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Constructive Functions of the International Bank

Courtesy Reuters

OF ALL the main features of the Young Plan, the Bank for International Settlements was the only one upon which the Committee of Experts were agreed practically from the start. Whereas the strictly reparation features of the plan took the experts some seventeen weeks to bring to the point of agreement, they accepted the general framework of the bank within four. In one sense this prompt action was due to the fact that the work planned for the bank in connection with reparations was mainly administrative, and so stood outside the principal field of controversy. But it was also true that its non-reparation functions were designed to satisfy existing needs and so fell in appropriately with hopes and aspirations for anew financial order.

Between these two sets of functions a sharp line should be drawn. While the development of the reparations problem fixed the time and occasion for setting up the bank, and while reparations were expected to furnish it with the nucleus of its business during its formative years, it was believed that as the bank's other functions grew the administration of reparations would sink into secondary importance. It is these other functions, indeed, which justify its structure and the character of its management, and it is to them that one must look for its future importance. Many of them are still in their primary stages of development; but they give the bank its main points of interest for any observer of international financial relations.

Before moving to a consideration of some of these other functions one must recall the set of circumstances which led up to the establishment of the bank. At a very early stage in the work of the Experts' Committee, which met in Paris in February 1929, it was clear that some sort of an organization or institution would have to be created to handle the receipt and distribution of German reparation payments. At the cornerstone of the Young Plan was the intention of relieving Germany of

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