Britain a combination
Of actual drafts and standby
arrangements. In the past the
British have regarded the stand
by device as an effective conf
dence builder.
Meanwhile, anticipation of a
large British dollar withdrawal
from the International Monetary
Fund has had repercussions in
the United States Treasury. Fund
members are not required to tie
up large sums by depositing their
quotas with the fund. Members
treasures merely are called on by
the fund to provide the requisite