Evening Star Newspaper, May 12, 1929, Page 4

APPROVAL IS GIVEN REPARATIONS BANK Main Functions of Project of Unprecedented Scope Are Outlined. (Continued Ftom First Page.) functions, “between initial payments HEALTH CLAS and the final reception of funas.” ‘Two, that it has been found advis- able to carry a stage further the proc- ess begun by the Dawes plan of re- moving the problem from the political | sphere “and an institution is therefore necessary which justifies and makes | logical the liquidation of all nolitical controls and substitutes for the ma- | chinery essentially commercial and financial in character which carries | with it all the support and at the same | time all the responsibiiities that the economy of engagements imply.” Three, that such an institution cre- ated to carry on essential functions out of those previously performed by political or semi-political agencies “should be used as an organization for dealing with the whole work of ex- ternal administration, including the re- ceipt and distribution of payments, commercialization of the annuities and the exercise of such functions as will on the one hand aid Germany to pro- tect her exchange.” Beyond Political Influences. Your, that, as it has been stated, an organization such as the International Bank must be assimilated to (u'dinm'yl commercial and financial practice, “it | is therefore to be so organized as to be outside the sphere of political influ- ences and have powers and facilities sufficiently broad to enable it to deal freely and promptly with problems in- volved in the settlement of Germany's financial obligations.™ Five, that Germany's economic life may be expected to be subject to cer- tain fluctuations. Therefore the fixa- tion of her obligations on the assump- tion that the point of minimum ca- pacity of each change is a constant governing factor is quite as derogatory to an acceptable settlement as the op- posite assumption that & point of maxi- mum efficlency can always be main- tained. ‘Therefore the International Bank should be equipped with ma- chinery containing an elastic element between the payments to be made by Germany and their distribution for the purpose of giving the creditors the additional assurances that the effects of such changes will be minimized as far as possible in the flow of payments. Six, that it is quite natural that the International Bank should have powers wide enough to allow its activities “to extend beyond the fleld of Germany's obligations and to provide facilities for international settlements in general.” Two Main Sets of Functions. Seven, that as a result the bank will have two main sets of functions: (a) Its . essential or obligatory functions and (b) its secondary or permissive func- tions. These permissive functions are . to be regulated according to the ex- tent they may strengthen and make easier the bank's essential functions and to the extent that experience demonstrates the corporation as a whole may benefit therefrom. ‘The esscntial and permissive func- tions of the bank are defined thusly: ‘The bank's essential functions ‘“are those which are inherent in the re- ceipt, management and distribution of annuities.” It is poinied out that the character of the annuities and the mag- the payments to be trans- 1 “make it desirable to supple- ment with additional facilities the ex- isting machinery for carrying on inter- national settlements and for support- ing through credits the development of international trade.” This and the fol- lowing paragraph are of distinct im- P it P addition the institution in the course of its development me::.nymn general needs, such for example as offering an uen‘o,:( for international settlements; and within the limitations of & soung use of its credit it may con- tribute to the stability of international finance and the growth of world trade. : While there is no hard and fast line between essential and auxiliary func- tions and the two will often be ‘linked together it may be convenient at this ;oummwmuaupr:'mu distinction in what fer unequivocally to institution as ‘the bank.’” 4 s Matters to Be Handled. Part two of the bank plan as now drawn deals with “a preliminary sur- vey o_(’ matters to be dealt with by the bank,’ ving an outline of the mat- ters to be handled, as follows: 1. It is stated that Germany’s obli- gations as contemplated in the ‘Young plan fall into two general classifica- . tlons: (A) The part payable in cash which_is_transferable unconditionally, and (B) The part payable in cash the transfer of which is conditional. These obligations are thereafter referred to in the report as class 1 and class 2. A third category may later be envisaged, elative to obligations held by the bank whose proceeds in marks are not imme- diately transferable into foreign cur- rencies. The only distinction between the obligations of class 1 and those of class 2 is that the “service of the obli- gations of class 2 may be postponed on certain conditions for a limited period in Reichmarks, instead of foreign ex- 2. For the transitory period and for decreasing amounts the creditor na- ; tlons will undertake to apply certain hlfnl;l‘lnnés to the payment of deliveries 3. It is pointed out that the bank in certain circumstances may possess cer- tain funds belonging to the creditor governments. “It will be necessary to make use of these dormant funds for the benefit of the creditors, while af- fording protection to the German ex- change. The facilities offered by the bank may be utilized within discretion- ary limits to accomplish this double purpose. Operating in agreement with the Reichsbank it will have a certain power to invest these funds. Empowered to Issue Securities, “Against these investments held by the institution as trustee, the institu- tion will have the power to issue in foreign markets securities of specified type in substantially equivalent amounts and of maturities suitable to its pur- pose. From the proceeds of such of these obligations as existing conditions and correct financial practice permit to be sold, funds will becotie available for distributing toward maintenance of the schedule of the flow of payments, even of that portion represented in the service of class 2 obligations.” 4. It is evident that the bank, if it 18 to be an elastic link in the chain of payments and receipts, will require capi- tal funds and the power to give and obtain credits. “The funds of the bank will be derived from Cermany in one form or another from the sale of some portion of its capital stock, from the sale of bills drawn in eurrencies other than Reichmarks, and partly secured against existing values, which for the moment are not convenient to move across foreign exchanges: from deposits of central banks in return for the privileges which the bank may offer, and from rediscounting bills which it has received in the course of its own credit operations. “The bank will be in position to give credit to any central bank and thus conserve the stability of exchange until such time as the internal forces, which are put in operation in the meantime, have the opportunity to exert them- selves. This power will also mitigate one of the difficulties heretofore en- countered in dealing deliveries in kind, ing for the closing exercises of the heal School auditorium Tuesday night. THE SUNDAY STAR, WASHINGTON, D. C. S GRADUATES Left to right: Frances Pugh and Maisie Hadlow, two of the 274 graduates of the Chesapeake & Potomac Telephone Co.’s health class for women, rehears- Ith course, to be held in Central High | be paid for out of the funds provided | 5. “Moreover, since the bank is like- | 1y to have substantial amounts of for- | eign exchange at its disposal or at its | call, the privileges of rediscount open to central banks would give them the opportunity to acquire foreign exchange in_one country against the pledging or sale of foreign exchange in another, | without going directly into the foreign exchange market. i “The advantage of this facility is not to be lost sight of in connection with the settlement of large International obligations.” In the general relationships between the bank and the central banks, which would put into systematic form and do much to crystallize and support the practices which of recent years have developed between them. ‘With these carefully drafted prefaces the bank outline goes into the essential machinery proposed. Section 1 is entitled “The Essential | Functions.” 1In its capacity as trustee the bank will have the following duties: One, to collect and disburse to the paying agents the service on the Ger- man external loan of 1924 and possibly to act as trustee for the loan. Will Receive Obligations. ‘Two, to receive from Germany the various obligations, including the rai way bonds provided for in the plan; to hold them in keeping and to issue to the creditors its trustee receipts for these obligations. Three, to receive in approved foreign exchange the service on class 2 or pro- tected payments. Likewise, to plac: in reichmarks in the Reichsbank the service obligations to be liquidated through deliveries in kind. Four, to receive service on any of pos- ible class 3 obligations either in reichs- marks as to interest or in reichsmarks or foreign exchange as to sinking fund. Five, distribution. The bank will distribute to the creditor nations ac- cording to program A the service on class 1 obligations not already anti- cipated through process of commercial- ization and sale. B service on class 2 obligations, which has been converted into foreign exchange and C service on funds for deliveries in kind. Six, to disburse interest on com- mercialized and marketed obligations to m‘m agents for loan and sinking fund. Seven, to invest reichsmark balances with the agreement of the Reichsbank in approyed forms of German securi- ties holding the latter in trust. Efght, to act as trustee in other ap- propriate circumstances. Supervises Distributions. 1In its general capacity as agent for :Iilll the interested parties, the bank’ 9. Initiate and supervise operations for marketing bonds and arranging conditions. 10. Supervise distribution of pro- ceeds to the creditors according to| their participation. 11. Supervise international conver- sion loans. 12. Deal with the situation prior to and during moratoriums and initiate such impartial inquiry as may be de- sirable to enable advice to be given thereon. 13. Deal with funds in Germany during moratoriums. 14. Deal with issues of securities and against collateral securities in Ger- many. 15. By agreement with the Reichs- bank to market securities bought dur- ing morateriums. ‘The bank outline then gives the es- sential functions of the proposed in- stitution in relation to the different classes of obligations. Four cla: of obligations are given. The arrange- ments common to the first two classes are taken up first. Class 1 includes obligations relative to the uncondi. tional annuity and class 2 those rela- tive to the conditional annuity. Under the arrangements common to classes 1 and 2 the form of indebtedness is first treated. Debt in Form of Annuities. “Germany's debt shall be fixed in the form of annuities. A certificate of in- debtedness representative of these an- nuities shall be delivered by Germany te the bank as trustee of the creditor powers. To this certificate of indebted- ness shall be attached coupons repre- sentative of each annuity payable by Germany. Each annuity coupon shall be divided into two parts, the first part representative of that portion of the annuity which is subject to transfer de- lay and corresponding to the portion of Germany'’s indebtedness which is not yet once mobilizable, and the second part Tepresentative of that portion of the | anruity which is subject to transfer | delay and corresponding to the portion | of Germany's indebtedness which is not | mobilizable. Each part of the annuity coupon enjoys equal rights throughout except in the one instance of agreed | transfer delay.” | After the form of indebtedness, the | bond issues are treated. | “On the request of any one of the cred- | itor governments, the bank as trustee, if it considers such course opportune, | has the right to require the creation of, and the German goverment is obli- gated to create, issuable bonds repre- senting the capitalization of any part of the portion of the annuity coupons not_subject to transfer delay. “The " bank, however, is obligated | under the provisions set forth elsewhere to accede to requests for creation of bonds made to it by states which are desirous of undertaking internal issues of German bonds in connection with conversion operations. Guaranteed by Revenues. “The certificate of indebtedness, the coupons attached thereto, and such bonds as shall be issued in capitalization of any parts of the annuities not sub- ject to transfer delay, shall be made out in_the name of the German Reich and shall represent an unconditional obligation of the Reich, guaranteed by its general revenues and those of the German states.” After the bond issues, collateral guar- antees are considered, and the choice is left open between the four alterna- namely, the lack of provision for financ- ing that part of the projects or con- tracts which ean not, owing to the re- _strictions covering deliveries in kind, uv:fi treated in detail elsewhere in the outline. The general form of the bonds fol- a for that specific purpose. | a lows the section on collateral guar- ntees. “The wording of all issyhble bonds shall be identical, except for the part of the text fixing the value @ the bonds. This value may, according to the cir- cumstances, be expressed in dollars equivalent to so many pounds, Reich- marks, francs, etc., always provided that the principal of any bond issued in a particular market shall be payable only in the currency of that market at the equivalent of its gold value. “The coupons shall be expressed in dollars, nds, francs, etc. and shall be payable at the rate of the day on all markets on which the bonds are quoted. In the event of an issue, the amount and form of the bonds to be created, as well as the specification of the currency in which they will be is- sued. shall be fixed by the bank in ac- cordance with the requests it receives from creditor states, taking into ac- count the desiderata of the issuing bankers. “After a period of——years the bank, in agreement with the issuing bankers and the creditor governments may con- sider the issue of bonds, the service of which may be paid in different cur- rencies at par at the bearer's option.” Final International Obligation. The section of “status of mobllizable portions of annuity coupons” follows that on the general form of the bonds. The outline states that “the service of interest and amortization of mobilliz- able or mobilized portions of annuity coupons shall be paid to the trustee in foreign currency by the German Reich without any reservation, that is to say, on its own responsibility. The financial service of these mobilizable or mobilized portions of the annuities shall constitute a final, absolute and uncon- ditional international obligation in the ordinary financial sense of the words.” ‘The status of the “not yet mobilizable portions” of the annuity coupons is then treated. It is stated that .the payment of this portion of the annuity coupons shall be made to the trustee by the German government in the same conditions as that of the mobilized or mobilizable protions of the annuity coupons. Then follew two reservations: (1) Bonds representing the not yet mobilizable portion of the annuity cou- pons can not be created except by the concent of the German government, and (2) it is in respect of the not yet mobilizable portion of the annuity cou- pons that the German government may avail itself of the right of transfer de- lay granted elsewhere in the plan. Consideration is then given in the outline to the functions of the bank in connection with class 1 and 2 obliga- tions. ‘These functions are six in num- ber: (1) Supervision of agreement. The bank shall supervise both on behalf of the creditor states and the bondholders and on behalf of the debtor state, the strict execution of the agreements con- cluded between them on established Credits Shares to States. (2) Distribution without priority. The banks shall distribute moneys in payment of mobilized or mobilizable portions of the annuity coupon amohg the whole of the bondholders and credit the creditor states the propor- tionate rights of each to a share in the portion of the annuity coupons not subject to transfer delay without al- lowing priority of any kind to any por- tion or any claim. “It will distribute moneys relating to the not yet mobi- lized portions of the annuity coupons among the creditor governments, the transfer of these moneys taking place only after the transfer of moneys re- Stieff Grand Piano extras. 1340 G Street N. portion of the annuity coupons.” 3. Issue of bonds on markets. | “The bank shall inform the creditor states whenever an issue of bonds | | representing capitalization of some | | part of the mobilizable portion of the | |annuity coupon is possible. It will | | be the function of the bank to fix the | | minimum price of issue. Each of the! | states shall be entitled but not obli- | gated to issue its share of the bonds in its own country. It may come to an | understanding with the bankers of an- other country to cede to them all or| part of this share, but these bankers | shall be obligated to proceed to this | issue only on the minimum conditions | !fixed by the bank. Any of these states may also refuse to allow fits| quota to be created. In that event | the portion of the annuity correspond- ing to this quota shall continue to be | | paid to the state in question as be- ore Constitute National “Branches.” 4. Issue of conversion bonds. “States desiring to proceed to internal issues of | German bonds in connection with opera- | tions for the conversion of the nlflonlll | debt shall have the option of asking the | bank to create bonds representing all | or part of their quota of the mobilizable | portion of the annuity coupons. These bonds shall constitute natfonal ‘branches’ or portions which each state shall be free to offer in its own markets on whatever conditions can be obtained. These bonds shall be quoted only on their market of issue. The service of these bonds shall, however, be effected parl passu with that of other bonds. The coupons of these bonds shall be expressed in pounds, dollars, French francs, etc., and shall be payable at the rate of the day on all the markets on which the mobilizable bonds are quoted.” 5. (Missing.) 6. Auxiliary operations. “Apart from the above operations the bank may | within_its statutes (by laws) conduct | any other operation (such, for instance, as contango operations on the bonds of this debt, advances on coupons, etc.) which are bound up with the super- vision of ogerauomt relating to these bonds and their service.” It is clear that some of the above specifications may be chlnfed some- what as a result of the application of German conditions to the acceptance of the American annuity figures. These conditions are understood to pertain to a division of the conditional and uncon- ditional annuity categories. A relative revision of the top part of the annuities in case of severe economic stress in .Germany making payments impossible might conceivably necessitate some change in the bond specifications. The German conditions are only now being inserted in the ten- | tative conference report. It will not be known for a few days what modi- fications, if accepted, would involve. lating to_the mobilized or mohlllnblei | 'MT. PLEASANT GROUP " ELECTS C. D. MARSH | | Earl Dillon Is Named to Succeed Him as Vioe President of Association. C. Dwight Marsh was elected presi- dent of the Mount Pleasant Citizens Association at its meeting in the Mount Pleasant Branch of the Public Library last night. Mr. Marsh was vice presi- dent of the association during the year just ended and his successor to that position chosen last night was Earl Dillon. John De LaMater and Daniel Foley were re-elected secretary and treasurer, respectively. The association's delegates to the Federation of Citizen Associations also were retained in office. They are A. A, Cheney and Maj. A. M. Holcombe. e association went on record as objecting to the establishment of fire houses, police stations, swimming pools, pumping stations and other facilities for municipal operations in residential territory without hearings on the re- zoning of the territory. The organiza- tion also adopted a resolution commend- [German, Debt Expert Goes to ing Dr. E. J. Kimball, retired supervising plsnclpll of the third division of public schools. SCHACHT STUDIES CREDIT PROBLEMS| Essen to Discuss Reichs- bank Restriction Order. By the Associated Press. ESSEN, Germany, May 11.—Dr. Hial- | mar Schacht, chief German delegate to | the reparations conference at Paris, and . his colleague, Dr. Voegler, arrived here ! unexpectedly today from Paris for a consultation with Karl Rambeau, man- ager of the local branch of the Reichs- bank. They reached Essen at noon, after traveling overnight from the French ' capital, and immediately called Herr Rambeau into conference with them at their hotel. Credit Restrictions Studied. ‘The purpose @f the visit, according to the Rhenish Westphalian Gazette, principal industrial organ of Western Germany, is to discuss with local in- terests how to apply the Reichsbank’s ; H credit restrictions, which Dr. Schacht inaugurated recently, without hurting Germany's industrial nerve center, Es- sen is at the heart of this nerve system. The Gazette explains that in this emergency it was felt that Dr. Schacht’s personal touch would be indispensable. The main point was to make sure of avoidance of any stoppage of work as a result of the credit restrictions, since any labor trouble would be highly unde- sirable at the present moment. Branches Meet Difficulties. It appears that some of the local branches of the Reichsbank have been having difficulties in screwing down in- dustrial credits to_the level ordered by the main bank at Berlin, although they say they exercised every care to elimi- nate all credits that were obviously des- { tined to finance the hoarding of foreign | exchanges or speculation on the Bourse. | Dr. Schacht’s presence here doubt- | less will serve to bring home to thti local industrialists the necessity of ap- | plying measures dictated by the needs of the hour, while Dr. Voegler, who is on the directorates of most of the iron and steel enterprises here, will add his personal influence in handling the local situation. BERLIN KNOWS NOTHING. Officials Believe Dr. Schacht May Be; Spending Quiet Week End. | BERLIN, May 11 (#).—The govern- | ment press department today said thar | nothing was known here about the pur- | poses of Dr. Schacht's visit to Essen. | Officials thought it probable he merely | was passing & quiet week end there. i i DEBT EXPERTS QUIT PARIS. Dr. Schacht and Sir Josiah Stamp lo Confer Tomorrow Morning. PARIS, May 11 (#).—PFresh air proved a powerful attraction for the experts of the reparations conference today and most of the delegates left Paris early in the morning for the/ country. Headquarters of the second | Dawes committee was deserted. | Dr. Hyalma Schacht, chief German | delegate, has an urgent appointment with Sir Josiah Stamp of the British | delegation, tomorrow morning to resume ‘work on the experts’ report. The other | experts will enjoy a day or two of golf and other pleasures. | Resumption of the committee's gen- eral work is waiting on the results of efforts by the British and German ex- perts to arrive at something likely to prove acceptable to their colleagues as | the final conclusion of the committee's | work. As far as chances of success in sol feVila\ Washington corporation clinic for its employes. an opportunity to build up come. references. Reduced 700 You can’t tell it from new. And, just think! It's a Stieff. Never before has a Stieff piano been offered at such a greatly reduced price. CHarLes M. Stierr, INC. DENTIS dentist on full-time basis to operate and supervise dental Applicant must have passed District Dental Board examination and have active practice not less than three years. exceptional opening for a competent dentist to devote his entire time to his chosen profession with a definite in- Reply will be treated confidentially and should include age, dental school and date of graduation, num- ber of years in active practice, salary expected and Address Box 432-V, Star Office No interest, no OPEN EVENINGS considering employment of been in 2 ‘This is not a private practice, but an UNTIL 9 PM. MAY 13, 18 IEDWIN W. HUGUELY, 53, 0 ing the German reparations problem are concerned, the situation appears unchanged. ids on the nature of the CGerman conditions as incor ted in the report which Sir Josiah Stamp now is drafting. If they prove acceptable, the only remaining ~ difficulties would be Belgium’s demands for revalorization of the marks left in Belgium at the end of the war and the question of reparti- tion of the annuities. It is probable that both problems will be referred to| the governments. In that case, the final report of the committee will register agreement on the annuities | unless the German conditions are such as cannot be accepted by the creditors. | DIES SUDDENLY AT HOME! Burial Services for Washingtonian ‘Will Be Held Tomorrow at Glenwood Cemetery. Edwin Walter Huguely, 53, former treasurer and manager of the Washing- ton Electrotype Co., died suddenly at his residence, 3611 New Hampshire avenue, yesterday afternoon. Mr. Huguely was a native of Wash- | ington, & member of the local Board of | Trade and the Mount Pleasant Lodge of Masons. He is survived by his widow, Mrs. Martha Ethel Huguely; two daughters, Mrs. Mildred Knollman and Mrs. Helen Binger; a brother, George W. uguely, and a sister, Mrs. Bessie Austin, all of Washington. Funeral services will be held from the Wallace Memorial Presbyterian Church tomorrow afternoon at 3:30 o'clock. Burial will be in Glenwood Cemetery. NOTES TO SIGN SUIT YOU GR 1408 H St. N.W. U.S. 15 STUDYING ENTRY BY ATECA La Guardia Demands Exon- eration of American Held With Rebel Paymaster. By the Associated Press. The State and Justice Departments have under investigation the entry into this country of Salvador Ateca, alleged Mexican rebel paymaster, with about| $700,000 sald by the Mexican govern-| ment to have been taken illegally from | Chihuahua banks and government sources. Ateca was arrested with Russel Math- | ews, assistant director of immigration at El Paso, in New York last Saturday, with his secretary, Gomez Maqueo, and W. H. Fryer, a former assistant United States attorney at El Paso. The Mexi- can is being held at the request of the Mexican government on charges of theft, while Mathews and Fryer are held on h s of conspiracy, accused of hav- ing attempted to aid the fugitive to escape to Spain. Political Exiles Safe. Pending receipt of extradition from the Mexican embassy, thep?t:{es and Justice Departments have set out | b to_learn whether Ateca is wanted for political offenses or whether .he was wanted by Mexico to be tried on charges of theft. Heretofore, the American Gov- Morris Plan service has real community value. credit to men and women wage-earners and salaried em- ployes, at reasonable rates under liberal terms, on the basis of integrity and earning capacity. Not only the borrower, but merchants and the general business community, including the banks, benefit from Morris Plan service, for the reason that it enables debtors to pay their debts, and helps these individual borrowers to work out their money problems, and to better themselves financially to the point where they become logical clients of commercial banks. Morris Plan loans are made in amounts of from $120 up, with repayments arranged in conve.nient installments over a period of one year or less. Under Supenyision of U. S. Treasury ernment has declined to surrender polit- ical refugees as such. g Ambassador Tellez of Mexico is ex- Mrlk!fl to return to Washington this W eek. After a conference yesterday with Sccretary _Stimson, Representative La Guardia, Republican, of New York, said he was sure the State Department would look into the matter carefully and that Ateca would have an opportunity to prove his political activities. : The New Yorker said he did not want tosee a dangerous precedent established n the matter, and that he was con- ! vinced Ateca was wanted in Mexico for political activities and that he would be shot if returned. “No Rhyme or Reason.” Describing the arrest of Mathews as “unwarranted and unjustifiable,” La Cuardia in a statement said the immi- gration officer was carrying out his or- ders from Chief Inspector Grover C. Wilmonth at El Paso, Tex., in accom- panying the alien, who had entered this country illegally. La Guardia said Mathews was arrested “without any rhyme or reason” on the technical charge of conspiracy, while he wes on “official duty escorting an alien who is voluntarily leaving the country.” He said there could be no doubt as to the regularity and propriety as to Math- ews’ duties. ‘““Unless Mathews is released and ex- onerated within a very few days.” La Guardia added, “the fur will fly in Washington.” Storage Plant to Be Enlarged. HARRISONBURG, Va., May 11 (Spe- cial) —A six-story addition, costing $100,000 and providing storage space for 87,000 barrels of apples, is to be uilt at once by the Mutual Cold Storage Co., to take care of the pros- pective bumper crop of apples this Fall. The cold storage plant capacity now is only 37,000 barrels. URING the past seventeen years Morris Plan in- stitutions have served more than five million men and women in every walk of life, who have borrowed more than one and a quarter billion dollars for almost as many purposes as there are needs for money. It gives Any constructive purpose for which you need money will receive courteous and confidential consideration here. MORRIS PLAN BANK Washington, D. C. For 63 Years We Have Served the City of Washington We are now furnishing homes for the grand- children of our first customers. We have thousands of families on our lists who have been our patrons since they first home. B on furnished their Easy Credit We have nothing else to offer—no “two-for- one” specials—no “‘trade-ins” or other “atten- tion catchers.” We have found that honest values and dignified credit are all that are neces- sary to draw and hold patronage. Peter Grogan & Sons Co. OGAN’S 817-823 Seventh Street N.W. HOMEFURNISHINGS SINCE 1866