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In addition, heavy-set Gates W. Mc-Garrah, president of the Bank for International Settlements, is one of Mr. Wiggin's old friends. Often have they dined, motored, played golf together. Together they present the perfect embodiment of a pair of U. S. bankers as an anti-capitalist cartoonist would draw them. But about their minds, of course, there is nothing cartoonish. Nor are they hereditary exponents of Capitalism, but self-made representatives and leaders of a system in which all their countrymen have a stake.
Per Jacobsson. When the Wiggin Committee reached a tentative agreement on freezing foreign credit in Germany last week, it was promptly rejected by the German delegates for various reasons, the most important being that it left out of consideration the reichsmark balances in cash of foreign firms in Germany. This item totals nearly $140,000,000. If these balances were suddenly withdrawn, Germans believe they would be as badly off as ever. This point remained unsettled last week. The Wiggineers went back into their huddle. In the meantime the B. I. S. made an important move. Per Jacobsson, Swedish economist and budgetary expert, was given a job new to international banking. He was made Economic Adviser to the B. I. S.—an international financial bellwether, to study the statements of the central banks of various countries from month to month in an effort to spot future crises long before they can occur.
French Maneuvers. All this time Emile Moreau of the Bank of France sat at his end of the table smiling amiably, saying very little. But Wall Street suddenly perceived a curious maneuver which the Bank of France has been executing in New York. Ever since June 20 when the Hoover Moratorium was announced, the Bank of France has been converting its holdings of U. S. commercial bills into cash, holding the cash on deposit in the Federal Reserve Bank. Between June 17 and last week foreign bill holdings dropped from $378,717,000 to $220,174,000; foreign bank deposits swelled from $5,676,000 to $180,483,000. The Federal Reserve announced last week that gold earmarked for foreign account since June 29 increased $61,700,000. All of these changes have been attributed to the Bank of France.
Was France preparing a grandstand play to show the power of the French franc by causing a great withdrawal of gold from New York? Unlike the drain on the Bank of England it could be nothing but a grandstand play for the U. S. has still twice as much gold in its vaults as France. Still, the moral effect of the move would be great.
A few Wall Street bankers suggested a more charitable explanation. At the time the French franc was in danger the French Government passed an emergency law putting a tax of 1% on cash balances held outside France. The law is still in effect though the reason for it has passed. Conversion of the bills into cash and the cash into gold (which does not pay the tax) might just possibly be part of a move to have this old law annulled.