INTERNATIONAL BANK

Greymouth Evening Star, 8 May 1931, Page 4

INTERNATIONAL BANK

AID FOR EMBARRASSED POWERS LONDON, April 25. The return this week from the United States of the Governor of the Bank of England (Mr. Montagu Norman) set in motion reports concerning the purpose of the visit. The reports differ in the details, but generally agree that Mr. Norman visited American bankers to discuss a plan proposing the establishment of an international bank. This will be further discussed at the forthcoming meeting of. the Bank for International Settlements at Basle. • .' >

Although called the “Norman plan,” it was originated by Sir Robert Kindersley, assisted by Sir Charles Addis, both Bank of England directors. Hence the plan might sim T '’- be called the “Bank of England plan.” Briefly, the proposed bank is an international organisation for the direction of money available for investment towards those borrowing countries whose relief and rehabilitation are the agreed object of its policy. This would be an international league of bankers designed to get the world back at work.

The aims of the plan are three-fold: Firstly, to obtain money for potential borrowers who, if they do not obtain it are in fair prospect of deep embarrassment or worse; secondly, to put at the disposal of lenders, cbmplete guarantees as regards borrowers’ probable solvency; and, thirdly, a ■ plan foi*- the transference of money from lenders to borrowers in order that the quickest and surest results, like renewed economic activity and employment, may be secured. The authors of;. the plan primarily have in mind Germany and Eastern European countries, where interest rates are as . high as 10 per cent., all of whom are .faced with financial embarrassment; raw materials producing countries, such as Australia and Argentina, Brazil, which also is embarassed in the search for means to pay hei’ obligations, would also probably be included among the potential borrowers. The solvency of these overseas countries, is as important- to Britain as is Germany’s solvency. Hence, the Bank of England’s prominence in the negotiations. It is believed that potential lenders will be reassured concerning prospective borrowers’ solvency, chiefly, tv the knowledge that the world’s leading financiers are inspired by a common interest to keep them so. The plan’s simplest and most obvious part, therefore, is that the world’s most famous business organisations should agree in the co-operation of their lending banks, acceptance houses, and great producing companies. A preliminary feature of the plan is that all firms ranked as financially first-class, should combine to subscribe the ordinary capital of the international bank, which would be further financed by £109,000,000 worth of public debentures. Since it is necessary to induce France’s private investors to lend abroad, an essential part of the plan is French cooperation. Hitherto, the controller's of France’s financial policy have opposed the scheme, which they consider too grandiose. They are sceptic il concerning the ability of financial dictatorship to. force the human race to use its resources rationally. No opinion is at present hazarded whether the attempt to gait French co-operation will succeed. That is the chief task ahead of the sponsors of the plan.