The Guardian And Evening Star, with which is Incorporated the West Coast Times. THURSDAY, SEPTEMBER 12, 1929.

Hokitika Guardian, 12 September 1929, Page 4

The Guardian And Evening Star, with which is Incorporated the West Coast Times. THURSDAY, SEPTEMBER 12, 1929.

THE REPARATIONS BANK. The question or the .allocation of the reparations' payments so completely overshadowed all the other issues that had to he settled at the eonierence which was recently held at The Hague that the absence from the cabled reports of any reference to the decisions of the conference as to the location of the Reparations Bank, as it may conveniently be 1 called, was perhaps not surprising. The establishment of this new bank for international settlement, expains aii exchange, is an integral part of the Young Plan. It is designed, in the first instance, to handle Germany’s reparations payments, but it is anticipated that it will be something more than a mere piece of reparations machinery—that it will, in fact, develop into a central bank of central banks with a function “scarcely different in its exercise from the use of central bank credit by banks and bankers.” Further, it is contemplated that it will be an important stabilising'factor in the foreign exchanges and ultimately that its operations should go far to eliminate the costs and ’risks now incurred in the shipping and reshipping of gold and that as a natural corollary to this, it would be the appropriate organ through which any attempts to stabilise the value of gold should lie made. It is to lie feared that this explanation of the functions of the Reparations Biink is too technical to be intelligible to more than a select few. \\ hen however, the Economist declares that “if this great conception of the experts is even in a small degree an inspired vision of the future, then this part of the scheme becomes of far greater significance than the reparations scheme itself, for it will be a world’s institution of vital economic importance long after the problem, of reparations is dead and buried” it will be appreciated that the establishment of this bank will be an event of epochal

importance. The Reparations Bank is to “exclude political influence from its procedure’ and is to be so designed as not to interfere with the functions performed by existing institutions but is to create for itself supplementary functions in a special field of its own. Ihc independence of political control is in accordance with the tendency to remove central banks and the management of currency and credit questions from political influences. There is a good deal of confused '•thought upon the relative functions of Governments and banks, the existence of which warrants another quotation from the Economist: —“Ultimate l responsibility lor a country’s currency, banking and credit institutions, must rest with the Government of that country. What we mean when we talk of making monetary questions independent of politics is that, when once the Government has legislated and equipped the appropriate institutions with their necessary powers, it is desirable that there should be as little interference as possible in their administration. It means even more than this. If the institution created commands the ( confidence of a nation those who are responsible for its currency and,monetary institutions, may, in fact, be permitted to decide to a very large extent what monetary policy is to be pursued. But in the last resort this is purely a question of confidence, for every Government ultimately retains the power to resume control and to d : ctate whatever monetary policy it thinks fit.”