990 REPORTS ON THE STATE OF SCIENCE, ETC 
APPENDIX. 
International Credits. 
By Sir DrummMonp Drummonp Fraser, K.B.H., M.Com. 
The International Credits Scheme is the scheme of Mr. ter Meulen, unani- 
mously adopted by the International Financial Conference at Brussels in 
September, 1920, of which I was appointed Organiser in March, 1921, by 
means of which necessitous nations, with approved credits, may be enabled to 
finance essential imports. 
An International Commission of bankers and business experts is to be 
appointed by the League of Nations, who will have power to determine the 
gold value of the assets offered by the Governments of these countries. The 
Governments will then issue bonds to the gold value of their pledged assets, 
which will be specifically secured by the revenue from these assets. These 
assigned assets will be so administered by the participating Governments, or 
by the International Commission, that the bond-holders will be secured against 
default or loss. 
Guarantee.—The bonds are issued by the Governments—when the condition 
of their internal currency justifies the 1issue—against revenue-producing assets. 
They are lent by the Governments to their importers, who offer them as a 
guarantee that they will pay the exporter by the proceeds of the goods 
manufactured by them. 
Negotiability.—For ordinary commercial transactions banks in lending 
countries will find the necessary accommodation, because the bonds are a ‘ satis- 
factory security’ (the British Government will guarantee 85 per cent. of the risk 
to manufacturers). When the guarantee is used for reconstructive purposes 
and a number of years is required for the development of productive enter- 
prises, Credit Associations will be established to attract investors’ money on 
the bond principle in order to finance the purchase of goods on a long-time 
credit in place of the short-time credit afforded by banks. (The British Govern- 
ment will in this case guarantee 70 per cent. of the capital supplied by the 
banks, financial groups, &c.) 
Realisation.—In the event of the necessity to realise the guarantee, because 
the importer has failed to carry out his obligation to the exporter, the exporter, 
in the first instance, must offer the bond to the issuing Government in exchange 
for his debt. Should the Government not purchase the bond, he is at liberty 
to sell it on the open market, or otherwise dispose of it. 
It is intended that the accumulation of the sinking fund shall be sufficient 
to purchase the bonds of defaulters. The object is to create a new capital 
and credit by international co-operation. 
