(2 of 3)
1) Institution of a single gold bank with central office in Berlin, which with the exception of the State banks of Bavaria, Würtemberg, Baden, Saxony, shall be the sole bank of issue in Germany. The capital to be $100,000,000, part of which is to be raised in Germany and part abroad; the gold reserve to be at least 33 1-3% of the capital; the bank to be governed by a German Managing Board and a General Board of 14 members: seven Germans and a member from each of the following countries: Belgium, France, Great Britain, Holland, Italy, Switzerland, the U. S. The German Government to be debarred from issuing bank notes.
2) Payment of reparations, costs of armies of occupation and other treaty charges to be met by Germany from taxation, railway earnings and industrial debentures. Payments to be fixed on a sliding scale, starting with $250,000,000 (cash and deliveries in kind) and rising to a standard payment of $625,000,000—. A system of supplementary payments, based on an "index of prosperity," to augment the sum of $312,500,000 for the financial years of 1929-30 to 1933-34; thereafter the supplementary payment shall be added to the standard payment of $625,000,000.
3) An international loan of $200,000,000 to ensure the successful establishment of the gold bank and to cover internal payments on account of reparations for the financial year 1924-25.
4) German railway system (about 33,000 miles) to be controlled by a specially created corporation, capitalized at $6,500,000,000—by the issue of mortgage bonds. The corporation to be governed by a board of directors of 18 members, half appointed by the German Government and the public, and half by an Allied "Railway Commissioner," who is to be "a person accepted in the railway world as being in the front rank," whose duties are to be fixed "in considerable detail." The net revenue from the railway is expected to surpass $250,000,000 per annum, the whole of which is applicable to reparations payments.
5) German Government to mortgage German industry and provide guaranteed debentures to the capital value of $1,250,000,000; the debenture stock to be handed over to a trustee to be appointed by the Reparations Commission, who shall apply the proceeds to reparations payments to the Allies. The income from this source is expected to be $75,000,000, or 6% interest. No. 2 Committee (Chairman Reginald McKenna, head of the London Joint City and Midland Bank, previously Chancellor of the Exchequer under Premier Herbert H. Asquith), had as its purpose to compute the value of German capital exported abroad and report on the means of "repatriating" such funds. The main findings of No. 2 Committee were:
1) Estimation (in the face of enumerated difficulties) of the total amount of German capital abroad as about $2,175,000,000. This is made up of
Mean amount of capital
abroad by Germans $1,500,000,000
Foreign Currency in Germany 300,000,000
Real Estate and securities in Germany owned by foreigners 375,000,000
Total $2,175,000,000
2) Inflation must be stopped permanently in order to prevent a further exodus of capital from Germany.