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the purpose of the act authorizing the United States section of the International High Commission and providing for its maintenance that its officials should be authorized to accept this responsibility, which in truth constitutes the most definite form of cooperation on our part with the Central and South American Republics in this work. All the members of the United States section fully concur in the words of the chairman of our delegation at Buenos Aires when he thanked the assembled commission for the "signal honor * * * conferred upon our country by designating Washington as the headquarters of the International High Commission "; and they express their fullest confidence that the chairman and his associates of the central executive council will "bring to this service the very fullest measure of intelligence and devotion."

In outlining the work done at Buenos Aires the present report will follow the order of topics as followed in the meeting itself. We deem it wise, therefore, to set forth the chief facts in connection with the several topics and then to summarize the discussion and the resolution adopted, finally suggesting the most practical manner of making the recommendation effective.

FIRST COMMITTEE.

Topics: I. Establishment of a gold standard or gold exchange standard. XI. Banking facilities; extension of credit; financing of public and private enterprises; stabilization of international exchange.

TOPIC I.

The first question had been discussed between the American Nations for more than a quarter of a century. The First International American Conference of 1890 attempted to correct monetary uncertainty with a common coin. As a result of one of its recommendations an International Monetary Conference met in Washington in 1891 to study the problem of depreciated currency. This conference was content to adopt a general resolution favoring an international conference on bimetalism, in which Europe as well as America should be represented. The Third International American Conference at Rio de Janeiro in 1904 resolved that all the Governments should be requested to send to the Pan American Union studies of their monetary systems, so that the Union might prepare an elaborate report on the subject for the fourth conference. The response to this recommendation was very slight.

Familiar with this history, the United States delegation aimed at the adoption of a money of account as a step to a stable system of gold-exchange standards, and as a stimulus to commercial transactions. The Argentine delegation recommended the adoption of a gold coin of the weight and value of the gold unit existing in the Latin Union, with an international agreement on the mathematical equivalence between this money and the monetary unit of each country. The Bolivian delegate on the committee proposed the establishment of an actual international gold currency with a unit of 1 gram of pure gold, to exist side by side with the national system heretofore authorized, and the details of which would be supervised by the Pan American Union and the United States Treasury.

Finally, the Uruguayan delegation proposed a unit of account equal in value to the gold franc, to be known as the Pan American coin; and, an eminent member of that delegation, Dr. Llamas, urged that it should be used in all Government publications besides the national currency, while the Pan American Union could in its publications give tables of equivalences between the currencies of the participating republics and this unit, and the International High Commission ought to secure the adhesion of chambers of commerce and other organizations to the system.

These and other suggestions equally interesting were subjected to a searching analysis by the subcommittee. The members of the committee agreed that such an international unit of account was necessary. The discussion centered rather about the details of weight and fineness than about the principle at issue. The delegates readily agreed that any international unit must be a small one so as easily to fit into the economic needs of all the countries interested. The question was whether this unit should be a franc exactly equivalent to that of the Latin Union-that is to say, weighing 0.3226 grammes, or one weighing 0.33437 grammes, and exactly equal to one-fifth of the gold dollar of the United States-that is, worth $0.20 or $0.193 in United States gold. The importance of European trade in South and Central America lent weight to the suggestion that such a unit should fit in with some system already in use in Europe. Several South American countries, notably Argentina, already possess a system based upon that of the Latin Union. This view was urged by Dr. Piñero, of Argentina, as follows:

It is more desirable to select a gold money of the same weight and value as the unit of the Latin Union, since the latter unit is based upon the decimal metric system, has a great range of circulation, is widely known beyond the states composing the union, and enjoys legal standing, while its reduction to other monetary units is a simple operation and its use in calculations and accounts is both easy and safe. Especially would the adoption of this unit remove any obstacles and difficulties that now embarrass the relations, so important and so numerous, existing between the American peoples and the European nations that compose the Latin Union.

The view of Dr. Piñero and those who share his convictions is expressed in his memorandum in the following terms:

The future of the dollar of the United States is the greatest that any monetary system can have. It would seem probable that this dollar may come to be the international money, but this will occur only when and provided that the United States dollar conform more readily to the decimal metric system, and be reduced to exact equivalence with the gold 5-franc piece of the Latin Union. On the other hand, the United States delegation pointed out that business circles in the United States would readily subscribe to so simple an alteration as the creation of a unit of account worth onefifth of the existing national unit, provided that such action would improve commercial relations. They urged the value of a system exclusively American, and likely to give every incentive to the banking communities in the richer countries, especially in the United States, to engage in trade or investment in other countries. With no intention to diminish the strength or cordiality of the relations existing between Latin America and Europe, our bankers and business. men simply desire to create equally strong and enduring bonds between Latin America and the United States; Europe's part in the commerce and industry of Spanish and Portuguese America would

be only relatively less important; and the United States would ask but little encouragement to do its share in developing the commerce and industry of the southern continent.

The subcommittee submitted the following resolution to the committee, which in turn reported it to the commission:

The International High Commission believes that in view of the present monetary situation of the American Republics, the establishment of an actual uniform gold currency by these nations is an ideal impossible of realization. The only measure feasible at this time is the adoption of a money of account. Your subcommittee recommends that, the unit of this money of account should contain 0.33437 grammes in weight, and be nine hundred one-thousandths fine; its multiples and submultiples should be based upon the decimal system and its ratio with existing monetary units be established by common agreement.

A cursory examination of available financial statistics showed how complex must be the task of introducing a gold standard into some of the Central and South American Republics. The question in each case is vitally bound up with trade balances and with local economic and financial conditions. The central executive council proposes no immediate change. It looks forward to the gradual adoption of the money of account in Government publications, tariff schedules, and customs documents. In time the advantages of facilitating banking operations through the medium of this money of account will become more and more widely known, and then measures might be taken for the expansion of this movement and the actual coinage of an international currency. The most practical means, however, of encouraging the establishment of a gold standard or gold exchange standards in the South and Central American Republics would be the establishment of an international gold clearance fund under the guaranty of many or all of the American Republics. Briefly stated, this plan calls for the assumption on the part of all Governments signatory to the treaty of an obligation to regard the international fund as inviolable and to facilitate and protect the operations conducted by the various depositary banks agreed upon by the Governments. The physical transfer of gold with every large exchange transaction would thus be avoided; the gold would automatically pass to the depositary of the international clearance fund, while equally automatically the corresponding bank would release an equal sum to be drawn against by bills of exchange. Such a system obviously offers considerable economy in the cost of shipping, insuring, melting, and recoining bullion. In the course of time its adoption would lead to substantial reliance upon the proposed money of account, and ultimately stocks of gold would be coined on this basis, and the American franc would become a real coin in commercial use.

These suggestions met with favor, and the central executive council is taking the proper steps through diplomatic channels to secure their realization.

TOPIC XI.

There was much less opportunity for concrete suggestion in this field, and few memoranda were presented by the various delegations. It was, of course, entirely obvious that the financiers representing Central and South American Republics were anxious to learn what prospect there was of a greater amount of capital going to their respective countries from the United States. The United States

delegates pointed out that a beginning had been made in this direction; that various banks had already established branches in Latin America; and that other institutions were taking steps to engage in banking there.

The subcommittee agreed that one of the first steps would be the establishment of branch banks, not only for the purpose of facilitating normal business transactions, but also as a means to insure an adequate supply of capital for local investment needs. A resolution was adopted to the following effect:

That the International High Commission recommend to the American Governments the adoption of such measures as will place the banks in each country, wherever possible, in a position to extend their activities abroad, to establish branches on terms of reciprocity, and to facilitate the granting of credit to the trade and industry of other countries of the continent.

Resolved, further, That the International High Commission recommend to the institutions of credit of each country the adoption of such measures as are indispensable for the establishment of relations with those institutions in other American States, subject to their laws and on terms of reciprocity.

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By virtue of the amendments to the Federal reserve act approved September 7, 1916, the United States national banks may now jointly own stock in banks "operating principally in foreign countries under either State or National charter; and they are also permitted to accept clean three months' drafts, such as are required as means of remittance in foreign countries. The reserve act was further amended to allow Federal reserve banks to open reciprocal accounts for foreign banks that may become correspondents or agents of foreign banks. These are concrete, constructive measures largely serving to carry out the resolutions above recited-so far as legislation is concerned and they are but another evidence of the tremendous impetus given by the First Pan American Financial Conference to the movement for a more intelligent cooperation between the merchant and the Government in the development of foreign trade.

SECOND COMMITTEE.

Topics: II. Bills of exchange; bills of lading; warehouse receipts and other commercial paper in international trade.

XIII. Uniformity of laws for the protection of merchant creditors.

TOPIC II.

The second committee considered the uniform rules upon bills of exchange formulated at The Hague conferences of 1910 and 1912. This section hoped to secure, with reference to bills of exchange, the adjustment of local laws to the most liberal legal theories prevailing in the great commercial nations through the adoption in LatinAmerica either of the so-called Anglo-American principles or of the continental law as expressed in The Hague uniform rules. The Latin-American jurists believe that The Hague rules are more in line with the normal and natural development of their own law than is the Anglo-American law on bills of exchange. In view of this preference and of the fact that if The Hague rules were widely adopted in Latin America, there would be, broadly speaking, only two systems in use in this hemisphere, respectively based on the uniform rules of The Hague and on the United States uniform negotiable instruments act, this section recommended that The Hague

rules be adopted; that the commission proceed to regulate those matters left by The Hague convention to the free action of the contracting States; and that authoritative Spanish and Portuguese translations of the rules and relevant laws and commentary be circulated preliminary to the carrying out of the first recommendation.

Argentina recommended the adoption of the uniform rules of 1912 on the principle that the rules adopted should be those in use by the greatest number of States. The Uruguayan delegation submitted a report and draft embodying the best elements of the law on bills of exchange to be found in the commercial codes of Central and South America; and urged, pending the adoption of this draft, the acceptance of the series of definitions on bills of exchange formulated by the Congress of Jurists at Montevideo in 1889.' The Brazilian delegation urged that the International High Commission take as a basis of study The Hague rules, together with the laws of England and the United States, so as to unite the best elements of all in one system. The Venezuela delegation advocated the adoption of The Hague rules with certain modifications, and outlined a number of changes which it regarded as expedient. The delegation of Salvador contented itself with the acceptance of The Hague rules without change, while that of Costa Rica, after recommending public circulation of authorized Spanish and Portuguese translations of the rules, advised their adoption, with the reservations permitted by the first 22 articles of the convention, as well as others.

After the presentation of these memoranda the committee proceeded to study The Hague convention and reglement in detail with a view to determine to what extent each article was consonant with the law of each country and to find a compromise rule where necessary. An effort was made to dispense with the reservations permitted by the convention, and on the whole it was a successful effort. Permission to adhere to traditional national law was reserved in a few minor cases, but only in one important case, that of article 74 of the rules and articles 18 and 20 of the convention. It is not necessary to dwell upon these articles; the conflict between the law of nationality and the law of domicile has been an important point in all branches of commercial law. It is not readily realized how large a part of the exchange business of all the Republics of Central and South America involves transactions with Europe and with the United States, but it is easy to see that if many transactions were to rest within the jurisdiction of Europe or of the United States there would be little recourse to South American jurisdiction. A number of the delegates therefore found it impossible to accept article 74 of the rules and insisted that its consideration be postponed, although a strong argument for the adoption of that article was made by Dr. Eusebio Ayala, of Paraguay. Further formal consideration of this point was postponed until the second meeting of the commission.

The committee directed that the text of the uniform law be modified in accordance with these resolutions and that the draft of the law thus modified be submitted to the several Governments. The acceptance of the definitions formulated at the conference at Montevideo in 1889, was urged on the ground that these definitions would facilitate the adoption of the uniform rules.

1 These will be found in part 2.

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