20Th Annual Report of the Bank for International Settlements
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BANK FOR INTERNATIONAL SETTLEMENTS TWENTIETH ANNUAL REPORT 1st APRIL 1949 — 31st MARCH 1950 BASLE 12th June 1950 TABLE OF CONTENTS , . Page I. Introduction 5 Introductory remarks (p. 5), twenty years of the B.I.S. from 1930 to 1950 (p. 6), the Bank's activities since the war (p. 17) II. The Significance of Mounting Production 22 Industrial production (pp. 22 and 32), certain critical stages (p. 22), Marshall aid (p. 25), productive efforts of the western European countries (p. 26), the effect of Marshall aid in increasing investments or strengthening reserves in the recipient countries (p. 29), increased requirements of materials, capital and labour for repair of war damage (p. 34) : U.S.S.R. (p. 34), Poland (p. 34), Hungary (p. 35), Norway (p. 35), Netherlands (p. 36), Belgium (p. 36), France (p. 37), Italy (p. 37), Germany (p. 37), United Kingdom (p. 38) — income of Europe from foreign investments (p. 39), increase in defence expenditure of most countries (p. 40), the serious interference with the normal pattern of trade (p. 42), east-west European trade (p. 42), reorientation of western Germany's trade (p, 43), triangular trade via south-eastern Asia (p. 46), general problem of overcoming the disorganisation brought about by the war (p. 48) III. Return to a Balanced System 50 Balance between government revenue and expenditure (p. 50) : in Belgium (p. 51), France (p. 51), Italy (p. 52), United Kingdom (p. 54), Norway (p. 55), Sweden (p. 56), Denmark (p. 56), Netherlands (p. 57), Switzerland (p. 58), western Germany (V- 59^7 A<^inafp^u);Gtedhosiovskiz (p. 61), U.S.S.R. (p. 61), eastern European countries (p. 62), United States (p. 63) — burden of taxation (p. 65) — equilibrium between savings and investments (p. 66) : in the United States (p. çz), Norway (p. 68), Denmark (p. 68), Sweden (p. 68), Belgium (p. 68), United Kingdom (p. 69), France (p. 70), Italy (p. 70), western Germany (p. 71), eastern Europe (p. 72) — increase of domestic savings (p. 73) : in the United Kingdom (p. 75), France (p. 76), Italy (p. 76), western Germany (p. 76), Switzerland (p. 91) — capital issue markets (p. 77), balance in the cost and price structure (p. 81), index of gold prices (p. 82), equilibrium in the balance of payments (p. 85), national product in the United States (p. 88), U.S. aid to foreign countries (p. 89), conclusions (p. 93) IV. An Approach to more normal Price Relations 95 Important changes in market prices (p. 95), American and British prices (p. 96), improvement in the supply of agricultural commodities (p. 97), terms of trade of certain European countries (p. 101), countries in which most prices have been decontrolled (p. 103), countries in which authorities still retain the power to control prices (p. 105), eastern European countries (p. 107), consolidation of the price structure (p. 108), E.R.P. (p. 112), stockpiling for strategic purposes (p. 112), commodity schemes adopted in the international field (p. 113), price movements in Europe (p. 104) V. A Year of Contrasts in the World's Foreign Trade 115 Value of world trade turnover (p. 115), trade development in different areas (p. 117) : in the United States (p. Xi8), United Kingdom (p. 123), France (p. 129), Italy (p. 131), Switzerland (p. 132), Belgium (p. 133), Netherlands (p. .133), Sweden (p. 134), Denmark (p. 135), Norway (p. 136), Finland (p. 136), western Germany (p- I37), Spain (p. 140), Portugal (p. 140), Greece (p. 141), eastern Europe (p. 141) — liberalisation measures (p. 142), commercial relations with countries outside Europe (p. 144), balance of payments of the United States (p. 90), the United Kingdom (pp. 28 and 127), France (p. 130), Italy (p. 131), Belgium (p. 133), Netherlands (pp. 87 and 134), Sweden (p. 135), Denmark (p. 135), Norway (p. 136), Finland (p. 137), western Germany (p. 139), visible and invisible trade of certain countries (p. X24), terms of trade of certain countries (p. 101), of the United Kingdom (p. 126), Sweden (p. 134), Finland (p. 137), U.S. tariff policy (p. 145) : Page VI. A Year of sweeping Changes in Foreign Exchange Rates 148 Characteristics common to devaluations in. 1931 and 1949 (p. 148), free rates of bank- notes in Switzerland (pp. 149 and 165) — factors responsible for the devaluations (p. 150), British monetary reserves (p. 151), the ten-point programme of Washington (p. 152), exchange rate alterations (p. 154) of the United Kingdom (p. 153), Belgium (p. 155), France (p. 155), western Germany (p. 156), Austria (p. 157), Finland (p. 157), Spain (p. 157), Iceland (p. 158), eastern Europe (p. 158), countries outside Europe (p. 158) — Swiss monetary policy (p. 160), nature and extent of the international use of sterling (p. 160), Uniscan agreement (p. 163), French policy (p. 164), conclusions (p. 168) VII. Production and Movements of Gold 170 General characteristics of 1949 (p. 17°), gold production (p. 171), movements of gold (p. 175), gold reserves (p. 176), gold outside monetary reserves (p. l8o), price of gold (p. 181), final observations (p. 184) VIII. Money, Credit and Interest Rates 186 Return to monetary stability (p. 186), money and the national income (p. 188), credits and the national income (p. 190), credit conditions in Austria (p. 198)1 Belgium (p. 20g), Czechoslovakia (p. 207), Denmark (p. 202), Finland (p. 207), France (p. 53 and 193}, Germany (p. 199), Greece (p. 197), Italy (p. 195), Netherlands (p. 208), Norway (p. 204), Sweden (p. 203), Switzerland (p. 210), United Kingdom (p. 212), United States (p. 215) —interest rates and credit policy (p. 219), notes in circulation (p. 192) IX. Intra-European Payments and Compensations 224 First Agreement for Multilateral Monetary Compensation of 18th November 1947 (p. 224), Agreement for Intra-European Payments and Compensations for 1948-49, signed on 16th October 1948 (p. 224), final statistics on this first payments scheme (p. 224), Agreement for Intra-European Payments and Compensations for 1949-50, signed on 7th September 1949 (p. 226), general description of scheme and Belgian loan agreements with statistics up to 31st March 1950 (p. 226), practical working of the agreement (p. 231), comparison of results of payments schemes for 1948-49 and 1949-50 (p. 235), net deficits and surpluses of participating countries (p. 236), com- parison of net deficits with drawing rights (p. 239), advantages and disadvantages of payments plans (p. 24.0), recent developments and European Payments Union (p. 241), turnover of all operations to date and final remarks (p. 242) X. Current Activities of the Bank 244 Operations of the Banking Department (p. 244), the Bank's assets (p. 247), the Bank's liabilities (p. 250), intra-European payments scheme (p. 252), Trustee and Agency functions of the Bank (p. 253), financial results (p. 254), changes in the Board of Directors and in Executive Officers (p. XI. Conclusion 256 * # # Agreements for Intra-European Payments and Compensations 261 Schedule of Par Values as announced by the International Monetary Fund . 302 # * # ANNEXES 1. Balance Sheet as at 31st March 1950. 2. Profit and Loss Account for the financial year ended 31st March 1950. TWENTIETH ANNUAL REPORT submitted to the ANNUAL GENERAL MEETING of the BANK FOR INTERNATIONAL SETTLEMENTS held at Basle, 12th June 1950. Gentlemen, I have the honour to submit herewith the Annual Report of the Bank for International Settlements for the twentieth financial year, which began on ist April 1949 and ended 31st March 1950. The results of the year's business operations are set out in detail in the section from page 244 to page 254, together with a general review of the current activities of the Bank and an analysis of the balance sheet as at 31st March 1950. The financial year closed with a surplus of 6,027,272.95 Swiss gold francs, of which 400,000 Swiss gold francs have been transferred to the account for exceptional costs of administration and 3,000,000 Swiss gold francs to the provision for contingencies. The balance of 2,627,272.95 Swiss gold francs has been carried forward. At the end of the previous financial year (on 31st March 1949), the surplus had amounted to 5,101,855.91 Swiss gold francs and the Board of Directors had decided that it was necessary to transfer the whole amount to contingencies accounts: namely, 300,000 Swiss gold francs to the account for exceptional costs of administration and 4,801,855.91 Swiss gold francs to the provision for contingencies. The moderate extent to which the surplus has increased does not in itself sufficiently indicate the substantial expansion of the activities of the Bank for International Settlements during the past financial year. There was, first of all, a considerable increase in the deposits entrusted to the Bank. Apart from the long-term funds connected with the Hague Agreements, the total amount of deposits rose from 242 to 497 million Swiss gold francs. The total of the balance sheet (when calculated so as to render the figures comparable with those of last year) rose from 722 to 984 million Swiss gold francs and there was a considerable expansion of the volume of the Bank's business. Having thus obtained an increase in the means at its disposal, the Bank has generally been able to comply with the requests that it has received — 6 — from the various central banks with which it has relations. The resulting transactions, whether they have consisted in the arrangement of short- term credits or the carrying-out of foreign exchange operations or sales, purchases or exchanges of gold, have in each case been undertaken in con- formity with the monetary policy of the central banks concerned, the Bank having ascertained — as is incumbent upon it — that there was no objection on their part.