Financial Committee
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LIBS AST AltOHiVJOT [Distributed to the Council and C. 437. M. 167. 1926. ti. the Members of the League.] [F. 309] Geneva, Ju ly 29th, 1926. LEAGUE OF NATIONS FINANCIAL COMMITTEE REPORT TO THE COUNCIL ON THE WORK OF THE TWENTY-THIRD SESSION (SPECIAL) OF THE COMMITTEE Held in London from July 1 9 th to 2 3 rd, 1926. INTRODUCTION. The Financial Committee has the honour to submit to the Council the following report on the work of its Twenty-third Session (Special), held in London from July 19th to 23rd, 1926. The following members were present: M. D u b o is (Chairman); M. Takashi A oki (in place of M. Teiji Sekiba) ; M. d e C h a l e n d a r ; M. J a n s s e n ; M. M auro (in place of M. Bianchini) ; M. t e r M euleN ; S ir O tto N i e m e y e r ; M. P o s p is il . The following also attended part of the meetings: 1. For the Question of the Loan for the Settlement of Bulgarian Refugees: M. M o l o f f , Bulgarian Minister of Finance; M. I v a n o f f , Governor of the National Bank of Bulgaria; M. Ca c l a m a n o s, Greek Minister in London; M. D io u r it c h , Serb-Croat-Slovene Minister in London ; M. Constantin M. L a p t e w , Roumanian Chargé d’Affaires in London. M. Viktor B raf, Czechoslovak Chargé d’Affaires in London; 2. For the Question of the Financial Situation of Danzig: D r. v a n H a m e l , High Commissioner of the League of Nations in Danzig. Representatives of the Free City: D r. Sahm, President of the Senate; M. Julius G e h l , Vice-President of the Senate; Dr. E. V o l k m a n n , Senator in charge of Financial Questions ; M. Konrad M e i s s n e r , President of the Bank of Danzig; Dr. F e r b e r , Government Counsellor. Representatives of Poland: Dr. S t r a s b u r g e r , Commissioner-General of Poland at Danzig; Dr. Za c z e k , o f the Ministry of Finance; M. L a l ic k i, Counsellor at the General Commissariat of Poland at Danzig; M. B e n i s , Secretary of Legation; M. R a s in s k i, Chief of Customs Department. 3. For the Question of Counterfeiting Currency: M. B r o e k h o f f , Commissioner of Police at Amsterdam. ^ ^ N- 850 (F). 850 (A), 8/26. Imp. Kundig. Publications of the League of Nations II. ECONOMIC AND FINANCIAL 1926. II. 29. S um m a r y. Page I. Loan for the Settlem ent of Bulgarian R e fu g e e s....................................................................... 2 II. Financial Situation of the Free City of D a n z ig ......................................................................... 3 III. Counterfeiting C u r r e n c y .................................................................................................................. 5 IV. D isarm am ent ................................................................................................................................... s I. L o a n f o r t h e S e t t l e m e n t o f B u l g a r ia n R e f u g e e s . 1. The Financial Committee was requested by the Council to consider the question of the settle ment of Bulgarian refugees at its present session and, if the conditions contemplated in its report of June 7th had been fulfilled, to recommend to the President of the Council the measures necessary to obtain advances on a loan. The Committee has had the opportunity at its present session of hearing statements by M. Moloff, the Finance Minister of Bulgaria, and by M. Ivanoff, Governor of the National Bank. It has also had an exchange of view's with the diplomatic representatives in London of Greece, the Kingdom of the Serbs, Croats and Slovenes and Roumania, the representative of Czechoslovakia being also present. In its report of June 7th, 1926, the Committee made certain recommendations with a view to furthering the negotiation of a loan. In respect of these recommendations, the Committee has ascertained that the situation is as follows : (1) The necessary decisions (Annex I), releasing the revenues required as security for the loan from the general charge for reparations and armies of occupation and providing safeguards against the depreciation of the leva, have now been taken by the Inter-Allied Commission at Sofia and by the Reparation Commission at Paris, and, on the information received, are in a form which satisfies the requirements of the Financial Committee’s report. (2) Satisfactory assurances have been received from the Bulgarian Government and the Governor of the National Bank as to the modification of the statutes of the Bank. The conditions affecting the security of the loan may now therefore be regarded as satisfied. There remains the fact that, in the negotiations of the advances and of the loan, the Committee is of the opinion, as already stated in its June report, that the Bulgarian Government will find it necessary to arrive at a satisfactory agreement with the bondholders of the pre-war loans and to meet certain other pre-existing rights. Negotiations to this effect have made good progress, and it is hoped that a settlement may be reached almost immediately. (W ith regard to the special question of the bills of 1912-13 discounted by the Banque de Paris et des Pays-Bas, the Committee trust that a suitable arrangement can be made in connection with the issue of the loan.) 2 . In these circumstances, the Financial Committee recommends to the President of the Council to authorise the following measures, to come into force as soon as the President of the Financial Committee is able to verify formally the official texts of the reparation decisions : (1) The Bulgarian Government is authorised to enter into negotiations with bankers in order to obtain advances (not exceeding a net sum of £400,000) on the main loan to be issued on the basis of the scheme outlined in the report of the Financial Committee to the Council. The letter of authorisation should add, however, that the President of the Council thinks it necessary to call attention to the opinion of the Financial Committee that “ the Bulgarian Government will find it necessary to arrive at a satisfactory agreement with the bondholders of the pre-war loans for the future and to meet certain other pre-existing rights, and that he expresses the hope that this difficulty will soon be removed. (2) M. René C h a r r o n is appointed for a period of three months as representative of the League of Nations to supervise the expenditure of the advances. (3) Before becoming final, the contracts for such advances as may be obtained by the Bulgarian Government, in accordance with paragraph 2 (1) above, shall be submitted for the approval of the President of the Financial Committee. — 3 — II. F in a n c ia l S it u a t io n of t h e F r e e Cit y o f D a n z ig . In conformity with the request of the High Commissioner and at the express desire of the Senate of Danzig, the President of the Council, by a telegram of July ist, 1926, asked M. Janssen, a member of this Committee, to study the financial situation of the Free City, which the Senate considered to be serious. M. Janssen was able to accept this task, and visited Danzig between July 10th and 15th. He was assisted by M. Jacobsson, of the League Secretariat. The Financial Committee has considered the report presented by M. Janssen (Annex II), and has heard Dr. van Hamel, the High Commissioner of the League of Nations in Danzig, M. Sahm, President of the Senate, M. Gehl, Vice-President of the Senate, Dr. Volkmann, the Senator in Charge of Financial Questions, M. Meissner, President of the Bank of Danzig, and Dr. Ferber, Government Counsellor. On the questions which according to the Conventions in force concern Poland, the Committee heard Dr. Strasburger, the General Commissioner of Poland in Danzig, M. Zaczek, financial expert, M. Lalicki, Counsellor at the General Commissariat, M. Benis, Secretary of Legation, and M. Rasinski, Chief of Customs Department. The Committee desires to submit the following report to the Council. The measures contemplated in this report depend both on decisions to be taken by the author ities of the Free City and on an agreement to be concluded regarding certain points between the Free City and the Polish Government. The Financial Committee has been led to express its views on these different points in the hope that it may thereby facilitate the negotiations which will have to be undertaken. I. The monetary reform which Danzig carried out in 1923 with the aid of the League of Nations has been wholly successful, the stability of the Danzig gulden having been maintained without difficulty and the notes of the Bank of Danzig being covered by more than 100 per cent, if all foreign assets of the Bank are added to the legal reserve. On the other hand, after the monetary stabilisation, Danzig did not escape the effects of the general crisis which swept over Central Europe during the latter part of 1925 and led to widespread unemployment in Germany, Poland, and also in Danzig, where the number of unemployed rose to more than 20,000 at the beginning of 1926.