551.A1/50: Telegram

The Ambassador in Belgium (Whitlock) to the Secretary of State

132. B-283 for Davis from Boyden.

Delacroix scheme for new international bank evidently impresses delegates as too ambitious, too complicated and slow to be [Page 101] practical, not likely to be considered seriously for these and other reasons.
Ter Meulen of Holland makes proposal more likely [to] meet approval convention. In substance proposes any government whose nationals because of disturbed situation cannot get raw material on personal credit may segregate certain assets or revenues against which government may issue bonds. Such bonds given to its nationals to use as collateral to obtain credit for import transactions. Such transactions must meet approval of government concerned. Such bond issues and their security, also transactions, all approved by central commission acting under League of Nations. My impression this scheme neither very useful nor very objectionable. Any government can now do same thing, machinery proposed merely adds sanction of central commission to transaction and to bonds. This gives bonds better credit but seems cumbrous and not well adapted to business transaction; also slow in operation and probably [would be?] operated too conservatively to accomplish large results. Such transactions might affect United States because assets or revenues used to secure proposed bonds would be by version process [sic] become unavailable for payment other indebtedness of country issuing bonds. This does not seem serious for any country which would avail itself of such machinery would obviously be in position where receivers certificates were only remedy.
Reid of India74 accepts foregoing principles but wishes to have such government bonds issued to central commission and used as collateral for bond[s] issued by central commission but those last bonds handed to governments to be delivered to their nationals for use as collateral as above described. Central commission bonds would be supported by guaranty of all governments who chose to participate in guaranty or even by large corporations or trade associations which wished to participate. All participation voluntary and each guaranty limited to definite amount but amount of bonds actually issued by central commission could obviously much exceed total guaranty. This would create a much better bond, Reid’s purpose being to get a bond which would be of real use to selling exports, as collateral with banks or otherwise. The idea seems good but doubt how far they would obtain guarantees though India seems to have substantial sum available for use in this or any other way to help their exports which seem to be congested. From United States point of view recommendation by convention of any such scheme involves pressure on United States to join in guaranty but this difficulty inherent in whole situation and probably cannot be avoided if convention recommends anything. This scheme is not direct drive at [Page 102] United States, therefore we should be in bad position to try to stop it merely because United States may not want to participate and at same time may not want to be obliged to refuse. Boyden.
  1. Sir Marshall Frederick Reid, formerly member of the Council of the Secretary of State for India.