ARGUMENTS IN THE NEGATIVE i
“It is impossible, of course, to dissociate the work of these delegates of the Finan- Berk for International
cial Committee of the League from that of the committee which, in pursuance of = =
the decision of the Hague Conference, will draw up the statutes of the Bank for. aa - |
International Settlements. * * * It rests largely with this organization com ~~ w%
nittee whether the proposed bank is to be merely an agent for the collection an = b Tiel x |
listribution of reparations, or whether it is ultimately to fill that ambitious place in 2, ot
‘he structure of world credit that has been intended for it by those far-seeing men “hy 5 ge)
who drew the Young Plan. It is evident that if some super-national institution can Young Plan
ve set up to act, in fact, as the central bank of central banks, a tremendous step forward
 will have been taken in rendering the problem of a national control of gold
‘ipe for solution. * * *»

f

In the middle of November, when an outline of the statutes prepared by the
Organization Committee for the Bank for International Settlements became avail
able, it was apparent that results tended toward the latter conception of the field for
‘he Bank. This was apparently the understanding of the Statist’s correspondent who
was present in the city where the committee worked, for he wrote: “Since the bank
is a complete novelty without anything like a precedent in existence—for it can be compared
 only to a very limited extent to the Federal Reserve Board; since it will presumably
 exist for generations, not only for the Young Plan’s scheme of reparation
annuities (until 1988) but thereafter also; and since it is to be not merely a reparation
 bank but a sort of international clearing house, a perpetual liaison between the
existing central banks, a dispenser of credit and agent for the development of world
sommerce, and a money-maker for the benefit of its shareholders, who may ultimately
 be in greater part the general public—for these reasons and more besides the
experts have had a difficult course to steer between those who want the bank to do
great things and those who want it to do only small ones, between those who fear a
super-bank’ and those who dread to let the chance go by of establishing what may
be a really useful organization for the stability of the exchanges, and the facilitating
of international monetary and business transactions.” The plan formulated during
October and November for the Bank for International Settlements is to be considered
 bv a conference of governments at the Hague in January, 1930.

Bank's Statutes

Stability in the general price level is a proper aim for a central
banking system. Since too rapid an increase in credit will, by experience
 and according to theory, cause prices to rise there would be
1 safeguard for the reserve system against political or other extraneous
‘nfluences if there were statutory recognition of the responsibility of
‘he system with respect to prices.

Price Stability

The argument is not based necessarily upon an assumption that the reserve system
 has complete power over price levels, but only that it has a large influence.
Stability in the general price level does not mean absence of fluctuation in individual
prices, nor that there will not be minor changes upward and downward in the gensral
 level; it means stability in prices as a whole without changes upward or down-(Continued
 on page 31)

Meaning of
Proposals