Regional President Speech

CRKDTT ASPECTS 07 IMTEBHàTIOHAL FIMAMCE Karl R. Bopp Robert Morris Associât»# Lincoln Boom, Union Leagns Decomber U, 1944 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis CREDIT ASPECTS OF INTERNATIONAL FINANCE Introduction li&ny member* attended AIB seminar on International Monetary Fund. Different^ approach to the problem I* The interwar experience: a practical lesson on what not to do. A. The international investment position of the United States. (Excluding war debts) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 2 - End of year - Item______________ 1919 1930 1933 1939 U.S. investments abroad: Long-term: 3.9 8.0 7.8 7.0 2.6 6.0 \ 6.5 15.2 13.8 10.8 2.0 1.1 . ■-•ÜE Total long- and short­ term. . • 7-Q m g 11.9 jlsA Foreign investments in U.S.i Long-term: .9 1.4 1.8« 2.0 1.6 JksT 3.1 2.5 5.7 4*9 6.3 __s JàsOL J h l Total long- and short­ term. .. ftfiA Net creditor position of the U.S.s On long-term account*•••••. 4.0 9.5^ 8.9 On short-term account...... .6 On long- and short-term 3.7 8.8 9.5 1.8 ?*1929 data, 1934 data, includes misc. investments. *Net debtor position. Note: All data for 1919 and the data for 1929 on foreign long-term investments in U.S. Digitized for FRASER htatpr://efr asuenr.ostflofuiiscfeid.aolrg / ests; other data are ests. of Dept, of Com. Federal Reserve Bank of St. Louis - 3 - B. The new era of the 20* s 1« Ve invested in long-term $1 billion a year abroad. 2« Factors responsible a. High yields (1) Insistent demands just after the war« Many creditors with unblemished records« (2) Traditional credit soirees closed. b. Salesmanship Investment bankers Cuba and Peru C. The 1930* s 1. The depression 2« Financial instability a« Hordwolle - Credit-Anstal b. Darmstadter and Hationalbank c. Britain leaves gold standard 3* Defaults and exchange controls Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - A - D. Some lessons from these experiences 1. Prosperity, like peace, is unlimited. The more others have the more there is for each to enjoy. 2. Prosperity, like health, is indivisible. Can*t localize areas of depression. 3. Debtors ana creditors have responsibilities. a. Debtor to pay b. Creditor not to be unreasonable c. National economies vs. individual borrowers. Consolidated vs. parent company only statements. II. A pattern for international relations A. Dumbarton Oaks 1. General Assembly - all members 2. The Security Council - peace and security 5 + 6 members (voting?) 3« International Court of Justice 4.. The Secretariat 5* The Economic and Social Council - prosperity a. Food and Agriculture b. International Trade Body Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 5 - c. International Monetary Fund (1) Exchange stability without rigidity (2) Tiding over temporary needs d. International Bank for Reconstruction and Development B. The International Bank for Reconstruction and Development 1. Principles a. Long-term capital investment b. Restore economies destroyed by the war c. Develop productive resources of less developed countries d. Balanced growth of world trade 2. Capital subscriptions a. Amounts (1) Total $9*100 million (2) U.S. $3,175 million - 35% b. Division (1) For direct lending - 20% (2) For guarantee fund - 80% c. Payment (1) 2% initial gold or $ (2) 8% more within a year in currency. (3) Remainder as needed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis d. Liability - unpaid portion of subscription Activities a. Introduction (1) Facilitate private lending (2) Quarantee loans made by others (3) Participate in or make loans directly b. Amounts (1) Not over paid in capital plus surplus for direct loans - 20% (2) Not over 100% of subscribed capital c. Guarantee of loans (1) Conditions (a) Must be guaranteed by "borrowingn member (b) Must be approved by member where funds are raised (c) Must be approved by member in whose currency it is denominated (2) Commission 1— on outstandings for first ten years Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis - 7 - d. Direct loans (1) Out of its own funds (2) Out of funds borrowed by the bank (a) Must have approval of member where raised (b) Must have approval of member whose currency is designated 4-« Management a. Board of governors - 1 from each member. Majority of quota votes decides b. Executive directors (1) Number (a) 5 appointed by the largest quota members (b) 7 elected by Remaining members - 2-year terms (2) Vote by quotas c. President and staff subs cription a. Votes 250 + 1 per share or — $100 000— Total $102,000 U.S. - $32,000 or 31.A% Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Karl R. Bopp (1944, December 13). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19441214_karl_r_bopp

@misc{wtfs_regional_speeche_19441214_karl_r_bopp,
  author = {Karl R. Bopp},
  title = {Regional President Speech},
  year = {1944},
  month = {Dec},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19441214_karl_r_bopp},
  note = {Retrieved via When the Fed Speaks corpus}
}