RECENTLY ACQUIRED INTELLIGENCE MATERIALS LIST #13

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00926A003300050001-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 407
• Document Creation Date: December 15, 2016
• Document Release Date: January 15, 2004
• Sequence Number: 1
• Publication Date: April 11, 1951
• Content Type: REPORT

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INFORMATION REPORT
CQUNTRYF Various
SUBJECT 8pcently Acquired Sntblligen~e Materials
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DATE OF INFORMATION
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II. ENGLAND
Background
The National Health Service
Benefits ... Administration ... Participation
of Doctors and Dentists ... Financing ...
Problems ... Attitude of Medical Profession
Comment
Page
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III. SWEDEN
Organization of Medical Care 10
Voluntary Insurance Program 11
Administration ... Benefits ... Financing
Proposed Program for Universal Compulsory Insurance 13
Administration ... Benefits ... Financing ...
Attitude of Medical Profession ... Attitude
of Insurance Societies
Comment
16
IV. SWITZERLAND
Organization of Medical Care 17
Health Insurance Program 17
Administration ... Benefits ... Financing
Comment 19
V. FRANCE
Compulsory Insurance Under Social Security 20
Administration ... Benefits ... Financing
Other Compulsory Health Insurance 23
Voluntary Health Insurance 23
Comment 24
VI. THE NETHERLANDS
Background 25
Cash Disability Insurance 25
Administration ... Benefits ... Financing
Medical Care Insurance - Compulsory 26
Administration ... Benefits ... Financing
Attitude of Medical Profession
Medical Care Insurance - Voluntary 30
Comment 30
32
VIII, APPENDIX
List of Members of World;.Studytour #6 34
Schedule of Appointments and Conferences 35
Discussion of Medical Care Problems at the World
Health Organization 39
Summary of Proposed Cash Disability Benefits in
Sweden 11.0
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IViII!ICAL CARE INSURANCE IN WESTERN EUROPE
A REPORT OF RECENT OBSERVATIONS AND IMPRESSIONS
INTRODUCTION
Many thinking Americans today are attempting to make up their minds
whether they approve President Truman's plan for National Health In-
surance. They are given to understand that the American Medical Asso-
ciation is an evil influence because it was able to spend the sum nec-
essary to publicize its recent campaign "Keep Politics Out of this
Picture." They are led to believe there is an easier way to meet med-
ical care costs than by having individually to pay the doctor's bill.
"Substitute National Health Insurance for old-fashioned ideas. Doctor-
patient relationships will not be disturbed. There is no resemblance
to socialized medicine." So they are told; so they are promised. They
are also given to believe that the United States is one of the few
countries in the world that has not already adopted a system of public
medicine; that we are behind the rest of the world in our sense of
social responsibility; that we should move quickly to catch up with
the presumably superior programs that can be copied from the experi-
ments of more enlightened nations.
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ENGLAND
Background
Before July 5, 1949, the effective date of the National Health
Service, 20 million people in England and Wales (about 50% of the
population) were entitled to receive free treatment from their
family doctor under the National Health Insurance Act of 1911. This
Act made it obligatory for all manual workers, and white collar
workers below a certain income level, to pay health insurance pre-
miums to Friendly Societies approved by government to administer the
program. In return for premiums paid, such workers received medical
care without additional charge from the general practitioners with
whom they chose to register. The insurance also covered the cost of
medicines prescribed by these doctors. Although statutory benefits
did not include specialist advice or hospital treatment, some
Societies used surplus funds to provide additional benefits covering
part of these costs. The law made no provision for wives and chil-
dren of insured workers, or for workers who had reached retirement.
During World War II, the Coalition Government authorized an ex-
haustive investigation of existing social insurance plans with a
view to improving their organization and effectiveness. End products
of this study were the National Insurance Scheme providing illness,
unemployment, widowhood, retirement and other benefits in return for
regular weekly contributions, and the National Health Service pro-
viding free medical care, regardless of contributions, to the entire
population of England and Wales (over 43 million). With the adoption
of the Health Service Act, England broke completely with past expe-
rience to launch the most ambitious experiment in medical care to be
found in Western Europe.
The National Health Service
Benefits
Benefits provided by the Service include: 1) free treatment from
family doctor and dentist; 2) free hospitalization, including all
specialist treatment; 3) free local and home health services, in-
cluding vaccination and immunization, midwifery, maternal and child
welfare, and ambulance services; 1t) free drugs and medicines on
prescription of doctors or dentists; 5) opthalmic services; and
6) surgical and medical appliances.
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Administration
Responsibility for administering this program rests with the Minister
of Health..' who is answerable to Parliament for efficient running of
the four branches of the Service - General Practitioners', Dental,
Hospital, and Public Health. Theoretically, administration of the
Service has been carefully decentralized by the appointment of unpaid
volunteers to operate the plan at the regional and local levels. But
as the chart indicates, the Minister has direct control over the
hospitals and broad supervisory powers over the other three branches.
All but 200 of Britain's 3,000 hospitals were taken over by the
government on July 5, 1948; only the small "cottage hospitals" and
certain institutions operated by religious orders were left outside
the Service. The country was divided into 14 regions, each with a
university and teaching hospital, and responsibility for the hospital
system in each area was vested in Regional Boards appointed by the
Minister. These Boards, in turn, named 377 Hospital Management Com-
mittees to supervise day-to-day operation of the hospitals, The
Minister also appointed a separate Board of Governors to supervise
each of the 36 teaching hospitals.
The General Practitioners' and Dental Services were organized by 138
Executive Councils (one for each County Council and County Borough),
each composed of 12 members chosen by local doctors, dentists and
pharmacists, 8 selected by the local health authority, and 5 ap-
pointed by the Minister of Health. Responsibility for the, Public
Health Services was left with the County and County Borough Councils,
which were assigned specific duties under the Act.
Participation of Doctors and Dentists
Although the medical profession was vigorously opposed to the idea
of a National Health Service before it became actuality, about 90%
of Britain's 21,000 general practitioners are now participating in
the plan. This high enrollment was achieved by a clever piece of
strategy on the part of government -- a ban on the buying and selling
of practices. Prior to the Health Service, it was often customary
for a young doctor to start his career by buying the established
practice of a retiring doctor. He, in turn, counted on the sale of
the practice to provide him with an income after retirement. By
abolishing the buying and selling of practices, therefore, the
government armed itself with an effective economic club to coerce
general practitioners into the Health Service. Few could afford to
sacrifice their initial investment in the practice by remaining
outside the Service, and if they joined, the government not only
"bought" their practice but also provided them with a pension at
retirement.
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Teaching Hospitals
acid Specialists
Bacteriological Service
(Medical Research Council)
Blood Transfusion
Service
This diagram gives a broad view of the organisation of the National Health Service, and
omits or simplifies some of the details.
KEY Direct responsibility. - - - General supervisory powers.
Responsibility of Executive Councils or County and Count Borough Councils.
Maternity and
.............. Doctors and Dentists will work at Health Centres provided by local authorities. Child Welfare
Medicines and Appliances will also be supplied at these centres. (including Midwifery
111111}}H{}}}} Temporary responsibility- Eye Services will ultimately be provided by Regional and priority Dental
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Family doctors taking part in the Health Service may choose between
two forms of remuneration: 1) a per capita fee for.each patient
registered with them or 2) a fixed sum of #300 plus reduced per
capita fees. In order to attract doctors to socially or financially
unpromising localities additional "inducement" payments are made to
physicians practicing in such areas. Mileage allowances are also
granted in the rural districts. Most family doctors are receiving
much the same income now as they did before the Act, though they are
working much harder to earn their money. Only those physicians
practicing among the upper income groups have suffered financially.
Some of this group have remained outside the Service or retired from
practice altogether. Additional allowances from the "inducement fund"
have persuaded others to take part in the program.
Participating doctors are allowed a maximum of 4,000 public patients
on their panels. Both the physicians and the Ministry realize that
this is too great a number for one doctor to treat properly, but
shortages of personnel make such a high quota necessary. General
practitioners are free to accept or reject Health Service patients;
they may also accept private fee-paying patients. In general, they
have a wide choice of localities in which to practice; only certain
"over-doctored" districts are closed to newcomers.
Specialists and consultants can take part in the Service only by
holding a hospital appointment, for which they receive a salary based
upon their specialist rating and the amount of time devoted to Health
Service cases. Only % of Britain's specialists are full-time
salaried physicians; the rest accept part-time appointments and take
fee-paying patients outside the Service. They have a limited number
of beds at their disposal for use of private patients. Only by be-
coming a private patient can an Englishman secure the surgeon he
wants. If he enters the hospital on referral from his family doctor,
he is treated by the specialist assigned him.
All dentists are free to participate in the health program and may
accept private as well as public patients. Since the beginning of
the Service, the dental profession has been the scourge of the
Ministry and the envy of the doctors. In the first place, the
dentists' threat to remain outside the program unless they were paid
on a fee-for-service basis forced the government to comply with their
demands. Secondly, the scale of fees based upon a study made by the
Spens Committee produced average incomes far exceeding the Spens
estimate of a fair salary. As a result, costs of the Dental Service
have skyrocketed, while the dentists have reaped a harvest. When an
emergency measure set a ceiling on their earnings from public
patients, they refused to accept additional Health Service cases.
Although two reductions (totalling 30%) have been made in dental fees,
the Ministry is still seeking new ways to control dental costs.
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Financing
The British Health Service is not an insurance plan but a tax-
supported government agency. Its facilities may be used by anyone
regardless of his status with respect to the National Insurance
Scheme. Contributions from the Insurance Fund cover about one-tenth
the cost of the program; the balance is financed by the National Ex-
chequer.
Problems
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Government's most critical problem in connection with the Service
id'its cost. Confronted with urgent requirements for better food
and more adequate shelter, leaders in both political parties now
wonder how much "health" their country can support. Some believe
that too much of the national income is devoted to curing ills re-
sulting from poor nutrition and sub-standard housing. If less
were spent on the Health Service, they reason, a greater amount
would be available to improve more essential elements of the
living standard. This, in turn, would lead to better health, less
demand for medical attention, and a reduction in cost of the
program.
The Ministry claims that the Service is being run with a strict
eye to all possible economies. Granted, only the most urgent
construction has been authorized and not a single Health Center
has been built. Yet in spite of these "economies", expenditures
during the first two years have far exceeded original estimates.
The government recognizes that competition among the people to
get the maximum amount of "free" service is a primary cause of
soaring costs. Yet neither political party dares to advocate
constructive measures to correct this situation. Both Socialists
and Conservatives fear they will commit political suicide if they
attempt to curb abuses of the health facilities by imposing
limitations on benefits. Thus, although the Minister was em-
powered by a 1949 Amendment to require people to pay part of the
price of prescriptions, this practical method of reducing costs
has yet to be tried. Since political considerations prohibit
real economies, there seems to be little chance of establishing
the program on a sound financial foundation until people learn to
use its facilities wisely.
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2. Cursory examinations
Stories of "three minute medicine" which circulate in this country
are dismissed as "fear propaganda" by Mr. Ewing and his associates,
but the necessity of cursory examinations is a cause of great dis-
tress to British doctors, One of them told us that he frequently
sees 45 people in 90 minutes, then added, "What kind of medical
care do you call that?" Although not undisturbed by this situa-
tion, Ministry officials claim it to be a temporary condition
caused by shortages of personnel and facilities necessary to meet
the overwhelming demand for medical attention. They believe that
the problem will be solved gradually as the supply of doctors and
nurses increases and as health centers are built,
3. Hospital admissions .
In order to ease their on loads, many family doctors now refer
patients to hospitals more readily than in the past. This Drac-
tice has aggravated the shortage of beds created by heavy de-
struction of hospitals during the war. As a result, a 350 bed
hospital may have as many as 2,000 patients waiting for admis-
sion, and most of the large hospitals are so crowded that only
serious emergencies will be admitted at once.
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4. Rush for drugs
The prescription problem is vexing both the medical profession
and government. Since the Ministry declares the Health Service
to be a "first-rate" service, family doctors are expected to
prescribe the "best" drugs for their patients. The British
people have been quick to seize this opportunity to satisfy their
penchant for expensive patent medicines. Most of these propri-
etary drugs are no more effective than their pharmacopoeial
equivalents, yet the public demands them because they are highly
advertised and attractively packaged. Fear of losing patients to
a more obliging competitor compels many a doctor to yield to de-
mands for proprietary drugs. By doing this, however, he runs the
risk of being called to account by the Executive Council, which
enforces sanctions against extravagant prescription.
Faced with a yearly drug bill which accounts for one-twelfth the
entire cost of the Health Service, the government is equally
embarrassed by this problem. Although the Minister of Health
advises doctors to prescribe proprietary drugs judiciously, he is
reluctant to curtail their prescription drastically because
profits on patent medicines support research conducted by the
pharmaceutical houses. Were it not for the initiative of drug
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companies, development and testing of new medicines would virtu-
ally cease, since the Ministry itself is not prepared to undertake
such research.
5. Poor coordination between branches
When the Health Service was a blueprint, its supporters advanced
in its favor the compelling argument that it would integrate the
work of public health authorities, general practitioners and
specialists to provide the most effective overall program of pre-
ventive and curative medicine. In practice, the Service has sadly
failed to realize this objective. In some instances, it has even
widened existing cleavages between different groups.
Prior to the Health Service Act, local authorities had made great
progress in the coordination of all health facilities within their
jurisdiction. Their efforts received a severe set-back when the
Minister took over responsibility for all hospital services.
Public health work is now frequently disrupted by breakdowns in
liaison between local authorities and hospital authorities. For
example - before the Health Service Act, control of tuberculosis
among the 3,500,000 inhabitants of London County was exclusively
a function of the Council, public health authority for the area.
Now, however, diagnosis and treatment are a function of the
hospitals, prevention and after-care a responsibility of the health
authority. Nine different central government agencies are pres-
ently involved in the control of this disease.
The Health Service has also aggravated the dichotomy between
general practitioners and specialists by barring family doctors
from the hospital. Once he has referred a patient for laboratory
tests or specialist diagnosis, the practitioner loses contact
with the case. Because they do not have the opportunity to work
together, neither the family doctor nor the specialist gets a
complete picture of the patient's condition. This situation
makes it impossible to maintain the continuity of diagnosis,
treatment, and after-care essential to restore patients to the
highest possible level of health.
Attitude of Medical Profession
Long before the Beveridge study was authorized, the British Medical
Association had advocated that government take a larger part in
organizing and subsidizing health services. According to the joint
Deputy Secretaries of the BMA, the profession took the stand that
comprehensive medical care for all the people could not be achieved
without help from the state. Apparently no thought was given to the
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possibility of joining forces with the insurance industry to meet the
need by expanding coverage under the existing program.
Although the BMA was ready to let the state play a larger role in the
provision and financing of medical care, it was certainly not willing
for government to take complete control, as indicated by the bitter
opposition to passage of the Health Service Act, Nevertheless, the
profession has made an honest effort to adjust itself to the program.
After two years, however, only the dentists and specialists are
reasonably content with their lot,
Medical Association officials believe that the Minister of Health
deliberately divorced general practitioners from the hospital in
order to produce an "assembly line" type of medical care. It is
certainly a fact that the Health Service has confined family doctors
strictly to the treadmill of daily calls and office hours. Their re-
action to this situation is understandable. Denied the stimulation
which access to diagnostic facilities and consultant opinion would
provide, they are rapidly losing their incentive and their enthusi-
asm. Professional frustration is breaking the spirit of young,
ambitious physicians who cannot find time in practice to apply the
special techniques developed in medical school or learned in "re-
fresher" courses offered by the government.
Also detrimental to the family doctor?s morale is the fact that his
patients tend to regard him not as a friend and medical advisor but
as an "official" whose main duties are to satisfy demands for pre-
scriptions and make arrangements for X-rays and laboratory tests.
Thus, although Health Service supporters claim that the program does
not interfere with the doctor-patient relationship, it has actually
altered this relationship considerably.
But the doctors' chief complaint is the failure of the program to
put first things first. A recent editorial of the British Medical
Journal reiterated this grievance as follows: "The shocking waste
of public money over the inessentials of medicine has left little
over for what is more urgently needed... It is difficult to see
how the N.H.S. can be put on a sound footing and the full resources
of modern medicine be at the disposal of the public without con-
siderable readjustment of its economy. The medical profession is
discontented and disillusioned not because of payment, or lack of
it, for this or that, but because it sees postponed indefinitely
the opportunities for improving the medical care of the people."
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Insofar as the Health Service is a plan under which the middle and
upper classes help subsidize medical care for low income groups,
it may be regarded as another manifestation of the social and
economic upheaval taking place in England during the past ten years.
But to explain the Health Service as just another result of a new
social philosophy is to ignore the psychological factors largely
responsible for its ready acceptance.
It must be remembered that England's health program was conceived
during grim years of war when men took refuge from despair in brave
plans for the future. War's end found the British ready to embrace
almost any program which promised to fulfill their understandable
longing for an end to suffering and needless death. Unfortunately,
their impatience to remedy a desperate situation led them to adopt
a plan so ambitious that it cannot be implemented to produce
promised results.
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SWEDEN
Organization of Medical Care
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Sweden's medical care program is based upon a highly developed
system of public medicine, with insurance playing a relatively minor
role in financing costs. Health standards in this country are ex-
ceptional, as indicated by an average life expectancy which betters
that of any other country except New Zealand and Holland. The sys-
tem producing these results had its beginning more than 250 years
ago in a social welfare measure which put medical care within reach
of even the poorest by creating an institution unique to Sweden -
a network of provincial doctors hired by government to carry on
public health work and to treat patients at fixed low fees. These
salaried doctors are responsible for all routine medical care not
requiring specialist skills. Assisted by public health nurses, they
have attained outstanding results in both preventive and curative
medicine for those residing in rural localities. In urban areas,
municipalities employ doctors for duties roughly similar to those
of provincial physicians. Inexpensive medical care is also avail-
able at out-patient departments of large city hospitals.
Consistent with the Swedish belief that medical care is a com-
munity responsibility, provincial and municipal councils are
legally responsible for organization of hospitals for physical
diseases. The national government is responsible only for military
and mental hospitals and two physical disease hospitals operated in
connection with medical colleges. Staff doctors are salaried
physicians hired by the provincial or municipal councils. They de-
vote about half-time to public patients, half-time to fee-paying
patients for whom a few private beds are available. Many of them
also maintain outside clinics for treatment of private patients.
Most provinces and municipalities have set up a well-integrated
network of hospitals which make all types of service available at
nominal cost. Even in Stockholm's South Hospital, one of the finest
in the world, the average cost per patient does not exceed $7.00 a
day, including diagnosis, X-ray, and surgery. Patients in its four-
bed wards are charged less than one-seventh this amount; the balance
is borne by the municipality,. If a patient is destitute and has no
insurance protection, his bills are paid by the local welfare
society. Because private hospitals cannot compete with the low fees
of the public institutions, they are practically non-existent; only
2% of Sweden's hospitals are privately owned.
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Voluntary Insurance Program
Sweden is the only country II which still has a completely
voluntary health insurance program. Although a resolution for uni-
versal compulsory health insurance was passed by the Riksdag in
January, 1947, the government has postponed its effective date in-
definitely. At present, 60% of the entire population of 7,000,000
is participating in the voluntary program instituted by the Sickness
Insurance Act of 19319 Any individual between the ages of fifteen
and fifty who has no existing disability may join the semi-public
organizations approved by government to furnish coverage under the
Act. If he joins with a group, however, limitations with respect
to age and health are waived. Children under fifteen are covered
by their parents' policies. There is no upper age limit at which
membership must be discontinued.
Administration
Before the 1931 Act, health insurance was furnished by mutual
associations similar to the British Friendly Societies, The Sick-
ness Act linked associations approved by the national government
into a countrywide network of societies and made them responsible
for administration of the program under supervision of the Royal
Pensions Board. However, only one society in each locality was ap-
proved to furnish the basic coverage prescribed by law. This
feature of the Act eliminates the possibility of competition among
associations since individuals are obliged to join the society in
their own locality. This monopoly does not seem to operate to the
disadvantage of the public - at least not from the standpoint of
cost. In fact, the societies are more prone to err on the side of
inadequate rather than excessive rates. One of the main functions
of the Pensions Board, therefore, is to prevent associations from
lowering rates to a level which might jeopardize solvency.
Benefits
Coverage under the voluntary program combines benefits for medical
care with cash disability allowances.
1. Medical care benefits
Society members have free choice of family doctor. Their in-
surance covers two-thirds of their routine medical bills in ac-
cordance with a fee schedule agreed upon by the insurance soci-
eties and the medical boards and approved by government. This
fixed scale of charges, however, is not binding, and a member
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whose doctor does not observe the schedule must assume the addi-
tional expense himself. Although few doctors abuse the privilege
of asking higher fees, the threat of compulsory insurance has
caused the Swedish Medical Association to exhort its membership
to even stricter observance of the approved schedule. The patient
pays the bill, then files claim with his society and receives the
two-thirds reimbursement to which he is entitled. The Swedes be-
lieve this method of payment essential to keep the insurance pro-
gram from interfering with the doctor-patient relationship.
Although the cost of drugs is not covered by the policy, many
societies pay half the cost of medicines prescribed by family
doctors. There is no limit on the duration of benefits for
routine medical attention.
Insurance societies pay directly to the hospitals the full cost
of treatment and ward maintenance, in accordance with prevailing
rates. Benefits are paid for a period of at least two years for
the same illness. The policy also covers the cost of transporta-
tion to the nearest suitable hospital. Patients desiring a
private room must pay the extra charge themselves, unless they
have provided for this additional expense by the purchase of
supplementary coverage from private companies not authorized to
write the basic insurance. Insurance patients do not have free
choice of specialist, but the Swedes do not object to being
treated by staff physicians since they are among the best
available.
Because a special law now provides free midwifery service and
free care during confinement, these benefits are no longer paid
by the insurance associations. However, the policy does provide
insured women with a lump sum benefit of 110 - 135 crowns. (The
Swedish crown can be considered equivalent in purchasing power
to our half-dollar.)
2. Cash disability allowances
Minimum benefits for loss of income during illness are paid at
a rate of one crown a day for a period of at least two years for
the same illness. Payment of additional premiums may increase
this allowance to as much as six crowns a day. There is a waiting
period of three days before benefits are payable. Supplementary
insurance for higher benefits may be purchased from private
companies not authorized to furnish the basic coverage.
Financing
Two-thirds the cost of the voluntary program is financed by premium
income. Premium rates vary throughout the country, reflecting dif-
ferences in economic conditions between one locality and another and
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differences in the financial position of the various sickfunds. Society
members may pay as little as one crown a month for medical benefits
and the basic cash disability allowance. Members pay premiums directly
to their local society, unless they are insured as one of an employee
group, in which case the employer forwards their premiums to the sick-
fund, (Even though employers do not share the cost of the insurance,
they may make the purchase of health insurance a condition of employ-
ment.)
Government subsidies supply the remaining funds necessary to support
the program. These grants are distributed among the societies on the
basis of a flat amount per member. The government is currently con-
tributing $10,000,000 a year to maintenance of the voluntary program.
Proposed Program for Universal Compulsory Insurance
The primary purpose of the compulsory health insurance resolution is
to provide cash benefits in case of illness. The insurance would
also cover three-fourths the cost of routine medical treatment.
Hospitalization, however, would not be covered by the program. A
companion resolution would make free treatment and maintenance in
public wards available to every citizen, with government assuming
that part of the cost now paid by the patient or his insurance society.
Medicines would be provided either entirely at state expense or at
reduced prices. Maternity benefits and dental care would also be
provided under separate plans.
Under the compulsory program, coverage would be extended to the en-
tire population, either as contributing or non-contributing members.
With a few minor exceptions, all Swedes would be obliged to contri-
bute to the plan unless covered as family members (wives of contri-
buting members and all children under 16).
,Administration
Responsibility for carrying out provisions of the compulsory law
would be delegated to sickness funds now furnishing voluntary cover-
age. Their activities would be carefully, supervised by the Royal
Pensions Board, which would advise them in the discharge of their
functions, review their financial position, and calculate and distri
buts state subsidies.
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Benefits
Under the compulsory program, medical benefits would be payable to
all members and their families, cash sickness benefits to all gain-
fully employed members.
1. Medical care. benefits
Unlike the British program, the Swedish proposal would not pro-
vide completely free medical care. By requiring patients to
assume 25% of the cost of routine medical attention, its advo-
cates hope to discourage abuse of the service and thus avoid
some of the woes afflicting the English system. Moreover, the
medical profession believes that such token payments often have
psychological value in speeding the patient's recovery. As under
the voluntary program, patients would retain free choice of
physician, and doctors would not be obliged to follow the estab-
lished fee schedule.
2. Cash disability allowances
Daily cash sickness benefits under the proposed plan would be
substantially higher than under the voluntary program (basic
daily compensation 3.50 crowns).- Since the drafters of the
resolution believe that the compulsory insurance should furnish
an adequate living standard during illness, benefits would be
paid at a standard rate, irrespective of earnings. After a
three-day waiting period, allowances would be provided for a
maximum of two years for each illness.
3. Voluntary benefits
Members who are in good health and under 55 may supplement com-
pulsory benefits by paying additional voluntary premiums to the
central society with which their local association is affiliated.
Medical benefits may include massage, corrective gymnastics, and
other therapeutic treatments. Cash disability benefits may go
as high as eight crowns daily, provided that the amount of combined
compulsory-voluntary health insurance, workmen's compensation
payments, and any private insurance do not exceed wages lost. Thus
it is possible for Swedes to purchase complete protection against
loss of wages during illness. This, of course, is contrary to an
accepted principle of cash disability insurance in the United
States.
1) Detailed schedule of benefits will be found in appendix, page 40.
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Financing
Very substantial state subsidies - about 70% of total costs - would
support the proposed compulsory program. The balance would be fi-
nanced by members' contributions; collected together with state taxes
and distributed among the societies by the Royal Pensions Board,
Contributions for the basic benefit would average about 24 crowns
yearly, the exact amount depending upon the financial position of the
local association. Although non-payment of contributions would not
disqualify members from receiving benefits, they would be liable for
prosecution in accordance with tax laws.
State contributions to encourage voluntary insurance under the plan
would amount to 20% of total costs.
Attitude of Medical Profession
Although the Swedish Medical Association is not unalterably opposed
to a program of universal compulsory health insurance, it does fear
certain features of the proposed plan:
1. Although the compulsory resolution would supposedly retain
the fee-for-service method of paying general practitioners, the
doctors are afraid that once the program were activated a capita-
tion system similar to Britain's might be imposed. The Associa-
tion objects vigorously to this method of payment,
2. The doctors fear that the public will abuse the system. Like
most other countries, Sweden has a shortage of doctors and hospital
beds; the Medical Association is afraid that this condition would
be aggravated by extending free medical services to the entire
population. The doctors have actively supported the principle of
a token charge for routine medical care in the hope that this pro-
vision may curb abuse of the general practitioner service. Even
so, they are afraid that if the resolutions should be executed in
the near future, the program would swamp existing facilities and
thereby lead to lower standards of medical practice,
3. Their most strenuous objection to the proposed reform concerns
the companion resolution which would have government assume the
cost of hospitalization now paid by patients or their insurance
companies. The medical profession fears that this arrangement
would lead to state control of hospitals, Dr. Stig Berseus, head
of the Serafimer Hospital (one of the two physical disease hos-
pitals run by the national government) cited several instances in
which his efforts to effect improvements in medical care atthe
Serafimer had been hampered by bureaucratic red tape and pointed
out that freedom from state interference enabled municipalities
and provinces to run their hospitals much more efficiently. Such
experiences with state-run institutions have convinced the SMA
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? that responsibility for hospitals should remain entirely in the
hands of local communities.
Attitude of Insurance Societies
In a discussion of the proposed plan with officers of the Stockholm
Sickness Fund, Sweden's largest approved society, we were told that
the sickness funds generally favor the compulsory program. Since
they would continue as administrative agents.for the state, they
would have little to lose and much to gain. Under the compulsory
system their business would be automatically increased. The pro-
posed law would overcome the problem of adverse selection by com-
pelling participation of the healthier members of the community who
tend to remain outside the voluntary program. Finally, the compul-
sory system, by making people more insurance conscious, might in-
crease their volume of voluntary insurance for additional benefits.
No one in Sweden ventured to predict when the compulsory law might
become effective. Sweden's leaders see more clearly than Britain's
that a realistic health program must be geared to their country's
economic strength. With one-fifth to one-third of the national budget
currently committed to an expanded military program, it is the con-
sensus that the nation cannot presently afford an annual outlay of
some $50,0?0,000 for a cash disability-medical care program for the
entire population.
The Swedes realize also that good health cannot be legislated arbi-
trarily - that shortages of doctors, nurses and hospital facilities
cannot be overcome by the simple stratagem of increasing state in-
fluence in the field of medicine. Even Dr. Axel Hdjer, head of the
Royal Medical Board and ardent advocate of universal compulsory health
insurance, conceded that it would be folly to rush the proposed reform
until these shortages are filled.
With good medical care available to all, regardless of ability to pay,
it is difficult to claim a need for universal compulsory health in-
surance. But this is of small consequence to the Socialists, who are
sponsoring health insurance as part of a program designed to transform
Sweden into a proper welfare state. Although they realize that prac-
tical considerations make such a step inadvisable at present, they
have no intention of abandoning the project.
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SWITZERLAND
Organization of Medical Care
Organization of medical care facilities is considered a community
responsibility in Switzerland. Although the cantons (states) do not
provide a free family doctor service, routine medical care is avail-
able without charge to those who cannot afford to visit private
doctors. In urban areas, such attention may be obtained at out-
patient departments of public hospitals; in the mountain districts,
it is provided by public health doctors and nurses.
Free hospital maintenance and treatment for those without means is
available in the wards of private charitable institutions or public
hospitals subsidized by the canton. Staff physicians of public
hospitals are paid as civil servants by the canton and devote about
half their time to public patients, the rest to private practice.
Roughly 20% of Swiss hospital patients have their bills paid by the
canton.
Health Insurance Program
The pattern of health insurance in Switzerland is a mosaic of
partially compulsory, partially voluntary coverage. The Confedera-
tion encourages the growth of low-cost voluntary insurance by
granting subsidies to all insurance companies (including "profit-
making" companies as well as Mutual Aid Societies) which conform to
provisions outlined in the Federal Health and Accident Insurance Law
of 1911. Although primary emphasis is placed on provision of medi-
cal care benefits, cash disability benefits may be included in the
coverage.
In addition to setting up standards which must be observed by ap-
proved companies, the 1911 Law stipulates that any canton may make
health insurance compulsory for everyone or for particular age or
economic groups. The canton, in turn, may delegate this authority
to local communities (communes). Thus, within the framework pro-
vided by federal legislation there exists a variety of plans de-
veloped to meet specific state or community needs.
Administration
More than 1150 private and public organizations have been recog-
nized by the Confederation to furnish the voluntary and compulsory
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coverages. Although they are allowed some latitude in the amount
and type of protection they offer, their contracts are subject to ap-
proval by the cantonal government. Districts which make health in-
surance compulsory often set up a Public Sickness Fund to cover those
not affiliated with a recognized private company. Activities of
Public Funds are supervised by the Cantonal Health Department.
Benefits
Benefits vary widely from one district to another. Some plans in-
clude dental care, physiotherapy, and appliances; others provide only
for routine medical care, and treatment and maintenance in the hos-
pital. Minimum benefits set forth by law are as follows-
1. Routine medical care
Family doctors' bills and the cost of prescribed drugs are paid in
full for at least six months in a period of 360 consecutive days.
If the policy provides a nine months benefit period, the company
may require the insured to assume 25% of the charges for routine
treatment.
?
The patient has free choice of physician unless his company has
made agreements with particular doctors to provide medical care
for their policyholders. In this event, his choice is limited to
the practitioners listed with his company. Patients pay their own
doctors' bills, then receive reimbursement from their company in
accordance with the fee-for-service schedule of charges fixed by
the cantonal governments after consultation with the insurance
companies and the doctors.
2. Maternity benefits
These are payable for a period of at least six weeks.
3. Hospitalization
The insurance covers the full cost of treatment and maintenance
in public wards of cantonal or private charitable institutions.
Patients may secure semi-private or private rooms by paying the
additional charge.
Financing
Since the 1911 Law provides that annual subsidies to recognized com-
panies cannot exceed one-half the sum of premiums paid by members, at
least two-thirds of total costs (for both the compulsory and voluntary
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benefits) must be met out of premium income. Cantons or communes
which have made insurance obligatory generally assume responsibility
for contributions on behalf of their indigents and are entitled to
reimbursement from the Confederation for one-third the amount so
expended.
Premium rates vary from one locality to another. In some plans
compulsory on low income groups, insureds pay a low initial premium
based on income classification and then contribute directly to the
cost of benefits actually received. Thus the rate is not only
geared to the individual's ability to pay but also reflects his
"lose experience
For the extreme flexibility of its insurance program Switzerland
is unique in Western Europe. Because the federal law allows the
cantons and the insurance societies such latitude in providing
methods for prepaying the cost of medical care, there is to be found
in Switzerland, as in no other country visited, a wide variety of
programs tailored to meet specific needs of particular localities
and groups.
With compulsion left to the discretion of the cantons or communes,
the proportion of people covered naturally varies from district to
district. It ranges from 30% in cantons where insurance is com-
pulsory for school children only, to 95% in cantons where coverage
is obligatory for all but the high income groups. Taken as a whole,
about 60% of the population is adequately protected against the cost
of medical care.
The fact that the Swiss have just voted down (by an 80% majority)
a proposal to make tuberculosis insurance compulsory for all indi-
cates that political agitation for universal comprehensive health
insurance would meet with a very cool reception. Disposed to
manage their affairs with a minimum of federal interference, the
Swiss are not likely to adopt legislation which would take health
insurance out of the hands of the cantons and communes.
Switzerland is the one country in Western Europe with a constitu-
tional structure comparable to our own. The Swiss have taken
advantage of the flexibility of this federal system to adapt their
health insurance program to the needs of different regions. If a
relatively small and homogeneous Federation has followed such a
policy with success, it seems reasonable to suppose that our own
much larger and more diversified Union will find it even more
worthwhile to retain a pluralistic approach, seeking to adjust the
program to the needs of the community rather than the community
to the needs of a centralized national program.
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The pattern of health insurance in France today is almost as con-
fusing as the political scene. probably because its development
has been influenced so strongly by political considerations. All
industrial and trade workers employed under contract of service
are compulsorily insured for medical care and cash disability
benefits under the 1945 Social Insurance Acts; agricultural
workers are obliged to insure with "mutual aid" (non-profit) in-
surance societies; professional people are obliged to insure
under a still different type of plan; and self-employed persons
may insure voluntarily with mutual aid societies or with private
companies.
Compulsory Insurance Under Social Security
?
Social insurance is divided into three sections: 1) social in-
surance risks (sickness, long-term sickness, disability, mater-
nity, old-age and death); 2) occupational risks; and 3) family
benefits. Conflicting political interests made it impossible to
unify these three sections into one complete system. Medical
care and cash disability benefits are provided under Section 1
to approximately 8,300,000 employed workers, who together with
members of their families total nearly 17,000,000, or 40% of the
population.
Administration
The Minister of Labour and Social Security is responsible to
Parliament for the general policy of social security. Under the
Minister the Directorate General prepares the necessary regulations
and instructions for operation of the scheme and supervises the
activities of the social security offices. The program is ad-
ministered locally by 124 offices (funds) which are linked to 32
regional funds and through these offices to the National Social
Security Fund, With the exception of the National Office, a
state body, all the social security funds have the legal status
of private institutions, are financially autonomous, and are sub-
ject to the same regulatory laws as the mutual aid societies.
Local offices are responsible for collection of social insurance
contributions, payment of benefits, and other functions con-
nected with day-to-day administration of the Social Insurance
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Acts, They are managed by elected boards having 75% employee
and 25% employer representation. These boards, in turn, elect
management boards for the regional offices. In establishing
such a system, it has been the intent of Parliament that in-
sured contributors should be made responsible for the sound
management of the funds collected for their security,
Benefits
Medical care benefits provided by the social security program
are available not only to the insured but also to husband or
wife, dependent child-ren, and dependent relatives living in the
same household. Cash disability benefits are payable only to
the insured. To be eligible for benefits, the insured must
have been employed for at least 60 hours in the three months
preceding first proof of sickness, though right to benefit is
maintained if he can prove unemployment during this period.
Benefits are payable for a maximum of six months for any one
illness.
The insured and his dependents are entitled to long-term sick-
ness benefits for a maximum period of three years if he can
prove one year's insurance and that he has been employed for 240
hours during the year, with 60 hours employment during the
quarter preceding proof of sickness. He must also have been
accepted for long-term benefit by the local office, which ac-
cepts persons only after submission to joint medical examina-
tion (by their own doctor and the medical advisor of the local
office) to determine whether the illness falls within the scope
of long-term sickness benefits. In case of disagreement be-
tween the two doctors, further examination is made by a
specialist,
1. Medical care benefits
Social security members have free choice of family doctor,
dentist, and chemist. They pay their own bills, for which
they must receive reimbursement within 15 days. The social
security scheme provides reimbursement for 80% of routine
medical, dental, and pharmaceutical bills in accordance
with a fee schedule fixed by agreement between the local
funds and professional associations and approved by the
National Scales Committee, Although both the doctors and
the funds are supposed to adhere to this schedule, private
doctors may charge higher fees if their own repute or the
affluence of their patients seems to justify the difference.
This extra cost is the responsibility of the patient,
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0
Because more and more doctors are finding ways to circumvent
the fee schedule, the average social security patient using
a private doctor must assume about 40% of the cost of routine
medical bills. Only by seeking treatment in the out-patient
department of a public hospital can he be certain that his
insurance will cover 80% of the cost, for polyclinic doctors
are obliged to adhere strictly to the schedule. Recognizing
that the approved charges are actually too low to provide
doctors with a comfortable standard of living, social secu-
rity officials are ready to increase the fee schedule if the
doctors will agree to observe a higher scale of charges.
Thus far the profession has refused to enter into any kind
of agreement which would fix fees definitively.
The insured also has free choice of any public hospital or
any private institution approved by social security author-
ities. (By this provision the French social security scheme
permits a wider choice of surgeon than is allowed insurance
patients in most European countries.) He is generally re-
imbursed for 80% of his surgical fees (again in accordance
with a fee schedule), but in cases of serious operations or
exceptional treatment he may receive a complete refund.
Social security also pays 80% of the cost of ward care.
?
Other benefits payable under the scheme include ambulance
service (80% of actual fee) and medical applicances and
travelling expenses (in amounts varying with individual
cases). Members covered for long-term sickness receive com-
plete refund of the cost of treatment involved.
2. Cash disability benefits
Cash benefits for loss of income during illness are related
to earnings. Social security members receive a daily al-
lowance equal to one-half their basic daily wage up to a
limit of 367 francs ($1.00?), an amount equal to 1/60th the
monthly salary "ceiling" for the payment of contributions.
There is a three-day waiting period before benefits are pay-
able. After the 30th day of incapacity, the daily allow-
ance is increased to two-thirds the daily wage for workers
with at least three dependent children. For long-term cases
the allowance is paid monthly and may be revised upward if
a general wage increase takes place during the period of in-
capacity.
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Financing
Unlike the situation in Britain, the French National Budget plays
no part in financing medical care benefits provided by the social
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security program. The entire social insurance system is sup-
ported by taxes ("contributions") on every worker's annual earn-
ings up to a ceiling of 26+,000 francs (about $800) and payable
by employer and employee at the following rates: 1
Employer
Employee
1.
Social insurance risks
10%
6%
2.
Occupational risks
(W.C.)
3%
3.
Family allowances
16%
4+.
General tax
596
Total
It is the duty of the employer to deduct employee contributions
from wages and to pay the entire 16% tax for "social insurance
risks" monthly or quarterly to the local social security fund.
No estimates were available as to the amount of tax necessary to
finance medical care and cash disability benefits alone.
Other Compulsory Health Insurance
?
When the 1930 Social Insurance Acts were remodelled in 19+5 in
an effort to establish a comprehensive and unified social secu-
rity program, French peasants displayed their characteristic
independence by thwarting all efforts to sweep them into the
broad overall program. Thanks to their strong political in-
fluence, they succeeded in preserving their right to insure with
mutual aid societies providing benefits equal to, and frequently
higher than, social security benefits. These societies are regu-
lated and partially subsidized by the state. Provision has been
made in the law for transference of former rights when an agri-
cultural worker enters an industrial trade.
Also insured compulsorily are professional workers, who are
allowed to organize their on mutual aid societies. Each group
may determine its rate of contribution based on the amount of
benefits members wish to receive.
Voluntary Health Insurance
The self-employed may purchase low cost voluntary insurance from
mutual aid societies subsidized by the state. These associa-
tions also sell voluntary insurance to cover the 20% difference
1) Based on total wages, the tax rate amounts to 25% for
employers, 5% for workers.
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between social security benefits and the total cost of medical
care. Although the combination of social security and voluntary
insurance provides employed workers with complete protection, it
limits their choice of hospital to those which have made agree-
ments with both the social security fund and the insurance
society furnishing the supplementary coverage.
The admitted aim of the French social security scheme is to
effect "a just and rational distribution of the national income."
In the attempt to achieve this goal, industry has been saddled
with a tax burden which is proving an impediment to production
and thereby a hindrance to economic recovery from the war.
The health insurance program under social security is beset with
certain problems reminiscent of the British Health Service. It
cannot be denied, for instance, that the system is subject to
abuse, though less from the public than from the medical profes-
sion. Social security members can ill afford to abuse a "service"
which seldom reimburses them for more than 60% of the fees
actually charged. The doctors, on the other hand, are lining
their pockets under a system designed to provide greater economic
security for the working class'.
More serious, however, is the cleavage which has been created by
tying one part of the nation's health program into the social
security scheme, under the Ministry of Labour, while leaving
other parts in the hands of the Ministry of Health. Political
rivalry between these two bodies is now so intense that the pos-
sibility of developing an integrated program of general health
maintenance is remote indeed. The only solution to the problem
thus far advanced, a 19+6 resolution to make health insurance
compulsory for the entire population, was effectively blocked by
opposition of the trade unions, the medical profession, and the
professional people now insured with mutual aid societies.
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THE NETHERLANDS
Background
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Health insurance in Holland began about one hundred years ago
with the formation of doctor-sponsored sickness funds. Trade
and religious groups later followed the doctors' initiative by
setting up their own organizations for pre-paying the cost of
medical care. By 191+1, about 40% of the population was partici-
pating in these voluntary programs.
During the years immediately preceding the German occupation,
the Dutch government was trying to develop a satisfactory plan
of compulsory insurance to extend similar protection to low in-
come groups. Before an acceptable program could be drafted,
however, the Germans forced passage of legislation making medi-
cal care insurance obligatory for all those insured for cash
sickness benefits under the Sickness Act of 1930.
Cash Disability Insurance
The 1930 Act originally required all employed persons whose an-
nual earnings did not exceed 3750 guilders to be insured against
loss of income from non-occupational accident or sickness. In
May, 1950 this figure was raised to 1+500 guilders. (The Dutch
guilder can be considered equivalent in purchasing power to our
dollar.) Since the average wage in Holland is roughly 2000
guilders a year, this salary ceiling is high enough to bring the
great majority of employed workers within the scope of the pro-
gram. Self-employers in the same income group may purchase
special low cost insurance on a voluntary basis.
Administration
The cash disability program is administered by 31+ "semi-public"
(non-profit) organizations. Some of these companies had been
established prior to the 1930 Act to furnish insurance on a
voluntary basis to particular trade groups; others came into ex-
istence with the compulsory law. All must be approved by the
Minister of Social Affairs and are subject to regulation by the
College of Supervision for the Sickness Act, which makes yearly
reports to the Minister on the conduct of their affairs. Most
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companies are directed by a board composed of representatives
of labor and management. Their operating expenses average about
15% of premium.
Benefits
Cash disability benefits are paid in an amount equal to 80% of
the daily wage up to 12 guilders, or a maximum of 9.60 guilders.
Benefits are payable for a period not exceeding one year; there-
after the insured is entitled to allowances under the Invalidity
Act if he is more than two-thirds incapacitated.
In case of pregnancy, employed women receive their full daily
wage during at least six weeks before confinement and from six
weeks to 12 months after confinement. The wife of an insured
man, or an insured woman herself, receives a lump sum of 55
guilders on confinement.
Financing
The cost of the cash disability program is borne by employers
almost exclusively. Although they have the legal right to with-
hold 1% of insured employees' wages to help cover the cost, most
employers pay the entire premium themselves. The premium rate
established by law amounts to 3% of wages, but companies are
allowed to write business at a lower rate provided they maintain
adequate reserves and can satisfy the College of Supervision that
their financial strength will not be jeopardized by such action.
Since employers have free choice of insurer, efficiently managed
companies with low operating expenses can enjoy a competitive
advantage based upon price. Officials of the Ministry of Social
Affairs were quick to point out that such competition operates to
the advantage of the insurance buyer. Their pride in this
"unique" feature of their cash disability program is not sur-
prising in view of the fact that competition is practically non-
existent in the insurance plans of other European countries.
Medical Care Insurance - Compulsory
As noted above, the Sickness Insurance Funds Decree of 1941 makes
medical care insurance compulsory for all those insured under the
Sickness Act of 1930. Protection is automatically extended to
wives and to children under 16.
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Administration
The 1941 law made existing voluntary sickness funds responsible
for furnishing the compulsory coverage subject to the approval of
the state. The activities of the 11+3 approved companies are
supervised by the Sick Funds' Council, a board composed of 35
members representing the sickness funds, doctors and hospitals,
employers and employees and the Ministry of Social Affairs. Ad-
ministrative costs run somewhat under 1C% of premium (9.7% in
1948).
Benefits
Benefits include: 1) full cost of treatment by general practi-
tioner or specialist; 2) ward care and maintenance in public or
private hospitals for a period of six weeks for each illness;
3) ambulance service (except for a token charge); 4) routine
dental care, including regular six months prophylaxis; 5) full
cost of drugs (provided patients use a pharmacopoeia product
rather than its patent medicine equivalent); and 6) part of the
cost of special appliances such as trusses and glasses.
The Dutch plan for providing free routine medical care resembles
the British panel system with the exception that family doctors
receive their per capita fees from the insurance companies rather
than from the government. A policyholder and his family register
with the doctor of their choice and retain the right to change
physician at half-yearly intervals. For each insured person on
his panel the doctor receives a yearly fee of five guilders from
the company furnishing the coverage. This amount is fixed by
agreement between the Royal Dutch Medical Association and the
.Sick Funds' Council.
Recommendation of the family doctor is a prerequisite to special-
ist treatment and admission to the hospital, and cases referred
for hospitalization are carefully screened by medical control
boards to avoid abuse of the service. Insured patients are free
to consult any recommended specialist who has agreed to the fee-
for-service scale of charges negotiated between the Sick Funds'
Council and the specialists. They also have free choice of any
public or private hospital which has entered into agreement with
the Council to provide ward care and maintenance for insurance
patients.
Unlike Sweden and Switzerland, Holland has very few public hos-
pitals, and cost of hospitalization in the private institutions
is generally rather high. But most hospitals have cooperated
with the Sick Funds' Council by agreeing to make ward care
available to insurance patients at reduced rates. Some hospitals
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and their affiliated specialists have contracted with the com-
panies to provide all necessary care for a daily charge of 7-8
guilders, including laboratory and specialist fees. Others make
separate charges for hospitalization and surgical care, in which
case surgical fees are paid in accordance with the fee-for-service
schedule negotiated with the specialists.
Financing
The compulsory program is financed entirely by premiums shared
equally by employer and employee. Originally 4% in 1941, the
premium rate is now 3.6% of the first 3750 guilders of annual
earnings,
1. Collection of premiums
In order not to interfere with existing voluntary insurance
contracts between individuals and sickness funds, the law pro-
vided that employees should retain free choice of insurance
carrier. At the same time, it made employers responsible for
collecting employee premiums, thus breaking the principal con-
tact between the employee and his insurer. The desire to pre-
serve this contact has led to the development of a complicated
and unwieldy system for handling premium collections.
The employer is obliged to deduct employee premiums from wages
(either weekly or monthly) and transmit this amount, together
with his own contribution, to the state-controlled "Equalization
Fund." At the time of such deductions, he must furnish each
employee with a receipt of payment known as a "coupon." The
employee, in turn, must surrender this coupon to the collector
from his own company, who stamps his insurance card entitling
him to medical and pharmaceutical benefits. Employers purchase
coupons in book form from the post office or local Board of
Labor. Since the amounts paid for the books will agree with
the amounts deducted from employee wages, the employer trans-
mits the book covers to the Equalization Fund together with
the difference between the total amount of premium due (as
calculated from his wage lists) and the amount paid for the
coupon books.
2. The Equalization Fund
The sickness funds,are completely dependent upon the Equaliza-
tion Fund for the money required to administer the compulsory
program. The law originally provided that premiums paid into
the Equalization Fund should be distributed among the insurance
societies on the basis of number of persons covered. Although
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this measure was meant to stimulate the companies to effective
control of administrative expenses, it became apparent almost
at once that costs varied widely for economic reasons quite
beyond their control. Thus, a distribution based on number of
insured operated to the advantage of some companies while
penalizing others. The Sick Funds' Council is presently
seeking a more equitable basis for apportioning receipts of
the General Fund. Temporarily, payments are being made to in-
dividual companies in the form of loans based on stated costs.
The 3.6% rate has produced a premium volume more than adequate to
cover costs of the compulsory program. (For 19+8 calendar year,
there was a residue of more than 25,000,000 guilders after pay-
ment of benefits and administrative expense.) At present, re-
dundant compulsory premiums are being used to subsidize the
voluntary program and to support Public Health Service research
in preventive medicine.
Attitude of Medical Profession
According to Dr. Wibaut, secretary of the Medical Society, the pro-
fession is reasonably satisfied with its status under the compul-
sory program. And nowhere in Holland did I hear complaints such
as those voiced in England over loss of professional prestige,
excessive paper work and undue interference from supervisory au-
thorities. Physicians are quite content with the system of re-
muneration. Since per capita fees based upon a maximum of 3,000
patients are set high enough to afford a comfortable living,
family doctors do not have to see more patients than they can
treat properly. The approved fee-for-service schedule has also
been found satisfactory, and specialists observe it willingly.
Two features of the compulsory law were criticized:
1. It tends to create an artificial separation between
medical care and general health maintenance by making
medical care insurance a part of the general social in-
surance scheme.
2. It throws an undue burden on the general practitioner
by making him the controlling doctor for use of the spe-
cialist, hospital, and pharmaceutical services.
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Medical Care Insurance - Voluntary
The 1941 law also authorized companies writing the compulsory in-
surance to furnish voluntary insurance at reduced rates to self-
employed persons with incomes not exceeding 4500 guilders. Al-
though administered by the same institutions, the compulsory and
voluntary plans are handled as two distinct programs. Costs of
administering the voluntary plan average 12% of premiums.
Those who insure voluntarily pay premiums directly to the sick-
ness fund of their choice. Since they do not have the advantage
of employer contributions, they are charged a lower rate than the
3.6% of earnings collected under the compulsory plan. At present,
participants in the voluntary program pay eighty cents a week for
each family member over 16.
These contributions, however, fail to cover the cost of benefits,
which must be equal to those provided under the compulsory system.
As a.result the voluntary funds are running deficits which are
currently offset by contributions from surplus compulsory funds and
from the state. These subsidies are granted if examination of a
company's operating statement indicates that the voluntary funds
have not been mismanaged. Government recognizes that it is vir-
tually impossible for the voluntary program to be self-supporting
at the rates charged. Yet it is reluctant to curtail benefits
or increase premium rates lest such action discourage voluntary
enrollments among lower income groups. For the present, therefore,
it is planned to continue the policy of subsidizing the voluntary
program.
Individuals whose salaries exceed 4500 guilders yearly are barred
from participation in the compulsory or the low-cost voluntary
plans, but can purchase insurance from "commercial" (profit-
making) companies provided they have no pre-existing disability.
Since policies furnished by these companies generally contain
a cancellation clause permitting the insurer to terminate
coverage at will, the protection they afford is often question-
able.
With 75% of the population now insured, the Dutch compulsory -
voluntary program is successfully accomplishing its fundamental
purpose of removing the financial barrier to good medical care.
At first glance, it may seem to have overlooked that segment of
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society which needs the protection most, namely, the unemployed.
But actually this group is well taken care of within each com-
munity. Private and public welfare agencies have always made
free medical care available to the indigent. Recently, however,
there has been a growing tendency for the local community to
discharge this social responsibility by insuring its unemployed
with the sickness funds until such time as they may return to
work. Thus the program covers practically everyone but the
well-to-do, who can afford to make their on arrangements for
medical attention.
Holland is one of the few countries in Western Europe where the
rising tide of socialist thinking has been stemmed. Taught by
their experiences during the occupation to dread the effects
of state control, the Dutch are fearful,of social schemes which
threaten to increase state intervention in their affairs. So
far as their health program is concerned, they believe that
government's role should be to strengthen and coordinate the
activities of private and public groups in the provision and
financing of health services,
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Except in England, western European programs for financing the
cost of medical care have evolved slowly in response to specific
social, economic, and political pressures. The wide variety of
programs developed through the operation of these forces makes
Europe a rich field of investigation for the student of medical
care plans. But it is a disappointing field for one primarily
interested in observing the role assigned private insurance.
For no mere reference to "private" or "semi-public" institutions
can sugar-coat the fact that European companies writing health
insurance are little more than chosen agents of the state, sub-
sidized by government to administer a public service.
The fact that in Europe private companies are practically in-
operative in the field of health insurance is largely due to the
inability, or the unwillingness, of such organizations to rise
to the challenge presented by a broadening philosophy of social
responsibility. Fortunately, the casualty industry in this
country is in a better position to preserve its stake in the
field of health insurance than-were the European sickness soci-
eties. Our handling of workmen's compensation has already
demonstrated how successfully private insurance can discharge
a social obligation. Through work in this field insurance'has
developed techniques and skills which can help weave a pattern
of health insurance more satisfactory than European programs,
Few in this country deny the need for a program designed to put
adequate medical care within reach of all. But even should the
need be met by private organizations, the demand for government-
operated national health insurance would not be completely
silenced. Certainly the excellence of Sweden's present system
would seem to obviate the necessity for compulsory federal in-
surance, yet such a program may be brought into existence as
part of a larger scheme to transform Sweden into a socialist
state. And we only deceive ourselves by believing that we are
immune to the contagion of socialist thinking which has crept
over Europe. Our problem, therefore, is twofold: not only must
we do as much as we can to meet the need for satisfactory methods
of financing medical care but we must do it well enough to vitiate
the arguments of those who would make provision of medical care
the full responsibility of government.
Obviously, there are certain areas of need in which private in-
surance is not prepared to operate. But the casualty industry
is equipped to make a significant contribution to the health of
a very large segment of the population - the gainfully employed
and their families. Our ability to provide employee groups with
on-and-off the job protection against the hazards of accident
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and sickness provides an unparalleled opportunity to influence
the nation's health through its workers. We have made a sound,
if modest, beginning. On the small scale represented by indi-
vidual employee groups, we have developed medical care plans with
the preventive and curative orientation lacking in so many large-
scale programs abroad. Within the limits of our resources and
abilities, we must increase our efforts to make available to
greater numbers of industrial workers the benefits of "in-plant"
medical care combined with protection against the heavy costs of
illness.
One of the more serious criticisms of voluntary programs is
their failure to provide benefits in keeping with actual costs of
medical care. Here. again we have-taken tentative steps in the
right direction. Under the Tennessee Plan, the Wisconsin Plan,
and a few others we can now offer low income groups complete pro-
tection against the cost of stated surgical procedures. We
should continue to work with the doctors for agreements which
will permit us to offer more contracts covering the full cost of
essential services, or at least a substantial percentage of
entire cost. We might also try to negotiate hospitalization
agreements which would help us narrow the gap between benefits
and costs. The medical services, as well as the insurance in-
dustry, should be willing to make some concessions to preserve
their stake in the voluntary program.
According to Senator Saltonstall, the threat of national health
insurance has been deferred for another two years. If the
senator is right, we have a period of grace in which to perfect
our own solution to the problem. We cannot capitalize upon
this opportunity simply by holding the line against unsound
legislation. We must take the offensive and make good our
claim that private enterprise has the resources and the experi-
ence to finance, underwrite, and service a satisfactory solution
to the need for health insurance,
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Next 5 Page(s) In Document Exempt
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STJMMARY OF PROPOSED CASE DISABILITY BENEFITS
IN SWEDEN
The scale of daily cash disability payments (in Swedish crowns)
proposed by the compulsory resolution is as follows:
Basic Compensation
3.50 for all persons between 18 and 67 except married
women without gainful employment and persons re-
ceiving a pension.
1.50 for married women without gainful employment.
2.00 for pensioners and children between 16 and 18.
Extra Allowances
2.00 for married beneficiaries who contribute to the
support of their family.
0.50 for each child.
?
1.00 for married women without gainful employment
if they have children under 10; this is a
flat rate, regardless of number of children.
This schedule can be increased upon payment of additional pre-
miums: the 3.50 basic compensation can go as high as 8.00 a
day, the 2.00 basic compensation up to 6.50.
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ERRATA (Important).
Page 5 Third line from bottom, delete "not." Read "though the warming pro-
cess does extend beyond. . ."
Page 23 First line from bottom of page. For "including fingers" read
"including fingers and toes".
Page 34 Third last line of second paragraph read "patients complain of loss
of feeling, general debility. . ."
Page 50 Ninth line of third paragraph. For "In the second case" read "In
the second exposure. . ."
Page 58 Last line on page. Read "Pasternak's Symptom ++, Laseque's Sign --."
Page 72 Third line of fourth paragraph. For "initial" read "incipient".
Page 76 Last line of second paragraph. Delete the word "period
Page 76 Second line on page. For "think" read "thick".
Page 102 Fourth line of first paragraph beginning on page, Read "who point
out that micro-organisms. . ."
MINOR ERRATA.
Page 29 Para 6, line 4. Read "probable" for "probably",
Page 39 Para 2, line 3. Read "leucocytes" for "leucytes".
Page 56 Last paragraph line 4. Read "MARGOULIES"; line 6, read "And" for "An".
Page 57 Para.4, line 6. Read "kind" for "king".
Page 95 Para 2, line 2. Read "by way of the trachea"; line 16, for "the
remainder" read "the others".
Page 101 Para 1, line 1. For "pleuritis" read "pleurisy".
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FROSTBITE
TRANSLATIONS FROM THE RUSSIAN
OF A COLLECTION OF SIXTEEN PAPERS
PUBLISHED BETWEEN 1939 Ek 1944
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Translations from the Fussian of a collection of sixteen papers
published between 1939 & 1944
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New Findings re the Pathology and Clinical Concept of Frostbite
T. Ia. ARYEV
1943 Modern Findings on Frostbite 13
S.S.0IRGOLAV
1940 Clinical Handling and Treatment of Frostbite 18
S.S.GIRGOLAV and T. Ia. ARYEV
1941 Some New Measures in the Treatment of Frostbite 26
M.G. KHASKELEVICH and V. Ia. VASIL?KOVAN
1943 Clinical Consideration, Classification and Treatment of Frostbite
R.L. GENKIN and Ia. F. LEVIN
1940 On the Carbohydrate Metabolism Rating of Patients with Frostbite.
A.I.LEVIN and T. Ia. MAIZEL?
0941 Contribution to the Problam of the Pathogenesis of Frostbite 43
A.I. LEVIN and F.M. KHALECSKAYA
1940 Contribution to the Question of the Clinical Aspects of Frostbite
0. STOLIARENKO
1944 Frostbite Clinical Data and Treatment 61
A.P. KIYASHEV
1940 The Treatment of Congelation Cases in Evacuation Hospitals 69
I.I. SMIRNOV and ORLOV
1941 On the Treatment of Frostbite
A.A. KEVORK?YAN
1940 Topical Treatment of Frostbite with Vitamins 74
K.L. GOLDSCHNIDT and M.F. MEREZHINSKI
1942 Frostbite Prophylaxis by Means of Greases
S.T. PAVLOV and K.K. SMIRNOV
1944 Lung-chill
L.M. GEORGIEVSKAYA and M.Z. KOTIK
1940 On the Influence of General Cooling on the Development of Purulent Infection
in the Lungs of the Rabbit
F.M. KHALECSKAYA
1943 On the Influence of Rapid Re-warming on Blood-pressure and Respiration in
Acute Hypothermia
M. SHAMSHINA
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Frostbite as a serious handicap is rare in peacetime military opera-
tions. In the past, the subject has many times come briefly into prominence
in wartime but interest has soon waned with the return of peace. History
clearly shows the bitter price paid by armies unprepared to operate in the cold.
and unprepared to deal with cold casualties. In winter warfare, exposure
casualties have never been inconsiderable (see page 3); in sub-arctic warfare,
frostbite may account for more casualties and loss of effective manpower than
all injuries directly the result of enemy action (see SMIRNOV and ORLOV, p.69).
There are two problems: prophylaxis and therapy. Neither can be
neglected. We must avoid the tendency to assume that once our prophylactic
doctrine has been perfected we are finished with the matter. Prophylaxis can-
not be infallible.
In winter warfare we cannot expect to be as efficient as in peace-
time; often we cannot accurately plan ahead; often time and the pressure of
events work against us.
In winter warfare we cannot always count on the provision of adequate
shelter, nor on an infallible service of supply. Clothing which is normally
adequate fails to give protection when wounded men and men unconscious from
blast are exposed to the cold; the same is true when men are pinned down by
enemy fire in exposed or damp positions or in cramped attitudes.
We do not have the same ability as in peacetime to evacuate men at
will when there is evidence of frostbite or severe chilling. Evacuation it-
self may be effective in producing casualties, by keeping men, both wounded
and unwounded, exposed to the weather and away from warmth and shelter.
These lessons the Soviet armies learned during the war, particularly
from the sequelae of the Finnish campaign. They learned them the hard way.
It is hoped that this miscellany of Russian articles on frostbite will have
some value for us; it may help to keep the historic lessons in view and in
correct perspective.
The articles
cover the period 1939-1944, the
orma ve period o the modern Soviet frostbite doctrine. Although the cover-
age is not complete, it may be taken as adequately representative; it will
give a concrete picture of treatments employed and of some attempts to follow
up theoretical leads. It is worth remarking that some of the fundamentals in
the treatment of frostbite are still unsettled problems.
The articles are not printed here in chronological order; they are
arranged roughly by authors or groups of authors or schools.
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Square buckets ('.] are used to enclose explanatory words inter-
polated by the translator.
The transcription or names is such as to indicate accurately the
original JMssian spelling. The digraph ?? is to be pronounced as a closely
linked Tg (not separated in pronunciation).
e 561 for ? read 33.
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Translated from Sovetski Vrachebny Zhurnal foviet Tournal of SurgerL7 7, (1939)
Pp. 392-402.
NEVY FINDINGS RE THE PATHOLOGY AND CLINICAL CONCEPT' OF FROSTBITE
T. Ia. ARYEV
(Leningrad)
Military Hospital Surgery Clinic (Director, "Meritorious
Scientific Activist" Professor S.S. GIRGOLAV) of the S.M.
KIROV Academy of Military Medicine of the Workers' and
Peasants' Red Army.
Frostbite on a mass scale has been the concomitant of all past wars.
It is sufficient to point out that in the 1914-1918 War frostbite cases
accounted for one-seventh of all French soldiers evacuated from the lines
(CHEVALIER), that on the German side the number of cold-exposure cases amounted
to 2% of all sick and wounded (SCHADE), and that in the 1931 Tapanese inter-
vention in Manchuria 100% of their troops, no less, suffered in some degree or
other from frostbite (TAKATSU). To quote figures for frostbite cases in the
last imperialist war, we note that in the French forces there was an average
of 30,000 per year (MIGNON), in the Italian forces, 12,000 (BONOMO); the average
number of frostbite cases in the German forces was not published, but one may
get an idea of it from the fact that during the first years of the war German
authors reported on 1,928 cases of frostbite, plus the fact that in the German
fm-ilitarhospitals the post ct "specialist in frostbite treatment" was created.
The facts speak for themselves. It is more than evident that frost-
bite is a very present problem.
One must however note that the amount of attention devoted to the
problem in the literature is not at all in proportion to its urgent importance.
In the literature one may see that interest in frostbite rises during a war
and slowly subsides in peace-time, evidently because frostbite is comparatively
rare in peace time, as statistics show. As for the theoretical side of the
question, it used to be thought that the last word had been said on the
subject. The theses worked out during the first period of laboratory study
of frostbite have been simply accepted and incorporated in all present-day
text-books, both Soviet and foreign. Nevertheless, a number of researches lately
carried out by ourselves have shaken the generally accepted concept of frost-
bite pathogenesis, changed our ideas on the nature of frostbite, and thereby
led us by logical steps to the necessity of reviewing the basic principles
of treating this type of thermic injury.
The fundamental methodological error of the older research workers
was that they identified frostbite with actual freezing flormation of ic?7. It
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has long been known that frostbite is possible at circumambient temperatures higher
than 0?C, a fact which renders the literal freezing of the tissues impossible.
Furthermore trench-foot, the most typical form of frostbite in war time, was
seen to occur on damp days, not on very cold days; it was infrequent in freez-
ing weather. We have shown by ex riment that death from hypothermia occurs
takes place in the tissues of a
long before any actual freezing e formation
warm-blooded creature; it is only a corpse when it does freeze.
In the technique of experimental cooling of animals, we introduced
the use of cold-chambers for general and local action; also the use of the
electrothermal pyrometer for temperature measurement, a device which may be
employed to measure not only the temperature of the surroundings but the tempera-
ture of the tissues too. The correctness of our experimental procedure becomes
evident as soon as one considers the fact that in all previous researches frost-
bite was induced by. actually freezing; the tissue-area in question.* For this
purpose the skin was sprayed with ether, ethyl chloride or methyl chloride, packed
with carbon dioxide snow, or some similar method was used to bring about freez-
ing of the tissues. The defects of such procedure may be summed up as follows:
(1) In the real world in whi c h a man lives, cold acts on his
whole organism or on his limbs, while in the old experimental
technique it was acting only on a narrowly delimited area;
(2) The causative agent in the overwhelming majority of real-life
cases is cold air, while in, the old experiments the causative
agent was a cold liquid;
(3) In real-life frostbite the period during which cold is act-
ing is measured in hours, while in the old experiments this
action was measured in minutes or seconds;
(4) In the old experiments the tissue temperature was not
measured; hence there existed no clear notion of the
temperature regulation within the tissues.
Once the cold-chamber and the electrothermal pyrometer were introduced
into our technique, we were in a position to establish immediately the follow-
ing facts:---
(1) When the skin is sprayed with ethyl chloride, the tissue-
temperature drops to 17 - 22?C in thirty seconds to one
minute, while if a rabbit is put in the cold-chamber at
-40oC, even a four-hour stay is not enough to get the
temperature of its ears below 0?C; usually the temperature
after this treatment is +12, or +1400.
(2) As a rule death of the animal takes place while the tempera-
ture is still +16 or +180C.'. Thus by the use of the pyrometer
and cold-chamber it was established that in cooling a warm-
blooded animal it is impossible, without completely upsetting
its general condition, to reduce the temperature of the tissues
to the point where they actually freeze.
* As this sentence shows, ARYEV does not deny the possibility of locally freezing the tissue by laboratory
methods. When he asserts that actual freezing of the tissues is Impossible, he must be understood to impI
"by the action of cold under natural conditions,";a qualification which he does not make at all clear. (Tr.).
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Numerous observations were made which cleared up a number of facts
relative to the pathogenesis of frostbite. On the basis of these observations
the following conclusion has been drawn: frostbite oc curs as a result of the
protracted action cf. low tissue-temperatures, which temperatures however in
the overwhelming majority of cases do not reach the point of actual freezing.
If actual freezing is possible at all, it is of insignificant extent and in-
volves the extreme peripheral areas of the body. The decisive factor is the
period of time: during which the low tissue-temperatures are acting. If very
severe cold-action is prolonged for a considerable period, then under these
conditions it is not frostbite which is characteristic, but death from cold,
because conditions capable of causing the actual freezing of an entire limb
are likewise the right conditions for causing a fatal hypothermia. Indirect
confirmation of this may furthermore be seen in the fact that cases of frost-
bite of the limbs higher than the ankle and wrist joints are a statistical
non-entity. It may be considered that in a living man actual freezing of the
tissues is something which practically speaking does not occur. Thus when we
remember that the present day concept of the pathological anatomy of frost-
bitten limbs is built almost exclusively on the old experimental work, we may
properly conclude that at present we have no real knowledge of the pathological
anatomy of frostbite. The establishment at a correct concept of frostbite
morphology is our task for the immediate future.
An example or two will suffice to show how the application of the
new technique to the testing of established theses demonstrates the truth of
what we have been saying.
For instance, we find copied from one text book to the next the thesis
that hemolysis takes place in frostbite and furthermore in hypothermia. In
our work (jointly with N.A.AESBERG) we have shown that in frostbite the fragility
of the erythrocytes is not increased and the changes which occur in the blood
are characteristic only of venous stasis. Exactly the same thing was shown
by V.N.SHQNIS of our clinic to be true in the case of hypothermia. This is
in fact quite understandable, because the blood will stand low temperatures
very well, down to the freezing point, a fact demonstrated by large scale
experimental work in connection with preserving blood on ice. However, it is
scarcely necessary for us to envisage freezing of blood in the tissues, be-
cause it is impossible to freeze the tissues of a living animal.
This experimental work among other things has furnished us with a
basis for clearing up a number of questions connected with the transfusion
of refrigerated blood. Direct pyrometer measurement has shown, first of all,
that is impossible to get blood: into the recipient of a transfusion if the
temperature of that blood considerably exceeds the temperature of the room
where the transfusion is being given. Hence the introduction of blood at
body temperature (37?C) is a task impossible to perform with our present-day
transfusion techniques. In the second place it has become clear that re-
frigerated blood is speedily warmed up in the veins, though the warming
process does not extend beyond the confines of any small section of the circu-
latory system. Thirdly it has become clear that animals have a high tolerance
for transfusions of cold blood. These findings have permitted us to draw a
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conclusion of particular importance, namely that from the point of view of
the temperature behavior of transfused blood the basic danger is not in re-
frigerating it but in overheating it. -
To return to questions directly connected with frostbite, I may
give certain further examples of the inadequacy of the traditional views on
the nature of this involvement.
In studies of the healing of wounds under conditions when they were
exposed to the action of cold atmospheric air, we found ourselves confronted
with a morphological picture which was diametrically opposite to that des-
cribed in the literature. The reason for this was that in the case of our
animals we used cold-chambers to subject their wounds to the action of cold,
while previous research workers were actually freezing the wounds of their
test animals. Quite recently SALGANIK, studying wound-healing in humans
under Spitzbergen conditions, obtained results on the whole similar to our
experimental observations; thus our findings have received clinical confirmation.
We may also point to one very widely held view, which we regularly
encounter even in the latest monographs and manuals (STI(BER, LECHSER). I am
speaking of the alleged brittleness of frostbitten extremities. Experimental
tests have shown that cooled extremities preserve their elasticity, and
frozen digits or ears cannot be broken even with a hammer. Thus the stories
of ears and noses breaking cff in the cold are to be relegated to the domain
of fairy tales. What an astonishing strength tradition has: We made a care-
ful search of the literature to find any concretely described facts on the
frangibility of frostbitten extremities, but we found none. We cannot doubt
that such cases, if they had occurred, would have been described on the basis
of direct observation. Hence there is nothing else to do but suppose that
this current notion is based on the foregone concept that frostbite is actual
freezing.
The practical significance of our researches on the "brittleness"
of frostbitten extremities resides in the fact that the old notions must in-
evitably militate against the use of massage in frostbite and of artificial
respiration in cold-exposure cases. Yet the importance of both these tech-
niques in the treatment of frostbite and exposure would be difficult to over-
estimate, and it is a good thing that the most recent manual of field surgery,
that of BORKHARD and SHMID N, recommends artificial respiration in exposure cases
and discounts the current notion of brittleness of the extremities in these cases.
We deny that actual freezing of the tissues is possible in a living
man. This is the number-one point in our concept cf frostbite pathogenesis.
We shall amplify the statement by considering five cases at what may be called
the biological peculiarities of the action of cold on the living organism.
The first biological peculiarity of the action of low
temperatures is the fact that the resistance of the organism
to cold and the complexity of its structure are in inverse
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ratio. The more complexly built the organism is, the greater
its sensitivity to the effects of low temperatures; thus the
single-celled protozoa, for which the concepts of "frostbite"
and "freezing" become indistinguishable, indistinguishable
not only in a relative sense but absolutely, have a high en-
durance for cold. The organism of one of the higher forms of
life, when separated into its component parts, becomes capable
of. standing temperatures which would inevitably cause the
organism as a single complex to perish. Many examples could
be adduced in support of this statement.
The second biological peculiarity of the action of cold
is the. immeasurably greater resistance of tissues, cells, and
living protein in general to low temperatures, as compared with
their resistance to high temperatures. It is sufficient to
point out that whereas a definite critical point (+50, +520C)
exists for protein acted upon by high temperatures, a point
at which it coagulates, in the case of low temperatures no such
critical point exists, It is therefore the time-factor which
plays the important role, indeed an immensely important role,
in the pathogenesis of frostbite.
The third biological peculiarity of the action of low
temperatures on living tissues is the slowing down of chemical
and biological processes in the cooled area. This effect is
such that we can account for it perfectly in terms of van't'Hoff's
law. Not only is it the basis on which the phenomenon of ana-
biosis takes place, but it is the factor which affords us such
great possibilities of improving results in the treatment of
frostbite and exposure cases.
The fourth biological peculiarity of the action of cold
on living tissues is the "latent" character of frostbite in-
jury. Our histological researches have shown that in tissues
taken before thawing out, the structure is not changed; changes
appear only some time after warming and are inflammatory, de-
generative and. necrotic in nature. However, the longer cold
acts on the tissues, the greater the break-down which is brought
about after warming. Thus the tissue-changes evoked by low
temperatures are not detectable by present-day histological
techniques at the time they are in progress.
The fifth and last "biological peculiarity" is the high
degree of reversibility of the tissue-processes occurring in
frostbite. This peculiarity is a consequence of the preceding
four, and is singled out by us on account of its practical
importance. Our observations in the clinic have repeatedly
shown us that the. f m stbit a site has a tendency to decrease in
area and that initial symptoms of menacing appearance very
often disappear. Many times in our practical work it has
happened that frostbite cases initially labelled "third degree"
took the clinical course of second or first degree frostbite,
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To understand the pathogenesis of frostbite, it is essential to
recognize these five peculiarities which I have enumerated. On the other
hand we must also give consideration to the state of the blood vessels in
frostbite (thrombosis, endarteritis ),, to disturbances in the colloidal
structure, to autoagglutination, and to neurogenic influences in order to
form an idea of the whole picture as it most probably does develop. Those
who are interested in these aspects of the subject will find data in our
monograph "Frostbite", Chapter III (Medgiz, 1938).
Such are the general outlines cit the new concept of frostbite
pathology. The radical changes which have taken place in that concept have
entailed certain changes in the clinical concept of frostbite. To start
with, our present terminology exists only by virtue of tradition and does
not reflect the real genesis of the process; our very word "frostbite" gives
a false reality to the idea of a freezing of the tissues.* It would be more
correct to speak of cold-injury, local and general. However, this expression
would be awkward and people at large are more at home with generally under-
stood terms; hence the introduction of a new terminology would hardly be a
good move.
I should however mention that in a number of cases the true genesis
of a cold-injury does from a rather elementary point of view find correct
expression in the terminology. Thus we have in. general use the terms
"trench foot" and "dampness gangrene %** which correctly reflect cold-injuries
typical of war-time. In many other cases the terminology is likely to re-
flect the importance of certain so-called "promoting factors" in the genesis of
a particular form of frostbite, (e.g.' "compression gangrene", "mycotic gang-
rene" etc. )o What is involved is that the incidence of frostbite depends
not so much or the surrounding temperature as on the temperature of the
tissues. As long as a man, through his natural and artificial temperature-
regulating resources, is able to maintain the proper temperature in his tissues,
frostbite does not occur. This is proved by the fact that large numbers of
people winter in the Soviet Arctic and numerous scientific expeditions have
survived there without the slightest impairment of bodily health. The proper
conditions for the incidence of frostbite take shape just as soon as factors
appear which permit the external temperature to influence the temperature of the
tissues. The influence of some of these factors is very great indeed. In first
place in this connection we must note the effects of damp. The importance of
damp really lies in the fact that it simultaneously neutralizes a man's arti-
ficial defences against cold and considerably reduces his natural defences.. It
means formation of v r from damp clothing; it means increased thermal con-
duction through the surface of the7 tissues, which in a dry state conduct
extraordinarily little heat. The following example from our clinical ex-
perience is very typical:---
Case #1. Patient T, age 38 years. Got drunk and spent the
night of February 17-18 outdoors, atmospheric temperature -90C.
During the night he had an involuntary passage of urine in his
The Russian word otmorozhenl (frostbite) means literally "freezing off". (Tr.).
a "NassengangrIn". See page 35 (Tr.). '
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sleep, the urine running down into his left boot. The result
was a serious case of frostbite of all the toes of the left
foot. March 27, exarticu]ation of all the toes at the
metatarso-phalangeal joints, without anaesthesia. Right foot,
ears and nose showed no trace of injury.
In individual cases the significance of other promoting factors or
combinations thereof may appear in a very evident manner; we should however
note that in all cases the second most important factor is pressure on the ex-
tremities (tight footwear).
As regards frostbite localization, under wartime conditions the over-
whelming majority of cases involves the toes or the foot itself (according to
BIRSCBNER and ZUCKERKANDL, 96% of cases; according to BONOMO 99%), either alone
or in conjunction with other parts of the body. The fingers stand in second
place. Cases of frostbite of other parts of the body such as the ears or the
nose, though frequently encountered in peace-time, are rare under war conditions.
The reason is that frostbite of the nose or ears is rarely of a serious
character; therefore such patients are not evacuated and escape our count.
The-reason for the non-existence of serious frostbite of the nose or ears seems
to be that in these cases the involvement is of an incipient nature: conditions
capable of producing any significant degree of freezing in the ears and nose
are just the conditions for causing a fatal hypothermia.
In the feet it is mostly the great toe which is affected, it being
the worst situated as regards circulation. In the hands it is on the contrary
the thumb which suffers less than the other digits, because the patient usually
keeps his thumb inside his fist. The fingers are hardest hit in ski-troops
and drivers, that is, in personnel who must hold. hard objects tightly in their
hands for some time at a stretch.
Other parts of the body are quite rarely frostbitten. We may note
cases of frostbite of the penis and scrotum, usually incurred in drunken
sleep in cold weather. As a rare case, frostbite of the labia has been reported
in a mother who was forced to give birth in the snow. The protracted applica-
tion of an ice-bag to the body may cause third degree frostbite of the skin.
The differential diagnosis of frostbite presents few complications,
though cases have occurred to "trench foot" (usually in its initial forms)
complicated by rheumatism, edemata of the limbs of cardiac or nephritic
origin, and morphological* ulcers. In such cases it is very important to
study the neurological picture, because sensory disturbances are characteristic
even of the very earliest stages of "trench foot."
For early diagnostic purposes and as a timely check on the develop-
ment of osteomyelitis, one should in third degree frostbite** have recourse
to roentgenography. By approximately the end of the third week from the time
if this word is not a misprint, it seems that the sense is "ulcers of known morphology, i.e. of
recognizably non-frostbite origin." (Tr.).
~E Note that in this article ARYEV is apparently using a three-degree classification, not the
four-degree classification which was developed later. Thus the third degree frostbite here
mentioned is that involving the bone. (Tr.).
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of origin the X-ray will reveal osteoporosis not only in the affected area
of the soft tissues but also in areas considerably more proximal. The nature
of this -osteoporosis cannot yet be regarded as fully explained, but there is
no doubt that it is encountered in the majority of frostbite cases, not only
those of the third degree but those of the second degree too, and it continues
for a long time. This phenomenon has'a good deal in common with "chilblaining"*
(affected areas general rather than local; persistence; some connection with
previous frostbite) and suns to reflect trophic disturbances which are
characteristic of frostbitten areas.
Complications in frostbite we divide into four basic groups:---
(1) Infective complications of acute suppurative type. To this
category belong phlegmons, osteomyelitis, arthritis, general
infection, also tetanus and'anaerobic gangrene. The latter two
complications in frostbite result in almost 100% mortality.
(2) Acute infective complications developing without suppuration
...
neuritis, arthritis.
(3)
Complications of the nature of metabolic and tiophic dis-
turbances. Here we should mention disturbances in the pig-
mentation (melanosis), disturbances in the salt metabolism
(local calcifications), trophic ulcers. We have seen Lwo
cases oS7 ulcers developing-as a result of frostbite which
had occurred four years and fifteen years previously. As a
rule such ulcers are exacerbated when cold weather sets in.
Very occasionally one observes chronic swelling and thicken-
ing of the tissues on ground prepared by a chronic recurrent
frostbite.
(4) Various complications not included in the above three grou
The following have been described: emboli of the brain,
various endocrine disturbances, onychogryphosis, subungual
keratomata.
An article of this length does not permit me to dwell in more detail
on the clinical handling of frostbite from the point of view of the most
recent concepts. For the same reason it is not possible to dwell on the problem
of frostbite prophylaxis, which in the case of this ailment is a matter of
exceptionally great significance. I must however try to cast a little light
on recent findings re first aid in frostbite, this being a matter of fundamental
importance.
It has been a widespread and generally accepted rule-of-thumb that
frostbitten limbs should be warmed up slowly and gradually. In every text book
you may read that rapid rewarming of frostbitten extremities causes gangrene
in them. For some time we have been trying to discover the sources of this
See Translator?s note page 85 (Tr.).
stir Phlegmons ... definedas suppurative inflammation of the areolar tissue ... cellulitis. (Tr.).
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assertion and have by now come to the following conclusions:---
(1) The rule at slow and gradual rewarming of frostbitten ex-
tremities is based on the foregone concept of frostbite as
a state of actual freezing: living tissues are viewed on
the analogy of the thermal behavior of lifeless substances,
particularly metals. In part it is based on folk traditions.
(2) In the literature we failed to find any trustwca thy des-
criptions of concrete cases of frostbite treatment in which
a departure from the accepted rule-of-thumb produced adverse
results.
(3) It is on the whole impossible to warm a frostbitten member
rapidly.
(4)
The more rapidly we warm a frostbitten extremity, the less
necrotic and degenerative symptoms we find in the tissues
after warming.
The first of the above theses may be demonstrated by the fact that
authors, in developing the theoretical side of the old first-aid rules, either
allude directly to the necessity of "thawing out" the frostbitten extremity
or proceed to theorize on the basis of a crystallization of the tissue fluids
(formation of ice). The instances cited are usually references to adverse
results obtained in the rapid thawing out of frozen meat or fruit. It follows
(without speaking at all of the impossibility of using in this connection ex-
amples drawn from the culinary field) that the arguments could not apply to
that extensive category of frostbite in which there is no question whatever
of an actual freezing of the tissues ("trench foot"). Furthermore when we
"rapidly" warm (in experiments) tissues which are indeed frozen solid, we do
NOT produce those grisly consequences of which the text-books speak.
The second thesis may be demonstrated by the fact that where isolated
cases of gangrene in frostbitten limbs are adduced in the literature, they are
such as to be quite unacceptable as proof that the gangrene was really a con-
sequence of "rapid re-warming."
The third thesis rests on the fact that, since the skin and the
cellular tissue under the skin are very poor conductors, the penetration of
heat from outside to within takes place extremely slowly; this we have
demonstrated by direct pyrometric measurements. Thus even the most "rapid"
re-warming in practice turns out to be very slow.
Finally, the fourth and last thesis is demonstrated by many experiments
which we have carried out. Using warm moist compresses to warm up even a
solidly frozen ear, limb or muscle of an animal, the more rapidly we did so
the less signs there were of inflammation and necrosis. The same thing was
recently shown by V.SHEINIS to be true of hypothermic animals. In numerous
tests, tests which were the logical development of our ideas and experiments,
he demonstrated that the most thorough-going means of restoring an animal
which had succumbed to hyperthermia is a speedy and intensive re-warming. The
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I
emergent fact is that in the case of frostbitten limbs or of persons suffer-
ing from exposure to cold, it is senseless to put them in icy baths, pack
them in snow or bathe than with icy water, as recommended in the text books.
So long as the patient is alive, his body temperature cannot be lower than
+20?C nor the temperature of his limbs, it seems, lower than +10?C. Such
being the case, baths of a lower temperature will not warm the tissues but on
the contrary will cool them; this is all the more evident if we take into con-
sideration the fact that wetting the integuments will heighten the thermal
conductivity and increase the propagation of the low temperature into the
depth of the tissues. If we bear in mind the enormous significance of the
time-factor in the pathogenesis of frostbite , it becomes quite clear what these
researches do mean in the field of first aid.
For humans too we now have at our disposal some isolated observations
on the rapid warming of frostbitten extremities. The results obtained are
encouraging and never in any case indicate an adverse influence on the sub-
sequent course of the involvement. To be sure, the full-scale clinical testing
of our experimental results still lies ahead of us, a fact which we must
stress; nevertheless logic and the facts are on our side. And we should hasten
to explain that what we mean by "rapid" warming is the combined use of hot
baths and massage. Particularly do we emphasize that the temperature of the
baths must not be higher than body temperature, that is, not higher than 37?C,
because overheating of the tissues is the last thing we want.
As regards the ccmtinui * treatment of frostbitten extremities,
this reduces to two fundamental measures: (1) maintaining circulation in
the affected area and (2) keeping infection from getting into the tissues.
In practice this is effected by a combination of ordinary conservative
surgical procedures. We must particularly stress the conservative side of
treatment, as I think follows from the particular nature of frostbite patho-
genesis. It is to be remembered that for amputation and exartieulation
specific indications are required, and that primary amputation of frostbite
is a mistake.
This survey of the problem has had as its purpose to acquaint
readers who are not surgeons with the present state of the frostbite problem..
To do so, it has proved necessary to deal with certain theoretical questions.
However in frostbite it is easy to convince oneself of the indissoluble bond
between modern clinical practice and theory. In demonstrating the incorrect-
ness of the old concepts of frostbite,. we have come by logical steps to the
statement of a whole series of new facts and to a new. concept of frostbite.
therapy.
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Translated from "Klinicheskyaya Medicina 21: 3-6 (1943)
MODERN FINDINGS-ON FROSTBITE
By Prof. S.S. GIRGOLAV
Since 1934, I have had the opportunity of carrying out a number of researches
on the effect of cold'on the organisms of animals and humans.
Originally our efforts were confined to experimental work, but later, during
the war with the White Finns, we added clinical observation work, which was still
later continued during the autum-winter-spring period of the first year of the
Great Fatherland War,
This work began with the researches of Dr. ARM, which uncovered a number
of new facts; these facts clearly contradicted accepted views and prompted me to
immerse myself in the problems of cryopathology. Then came the work of SEBINIS,
MOLDAVANOV, GAMOV, KAZ and in general the further researches of ARYEV and his co-
workers,
The first results of the researches had already spurred me to broaden our
work and to interest a number of other research workers in checking it, 'The
People's Commissar for Health, G.A. MITEREV, for purposes of centralizing the work
on this subject which was so important from the defence view-point, thought it
necessary to form a Cold Bureau (Cryoburo) in Leningrad with myself as Chairman.
This Bureau worked systematically up to the time of the evacuation of all its
personnel from that city.
New data of a highly important and interesting nature were obtained and laid
before the sessions of the Bureau by Prof, F' KEL and his co-workers, by Prof.
S.T. PAVLOV, by the co-workers of-PROF. BYROV, by my own associates and by certain
other research workers. Part of this work has already appeared in print; accounts
of other work which was carried out in other cities of the Union will appear later,
either in reports or in the pages of periodicals.
The purpose of the present article is to formulate certain propositions
which I can already state with great confidence, as they have been confirmed not
only in experiments alone but in pathological work and clinical practice, that is,
in work with human subjects,
The first and most fundamental of these propositions is that the actual
destruction of the tissue elements of the human body does not take place directly
from the effect of cold, but secondarily. This does not mean that cold is not
capable of causing gangrene and of destroying tissues, but it means that in actuality,
at the temperatures met with on our earth, nothing of the kind is observed or
hardly ever observed. This statement is all the more justifiable in view of the
fact that the effects of cold manifest themselves in direct proportion to the time
of exposure, the reason for this being mainly the low thermal conductivity of the
tissues of the human body. As is well known, the action of cold over a short period
of time, when used for purposes of anaesthesia, does no damage. Thus in exposure
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to cold the time-factor plays a~decisive role. I further note that it is precisely
this factor which explains why Frostbite takes on so much importance in war-time.
The reasons are quite understandable and there is no need to dwell on them.
The cause of tissue-death is first of all the embarrassment and then the
suppression of the blood circulation. It has been established that at a body-
temperature of 200C an experimental animal will succumb, in tissues at 18?C the
blood circulation is diminished~by half, and at 10? or 11?C it stops.
Thus it is evident that in exposure to cold, not only the death of the
whole organism but the death of'the individual tissue may take place long before
there is any freezing thereof. Of course, different tissues are capable of sur-
viving for different lengths of time in the absence of blood circulation. It is a
generally known fact that the extremities will stand a 2m2* hour suppression of
circulation, with a tourniquet applied..
It follows that all theories of frostbite based on the assumption of
water freezing in the cells are meaningless, since there is no necessity of any
such thing as a freezing of the water in the cells for frostbite to manifest it-
self. According to the hypothesis which I previously advanced, and which since
has been supported by the picture revealed under the microscope, what we are deal-
ing with is nests of cells or individual cells in a state of necrosis, dotted here
and there throughout the tissues, this even when there is no necrosis discoverable.
That is, we have a disseminate necrosis, which is characteristic of the action of
cold on the tissues. It is clear that if we have a necrosis of a number of the
elemental units or groups thereof, then we have just that many foci of degeneration,
dispersed in the form of nests and in the most widespread fashion in a great
diversity of tissues, particularly in the vessels and nerves.
The importance of the time-factor has compelled us to reexamine the gen-
erally accepted idea of the necessity of re-warming of the patient or of the
frostbitten members of his body, beginning with immersion in icy water.
In the light of the above findings, the use of icy YLater appeared to us
to be completely senseless, since It not only did not warm but on the contrary
cooled the body or a portion of it-, moreover the duration of the effective exposure
to cold was lengthened-, all this could not do anything else but aggravate the
process and could in no sense be called "first aid".
A whole series of researches on various animals has shown beyond any
possible doubt that the quicker we get the chilled animal or the chilled parts of
its body (ears, extremities) warmed up, the better the results. From numerous
experiments of this kind conducted by various research workers, it became very
evident that it is the speediest possible warming up which is most effective,
both of the whole body and of the frostbitten parts of the organism. At the
same time all possible measured must be taken to restore the blood circulation.
However, this restoration is feasible only if th temperature of the tissues
is first raised at least to 209 - 25?C. At a temperature of 10?C there is no
use in working on the circulation, because there is no possibility of improving it.
It would be difficult to overestimate the significance of these factors,
because simultaneously with the breakdown of circulation there is also a breakdown
of the tissue nutrition, tissue metabolism, etc. We have felt justified in
initiating a number of experiments in this connection, which even now cannot
by any means be considered as completed.
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Along with the blood-vessels, involvements of the nervous system were also
noticed; the efforts of N.N.BURDF'^TKO and his students have been dedicated to this
aspect of the matter. The work led to a practical suggestion: namely the early
blocking of the sympathetic nervous system for the purpose of improving the state
of blood circulation.
So that I shall not have to return again to the fact that speedy warming-up
is the best expedient, I shall merely note that three dissertations (ARYEV, SHEINIS
and MOLDAVANOV) and a number of works from other clinics and laboratories have been
in large measure devoted to this question. The following fact should be mentioned
in this connection, a fact which clearly reveals itself in re-warming experiments on
animals which have been exposed to cold: over quite an extended period of time,
the animal loses its temperature-regulating ability, and takes on the temperature
of whatever medium is used for warming it (air, water).
Hence, if the temperature of the medium is higher than 370 - 380C., then
the final result is over-heating. It is possible that in just this fact we have
the explanation of the traditional fear-of speeded-up warming, because the most
careful search of the literature fails to reveal any reliable facts to prove the
harmfulness of quick warming in itself.
At first we were exceedingly careful in carrying the results of our experi-
ments over to human beings, but experience in the war with the White Finns and
more particularly in the Great Fatherland War (ARYEV and his co-workers) has shown
that our formulation of the case is correct for humans too.
A propos of this important question I may point out one more comparatively
minor detail which by force of tradition has been repeated from one textbook to the
next, but which has shown itself to be untrue. This is the abnormal brittleness
which is alleged to occur in frostbitten members of the body, nose, ears, fingers.
So far no one has ever observed this brittleness of the members, and we may point
to the large number of experiments which we have carried out on cadavers and on
various animals, with no success whatever in detecting such brittleness. We
could dash a frozen frog against the floor with all our strength and perhaps suc-
ceed in breaking its toes.
From the study of the effect of cold on human organism, we find that the
most important means of prophylaxis are good warm clothing which does not restrict
the circulation, warm dry foot-wear, food rich in fats and, still more important,
in carbohydrates, and so forth. It is scarcely possible to ascribe great signific-
ance to ointments as alleged protection against cold, particularily those contain-
ing substances to induce hyperemia. A number of tests with various substances,
carried out for the most part with militia personnel in severe cold weather, ended
without exception in negative results. The use of substances inducing hyperemia
might be justified if there was to be`only a single short exposure, a case which
never arises under war conditions. The best protection is the healthy skin of a
well nourished (with hot food), warmly clothed, unfatigued, healthy and properly
trained man, and all prophylactic measures should be oriented in this direction.
A comparison of our military personnel with the Fascist cannon-fodder in the
winter of 1941-42 is a shining proof of this.-
In keeping with the purpose of this article I shall deal only with certain
angles of frostbite treatment, which are accepted as basic principles in the work
of those associated with my clinic, but first of all it is necessary to dwell a
little on the matter of classification. The generally employed three-degree
classification of frostbite cases does not call for any objections from the
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theoretical point of view, but from the practical side, particularly when we
consider the necessities of war-time documentation of cases, it would be more
useful to divide frostbite cases into four degrees, on the following basis.
In practice, the overwhelming majority of wartime frostbite cases involve the
extremities, the digits suffering most frequently of all. If necrosis develops
in the digits then it either involves the integuments, in which case the digit
will not be lost, or it involves the deeper tissue, in some cases the bone; then
amputation is inevitable. If the latter are classed as fourth degree, then this
enables us to keep track of the more serious cases which end in amputation.
Clinically, as is well known, the pathological process manifests itself from
the time of re-warming, and therefore the clinical follow-up may easily be split
into two phases, the prereactive phase and the phase oi' inflammatory reaction.
The treatment of first-degree frostbite does not demand any special consider-
ation; whatever the methods used the result is the same, namely recovery. In
second-degree frostbite we at first sight concentrate on removing the blisters. It
is difficult to determine the degree of the frostbite during the first few days, and
studying the base of the blister may considerably lighten the task of diagnosis.
Danger of infection practically ceases to exist when drying-out treatment is em-
ployed, particularly when physiotherapeutic means are used and when the surrounding
skin is carefully treated with alcohol.
The greatest danger threatens the patient when there are necroses. The
attitude of surgeons towards necrotic areas at frostbite origin has always been
determined by the older views on the subject and consequently is strictly conserv-
ative, in contrast with their attitude toward any accessible necrotic areas of
other origin. The watchword has always been DRY OUT the necrotic area completely,
wait for sloughing and epithelialization; then only proceed to the final amputation.
Who does not remember those frostbite patients undergoing exhausting months of
treatment in hospitals?
We categorically deny that there is any use in this attitude toward the nec-
rotic area. If one makes an incision within the boundaries at the necrotic area,
which is practicable without anaesthesia and without blood flowing, then there
immediately issues a large quantity at fluid, which would otherwise have to be
slowly evaporated or dried out. Yet as is well known, within a few days after
frostbite a hard scab is formed which is a strong hindrance to drying out, while.
dispersed foci of decomposition are formed inside it, threatening infection,
Instead of waiting, we propose that as soon as the boundaries of the necrosis
are manifest, that is not later than the sixth to the tenth day, we should right
away have recourse to removal of the whole necrotic area (necrotomy) inside the
necrotic boundary, leaving a few millimeters to one centimeter of necrotic tissue.
This operation is absolutely safe, painless and bloodless. Then the remaining
necrotic band of tissue, after a few days of open (unbandaged) therapy and ap-
plication of drying-out procedure, will convert itself into a scab, solidly
seated on the demarcation line. In this shape the extremity is ready for a final
operation, using blind sutures.* On the feet, this may be the amputation of a
phalanx, of a digit or digits, Lisfrank's operation, Pirogov's operation, or Bier's
operation, depending on how high the involvement extends. On the hands, it will
probably be a conservatory operation, because here every millimeter of tissue may
have functional importance. After healing, the patient is ready for prosthesis.
With this method the saving of time and of the patient's strength is inestimable
as compared with the results of previously used conservative methods of case-
handling.
Without drainage.
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But this of course is far from being everything which has resulted
from our study of the frostbite question. Our studies revealed a general
distress of the organism accompanying the local involvements, opened up a whole
series of new problems, and above all showed the necessity of studying the
tissue-conditions which develop during the pre-reactive phase, when morpholo-
gically the tissue seems to have suffered no harm, while in fact it has already
been deprived of its viability to some extent.
This chapter of pathology has, in the last analysis, been set
before us in a completely new light, and promises much that is new when it
is further studied.
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From Vrachebnoe Delo
surgical Affair,
No. 6, 1940.
Clinical Handling and Treatment of Frostbite
By "Meritorious Scientific Activist" Professor S. S. GIRGOLAV
and Cand. Med. Sc. T. Ia. ARYEV ZE-eningraJ.
For the last five years our clinic has been devoting a good deal of
attention to the ,study of questions related to frostbite. A world-wide collection
of literature on the subject was made and submitted to critical analysis. A pro-
cedure was worked out for inducing experimental frostbite, by means of which a
number of old hypothesis were refuted which had long been copied from one text-
book to another.' Thus we were able to demonstrate 1) the fallaciousness of state-
ments that frostbitten extremities are brittle, 2) the absence of he;nolysis in
frostbite and freezing, 3) the inhibiting influence of cold on wound-healing and
along with this the different histblogical picture observed in freezing Lwith ic.2/
and in the effects of exposure to cold air. In special experiments we studied
the structure of the liver, spleen and seminal glands when subjected to freezing,
and the skin-structure when acted upon by cold. New light was cast on problems
of the pathogenesis of frostbite, and we were able to describe five particular
characteristics.of the action of cold on the living organism, of which the so-
called latent period of cold-action has particular significance.
We brought together and systematized four groups of "frostbite-
promoting factors" and studied in detail the significance of each these. We
demonstrated the importance of systematic roentgenography in the diagnosis of
the severity of frostbite, and we showed that there is a fundamental difference,
in pathogenesis, clinical handling and treatment, between frostbite: and burns
Lr scald7, though until quite recently there have been attempts to draw an
unwarrantable analogy between them. Finally, we demonstrated experimentally the
fallaciousness of the old principle of "slow and gradual re-warming of frost-
bitten extremities" and we showed the efficacy of the speediest possible re-
warming of the tissues in frostbite.
However we were until quite recently not in a position to carry out
systematic research to work out a clinical picture of frostbite and a systematic
method of treatment. It is well-known that in peace-time frostbite is rarely
encountered. While acting as consultants in a number of hospitals during the
last winter campaign, we had opportunities to make up this shortcoming, and we
are now able to systematize the problems of the clinical handling and treatment
of frostbite cases, on the basis of a personal experience sufficient to permit
us to generalize and draw conclusions.
First of all it is necessary to agree upon a nomenclature and class-
ification for frostbite.
Among the many incorrect a priori thesis in frostbite-lore, the older
surgical text-books have endowed us with an obsolete classification, built on
7.
the notion of a similarity between frostbite and burns jcalds
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Fig. 1
Fig. 2
Fig. 3
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In distinction to other injuries and diseases, frostbite submits easily
to a system of classification based on anatomical principles, that is, on the
same principles as the classification of wounds. This is so because of the regu-
larity of location of frostbite, which in the overwhelming majority of cases in-
volves the digits of the feet and hands. It may be said that the ankle and wrist
joints constitute a boundary above which frostbite seldom appears, and this cir-
cumstance permits us to differentiate a number of typical clinical symptoms in
frostbite, which are quite sharply distinct one from the other, depending on the
depth of penetration of the pathological change.
It is necessary to distinguish between frostbite prior to the stage of
inflammatory reaction, and during the stage in which this reaction is developing.
In the first stage, the appearance of the frostbitten extremities shows nothing
distinctive except an area of noticeable pallor and numbness in the hands and feet.
Upon warming up, the inflammatory reaction begins; in this period we may distin-
guish four degrees, determined according to the depth janatomical& to which the
pathological process has penetrated.
As will be clear from the sketch (Fig.].), cold may cause in the digits
(1) transient disturbances of the vascular and neural apparatus, not accompanied
by irreversible tissue-damage, (2) skin-damage, extending to the germinal layer
but without necrosis of the latter, (3) damage to the germinal layer itself and,
finally, (4) necrosis of the bones.
In (1) we have frostbite of the first degree, characterized by cyanosis
and pallor of the skin, without formation of blisters. First degree frostbite
clears up in the course of three to five days after the patient is placed in &
favoraJ)J..e environment, and leaves no traces as far as skin-changes are concerned.
With first degree frostbite we may include the so-called "chilblaining" or "frost-
ing"*, a quite serious ailment under winter warfare conditions; radical treatment
thereof is impossible unless the "frosted" extremities may be given a prolonged
warming u), which is difficult to manage in military operations in winter.
As stated, the appearance of "chilblaining" or "frosting". is reminiscent
of first degree frostbite, being distinguished from the latter only by its chronic
course and periodical aggravation in recurrent cold-spells.
In the next degree (see Fig.2) it is blisters which are determinative in
the clinical picture; they appear on the second or third day after the start of
the reactive period and remain for 5 - 7 days, after which they shrivel up and
fall off. In this type of frostbite (second degree) new pinkish skin forms under
the sloughing blisters, since the germinal layer remains unharmed. In second
degree frostbite the nails may come off, but since their matrix remains undamaged,
the missing nails will grow in again. Hence in this degree of frostbite there is
no irreversible damage to the dermal layers. In all of the three higher degrees
of frostbite the content of the blisters may be now of a fluid character, now of
a jelly-like appearance (clotted with fibrin). There is no relation between the
nature of the blisters and the severity of the damage suffered.
* See footnote on page 85,
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In third degree frostbite the germinal layer is destroyed, and thus it
takes a course in which we may distinguish a stage of blister formation, a stage
of absorption of necrosis and formation of granulation-tissue, and a stage of
eschar-formation and epithelialization. In the first stage, after the blisters
open, we have the formation, not of a pink-colored germinal layer covered with
a white film of fibrin, but of a dark brown skin impregnated with ecchymoses.
Later the necrotic areas of the skin are absorbed, and granulation-tissue devel-
ops which in time epithelializes, either by itself or under the influence of
treatment. Very often all the stages of development of third degree frostbite
will proceed under the scab, and when the scab falls off there is revealed in
many cases a newly formed scar. Thus it is granulation and scar-formation which
distinguish third degree frostbite from that of the first and second degrees, in
which as we have pointed out neither granulation-tissue nor scars are formed.
In the deeper damage of fourth degree frostbite, it is necrosis of the
bones which is determinative in the clinical picture. In the first stage of this
type of frostbite the clinical picture is characterized by necrosis of the skin,
which not infrequently separates from the undamaged regions. In the second stage
there develops a typical picture of moist or dry gangrene, and a demarcation-band
forms. The third stage is that of getting rid of the mummified tissues, either
spontaneously or operatively, and of the development of granulation-tissue. In
the fourth stage epithelialization occurs, with the scarring over of a spontaneous
or operative stump.
In frostbite, it is in the initial period of the involvement that diag-
nosis of the severity of the damage is beset with difficulties; later on, the
task is rendered easier by the development of granulation-tissue and osteomyel-
itis. Among the symptoms which serve for diagnosis in the initial stages is the
absence of blisters, indicative of first degree frostbite. For differentiating
among the other three degrees of frostbite, it is necessary to open the blisters.
When a pink germinal layer is discovered, the diagnosis of second'degree frost-
bite becomes indubitable. It is more difficult to differentiate between the third
and the fourth degree. Here it is necessary to be guided by the extent of the
injury. When there is necrosis of the skin extending to the whole terminal pha-
lanx, fourth degree frostbite is likely; when there is necrosis of the skin over
the whole-surface of the digit as far as the metatarso-phalangeal and metacarpo-
phalangeal joints, the diagnosis of fourth degree frostbite becomes indubitable.
This thesis is based on the constancy and regularity of the location of frostbite
damage, which takes the shape of a wedge running along the instep and sole of the
foot, or along the back and palm of the hand. The depth and extent of the tissue-
damage in fourth degree frostbite may be further determined by certain supplemen-
tary methods suspicious areas of the skin may be tested by pricking the,surface,
after first processing it with alcohol. The complete absence of pain twenty-four
hours or more after the frostbite occurred is, according to Billroth, evidence of
irreversible necrosis of the tissues; the same thing is indicated by the absence
of blood-flow from the punctures.
It is particularly difficult to diagnose the severity of the 'injury in
frostbite of the sole of the,f oot, where the thickness of the epidermis, impreg-
nated with decomposing blood, may obscure the picture for a long time.
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Fig. 4
Fig. 5
Fig. 6.
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As soon as the demarcation-band has formed, the clinical picture comes
out much more sharply and it becomes possible to make a final determination of the
extent of the damage. Later, we very often observe the phenomenon of the "dis-
placement" of the demarcation-band peripherally toward the extremities. No-one
can doubt that some part of the pathological processes at the necrotic boundary
has a reversible character; nevertheless the "displacement" of the demarcation
baiiu is in part a mere illusion, because in the interior parts of the frostbitten
region a complete restoration of the injured tissues may be taking place (second-
degree frostbite), and after the necrotic layers of the epidermis have peeled of
the new skin which comes to light gives the illusion of a displacement of the
demarcation band.
Frostbite of the face Lor heap has its own particular appearance and
clinical picture. Here neither blisters nor granulation-tissue are formed.. Most
often we observe hemorrhages in the skin of the cheeks, chin, and the region over
the arch of the brows. These hemorrhages usually have the appearance of dark blue
blotches, but in one case, an 18-year old girl, we observed frostbite in the form
of a crimson blotch covering the whole left cheek. On the nose, solid infiltrates
may form, of a pale yellow waxy color, separated by a quite sharp border from the
remaining parts of the nose. Both infiltrates and hemorrhages are subsequently
absorbed, even though very slowly.
Frostbite of the ear takes a clinical course the same as that of frost-
bite of the limbs, with the difference however that in fourth-degree involvements
it is not osseous tissue which is injured, but cartilaginous tissue.
Wound-damage, particularly gun-shot fractures of the bones, may alter
the clinical picture of frostbite and increase the extent of the injury. The
circulatory embarrassment which may develop in a limb where there is a bone-
fracture will tend to promote an intensified transudation beneath the epidermis
and an increase in the number and extent of the blisters. Thus for example
Fig. 7 shows a hand covered with blisters. This patient had a gunshot fracture
of the humerus. The appearance of the hand seemed to indicate a grave case of
frostbite. In reality it was only of the second degree. The development of
blisters was facilitated by the hampered blood and lymphatic circulation in the
wounded arm.
Frostbite of the extremities as a rule takes a course free of infective
complications. This is sometimes really surprising, when the extent of the damage
is considered. Nevertholess the rarity of infective complications in frostbite
is a fact which has by now been statistically established.
The most frequently encountered infective complication in frostbite is
sluggish phlegmons* which appear along the course of the lymphatic vessels and
veins. These phlegmons, in spite of their local character, may cause, quite a lot
of tissue-destruction. In a number of cases where only the toes and the tip of
the heel suffered frostbite, the associated phlegmons destroyed a considerable
part of the arch of the foot,
Purulent arthritides of the interphalangeal and of the metatarso-
phalangeal joints are relatively frequent. Generally speaking, these arthritides
develop as a monoarticular involvement, but in one case we observed purulent
* Phiegmon: defined as suppurative inflammation of the areolar tissue. (Tr.).
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arthritis of every interphalangeal joint of both hands, without exception. In
this patient, high fever and a serious general condition persisted until all of
the affected joints were opened.
In one patient we observed general infection and death resulting from
an infective complication offburth degree-frostbite in all four limbs. From the
very beginning it was possible to see that demarcation of the necrosis was delayed,
a fact that was later verified histoloicalay. In addition to the frostbite, the
patient had a serious gunshot fracture of the femur, and this apparently exerted
an influence in the direction of enfeebling the defensive powers of the patient's
system. Staphylococci were found in a culture of his blood.
As will appear from the above, treatment of frostbite is practicable both
during the stage prior to the inflammatory reaction, and during the stage when
it is in progress. In the first case the measures we take are of a first-aid
nature and entail the speedy re-warming of the frost-bitten extremities, the re-
storation of circulation in them, and the prevention of infective complications.
These purposes may be achieved by warming the limbs in hot-water baths, by mas-
sage, and by processing the skin with alcohol.
If one follows the traditions, the water baths may be heated up grad-
ually to body temperature. It does not follow however that one should begin
with the baths at a temperature lower than that in the tissues of the frost-
bitten extremities, because in this case what would happen is a further cooling
of the affected feet or hands. The best course is to suggest to the patient
himself that he should decide the water temperature by feel, that is,,by how the
water feels to the injured extremity itself. If it feels cold to the patient,
hot water should be added to the bath, the temperature being gradually brought up
in this manner to 38 - 40?C. The temperature of the bath must not be taken higher
than this. one may remark that under war-front conditions it is often impossible
to employ such treatment for lack of a source of heat; then massage is the only
measure we can take. Moreover, war-time frostbite has its own pathogenetic
peculiarities and it is often difficult to determine the time when the exposure
to cold ceased; in most cases it may have taken three or four days for the frost-
bite to take form, during which period the action of cold may often have been
interrupted for short spaces. of time.
It is essential to combine the water-baths with massage, which is often
used both independently of the baths and in addition to them. Massage should be
carried out if possible with clean hands and should continue until warmth and
erythema is secured in the frostbitten area. If the inflammatory reaction is
already in progress Ledema7, then massage is contra-indicated.
After the frostbitten extremity has been processed in the manner des-
cribed above, the skin is gone over with alcohol and the limb itself is placed
in a raised position. 'When the patient is in transit, a dressing with grease
or ointment is put on the frostbitten foot, this being intended to protect the
patient from further frostbite. On the same line of reasoning, moist dressings
ought not be put on a patient in.transit. And here it should be remarked that
in general moist dressings are not indicated for frostbite, since they favor
the development of moist gangrene.
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Fig. 8
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In transit, a frostbitten extremity should be immobilized and the patient
should be transported in a reclining position.
In recent times experimental data have been accumulating which show the
great value of ultra-high frequency radiation as a first-aid measure in frostbite.
To just the extent that we are advocates of rapid warming up of frostbitten limbs
--- which can be accomplished in the most thoroughgoing manner with UHF --- we
are also convinced of the efficacy of using this radiation for first-aid purposes
in frostbite. As a final first-aid measure in frostbite, each patient is given a
prophylactic dose of anti-tetanus serum (1500 units).
From the time that the inflammatory reaction sets in, frostbite treat-
ment should be carried out in a manner strictly adjusted to conform to each degree
and stage described above. We particularly emphasize that there does not exist
any universal nor particularly any specific treatment for frostbite; this is very
evident from the diversity of the clinical picture. Recently, as in the past,
large numbers of medicaments have been proposed, and are still being proposed,
which are imagined'to have specific curative properties or which have a
"beneficial" effect on frostbite, no matter whether the latter involves necrosis
of the bones or the most superficial damage to.the skin, and no mat-ter what the
?stage of progress of the ailment may be. Among them we have kerosene, iodine,
goose-grease, carotene, etc. We could expand the list quite considerably from
data in the literature, but we shall not do so; we assume that once the
realities of the clinical course of frostbite are grasped, it is impossible not
to understand that there are no specific nor universal properties in any of the
medications recommended for frostbite treatment.
In conformity with the proposed classification for frostbite, in the
first degree of this ailment we recommend repeated processing of the skin of the
affected area with alcohol, plus physiotherapeutic procedures.
In second degree frostbite the blisters are removed and the germinal
layer thus revealed is processed with tanning agents (for instance, a one or two
percent solution of brilliant green or methylene blue). This processing with
tanning agents is continued until a scab is formed, under which further healing
will proceed. In third degree frostbite, after removal of the blisters, a
scarification of the surface layers of necrotic skin is carried out and "open"
runbandageg treatment, in a covered bath, is instituted. When this is impossible,
dressings with alcohol, i.e. with a tanning medium, are applied to necrotic areas
on the hands. Where granulation-tissue is forming we at first use a dressing with
MIKULICZ?s OINTMENT, and in the stages when the granulations are developing nicely
and consolidating (prior to epithelialization) we apply dressings with a neutral
ointment. Physiotherapeutic procedures are also used in second and third degree
frostbite throughout the various stages of development,
Treatment of fourth degree frostbite is the most complicated. After
processing the areas of moist gangrene with alcohol, the nails are removed, along
with any removable portions of dead tissue (including fingers). The remaining
dead tissue is scarified with deep incisions. The operation is carried out
without anaesthesia. Fig. 8 will give an idea of the appearance of a foot with
fourth degree frostbite, when processed according to this method.
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After this processing is carried out, a frostbitten foot is put in a
covered bath, while for a frostbitten hand an alcohol dressing is used. The
mummification which goes on for ten to fifteen days will prepare the way for
final amputation, including osteoplastic amputation. Skin grafting may also be
used, according to the methods of Thiersch and Davis. As to what type of oper-
ation is indicated, the important criterion is whether the injury is located on
the foot or on the hand. In the first case standard operations are the. rule
in the second case the amputation is per-
hose of Lisfrank, Pirogov, or Bier
formed on a line directly adjacent to the demarcation zone.
General building-up treatment, vitamin-rich diet, blood transfusions,
therapeutic physical exercise and physio-therapeutic procedures will, in frostbite
of all degrees and at every stage, help to prevent infective and later.neuro-
trophic complications, to promote the rapid epithelialization of the granulation-
tissue, and to get rid of the progressive loss of joint mobility which is observed
in severe frostbite cases.
Therapeutic measures for. frostbite of the extremities may all be set
forth schematically as in the following table.
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TABLE OF TREATMENTS
Frostbite of the extremities
ALL DEGREES Rapid rewarming (including the use of UHF), Massage. Sterilization of the skin
(alcohol_, benzine). Immobilization and elevation of the limb. In transit, bandage with
neutral grease. In hospital, "open" treatment or alcohol dressings. In all cases Injection
of a prophylactic dose of anti-tetanus serum (1500 units).
2. DURING THE PERIOD OF INFLAMMATORY REACTION
FIRST DEGREE: Repeated processing of the skin with alcohol. No dressing.
SECOND DEGREE: Removal of blisters. Repeated processing of the skin with tanning agents until
the spontaneous sloughing of epidermal "sheathe-scabs" and of the nails.
THIRD DEGREE: First stage: Removal of blisters. Incising of the necrotic tissues.
"open" treatment. When it is impossible to use "open"
treatment, and when it is the hand which is involved, use
alcohol dressings.
Second stage. Ointment dressings on the granulating surface; no dressing
during scab formation.
Third stage. Scar formation; no dressing.
FOURTH DEGREE: First stage, Incising and removal of necrotic tissues. Removal of
nails (conversion of moist gangrene into dry). Treat-
ment by "open" method. On the hands, alcohol dressings
on the necrotic areas.
Second stage. Exarticulation of necrotic bones (when the demarcation
proceeds past the joints). Removal of portions of bone
protruding from the granulation tissue. "Open" treat-
ment or ointment dressings.
Third stage. Encouragement of granulation (MIKULICZ's ointment,
physiotherapeutic procedures).
Fourth stage. Skin grafting (on hands), osteoplastic and corrective
operations (on feet),*
Therapeutic physical culture. Ph siotherapeutic procedures. General treatment (particu-
larly blood transfusions, as Indicated). Diet (vitamin=rich), Relieving of pain.
Special treatment of vascular and nervous derangements.
It is evident that these therapeutic measures will conform to the general methods of
treatment accepted in modern clinical practice, and must be strictly adjusted to the diverse and
complicated clinical picture of frostbite of the extremities.
As for frostbite of the face /r hea], it is mainly handled by the "open" method. The
skin of the frostbitten region is repeatedly processed with alcohol and is given physiotherapeutic
treatment.
In conclusion, some remarks about anti-frostbite prophylaxis for the individual. The
most effective means of prophylaxis are proper footwear and clothing. Greasing the skin may have
some significance as an auxiliary measure In the prophylaxis of the face and hands. In the case
of the feet it can scarcely be recommended. Anointing with skin stimulants (infusion of mustard)
does not give 'the desired effect; it has no foundation from the point of view of the pathogenesis
of frostbite, and if used systematically every day (which Is the only procedure that could be of
interest to us for war-time purposes) it may produce exactly the opposite of the desired effect,
as it will maintain a continual inflammation of the skin.
When the demarcation passes the diaphysis of the bones under the scab, osteopiastic
and corrective operations may be performed when complete mummification of the necrosis
takes place.
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From Vrachebnoe Delo, Surgical Affair 2, 96-100, (1941)
SOME NEW MEASURES IN TAE TREATMENT OF FROSTBITE
M. G. KHASKELEVICH and V.1a. VASIL? KOVAN (Odessa)
Third Surgical Clinic (Director, Prof. P,A, NALIVKIN) of the Odessa
Medical Institute and the Odessa Finishing Institute for Surgeons.
Of all chapters of surgery, that of frostbite has had the least work de-
voted to it. In first aid and in subsequent treatment, there were solidly en-
trenched, rule-of-thumb traditions, and-very few have tried to rise superior to
them.
The reason for this lies in the comparative infrequency of frostbite in
times of peace and in the consequent lack of any accumulation of clinical experience.
But even wartime experience was not enough to introduce any real changes
in the business of treating frostbite. Thus in spite of the enormous number of
frostbite cases observed in the French Army in the first Imperialist War, treatment
thereof made few advances and was limited to the use of hot water immersion,
various antiseptic ointments, light massage, plus air-drying procedures. Such
treatment included wrapping the frostbitten extremities in cotton wool and keeping
them in a raised position.
The unsatisfactory state of the question of treating frostbite resulted
in this subject's occupying a high place on the order of the day at the Twenty-
fourth All-Union Congress of Surgeons.
At this congress, questions in connection with frostbite etiology,
pathogenesis, prophylaxis`, first aid and subsequent treatment were widely dis-
cussed; on many of these questions there was considerable divergence of views.
Ordinarily our clinic, located in the south, has by reason of the
climatic conditions a very restricted number of patients suffering from frost-
bite. Nevertheless observations over a period of fifteen years have made it pos-
sible for us to work out certain definite ideas. We had the chance of trying
these ideas out on a large scale during the severe cold of the winter of 1939-40,
which was quite unusual for the southern provinces of the Union.
Our experience has confirmed the fact that in frostbite it is only
very rarely that primary gangrene is observed arising from necrosis of the
tissues caused by the action of cold. This gangrene may occur only with extra-
ordinarily protracted action of a very low temperature upon the tissues, in
which case, according to SOHADE's theory, the colloidal structure of the tissues
is altered and the rate of biological and chemical processes is markedly slowed
down. The changes in the tissues then have for the most part an irreversible
character and all measures directed toward the restoration of circulation are
doomed to failure. In such cases the sum total of therapeutic measures does
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not amount to more than an endeavour to see that the tissues are guarded against
infection from outside.
In the overwhelming majority of cases we find necrosis developing
secondarily. The presence of edematous intumescence, the congested nature of
the erythema, the subsequent appearance of blisters and the sanguineous content
thereof, all these clinical findings noted in frostbite point indubitably to the
factor of stasis in the changes which develop. Autopsy examinations, showing
stasis in the venous system with formation of thromboses, support and supplement
these clinical findings. The undoubted therapeutic importance and high value of
massage in frostbite first aid, which everyone affirms and no one disputes, is
simply an indication that the derangement of the blood-vessel system lies mainly
in the venous channels. The stasis which develops in these cases has initially
a reversible character; it is just this reversibility of the changes in the
veins that is the explanation of the good therapeutic effect obtainable with
ma s sage 0
During the initial period of frostbite the tissue changes taking
place in the majority of cases are NOT of an irreversible character; the ex-
perimental researches carried out at S.S. GIRGOLAV's clinic are weighty con-
firmation of this fact. These researches have shown the incorrectness of the
notion, well established in the literature, that hemolysis of the blood takes
place in frostbite. So long as the experimentation is conducted under con-
ditions within the limits necessary for keeping a macroorganism alive, then no
hemolysis occurs.
The damage manifesting itself in frostbite has a secondary character;
it depends not on the primary effect of thermal trauma but on subsequent changes
and disruptions in the blood circulation. This permits us to suppose that with
proper, well-calculated and timely aid the disturbances initially arising could
be corrected.
The treatment of frostbite may be split up into two stages, namely
first aid, the endeavour to eliminate the after-effects of the action of cold
on the tissues, and then the conquest of the changes of a local and general
character which meanwhile take place. It is difficult to over-estimate the
significance of well-calculated, complete and timely first aid, on the adequacy
of which will depend in large measure the whole further development of the
process and its outcome.
At the Twenty-fourth Congress of Surgeons the question,
of warming-up procedure in frostbite was widely debated. Two
opposing points of view emerged: there were some (LUBO, GOL? DAMN)
who adhered to the old method of treatment with slow re-warming;
others (GIRGOLAV, ARYEV) expressed themselves in favour of
energetic re-warming measures, with the patients put as soon as
possible into an environment of considerably higher temperature
so that warming.may be accelerated. The choice of one or another
method of re-warming must be based first of all on the endeavour
to get the patient's system as a whole out of the over-cooled
state, because further lowering of the body temperature, if the
critical point is approached, constitutes a positive threat to
the life of the patient; on the other hand, it is essential to
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have a clear idea of how much influence the re-warming process
may exert on the completeness of the removal of local derange-
ments which may have developed.
In giving first aid to those suffering from the effects of cold, we
find patients of two different categories. In some cases the dominant symptoms
are those of the general influence of cold upon the organism as a whole, this
influence producing a general depression of all the vital functions. These
patients are benumbed, with the extremities half contracted and movable only
with difficulty; they are markedly apathetic, drowsy, in severe cases un-
conscious. Under these circumstances all our efforts should be directed to one
end; to put a stop as soon as possible to any further action of cold on the
organism and to create all possible conditions favouring the speedy elevation
of body temperature.
In such cases the fear of overheating the tissues has little founda-
tion, if only for the reason that the low thermal conductivity of the tissues
of the human organism will itself ensure the gradualness of the re-warming,
however much we try to speed it up by putting the patient in a warm environ-
ment.
It fell to us on five occasions to render first aid to patients with
general symptoms of over-cooling. Having installed the patients in a room of
the receiving ward with a temperature of 190 - 200 C, we were able to satisfy
ourselves that rapid re-warming had no negative influence in the development
of local tissue- derangements, and that measures taken under these circumstances
were effective in saving the lives of the sufferers. Indeed, in spite of being
placed in warm surroundings and in spite of energetic massage of the skin, the
patient's body remained cold for a long time; this fact compelled us to seek'
new ways to speed up the re-warming process.
To this end, we in three cases made use of intravenous injections
of a ten percent solution of calcium chloride. Over a period of half an hour
we injected 5 cm3 of this solution every ten minutes. The introduction of the
calcium produced in the patient a very beneficial sensation of re-warming,
which coincided with an objectively observable hyperemia of the integuments.
We gained the impression that the internal action of calcium chloride is such
as to make It quite an effective agent, enabling us to speed up the re-warming
process, considerably; it is therefore one of the most important means of restor-
ing the patient.
Thus for purposes of urgent first aid in hypothermia we have recourse
to placing the patient in warm surroundings, giving energetic and prolonged
massage of the body, intravenously injecting calcium chloride, administering
hot tea and strong wine per os.
In massaging we endeavour to avoid excessive traumatization of the
integuments which are weak and suffering from thermal. trauma, and also to
lessen the chances of their becoming infected. After wiping the skin over
with alcohol swabs we wrap the patient in a sterile towel, pulling strongly
on the edges so as to bring it tightly into contact with his body; then we
massage energetically over the towel with the open palm. This method has
great advantages even over massage with the hand in.a sterile glove, since it
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is milder, easier on the integuments, develops a considerable amount of heat and
gives the maximum protection against infection.
In one particularly serious case when the patient was unable to swallow,
we successfully fed him hot liquids and alcohol through a stomach tube introduced
by way of the nose.
Thus our procedure in giving first aid to frostbite sufferers is based
on the endeavour to put a stop as soon as possible to the action of cold on the
tissues of the organism and to get the blood-circulation renewed by speeding up
the re-warming process. On this basis, we have no fear of putting the patient
immediately into a quite warm room, as stated above.
We have never had recourse to rubbing the frostbitten parts of the
body with snow, as so many recommend, because under hospital conditions we were
in a position to use other more modern methods. Nevertheless we are inclined to
think that rubbing with snow has become so widely regarded as the best method of
re-warming parts of the body and has to such an extent justified itself in the
vast experience of people dwelling in the north, that it cannot be discarded and
will still find its proper use under given circumstances. Thus for instance if
frostbite occurs somewhere in the open country, 15 to 20 km from the nearest
dwelling, then it would take two or more hours to get the patient in; under these
circumstances, what procedure have we more reasonable than to treat the patient
on the spot by rubbing the members with clean soft snow, by which means we usual-
ly succeed in getting the pallid bloodless integuments into a ruddy hyperemic
state?
Now let us turn to the procedure we have been using for treating the
local derangements caused by the action of cold. We think it essential to point
out that immediately after thermal trauma it is utterly impossible to determine
the degree of frostbite. This is quite understandable if we take into considera-
tion the fact that the development of necrosis is basically a consequence of
disturbed circulation and neurotrophic derangement, the extent and depth of
which may be established only from subsequent observation.
The presence of blisters of turbid sanguineous content can not be con-
sidered a precisely determinative sign of second degree frostbite; they do not
exclude the possibility of the deeper-lying tissue-changes which characterize
third degree frostbite. Even after removing the blisters and revealing the
deeper tissues it is difficult to judge the degree of reversibility of the de-
structive process.
On the basis of our observation we have found that it is to some ex-
tent possible to determine the degree of destructive change from the coloration
of the tissues after the removal of the epidermis. Thus a carroty coloration of
the tissues makes it very probably indeed that they still possess viability,
while a dark cherry coloured tinge is an indication of a far advanced necrotic
process and deep-lying destructive changes.
The general course of treatment of the local derangements in frost-
bite should be decided on the basis of an accurate analysis of just what
pathologo-anatomic and biological changes really do occur inevitably as a result
of the action of cold. The derangements which take place in frostbite may be
summed up as (1) considerable disturbances in the blood circulation, of various
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degrees of reversibility or irreversibility, (2) destructive processes in the
tissues arising from irreversible local changes in the vascular and nervous
systems, and (3) the development of an infective process, a complication which
is an inevitable concomitant of necrosis.
If we take it that our task is to secure the maximum restoration of the
viability and functional integrity of the tissues, we must primarily concentrate
all our attention on measures directed toward the fullest possible restoration of
the disturbed circulation,
When the pathological changes in the venous system which take place in
the first few hours after frostbite are compared with the changes which occur in
thrombophlebitis, one can not help noticing the points of similarity, even though
there are indubitable quantitative and qualitative differences in the intensity of
the process. On the basis of our own data we can confirm that the repeated ap-
plication of leeches has a good effect, sometimes a strikingly good effect, in
thrombophlebitis cases where gross pathological changes resulting from infection
have already taken place. Thus it is natural to assume that in the initial period
of frostbite, when we have only venous stasis and when the vascular walls have not
suffered any great amount of change, the use of leeches should give favourable
results. For this reason, if in giving first aid to frostbite cases we do not
secure a definite active hyperemia In the affected extremities in spite of all the
mechanical and thermal methods we use, then we at once have recourse to leeches.
The beneficial effect of leeches manifests itself in a considerable lessening of
pain, edema, and skin-cyanosis, testifying that an improvement in the blood circu-
lation has taken place. Leeches have considerable advantages over the use of
scarification as recommended by Nt5SSKE for cases of stubborn edema. These ad-
vantages may be summed up as: (1) less traumatization, (2) considerably less
possibility of subsequent infection, (3) the sucking-out action of the leeches
is considerably more effective than the passive flow of blood from scarifications,
(4) a prolonged subsequent flow of blood from the leech bites, which we make no
attempt to arrest, and finally (5) the specific effects of hirudin.
The measures indicated considerably enlarge our ability to. exert an
active influence on the reversibility of the process. Nevertheless there still
remain numerous cases in which no measures we take will enable us to prevent the
incidence of necrosis. This happens in neglected cases, where the destructive
process has gone too far and has become irreversible. In these cases the first
aim of our treatment is prophylaxis against the development of infection, to the
severity of which the acutely lowered resistence of the tissues will contribute.
To forestall the additional complication of infection, we apply to the frost-
bitten areas gauze compresses liberally moistened with equal parts of 20% camphor
oil and ichthyol, or, better still, we leave the frostbitten areas open and anoint
them with this mixture. We have formed a favourable impression of the effects of
this ointment, which has analgesic and antiseptic properties. However with this
processing of frostbite the blisters which are left constitute a perfect nutritive
medium and refuge for bacteria. With this concept as our starting point, we found
ourselves on the right road for the initial processing of frostbite cases in which
there was blister-formation and which were usually on the boundary between the
second and third degrees. The technique of this initial processing of frostbite
is completely parallel to that which we employ in the initial processing of burns,
namely MITCHERIN's method with certain modifications introduced by one of our
number (V.Ia. VASIL?KOVAN). It may be summed up as follows: a preliminary in-
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jection of 2 cm3 of 1% morphine solution; careful wiping of the skin in the
vicinity of the frostbitten areas with alcohol; then the blisters are carefully
removed with tweezers and swabs moistened with a 5% solution of aqua ammoniae.
The epidermis usually comes away very easily, and on the upper surface of the
fingers or toes it brings the nails off with it. The final step is to apply a
dressing consisting of eight layers of gauze moistened with a 5% solution of
tannin in mercuric chloride solution (1:1000). Over the gauze a thick layer of
cotton wool is placed and firmly bound. One should remark that the removal of
blisters in frostbite is considerably less painful than in the case of burns.
We have handled eight cases of frostbite of the hands and feet accord-
ing to this methods and were left with a very favourable impression of its
effectiveness. Almost immediately upon processing there was a sharp decrease of
pain felt, temperature throughout was not high, and the general state of the
patients remained quite satisfactory. After 18 to 20 days we were able to assure
ourselves, upon removing the dressings, that the whole frostbitten surface had
successfully covered itself with soft and recently formed epidermis: if however,
as is often the case, there are areas of deep-lying necrosis under the blisters,
then after taking off the dressings we find that the necrosis takes on the
character of a dry gangrene, with a tendency to speedy demarcation and sloughing
of the necrotic tissues. In three cases of frostbite of the hands we carried out
the following observations for purposes of comparison: one of the frostbitten
hands we processed with the tannin and mercuric chloride, on the other hand we
neglected to take off the blisters but gave the frostbitten areas repeated
applications (twice in the 24-hour day) of ichthyol-camphor ointment. The heal-
ing process in each member proceeded differently: on the side given our treat-
ment, the areas with second degree tissue damage were in 18 to 20 days already
covered with new epidermis; on the side kept on the ichthyol-camphor treatment
the formation of epidermis, which followed upon the gradual sloughing of the
necrotic epidermis, was accompanied by suppuration and dragged out for 35-40 days.
We may mention that after this latter treatment the extremity remained swollen for
a very long time, while on the other side, processed with tannin and corrosive
sublimate, there was almost no edema. On the side not processed with tannin and
corrosive sublimate, the development of the inflammatory process caused pain, and
was accompanied by subfebrile or sometimes even higher temperatures.
In our tactics for treating third degree frostbite we are in full
accord with those authors who consider it essential to withhold the necrotic
areas from operative removal until such time as the demarcation line has become
completely and visibly defined. Only when there develops necrosis taking a
course of the moist gangrene type with gross septic symptoms does the necessity
arise for early amputation while there are still indications of viability.
In observing several cases of frostbite of the hand, our attention
was drawn to an interesting phenomenon. It seems that ordinarily the thumb of
the hand suffers least of all; even in those cases where the remaining four
fingers become gangrenous right to the tips of the metacarpal bones, the thumb
is still preserved completely, or, at the worst, suffers only necrosis of the
terminal phalanx or part of the next. This fact may be explained as follows:
(1) the biphalangic thumb, the shortest of the digits, has at its base the
substantial muscular mass of the thenar, which gives the thumb considerable re-
serves to draw on; (2) the principal blood vessels supplying the thumb are the
most proximate branches of the radial artery and therefore are in the most
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favourable position to become well filled; (3) it is also probable that there is
some significance in the fact that a person suffering from the cold will in-
stinctively close the fingers of his hand so as to cover the thumb.
The preservation of the thumb is of great value, because it preserves
some of the functional powers of the hand.
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From Sovietskaya Medicsina Soviet Medicine7ll?12, 12-159(1943)
CLINICAL CONSIDERATIONS CLASSIFICATION AND
TREATMENT OF FROSTBITE
Land. Med. Docent R. L. GENKIN and
Cand. Med. Docent Ia. F. LEVIN
Of the Evacuation Hospital at N,,,, (Chief, Nil. Surgeon
Grade 11 V.F,SAVELYEV9 Consultant, Prof. A.Z. CSEITLIN),
After studying frost bite of different intensities over a long period
in peace-time, and a large number of cases (hospital data) during the war, we con-
sider that frostbite may be most effectively divided into four grades based on
clinical findings and pathological anatomy, and characterized as follows. 3F
First degree: For a short time at first there appears a pallor of the
skin9 which later changes to erythema and a slight puffiness in the same area, re-
sulting from hyperemia of the skin. On pressing this hyperemic area, the redness
disappears. The patients report pain of varying intensity and duration (most
frequently the pain disappears by the end of the second day), a'burning feeling,
hot glow, and itching. During the first few hours they complain that palpation
of the hyperemic area is painful; later its sensitivity decreases, but a feel-
ing of numbness persists for quite a long time, sometimes as much as six or
eight days. This period indeed usually coincides with that of both clinical and
subjective recovery, which takes place without loss of tissue.
Second degree.- The start of the process is the same as in the first
degree, but by the end of the first few days the patients are complaining of
severe pain. The initial puffiness of the frostbitten area and adjacent healthy
tissue is replaced by a considerable edema of the cellular tissue. The picture
of weeping inflammation with copious exudation becomes sharply defined, and is
accompanied by the appearance of flaccid, blisters of clear sanguineous jelly-
like content. The Malpighian layer is revealed but remains completely intact.
In uncomplicated cases the process ends in shriveling of the blisters and drying-
up of the exfoliating epidermis, which then peels off of its own accord, reveal-
ing a tender pink skin.
Third degree.- The initial symptoms are the same as in the second
degree, but usually more marked. A persistent pallor of the skin is developed.
Pain is so severe that the patient is unable to sleep without narcotics. A
rapidly increasing edema appears, and the skin takes on a bluish-purple color.
The blisters, which appear at a very early stage, contain.a reddish-brown fluid
and easily collapse when touched. A persistent loss of sensation is noted not
only in the affected area of the limb, but also in a considerable part of the
adjacent tissues. Within a few days time the hyperemic area is demarcated from
the surrounding healthy skin which has a normal color, and one notices a
This classification was worked out by ourselves and first put into use at the N.... Evacuation Hospital
in the winter of 0939/40 during the war with the White Finns.
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tendency of the demarcation-line to form a sunken groove. The Malpighian layer
and the subcutaneous cellular tissue are destroyed. The skin rapidly turns
dark, indicating necrosis due to complete failure of its food-supply. Sub-
sequently, if the course is favorable, the process ends in the loss of the
demarcated area of the skin and subcutaneous cellular tissue, which is con-
verted into-a thick mummified layer and then, if it is not forced, separates
of its own accord from the outside toward the center. On the fingers and toes
these solid necrotizing areas form so-called "scab-sheathes",*which upon
termination of the process come off by themselves, bringing the nails with
them. Under the scab the tissues are fully restored, sometimes even without
the formation of noticeable scars, while in some of the protracted, sluggish
cases thin actively forming scars appear, which when they finally contract leave
some disfigurement.
Fourth degree. In the fourth degree of frostbite we should put those
cases in which necrosis penetrates throughout the whole thickness of the soft
tissues.
In this degree the beginning of the process may be quite indistinguish-
able from third degree frostbite, or it may have a more marked character. Within
a few days there takes place a delimitation of the necrotic tissue from the
healthy, by way of the formation of a surface demarcation-line. The unbearable
pain which appears at the time the frostbite occurs may continue"for a long
time. The injury itself is most frequently of the nature of a moist gangrene,
while in the healthy tissue there may be for a long time a persistent edema and
loss of sensation. The tissue-necrosis increases very rapidly, while the further
deepening of the demarcation-line proceeds very slowly, particularly delaying at
the tendons, which may remain viable for a long time. The patients complain of
feeling general debility, loss of appetite and poor sleep. With inadequate
nursing, fourth-degree frostbite patients show increasing anemic symptoms.
The temperatures often give evidence of a toxic condition, the result
of copious absorption of decomposition products.
Profound and stubborn neurotrophic and vascular derangements lead to
the demarcation and sloughing of the whole of the soft tissue down to the bone,
involving more or less crippling disability. Usually, in fact nearly always,
frostbite effects portions of the limbs with thin muscular layers (the foot
or the hand).
.The treatment of a patient with fourth degree frostbite may last four
or five months, and in some cases may drag out for a year.
I should mention that we usually took X-ray pictures three or four
weeks after the occurrence of the frostbite and in a certain proportion of the
cases we found no changes in the bones to have taken place in this period. A
second X-raying after one to one and a half months had elapsed showed symptoms
of osteoporosis well-developed.
With our patients, we had the opportunity to convince ourselves that
the changes taking place and their intensity do not depend on the action of low
atmospheric temperatures alone. Several very real factors come into play here;
thus for instance we observed cases of third degree and even fourth degree
frostbite (by our classification) which occurred secondarily after insignificant
* Crusts (Tr.). 34
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wounding of the lower extremities with blood flowing into the footwear. The
resulting dampness in the region of the foot increased the thermal conductivity
of the footwear and thus caused the temperature of the tissues to be lowered.
The other foot was completely uninjured.
Frostbite occurring with dampness as a contributing factor was called
by DREYER "dampness-gangrene" (NassengangrAn). DREYER observed such cases in
large numbers at the time of the Balkan War among soldiers in trenches filled
with thawing snow. This was also the origin of the French term "trench foot".
In cases of frostbite following serious gun-shot wounding, with destruction
of the integrity of the bones and larger blood-vessels, the factor of disturbed
circulation also comes into play.
It is impossible to explain the origin of "dampness gangrene" in terms
of increased footwear heat-conductivity and lowering of tissue-temperature alone.
GIRGOIAV considers that "damp cold undoubtedly causes neurotrophic changes, the
nature of which we cannot consider to have been fully explained."
Among the numerous factors promoting frostbite we must include the
wind, which keeps continually renewing the cold air in contact with the various
parts of the body, particularly the uncovered parts. A major role in the in-
cidence of frostbite is played by tight, ill-fitting footwear. According to
GIRGOLAV's findings, "injuries to the feet make up from 70 to 90-97% of all
frostbite eases." Usually however the boot itself is not tight, but, in the
attempt to protect themselves from cold, our people wrap a great mass of foot-
cloths around the foot, which squeezes the extremity and does nothing except
create conditions favorable to frostbite. We have observed many cases of frost-
bite of the first and fifth toe due to transversal boot-pressure.
Particularly to be stressed as a frostbite-promoting factor is bodily
fatigue. To use SORGE's phrase, "fatigue and over-tiredness are the best pos-
sible conditions for the incidence of frostbite". Nervous fatigue, drunkenness,
an insufficiently strong physique and vascular ailments (general sclerosis or
varicose dilation of the leg veins) all play an indubitable part.
In consideration of all these very real factors, the problems of
frostbite prophylaxis take on a pressing importance, all the more so in war-
time when mass prophylactic measures are necessary. Among them we should note
the necessity of wide-spread educational work in military units, continuous
toughening-up training in the winter season and in all weather, the most care-
ful fitting of footwear, and the wearing of felt shoes in freezing weather.
Medical workers in the smaller military units should carry out
periodical checks of the men's feet, taking measures wherever possible to com-
bat sweaty feet, which in extreme cases may bring on frostbite. Since grease
is a bad conductor of heat, it would be worth while to consider the matter of
greasing the extremities. The provision of hot food and drink should be a
focal point for the attention of commanders* and medical workers.
Non-medical first-aid, in the form of self-help or mutual assistance,
has usually taken the form of rubbing frost-bitten areas with snow, and the
* i.e., officers. The Russians do not use the word "officer" except for foreign armies. (Tr.)
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'use of cold baths with hot water slowly added.
Researches in recent years have thrown some light on the; intricate
complex of changes taking place in the cells and tissues under the influence of
frostbite, and have led to a revolution in our ideas on treatment.
A very large majority of the older and a few of the modern writers on.
the subject consider that, the rapid rewarming of tissues suffering from some de-
gree of frostbite will cause the development of gangrene and will have a de-
structive effect on the life-processes of the cells. A number of other authors
consider that rapid rewarming of the blood-vessels leads to intensified throm-
bosing thereof and to the destruction of the erythrocytes. However BILLROTH
long ago expressed doubts as to the necessity and efficacy of slow rewarming of
frostbitten members.
LAPCHINSKI?s experiments caused a complete about-face in our thinking
on this matter. Twenty dogs, exposed to cold and rewarmed in a hot bath, had
their reflexes rapidly restored and not one of them died; of twenty dogs re-
warmed in a heated room but in a cold bath, eight perished, and when they were
allowed to warm up in an unheated room, fourteen out of twenty perished (ARYEV).
LEPESfiINSKI and FLOKERMAN, KEASKELEVICH and VASIL?KOVANm also came to the con-
elusion that it is essential to rewarm the organism in the shortest possible
space of time. Further clinical and experimental study of this question in
GIRGOLAV?s clinic (ARYEV) has been even more indicative of the uselessness and
unreasonableness of the method of gradual rewarming. The author is of the
opinion that ?4rewarming19 by means of cold baths and cold syringes and so forth
is in reality only a further cooling of the tissues, and this is all the more
true because the wetting of the skin in the bath increases its thermal con-
ductivity; Both the work at GIRGOLAV?s clinic and the convincing arguments ad-
duced by other authors show that the treatment of frostbite by re=heating in warm
baths and in warm rooms should be put into practice as widely as possible.
As a method of helping restore the circulation, massage merits con-.
sideration.. But massage in the form of rubbing with snow is a completely
superfluous procedure, since snow on contact with the body is speedily converted
into water, and hence makes the frostbitten areas damp; moreover the gritty ice-
particles contained in snow break through and contaminate the already damaged
epidermis. We must also bear in mind the possibility of rubbing in dirty snow
or microbes from the hands; also the possible dislodgment of the thromboses which
form in the small bloodvessels shortly after frostbite.
Massage should be given only after first washing both the affected
areas and adjacent parts with soap solution and then applying alcohol; likewise
only after proper aseptic techniques in the treatment of the hands. GIRGOLAV
further recommends that a sterile glove be used for massage. Further massage
should not be given when some hours have elapsed after the incidence of frost-
bite, because by that time more or less marked inflammatory symptoms will have
made their appearance and the injured tissues are then in need of absolute re-
pose, plus warming.
In first degree frostbite we may follow up by simple irrigation with
* See page 26.
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a 5% tannic alcohol solution or painting with a 2% solution of brilliant green;
also with short sunlamp exposures (10-15 minutes) during the first three or
four days, which will have a mild analgesic effect and_ will promote the rapid
restoration of circulation.
In second-degree frostbite the irrigation should be more frequently
repeated, using a 2 - 5% tannic alcohol solution or a,5% solution of methylene
.blue according to the method of GOL'DMAN and LUBO, so as to promote the maximum
drying-out of the peeling skin and to preserve the blisters. To achieve this
one should avoid putting dressings on a frostbitten extremity when there are
blisters (if bandaging is necessary for transporting a patient, grease or ointment
dressings should be used and the limb immobilized). Only in those cases where the
content of the blister is suppurating under thick skin may one have recourse to
puncturing it or trimming it down to the base.
BHASKELEVICH and VASIL'KOVAN recommend that immediately after processing
the frostbitten parts a tannin-mercuric-chloride bandage should be applied (a 5%
tannin solution in mercuric chloride 1:1000). One should however bear in mind
that during the first few hours after frostbite and before exudation develops
a rapid absorption of fluid is in progress; hence the application of mercuric
chloride to a large area of frostbite may lead to the mercury poisoning of the
organism.
To combat edema, keeping the limb in a raised position is very im-
portant; at the same time this helps to lessen the pain. A quite valuable
supplementary analgesic measure is the use of the quartz lamp. For the same
purpose we frequently had recourse to VISHNEVSSKII's paranephral blocking. We
have repeatedly had the occasion to observe that novocaine blocking according to
VI3ThTEV I's method is an excellent means of analgesia, and helps to speed up the
demarcation process and the resorption of persistent infiltrates.
Academician BBRDENKO recommends paravertebral anaesthesia by repeated
injections of 80-120 cm-' of 0,5 - 1% novocaine solution. He concludes that these
injections help to restore circulation and protect the frostbitten areas from in-
fection.
Many patients state that after irrigation of the frostbitten region
with alcohol or tannic alcohol there is a brief sensation of burning, and then
the pain ceases for some hours, sometimes for a whole day.
The use of "open" Zu-nbandagegtherapy and blue-lamp irradiation under
a hood has, in addition to the specific action of blue light on the tissues,
another positive effect: the gradual warmth improves the circulation in the ex-
tremity and the drying-out of the epidermis in second-degree frostbite or of
the deeper tissues in third and fourth degree frostbite. One should however
guard against attempting to produce an excessive drying-out of the tissues by
various physiotherapeutic means, because in this case the penetration of the
demarcation process is slowed down, edema of the affected areas is intensified,
and the patients begin to complain of a renewal of intense pain. In the penetra-
tion of the demarcation in depth and the development of gangrene in a frostbitten
Vishnevski's work on novocaine block not available for check, but it seems this word should be
"paraneural". In Russian the difference in pronunciation is slight. (Tr,)
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area, the process most often takes on the character of a moist gangrene; hence
it is essential to see to the aseptic'processing of'the frostbite field and to
spare the injured tissues as much as possiblea During this period a'moderate
drying out by physiotherapeutic means for the purpose of converting moist gangrene
into dry, plus VISIU EVSKI paranephralm blocking, deep penetrative heating of the
injured tissues and raising of the limb to combat edema, will hasten the de-
marcation'process and promote the consolidation of a scab or mummification of the
distal (injured) portion of the extremity.
In fourth degree frostbite, by the time the demarcation process has
penetrated the soft tissues to the bone, the distal portion of the frostbitten
extremity is completely mummified and shriveling up; a little forcing will cause
it to separate at one joint-line or another. Sometimes it is necessary to assist
this sloughing process by cutting the odd tendon connection or joint capsule. If
after complete demarcation of the soft tissues and subsequent sloughing of the ex-
tremity the bone is left standing 1 - 1.5 cm out of the stump, then one should
handle the wound conservatively, waiting for full covering of the bone with granula-
tion tissue. Under these circumstances it is appropriate to use grease dressings
on the stump according to the method of LEHR or VI 3 NEVSK1, or dressings with
sterile vaseline oil, and these dressings should be changed as infrequently as
possible. Usually the granulation process proceeds very slowly (sometimes taking
two to three months).
When the waiting period is long drawn out, torpid, sluggish granulation
of the stump develops inordinately, the whole stump being thus thickened. The
torpid granulation-tissue is unable to rise to a height of 3 - 4 cm;-it becomes
covered with a glassy incrustation and takes on a persistent cyanotic tinge.
In cases where frostbite was contracted secondarily after severe gun-
shot injury to the extremity, the process of sloughing and mummification may
proceed even more slowly and reveal a stump of even more -unhealthy and sluggish
nature. In such cases it is all the more necessary to amputate protruding
portions of the bone, so as to facilitate the regenerative process in the stump.
It is of great importance that the limb should be absolutely im-
mobilized. We are not proponents of ZUCKERKANDL's method of putting the frost-
bitten extremity in a plaster cast, because in this case we are deprived of the
chance of using physiotherapeutic procedures; mummification of the necrotic
areas is also retarded, and if edema increases the circulation in the stump is
impeded.
I am purposely omitting the long list of antiseptic solutions and
ointments used by various medical institutions and individual physicians. One
might however be of the opinion that the antiseptic or healing properties of these
medicaments are quite insignificant and we should not hope for very much from
them.
Sometimes, when proven medicaments were not at hand, equivalent
substitutes have been tried which looked as if they might.achieve the desired
antiseptic results, with some simultaneous tanning action. Thus Military Surgeon
II Grade PAPKOV, finding himself in such a situation, began to use formalin for
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frostbite treatment in the same concentration as had been proposed for its use to
replace alcohol in disinfecting hands and instruments (formalin 2.0, carbolic
acid 1,0, distilled water 100.0). The author obtained not too bad results with
it.
TUMPIANSKI recommends treating frostbite by dressings with diluted
Lugol's Solution (iodine 1,0, potassium iodide 2.0, distilled water 100,0); he
observed good results therewith.
An effort should be made to increase the general biological tone of
the tissues. It is worth considering the prescription of calcium chloride per
os and intravenously for increasing the phagocytic powers of the leucytes and
promoting the most speedy resorption of thromboses.
In third or fourth degree frostbite, and also in cases with complica-
tions and a "septic" temperature, the prescription of large doses of white
streptocide*and glucose is indicated. In such cases one should also make use
of frequent blood-transfusions of small volume.
To recapitulate, we must recognize that in recent years very valuable
progress has been made in the prophylaxis and treatment of frostbite.
In the matter of the classification of frostbite, we must give up
treatment based on the old three degrees. All deep thermic injuries, in which
restitutio ad integrum is impossible, where tissue-necrosis has taken place be-
low the skin and cellular tissue, with subsequent loss of a part of the ex-
tremity, must be classed as of the fourth degree.
As a basic part of our treatment we must suppose the most rigorous
aseptic technique, rest, and an effort to handle the wound by "open" fnbandage]
methods, with our entire attention directed toward improving the circulation in
the affected extremity. A quiet mental attitude, general bodily hygiene, and
proper food are very important supplementary factors in the treatment of the
frostbite patient. As soon as inflammatory symptoms and purulent exudation dis-
appear it is as a rule essential to begin the use of therapeutic physical
exercise,
* Streptocide - Sulphanilamide, called "white streptocide" to distinguish it from "red streptocide"
(Prontosil Rubrum) and "yellow streptocide (Prontosil Flavum). See U.S. Dispensatory (24th
Edition 1947), pp. 1148, 1610 (Tr.).
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Arkh. biol. nauk rBiological Recorf
Vol, 60, 3, 25-28, 1940
ON THE CARBOHYDRATE METABOLISM RATING OF
PATIENTS WITH FROSrBITE,1
Of the Department of Morbid Anatomy, Leningrad Branch
of the All-Union institute for Experimental Medicine
(Director, Academician N. N. ANICHKOV), the Laboratory
of Pathological Physiology (Director,. A. 1. LEVIN, M.D.),
and Evacuation Hospital No, 2010 (Consultant and
Scientific Advisor, Prof. 0, A. LEVIN).
We have been conducting research on certain aspects of carbohydrate
metabolism in frostbite patients. This is a question of interest, because
hitherto in the literature it has been stated that under the influence of cold
there takes place a real disturbance of the carbohydrate metabolisms in many
ways comparable to the action of adrenaline on the organism (SHADE); in fact
hyperglycemia, glycosuria, and a lowered amount of glycogen in the liver are
stated to have been observed. In his report to the Twenty-fourth Congress of
Surgeons, GIRGOLAV called attention to a carbohydrate impoverishment of the
organism seen in persons suffering from frostbite.
It is furthermore known that repeated exposure specifically sensitizes
some individuals to the effects of cold, so that a series of exposures may pro-
duce more serious local injury to the tissues. If one considers the similarities
with the allergic state (and the tissue hyperergy3E3E which arises therefrom), it
appears from the finding of various authors (AL?PERN and his associates, MATUSIS)
that in this case too a disturbed carbohydrate metabolism and particularly hyper-
lactacidemia have an evident place.
We attempted both to establish the reliability of these findings and
to throw some light on the effects of an already developed frostbite condition
on the carbohydrate metabolism, a question which is not without interest from
the point of view of proper nutrition and the selection of a diet for patients
of this category.
Our researches were made on patients with acute
frostbite (of the third degree according to the old classi-
fication) but without additional complications (infection).
~- Read at a Technical conference at Evac, Hosp. No, 2010 on the 24th of May, 1940, and at the Leningrad
conference of evacuation hospital and special-ward workers, May 26th, 1940
*&Hyperergy - defined as a condition of increased functional power (Tr,)
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Fig. 1. Blood-sugar (on empty stomach) in ^g-%% in frostbite cases
Fingers of left hand
3rd degree
Nail-phalanx, big toe of
left foot, 3rd degree
Toes of both feet
3rd degree
Left foot
3rd degree
Toes of both feet
3rd degree
Toes of both feet
3rd degree
Toes of both feet
3rd degree
Both shine
3rd degree
Toes of right foot
3rd degree
Both feet
3rd degree
Toes of left- foot
3rd degree
Right foot
3rd degree
so=
Right foot, 3rd degree
Both feet, 3rd degree
Both feet, 3rd degree
Left foot
3rd degree
Fingers of both hand:
3rd degree
Fingers It parts of forearm
3rd degree
Mail phalanx, big toe of
left foot, 3rd degree
Toes of left foot
3rd degree
Toes of both feet
3rd degree
Toes,of right foot, 3rd degree
Both feet, 3rd degree
Both feet, 3rd degree
gas phlegmon
Both feet
3rd degree
Toes of both feet
3rd degree
is
MENMEMEM
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Fig. 2. Blood-sugar (on empty stomach) in wound-patients
Trauma, amputation
of left arm
Trauma, amputation
of right arm
Fracture of right
humerus, gas phlegmon
wound of right arm
,Trauma,, Injury to left are
Wound & tissus-
shattering, left thigh
Trauma, amputation
left thigh
Gunshot wound, right thigh
Wound, tissue-shattering
both thighs
Wound, lumbar region
Gunshot wound
right thigh
Gunshot fracture z
Gunshot wound, gluteal region
fracture of pelvic bons
Wound and tissue-.
shattering, left shin
Concussion, head-wound it
Tissue-shattering
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Blood-sugar (on an empty stomach) and urine tests were made
at some time during the first few days after admission to
hospital, and repeated at different intervals during the
course of treatment. In,. a number of cases the blood-sugar
level was determined (by the HAGEDORN and JRNSEN Method)
immediately before dosing the patient with sugar (100 gm of
glucose or galactose per os) and then after 15, 30, 1}5, 60,
90, 120, and 180 minutes had elapsed. The lactic acid con-
tent in blood from the ulnar vein was determined by the
method of FRIEDB AN, COTONIO and SCHNFER, as modified by
VLADIMIROV, WITRIEV and URLNSON. To establish the extent
to which our findings were specific for frostbite patients,
similar control tests (blood sugar and urine, sugar tolerance)
were made on other patients not suffering from frostbite
(various wound cases).
As will be seen from fig. 1, we not only found no hyperglycemia in frost-
bite patients during the first few days after admission, but on the contrary there
was a clear tendency for the blood-sugar figure to be low. Only in four cases
(see fig.1) did the blood-sugar at the time of arrival exceed 100 mg % and then
the excess was slight. Moreover it was easily seen that the tendency to a low
level of glycemia persisted stubbornly in these patients. This appeared from re-
peated tests over a period of two to three months on those patients in whom, in
spite of a general improvement in their condition (after operation and physio-
therapeutic treatment),, the blood sugar figure remained lower than normal,
Generally speaking, in tests on frostbite patients at various times during their
stay in hospital, we found in 87.3% figures less than 100 mg-%, in 10.9% figures
from 100 to 110 mg-%, and only in one case 121 mg-%.
Our control tests (fig.2) showed that in other patients too (with no
frostbite) relatively low blood-sugar figures obtained throughout the whole
series of tests.
As for sugar toleranc e a frostbite patients really showed no marked
pathological deviations from the alimentary glycemic curve.
The only noticeable point was that in some cases only (patients Z,
D., Br., M., L.) there was a relatively small maximum rise in blood-sugar con-
tent following a tolerance-dose. Repeated dosing of the same patient during the
first few days after frostbite developed and two or three months later showed no
significant differences in the blood-sugar curves. For the most part, similar
glycemic~curves were obtained from patients with no frostbite (patients M.,
K4, p. ).
As for the content, of lactic acid in the blood, its level in our tests
on frostbite patients usually did not exceed the upper boundaries of the norm
(12 - 13 - 16 mg-%). In repeated urine analyses and in particular after sugar
dosing, sugar in the urine was in no case detected. Thus our tests show that
there are no pathological abnormalities in the carbohydrate metabolism in frost-
bite (whether in the sugar and lactic acid content of the blood, or in the
* The initials given here do not quite coincide with those in Figs. I and 2. (Tr.),
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alimentary glycemic curve; neither is there sugar in the urine).
We had no opportunity to investigate the carbohydrate metabolism at the
time of exposure to cold, but in any case we may say that patients a few days
after contracting frostbite show rather low blood-sugar figures (near the lower
boundary of the norm) and a somewhat increased tolerance for carbohydrates. But
there is no necessity to consider even these pecularities as specific for frost-
bite.
On comparing our data for frostbite patients with those for wound
patients, we note eccentricities common to both these groups. For this reason
it is natural to suppose that there are, in both groups of patients, certain
common factors basically concerned in the noticeable and comparatively per-
sistent lowering of the blood-sugar and the slight increase in carbohydrate
tolerance.
It appears most reasonable to connect these phenomena with physical
strain prior to admission to hospital and to some extent with the local in-
juries observed in the cases studied. Our data do not permit us to study the
dynamics of carbohydrate metabolism at the time of the actual exposure to cold.
For this we must have recourse to experimental research. Nevertheless the data
obtained are sufficient for us to recommend the feeding of carbohydrates to
patients with frostbite.
1. The development of frostbite is not accompanied by any marked dis-
turbance of the carbohydrate metabolism (as far as glycemic level, lactacidemia,
and the glycemic curve are concerned; neither is there glyeosuria).
2. The relatively low blood-sugar figures and the slightly increased carbo-
hydrate tolerance as seen in a number of frostbite patients are not specific for
this condition.
A carbohydrate-rich diet may be recommended for frostbite patients.
LITERATURE
1, Schade, Muench. med. Wschr., 36, 1021, 1919,
2. GIRGOLAV, Works of XXIV All-Union Conga of Surgeons,
Gosmedizdat, Moscow-Leningrad, 1939.
3, AL9PERN, Hyperergic Reactions (symposium edited by
AL?PERN, Gosmedizdat, Ukrainian SSR, 1938.
4. AL?PERN, Collected works of the conference on allergy.
Ukrainian Academy of Science Press, Kiev, 1937?
5. MATUSIS, eodem loco.
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Arkhiv, ~~0 . nauk. LBiol. Record
Vol. 60, 3, 15-24 (1941).
CONTRIBUTION TO THE PR OBT.EM OF TEE
PATHOGENESIS OF FROSTBITH
(The role of local disturbances. of the blood circulation.)
Report #1
A. I. LE VIN and (one) F. M. KEALEC SKAYA
Of the Laboratory of Pathological Physiology (Director, A.I. LEVIN,
M.D;) of the Department of Morbid Anatomy Leningrad Branch, All-
Union Institute of Experimental Medicine (Director, Academician N.
N. ANICHKOV),
Received June 7th, 1940.
For a comparatively long time now, many authors have been directing
attention to the real importance of circulatory disturbances, particularly those
of a local nature, in the mechanism of the development of frostbite (KRIEGE,
MARCHAND et al.). The hypothesis has been advanced that this factor plays an
important role in the varying susceptibility to frostbite injury which is seen
in different individuals under practically identical conditions of exposure to
low temperatures (in war and in competitive sports); likewise that it plays an
important role in the selective involvement of different parts of the organism
(WIETING, HEFDING, ZUCKERKANDL, NUGELSBACH, GIRGOLAV, ARYEV, GOL? DMAN et al.).
GIRGOLAV, basing himself on data in the literature and on his own clinical ob-
servations, emphasized in his report to twenty-fourth Congress of Surgeons that
necrosis of the tissues in frostbite is (to a considerable extent or completely)
bound up with disturbances in the functioning of the blood-vessels, and appears
secondarily. At the, same time however other authors (LAKE, SACHS) are inclined
to ascribe the principal role in the pathogenesis of frostbite to the direct
action of cold on cells and tissue.
In the various researches, little has been done to shed light on the
question of the significance of local circulatory derangements in frostbite.
What work has been done has involved the study of either
the state of the vascular system at a stage subsequent to
the appearance of the changes which are caused by the local
action of cold or the local action of fluids and substances
with. low boiling points (ether, carbon dioxide, ethyl chloride
etc. )p
the influence on frostbite. of a disturbed vascular innerva-
tion in some particular region.
In our researches we undertook the task of clarifying, by experiments on
animals, the manner in which various types of local circulatory derangement are
manifested in the incidence and development of frostbite, and also the part played
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by these derangements in its pathogenesis. It seemed to us that a clarification
of these points would make it easier to understand the causes of selective frost-
bite injury as related to the individual and as related to the various organs
and parts of the body; likewise the part played therein by the local, peri-
pheral blood circulation.
First of all we were faced with the problem of inducing experimental
frostbite. For this purpose some research-workers have been making use of local
applications of freezing mixtures, fluids and substances with a low boiling
point; others have been placing the various parts of the animal's body (limbs,
ears) in specially constructed chambers in which chilled air was circulated (viz.
the cold-chambers constructed at Prof. GIRGOLAV's clinic and. at the S.M. KIROV
Skin Clinic of the Red Army Academy of Military-Medicine). For our experiments
these procedures did not seem to be completely acceptable, since they are far
removed from the conditions usual to frostbite in humans (in some of the above-
mentioned procedures only limited portions of the body were subjected to cooling;
when the chamber was used it was necessary to immobilize the animal and this
affects the blood circulation; usually the effects of cold were studied without
taking into account the simultaneous action of other weather-factors on the
organism (dampness, wind, etc.)
Hence we undertook to induce frostbite experimentally in such a way as
to make use only of natural environmental agencies.
The rabbits were placed in cages outdoors (the tests
were made during the winter months) for a set number of hours
(in some cases, repeated exposures). In some of the rabbits,
local anemia was induced before they were put out in the cold.
To do this, the rabbit's ear (near to the root) was put be-
tween the two halves of a cork with grooves corresponding to
the course of the veins. The two halves of the cork were
held pressed together with a fine rubber band. This reduced
the supply of blood to the ear without interfering with the
return flow of blood. (The pressure was not enough. to cut
off the flow of blood along the artery completely).
In another group of tests, venous congestion was in-
duced by similar means, the cork in this case having grooves
to correspond with the arteries, which thus remained un-
impeded. After completing the test (when the rabbits were re-
turned to a warns room) the corks were removed. Local anemia
or venous congestion was induced only in one ear at a time, so
that the other, which was likewise exposed to the surrounding
air but without any interference to its local circulation,
could serve as a natural control. As an additional control
we used rabbits which were simultaneously put outdoors but
which did not have the bloodvessels constricted; also rabbits
which had the vessels (arteries or veins) constricted but
which were left for an identical number of hours indoors
(four hours, some as much as 24 hours). In the latter case
the intention was to keep tab on changes which might be pro-
duced by vascular constriction alone.
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Data were systematically .compiled relative to the
general condition of the rabbits (there were 32 rabbits used
in the experiments) and the local changes taking place in
the ears. With some of the rabbits, readings of the general
body temperature were taken during the time they were out-
doors. At fixed intervals of time, bits were clipped from
each ear (constricted ear and control ear) for microscopic
examination; each time this was repeated, the clipping was
taken at a set distance from the place where the specimen for
the previous test was taken. The clippings were fixed with
10% formalin, al so with Bouin' s fluid, and were stained with
hematoxylin-eosine and by Van Gieson's method.
First group of tests. Single exposure of rabbits with local anemia in-
duced in ear. In this group of tests, local anemia was induced in one ear of
each rabbit by the means described above, and immediately after this the animals
were put outdoors for a single exposure of sometimes two hours, sometimes three to
four hours (at air temperatures -23, -20, -18, -17?C.). In all, ten such tests
were carried out. The general condition of the rabbits during the tests was not
distinguishable in any way from normal.
The changes produced in the ear with the constricted artery (the anemic
ear) and those produced in the control ear are completely different. By the time
the rabbits are taken indoors the ear with the constricted artery is hard to the
touch and very cold (as measured with a "frigorimetric" pyrometer constructed in
the form described by ARYEV). Its temperature may go down to -1, -2, -3?0. It
is of a dark red color, particularly about the edges. A few minutes after the
rabbit is brought indoors and the constrictor removed, the ear is already be-
coming soft, warmer than normal, and drooping. The other, the control ear, is
cold to the touch, but it is soft all the while and its tone is normal,
Subsequently in the anemic ear a growing cyanosis and edema is noticed,
which assumes considerable proportions, particularly during the first two or
three days, and mostly on the edges and in the upper third of the ear. Mean-
while the ear continues to hang down and is colder than normal to the touch.
In two or three days' time it usually develops blisters, particularly on the
inner surface (thin-walled, small blisters, often confluent; in some cases large
blisters occupying a considerable portion of the ear surface), with a slightly
turbid, sometimes hemorrhagic content. Usually in five or six days there
develop, along with the.edema, darker areas of necrotic tissue with a dark brown
color (symptoms of moist and dry gangrene) ; at places where blisters had burst
there is an ulcerous surface. Nearer to the root, symptoms of cyanosis and
edema persist, and there is a slight induration along the edges. After ten or
twelve days the boundaries of regions of necrotic tissue may be clearly dis-
tinguished (predominantly in the upper third of the ear); in the remaining part
of the ear a dilation of the vessels is seen. The ear assumes its normal
position. In the control-ear no macroscopically visible pathologic deviations
are observed after a single exposure to cold.
When the anemic ear immediately after a three-hour exposure is ex-
amined microscopically, the epithelium, the root-bulbs of the hair, and the
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sebaceous glands are found to be unchanged. There is a little edema of the sub-
cutaneous cellular tissue and the lower layers of the corium. The lumina of the
arteries are narrow, their.walls slightly thickened, the muscular envelope here
and there homogenized. The veins are acutely dilated, engorged with blood, and
in places there are signs of a marginal stasis of leucocytes.
Twenty-four hours after a single cooling the stratum corneum of the
epidermis is somewhat swollen, the structure of the cells of the surface layer
of the epithelium is no longer distinct, and the intercellular boundaries are
somewhat blurred.' Scattered lumps of chromatin are seen here, which take. a weak
nuclear stain. At places in the prickle-cell layer are many epithelial cells
with vacuolated nuclei. The epithelium of the basal layer is for the most part
little changed, containing succulent cells with large nuclei, in which various
mitosis-patterns may be seen. In the cells of the hair-bulbs and sebaceous
glands there are dystrophic changes (cell nuclei take stain badly, protoplasm
homogenized, cell structure not properly distinguishable). The collagen fibres
of the deep and surface layers of the corium are somewhat swollen, thickened and
separated by a large accumulation of edematous fluid which here and there contains
numerous erythrocytes, granular leucocytes and a variety of stray cells. At
places, in both the subcutaneous cellular ti ssue and the corium, small recent
hemorrhagic foci are seen. The capillaries and veins are considerably dilated,
with their lumina engorged with blood. Quite often symptoms of marginal stasis
of leucocytes are found. In numerous places there is diapedesis of erythrocytes.
The muscular walls of the larger arteries are for the most part homogenized, in
places showing a granular structureless mass, staining strongly to a pink color
with eosine. The internal elastic lamina is broken in places, the endothelium
intact. Around such vessels one may often find both hemorrhagic foci and an
accumulation of edematous fluid.
Two or three days after a single exposure the superficial and sometimes
the deeper layers of the epidermis are forced apart by a large amount of fluid
(fig.l). The cavities formed contain serous fluid, in which a good number of
granular leucocytes are found. In places the epidermis is exfoliated, and here
the exposed surface of the edematous corium is seen. The collagen fibres of the
elastic tissue are thickened and swollen, with no marked cellular reaction. The
walls of the larger arteries therein are homogenized. In the lumina of various
veins are found accumulations of granular masses laced through with leucocytes
(commencement of thrombus-formation). The larger veins are dilated.
Microscopic examination of the control-ears (those taken from the
same rabbits after exposure to cold; the ears in which no anemia had been in-
duced) after twenty-four hours had elapsed showed no signs of change on the
part of the epithelium, corium, subcutaneous cellular tissue, cartilage, nor
blood-vessels.
In a number of tests made after a single exposure at temperature
somewhat higher than in those described above (-10, -8, -6?C), we found that
after the rabbits had remained outdoors for four hours the ears with the artery
constricted showed, immediately after the rabbits were brought indoors, sym-
toms of edema, cyanosis, and a strong tendency of the ear to droop (the ear
temperature varied from +70 to +20C). The edema and cyanosis increased,
usually for two days, and then began to diminish. After five or six days
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fig. 1. Sloughing of the
epidermis. Large cavities
filled with edematous fluid
Edema and necrosis of the
derma.
Fig.2. Left, ear with artery constricted and
exposed to cold. Large blisters covering a
great part of the ear-surface. Right, the
control-ear (not constricted) of the same
rabbit.
Fig.4. Layers of epidermis separated
by edematous fluid ("micro-blisters")
Fig.3. Edematous infiltration.
of the epidermis. Edema of the
derma and subscutaneous cellu-
lar tissue. Homogenization of
the arterial walls. Purulent
perichondritis.
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the ear recovered its normal appearance. The ear to which no compression had been
applied showed no noticeable changes.
In this case then, in contrast to the preceding tests, the anemic ear
presented us with the symptoms of first degree frostbite
In the following group of tests the rabbits were subjected to cool-
ing at a low temperature (from -12 to -5?C) for a space of some days. Here we
tried to bring out the effects of a second and not so severe cooling under con-
ditions of an already existing local circulatory change.
Second group of tests. Repeated exposure of rabbits with local anemia
in the ear. First, local anemia was induced, For a period of four hours the
rabbits remained outdoors (at temperature -12, -10, -8, -6, -5?C), and then were
taken into a warm room where the corks were removed. This procedure was repeated
one, two, three or four times during the following days.
After a single stay in the cold, we observed in the anemic ear an
initial pallor which comparatively soon changed to cyanosis and edema; the ear
was held in a drooped position. After a second or third exposure (at more or
less the same attmaspher; :temperature) the ear was usually hard, markedly edema-'
tous, and of a dark reddish color when the rabbit was brought indoors. The
rabbits were then left in the warm room (with no further cooling). They de-
veloped an increasing edema, blisters (for the most part small and confluent; in
some tests large blisters co'46ving a third of the ear --- see fig,2), ulcera-
tion, necrosis, and sloughing of the epidermis. The control-ear remained without
noticeable changes throughout the whole test.
Under microscopic examination the anemic ears in this group of tests
most frequently developed the following picture-.-The superficial layers of the
epithelium are separated by edematous fluid, in which granular leucocytes are
found. In places the epidermis is exfoliated or loosely bound to the under-
lying layers of the corium. In some cases, there is a very complete necrosis of
the epithelium, with sloughing thereof and necrosis of the corium and sub-
cutaneous cellular tissue. On the boundary of such regions the collagen fibres
are saturated with edematous fluid and large accumulations of granular leucocytes.
Here, what looks like delimitation or demarcation of the necrotic masses is in
process. In the surrounding tissue cartilages, on the inner side of the ear,
there is a broad layer of inflammatory infiltration consisting of granular
leucocytes (perichondritis). In the demarcation zone the arterial walls are
thickened, their muscular envelope homogenized (fig-3), and some veins are
thrombo sed,
Clinical observations long ago revealed the important role of damp-
ness in the etiology of frostbite, Among the factors which favor the incidence
and development of this process, contact with very cold objects (particularly
metal objects) has been mentioned. Taking this as a lead, we made a series of
tests on rabbits with the artery constricted, during which we from time to time
moistened the ear with water or damp snow while the animals were out in the cold;
in other tests we applied a metal spatula to the ear. When this was done, at
various temperatures of the surrounding air (from 723 to -10?C), we observed a
very acutely developed frostbite picture (ear hardened, blisters already develop-
ing by the second day after the exposure, and so forth)
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Twenty-four hours after a single exposure to cold with the above-
mentioned agents applied, microscopic examination showed the following changes:'-
The superficial layers of-the'epithelium present a cavitated appearance because
of the separation of the granular and horny layers ("micro-blisters"). They
cavities are filled with edematous fluid, in which a small number of granular
leucocytes are found (fig-4). The cellular component a of the basal layer have
a dystrophic look (vacuolation, karyolysis of the nuclei). Other than this,
the changes in the corium and blood vessels are similar to those described in
the case of the single exposure at lower temperatures.
The experiments detailed above demonstrate the great influence of
diminished blood supply (local anemia) as a factor promoting the development of
frostbite under the action of cold. In the following tests we endeavored to
reveal how the incidence and course of the involvement is affected by another
kind of circulatory derangement, namely congestive hyperemia.
Third group of tests. Single and repeated expo sure of rabbits with
congestive hyperemia of the ear. Congestive hyperemia was induced in a rabbit's
ear by the method described above. Then the rabbit was put outdoors for a single
period of two, four, and ten days, at a circumambient air temperature of from
-10 to -23?C. In these tests., with both the single and the repeated exposures,
the ear having the veins constricted was soft and cold to the touch when the
animals were brought indoors, and differed from the control-ear only in a notice-
able cyanosis and slight symptoms of edema. . Very soon after taking off the cork
the test-ear showed a noticeable dilation of the blood-vessels and became some-
what warmer to the touch than the control-ear. The cyanosis and edema were
maintained for some days even after cessation of further exposures to cold, but
we saw no other signs of frostbite, such as blisters, necrosis, etc. The control-
ears.(those with no congestive hyperemia) showed no particular pathological
changes.
Where congestive hyperemia has been induced, the epithelium, hair-bulbs
and sebaceous glands show no noticeable changes under the microscope. There is a
slight edema of the corium and subcutaneous cellular tissue. The walls of the
larger veins are modified in places: their structure is indistinct, granular de-
composition is present; the majority of the fine veins have dilated lumina and
contain a homogenous mass of plasma. Individual fine arteries are seen which
have their lumina filled with thrombotic masses. The walls of the larger arteries
show no noticeable changes.
In this group of tests our attention is particularly attracted to the
results obtained with two rabbits (No.301 and NO-336). In one of them (rabbit
No-336), after repeated exposure to cold (temperatures on successive days were
-10, -239 -22, -13, -18, and -22?C) the ear in which congested hyperemia had been
induced showed only symptoms of vascular dilation and comparatively slight edema.
A. few days after the exposures were terminated the ear had recovered its normal
tint, and only a slight induration was observed in it, along the edges. A month
later this rabbit No-336 was made the subject of a test with exposure to cold
under conditions of local anemia (in the sauce ear). After the second exposure to
cold the rabbit had already developed an extreme degree of frostbite (acute
cyanosis, edema, numerous blisters both small and large; subsequently ulceration,
formation of a scab, necrosis and demarcation). All the upper ear and a part of
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the middle third of the ear turned black. In rabbit No-301 the artery in one ear
was constricted and the veins in the other ear; under the action of cold, acute
symptoms of frostbite developed in the ear with the artificially induced anemia
only.
Control tests and supplementary tests. In our cooling experiments, in
which exposure to cold was combined with local derangements of the circulation,
we used as control an ear of the same rabbit, with the blood circulation left
undisturbed in its original state. In addition we decided to make a series of
control tests in order to check up on changes which might develop after a single
constriction of the ear-artery for a longer period than in our tests (without
cooling: the rabbits remained indoors). In this group of experiments we kept
track of the effects of single and repeated constriction of the artery in three
rabbits for a period of four hours, and in one rabbit for a period of 24 hours.
In the first case the ear, immediately after removing the cork, usually
looked cyanotic and was noticeably edematous, mainly in the upper third of its
length. Two hours later the ear was quite warm, color normal, edema slight.
Next day it was very little different from the normal ear (the one which was not
constricted); it drooped slightly; edema was absent. Under microscopic examina-
tion the ear, after a four-hour constriction of the artery (immediately after
taking off the cork), showed no noticeable changes in the epithelium, hair-bulbs
and sebaceous glands. Insignificant edema, mainly of the deep layers of the
corium around the cartilage. The lumina of most of the arteries constricted, the
structure of their walls distinct; veins somewhat dilated, full of blood. Twenty-
four hours after the removal of the constriction the epithelium, hair-bulbs and
sebaceous glands showed no noticeable changes. The dermal layer under the epi-
thelium was thin; in the deeper-lying layers of the corium, near to the cartilage,
there was quite a wide zone of edema. Here the tissue was diffusely impregnated
with edematous fluid, the collagen fibres separated; here and there in the
edematous fluid isolated granular leucocytes were seen. No noticeable changes
were apparent in the walls of the larger arteries. Lumina of the veins were
dilated, with a homogenous mass of plasma to be seen in them.
After a 24-hour uninterrupted constriction of the artery, signs of
cyanosis and edema manifested themselves to a quite considerable degree as soon
as the constriction was removed. Yet after two days the ear had recovered al-
most its normal appearance and all that was noticeable was a little droop as
compared to the other ear. Under the microscope the surface layers of the epi-
thelium were swollen; here and there in the deeper parts of the prickle-cell
layer vacuolation of the nuclei and karyolysis could be distinguished; the cell-
boundaries at these points were indistinct. In places, dystrophic changes were
seen in the basal layer too. The collagen-fibres and elastic-tissue fibres of
the corium were considerably forced apart by edematous fluid. The larger
vessels were acutely dilated, engorged with blood; the structure of their walls
was indistinct and the muscular envelope in the majority of cases homogenized,
staining strongly with eosin. Here and there in the edematous fluid granular
leucocytes were seen.
.Forty-eight hours after taking off the constriction, binuclear cells
and amitotic patterns (symptoms of dystrophy) were found at various points in
the prickle-cell and granular layers. The basal layer was engorged with cellu-
lar matter, and here and there the patterns of mitosis were found. The corium
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is laced with mononucleated polyblastic elements and also fibroblasts. The
muscular envelope * of the arteries is somewhat thickened and., full of cells with
large pale nuclei.
Finally we made a series of tests in which rabbits, serving as con-
trols, were exposed to cold with the ear circulation undisturbed; they were left
outdoors for four hours (at -23?C or lower). Neither with a single nor with re-
peated exposure could any .frostbite be detected in these rabbits, nor indeed any
noticeable damage to the tissues.
In groups I and II of our experiments (cooling p16a'local anemia) we
combined exposure to cold with a disturbed condition of the blood circulation in
the ear, and obtained changes.which reproduced the typical picture of frostbite,
from inflammatory changes to necrosis. Changes of this kind did not develop in
control-rabbits subjected to single and repeated exposures to cold (at from -230C
to -50C). What is more, even when acute frostbite developed in the ear in which
local anemia had been induced, such pathological symptoms regularly failed to
manifest themselves in the other ear, which was exposed to the same low tempera-
ture without the blood-vessels being compressed. Thus our findings bring out
with the utmost clarity the enormous significance of local circulatory disturb-
ances in the mechanism of the development of frostbite under the action of low
temperature. In our case these disturbances are shown to be an essential con-
dition for the development of frostbite in rabbits' ears.
As may be seen from comparison of groups I, II, and III of the tests,
the basic factor here is the restricting or lessening of the' flow of blood
through the arteries; the type of tissues used in our tests is thereby rendered
particularly sensitive to the action of cold. A single exposure at a very low
temperature (from -20 to -17?0, or repeated exposures at less severe tempera-
tures (-10, -8, and even -500) will cause an anemic ear gradually to develop
acute and for the most part irreversible changes; acute cyanosis, edema,
blisters (ranging from small ones to blisters covering a considerable portion
of the ear), ulceration, necrosis, and demarcation. In the second case it was
noticeable that certain of these changes, particularly the edematous symptoms
(as observed in our control-animals with constricted arteries but not exposed
to general cooling) were distinguished by a much less intensity and compara-
tively rapid reversibility. This was particularly evident in the ears sub-
jected to a 24-hour constriction, where, 48 hours after taking off the pressure
on the artery, we could satisfy ourselves that there were symptoms of regenera-
tion, that the arteries were open,. that there was no necrosis, and so forth.
Thus the development of frostbite looks to us, not as if it was an
outcome of the direct action of cold on the tissues, but as if it was primarily
a consequence of a circulatory derangement which develops in the affected part
and lowers the resistance of the tissues. From this point of view, such agents
as dampness, very cold objects (which according to our findings hasten 'the r
development of frostbite) seem to cause their effects mainly by bringing about
either a direct or a reflex constriction of the blood-vessels, under which
circumstances the tissues become especially sensitive to the action of cold.
Our attention was particularly drawn to the sharp local decrease
which took place, during the time the rabbits were out in the cold, in the
temperature of the ear with the artery compressed, while the general body-
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temperature (as measured in the rectum) remained normal (38,5 to 400C) and
fluctuated within very small limits in any one rabbit (0.50C). Without denying
the great significance of the general condition of the organism in the incidence,
development and course of frostbite, we desire only to emphasize once more the
importance of the condition (or more properly speaking, the disturbed condition)
of the local blood-circulation in the selective involvement of various parts of
the body. This agrees very well with every-day clinical observations, particu-
larly instances of the frequency of involvement of certain parts of the body
where conditions favor an above-normal hampering of the local circulation (for
instance, if shoes are tight). Consequently it is natural to suppose that
frostbite prophylaxis should be based on prevention of anemia in those parts of
the body which are most liable to disturbance of the peripheral blood-circula-
tion, and on eliminating mechanical hindrances to the blood supply and any
factors promoting direct or reflex spasm of the bloodvessels (for example, damp-
ness). These points should also be given due consideration in personnel selec-
tion (particularly in connection with work in the North); persons having a
tendency to peripheral spasm (here of course we should include those suffering
from endarteritis) should as far as possible not be accepted for work under con-
ditions of very low temperatures and humidity; in any case such persons should
protect themselves very carefully from frostbite.
In our second group of tests we in many instances did not obtain any
well-expressed frost-bite after the first exposure to cold (at a temperature of
-12?C, -100C and the like); it seemed to be characteristic that it took repeated
exposure under these circumstances to induce a distinct frostbite picture,
particularly when cooling and moistening of the ear were combined. We shall not
dwell here on the undoubtedly real individual peculiarities which exist in rab-
bits as far as susceptibility to frostbite is concerned (this is mostly a matter
of the speed of development of the process). We should merely like to remark
that the basic role in the gradual intensification of the symptoms after repeated
exposure (likewise protracted exposure) was, in these experiments, NOT played by
any specific sensitization to cold, but by a piling up of more and more layers of
newly injured tissues which developed as a consequence of the prolonged and com-
bined action of cold and lessened blood-circulation. The changes thus caused
undoubtedly proceed until they reach the stage of manifest frostbite. In this
connection we should also like to stress our observations re the formation of
"micro-blisters", which may be formed even before the development of a macro-
scopically distinguishable picture of tissue-damage,
1) Local derangements of the blood circulation play a leading part
in the pathogenesis of frostbite. A decrease in the blood-supply (local
anemia) markedly increases the susceptibility of the tissues to the action of
low temperatures and accelerates the development of frostbite in the regions in
question when they are exposed to cold. Venous congestion does not manifest
itself so strongly in the development of this process,
2) In the presence of local anemia, repeated and protracted ex-
posure to cold even at moderately low temperatures (even at -5? C) will lead
to the development of frostbite in ear-tissue. In this case a really active
part is played by the gradual piling up of symptoms (changes in the tissue-
structures and lumina of the blood vessels, edema of the tissues, "micro-
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blisters") which are macroscopically undetectable, particularly at first,
3) ..In the prophylaxis of frostbite special attention should be paid to
the elimination of factors which favor direct mechanical or secondarg7 reflex
constriction of the blood-vessels in the peripheral parts of the body. (especially
dampness), and also to'the consideration of means for maintaining an increased
peripheral circulation.
4) In a rabbit's ear, the combination of general cooling and local
anemia will reproduce the typical picture of frostbite (beginning with vascular
changes and ending with necrosis). The procedure we propose for inducing ex-
perimental frostbite is distinguished by its simplicity and in many ways it
establishes just the conditions which obtain when humans contract frostbite.
The procedure may therefore be used to obtain a fully valid model for experimental
work on frostbite problems (particularly those of prophylaxis, experimental
therapy, etc..). It may also be used, for producing frostbite in other. parts of
especially the extremities.
the body fbesides the ears
REFERENCES
1) Kriege, Virch. Arch., CXVI, 64, 1899.
2) Marchand, Hdb. alig. Pathologie von.Krehi-Marchand, Leipzig, CVIII, 1911.
3) Wieting, Zbl. Chirurgie, XVI, 593, 1913; LII, 1985, 1913-
.4) HEFDING, Coll. Reports of Russian Red Cross Soc. and of participants In the
Balkan campaign of 1912/13, SPB, 1914.
5) Zuckerkandl, Bruns. Beitr. 100, 594, 1916.
6) NBgelsbach, Muench. med. Wschr., 13, 352, 1919.
7) GIRGOLAV, Works of XXIVth Cong. of Surgeons,.Moscow-Leningrad, 1939.
8) ARYEV, Frostbite, Leningrad, 1940.
9) GOODMAN, Contribution to the Clinical Handling, Treatment and Prophy-
laxis of frostbite, Leningrad, 1938. (K Klinike, lecheniyu I profilak-
tike otmorozheniyi).
10) Lake, Lancet, 4911, 1917-
11) Sachs, quoted by GIRGOLAV.
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Translated from Ortopediya i Travmatologia 5rthopedics and Traumatology, bi-
monthly publication of People's Commissariat of Healtg, Vol.5-6,101-107,(1910)
CONTRIBUTION TO THE QUESTION OF
THE CLINICAL ASPECTS OF FROSTBITE.
Of the Ukrainian Central Institute of Traumatology
and Orthopedics in Kiev (Director, Docent G.F.
SKOSOGORENKO).
In the winter of 1939-40 in the dermatological ward of one of the
Leningrad Hospitals, we had the opportunity to keep track of the course of.
77 cases of frostbite of the extremities, of a light and medium nature. Ex-
cept for three or four cases, these were all ambulatory patients. The most
serious case bad third degree frostbite of all the toes of both feet, with
partial involvement of the heel.
As was clearly manifested in the exchange of opinions
at the sessions of the PIROGOV society in the spring
of 1940, not three but four degrees of frostbite should
be distinguished, characterized as follows:---
1) Erythema with subsequent peeling of the
epidermis.
2) Blisters with clear serous content,
resulting from the necrosis of the
whole corium-layer.
3) Dense superficial foci of necrosis,
,involving both the corium .ermaal and
a sub-dermal stratum, or sanguineous
blisters over which there are always
parts of a necrotic sub-dermal stratum
showing, of more or less depth.
4) Necrosis extending solidly throughout the
whole diameter of the digits or extremi-
ties and involving the bone, with sub-
sequent mummification and sloughing
thereof,
Our 77 men had frostbite classed as follows: first degree, 1%;
second degree, 36%; third degree, 55%; fourth degree, 8%.
There was another form of the action of cold which we happened to
encounter in the neurological ward of the hospital. Here, as surgeon-
consultant, I was brought in for consultation on cases (51 in all) where
trauma of the spine was suspected.
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In 20 of these cases the roentegenogram confirmed the existence of
trauma. As for the other 31, they formed a group very uniform in anamnesis,
symptoms, and clinical course, and we shall describe them in some detail.
In the anamnesis of all this group (31 men.) there was general ex-
posure to cold, as a result of lying for some hours on snow, ice or in cold
water at an atmospheric temperature below zero. In 19 cases the patients
had lain thus in an unconscious condition after shell-blast concussion, and
in addition had often.been deluged with frozen earth by the explosion, In
the other 12 cases a prone position had been necessitated by the proximity of
the enemy and by continuous fire. Subsequently the patients, most often im-
mediately after recovering consciousness but sometimes on the following morn-
ing, developed such intense pain in the lumbar region that they became in
capable of moving or even of turning over, and were sent to rear hospitals,
including ours.
We carried out a fact-finding study of these cases with great. care.
Some of the patients in this group presented a picture of intense
subjective suffering. In one case it required the most attentive and repeated
X-ray studies of the spine, the whole thorax and the pelvis before we were
able to exclude confidently the possibility of bone-trauma.
Objectively speaking, the general condition of these patients showed
little upset., the temperature was as a rule normal (subfebrile for a few
days in only two cases); the pulse was not accelerated, regular, and of good
volume., the tongue was pink, not coated, moist.
The X-ray showed nothing wrong.
Blood tests., - Sedimentation rate usually in the lower brackets
(not higher than 10)0 Erythrocyte count, hemoglobin percentage and color in-
dex within normal limits. There was usually leucopenia, 31 - 4,- 5 thousand
leucocytes per cu. cm., never over 6 thousand. No displacement of the
leucocytic O&net2h count was observed, or if it was observed it was not
very marked, and rather in the sense of an absence of immature and rod-shaped
forms, i.e. a shift to the right.
In the urine we almost regularly observed a small amount of
erythrocytes, either faded or unmodified (23 cases); there were usually two
or three in the field of vision, and in one case 20-30 (patient S., case
history No. 886).
In neurological tests no deviation from normal was detected; this
compelled the neuropathologist to turn in each case to the surgeon. However,
Las8gue's Sign was very often in evidence on both sides, but, as is known,
it loses its pathognomonic significance in such cases.
lively.
ing., -
The tendon reflexes, and the abdominal and cremasteric reflexes were
No pathological reflexes.
The clinical picture in almost all the cases amounted to the follow-
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The patient maintains a constrained, rigid position of the torso,
and walks by himself with difficulty, cautiously bending and straightening
the legs, hunched over and rolling from side to side like a sailor on deck
in a heavy swell.
The mobility of the spine is more or less limited.
The patient is unable to bend forward or straighten up. Side-wise
movements of the spine are for the most part relatively free, but they are
not infrequently accompanied by a feeling of pain on the side opposite to the
direction of inclination: when bending to the right the pain appears in the
left half of the lumbar region and vice versa.
Pasternak?s Symptom is usually positive on both sides.
No visible deformations are apparent as far as the spine or other
parts of the osseovascular system are concerned.
On palpation, our attention was drawn to the tenseness and tender-
ness of both the longissimi dorsi. Sometimes (in three cases) this was so
intense that the patient literally would not allow himself to be touched,
and if touched, it provoked a violent uncoordinated motor reaction of all
the muscles of the body. Sometimes the tenderness was more acutely in
evidence on one side of the lumbar region than on the other, and in this case
the more tender of the longissimi dorsi seemed to be somewhat increased in
bulk as compared to'the other.
Less acute tenderness was also observed in the mm. gastrocnemii, the
adductores femoris, the flexor and extensor groups of the thigh, and on per-
cussion of the sacrum and particularly over the articulations of the sacrum
with the fifth ff-umba7 vertebra and over the sacro-iliac joints (about 70%
of all cases).
More rarely pain was observed on pressing the joints and bones,
particularly in the region of the knee and ankle joints, along the whole
length of the tibia and the lower metaphysis of the femur.
The muscular pains were sometimes associated with markedly evident
muscular contractions causing flexion (to as much as 900) in the hip and knee
joints (5 cases).
The third sign (next to the voluntary splinting and pains) was of
a general nature; we were able to satisfy ourselves of its existence in the
whole of this group without exception. This was an acute intensification
of the mechanical excitability of the muscles. The muscles responded with
a sharp contraction to even a light tap with the fingers. Not all the muscles
reacted in this manner, but only those affected. Most frequently these were
the longissimi dorsi. Then followed in order of diminishing frequency the
muscles of the calf, the flexor group of the thigh, the m. quadriceps femoris,
the adductores femoris, the gluteal muscles, m. latissimus dorsi (2 cases)
and mm. recti abdominis (2 cases), In one marked case nearly all the muscles
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of the body, except the small muscles of the face and hand, gave a picture
of acutely intensified mechanical excitability.
In two cases the men had spent some hours lying on their stomachs.
in cold shallow water.
In their cases the excitability and tenseness of the recti ab-
dominis muscles was so acutely in evidence that it was not a simple task
ans of the dsfense museulaire in
for the surgeon to differentiate them YbD. me
the ventral region 5bdominal refle
Thus the three main clinical signs in this group of patients were
the following:---
1. A decrease in the limit of extensibility of certain trans-
verse muscles, because of pain in them when stretched; almost a spastic con-
dition. This muscular condition resulted in a constrained attitude of the
torso, Las6gue?s Sign, and contractures. When the m. quadriceps femoris was
involved (5 cases), we noticed the following indicative symptom: with the
patient lying on his stomach and the leg bent (by the physician) at the knee-
joint, the hip-joint of the same limb would also bend; this region, that is,
the corresponding half of the pelvis, would noticeably lift., with the lumbar
part of the spine forming a lordosis. This becomes understandable when we
remember that the quadriceps femoris is a muscle which spans two joints and
it could protect itself from painful overextension only by bending'the hip
joint.
palpation.
2. Tenderness in certain muscles upon pressure, percussion, and
3. Heightened mechanical excitability of the muscles.
In the cases described we undoubtedly had to do with acute mus-
cular lumbago or acute "fibromyositis", as Prof. ASTVAOSATUROV has recently
been proposing that it should be called. But a diagnosis 'of "lumbago" Or
"fibromyositis" gave no real idea of the nature of the ailment nor of. its
etiology; it did nothing to explain the causes of the pa1J Hence it satis-
fied neither myself nor the neuropathologists of the hospital. We decided
to set our course by the anamnesis of these cases: we began to look upon the
whole symptom-complex of this group of 31 patients as a direct effect of an
acute general cooling of the organism.
In our repeated and persistent examinations, the patients themselves
declared with complete conviction "I simply got a bad chill."
As everyone knows, "chills" at the present time are not regarded
as an independent nosological entity. The majority of authors do not even
ascribe an etiological significance to them in lumbago (SCHMIDT and ERBEN,
EROLV, MARGOULIS and PROPPER, WEINHARDT et alil). Prof. ZAEHARCHEI~SQ.in his
course on the nervous diseases makes no mention whatever of lumbago, nor of
myalgias in general. An in exactly the same manner he leaves no place for
the effect of cold in the etiology of the neuralgias. ASTVACSATUROV,
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SHAMBUROV et alai see in myalgias, especially lumbar myalgias, a group of
ailments of quite diverse type, of which the so-called "fibromyositis" is
merely-one. This fibromyositis is most often the result of infection or
trauma; as far as cold is concerned, it has significance only as a kind of
"predisposing" factor.
"The etiology of the myalgias," writes ASTV'ACSATUR?V "has not been
fully explained and may be dissimilar in the various cases which have been
included in this group. The most important role must, it seems, be ascribed
to the effect of low temperatures, particularly in combination with dampness
and auto-intoxications."
SHAMBUROV says that the severe chill often mentioned by the patients
as having preceded their illness must be regarded as a predisposing phenomenon,
assisting the action of toxins and infections. However the possibility is
not excluded that overcooling of the muscles, by disturbing the blood circula-
tion and metabolism in them, may cause the muscular pains.
MMSCHEL observed a complex of reversible phenomena in human muscle
which he called "cold numbness"; these phenomena were pain, hardening of the
muscle, reduction of its working efficiency, and change in its electrical
excitability.
However, we are still unable to explain certaih,-,feats; if over-cooling
may provoke a whole series of local autonomiem derangements in the extremities,
why then should similar derangements not appear in the muscles and other
tissues of the body as a result of exposure to low temperatures? And if over-
heating is capable of producing a general pathological condition, known to
us under the name of "heat stroke", then why should some king of similar con-
dition not be produced by such a powerful agent as overcooling?
On the basis of this reasoning, I began to give, in the cases of the
above mentioned group of patients, such diagnoses as "general overcooling
of the organism (pernio communis)" or "myalgia of such-and-such muscles (as
enumerated) as a result of general overcooling" or more simply "a myalgic
(muscular, osseomuscular) form of overcooling."
I diagnosed the whole group of 31 men in this way, and the neuro-
pathologists of the hospital were on the whole disposed to agree with my
thesis.
What was new in this was not only the term "pernio communis" but
the idea that the observed myalgias should be regarded as the direct, noso-
logically specific effect of overcooling, whereas the majority. of con-
temporary authors, it seems to me, are inclined to underrate the effect of
cold, giving it at the most the role of a predisposing factor. Under peace-
time conditions it is only very rarely that victims of overcooling come to
the clinic during the first few days of their illness; usually they are all
classed under the usual diagnosis at "lumbago."
The 31 patients with "overcooling of nnralgic form" like all our
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other patients were admitted to our hospital on the third to. sixth day after
the start of their illness, with fully developed symptoms. Their treatment
lasted from 5 to 22 days, after which they were evacuated, almost without ex-
ception either much improved or nearly restored to normal. Treatment con-
sisted of water baths (in some cases only), sun-bathing and quartz-lamp ir-
radiation (in 100% of the cases), and d'Arsonvalization applied to, the lumbar
region (about 50% of the cases).
Meanwhile my attention was drawn to the surprising fact that among
the first and second groups of patients suffering from the effects of cold,
there were no cases of mixed or transitional form. Whereas In the first
group (77 patients) we had to do with frostbite of surgical form, that is,
with cases of limited local areas of necrosis, no myalgias were found among
them. In the second group on the contrary (31 cases) we were faced with
myalgias exclusively and found no necrotic areas.
This incompatibility of the necrotic and myalgic forms of overcool-
ing was an outstanding fact.
To test this out, I made another systematic examination of both
groups on the 5th of Tenuary 1940. It revealed the following points.
In the first group of 77 men with second, third and fourth degree
frostbite, only four of them (case-histories #81, #157, #123, #138) com-
plained of slight, ill-defined pains in the lumbar region and the calf-
muscles. These pains were so insignificant that except for my direct
questioning the patient would not have mentioned them. Sometimes they were
accompanied by nocturnal cramps in the calf muscles. In no case were ob-
jective pathological symptoms discovered as far as the muscles were con-
cerned. The mechanical excitability of the muscles was not intensified.
The leucocyte count in the four cases was between 8200 (patient A., case-'
history #138) and 11,600 (patient K., case-history #157). Sedimentation
rate, leucocytic (Arneth) count and urine showed no deviations from normal.
Las6gue's and Pasternak's Signs were absent.
In the second --- the myalgic --- group (31 men), only one had
shown traces of first degree frostbite in both feet (blanching and an in-
considerable amount of swelling of the toes, which had disappeared by the
time of my examination --- Tan. 5th.)
This patient (K., case-history #619) had been knocked out by blast
on the 28th of December and had lain for some hours unconscious in the snow.
In the anamnesis there was chronic rheumatic polyarthritis with recurrent
exacerbations, for one of which he had already been hospitalized for one
period of two months. On January 5th 1940 his temperature and blood and
urine data were within normal limits. He complained of pain in the lumbar
region, pains in the thigh-bones when walking, and more strongly still in
the bones of the calf and the knee and ankle joints on both. sides, with
which however there was nothing objectively wrong. Upon palpation there
was pain and intensified muscular excitability in the longissimi dorsi., the'
knee-flexors and calf-muscles on both sides. Pasternak's Symptom -, -;
Lasegue's Sign -, -. He walked with difficulty. Under heat-treatment-and
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quartz-lamp irradiation of the lumbar area, be gradually recovered during a
period of two weeks from the time he was affected.
Three other patients of this, (second) group complained of pains in
the digits of the hands and feet, of a "pernio" nature.
It should be mentioned that about 20% of the patients of the second
(myalgic) group had different forms of "rheumatism" in the anamnesis, which
perhaps. had.. sensitized them to cold.
Thus my repeated examination of both groups left no doubt that the
myalgic and necrotic forms of overcooling are incompatible in one and the
same patient. We saw either patients with surgical frostbite or patients
with myalgias, but never with the two together. In conversations with surgeons
of other hospitals I obtained confirmation of this fact. They could not re-
member a single case of even the more serious forms of frostbite where the
patient complained of muscular pains.
I have found no mention of this fact in any of the literature
available to me.
So far, we are unable to explain this curcumstance. It may be that
the way each Individual was protected or unprotected against the cold has
something to do with it. that is, how he was clothed. In those cases where
the extremities were well shielded-from the cold, a general over-cooling of
the whole organism took place first and produced the myalgic type of involve-
ment. If the extremities were poorly protected, they suffered necrotic
injuries before general over-cooling had time to occur and brought the patient
into hospital with only frostbite of the surgical type. Yet on the other
hand I know of cases of very grave fourth degree frostbite of the extremities,
where inevitably a general over-cooling of the body must have developed, but
nevertheless myalgia did not appear.
We may perhaps imagine that the presence of necrotic foci in
patients of the nerve*group could act to suppress muscular pains and con-
tractures in the same manner as we have seen in the work of Docent G.F.
SKOSOGORENMO (Kiev Orthopedic Institute).
1. Apparently the known surgical form of frostbite is not the sole
direct effect of the action of cold on the human organism. In addition it is
necessary to distinguish at least one other form of cold-action, namely the
myalgic form. We should distinguish the form characterized by local action
("otmorozheniye" --- frostbite) from the form characterized by general
action ("obmorozheniye" --- congelation); we must distinguish the surgical
form from the neurological form; the necrotic form from the myalgic form.
Incidentally the second (the myalgic) form is just as much the direct effect
of the pathogenic agent (cold) as is the necrotic form.
We say this, not as an assertion, but as a hypothesis.
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2. If we accept this hypothesis as a guide, then we may well pay
heed to the newly discovered fact, hitherto not mentioned in scientific litera-
ture and for the present inexplicable,.of the incompatibility of both forms
of cooling in one and the same patient. This fact is of the nature of a general
rule, which is clearly evident in group-studies of patients in different wards,
mainly the surgical and neurological.
3. If the assumption of the possible existence of a specific myalgic
form of overcooling is not mistaken, then it should have its own nosological
designation. We suggest that it be called "pernio communis" or "cryomyalgia",
since the old names "lumbago" or "fibromyositis" have no etiological reference.
We have to date been unable to discover any other more adequate term.
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Translated from Klinicheskaya Medicsina (organ of the Commissariat of Health)
Vol. XXII, 25-31 (1944).
FROSTBITE CLINICAL DATA AND TREATMENT
A. P. KIYASHEV
Mil. Surgeon Grade II
Of the N- - - - - Military Hospital (Director M.A.
KOLESNIKOV, Mil. Surgeon Grade l.)
According to the findings at PIROGOV, LARREY, SCHADE, KUPRIANOV at
al., frostbite cases account for a considerable percentage of the sick and
wounded, both in forces in action and on the march; they occupy an important
place in the picture of military field surgery and for that reason regularly
attract the attention of research workers.
In the Soviet Union, work on this problem is being done by Academi-
cian N.N.BURDENKO (1), A.V.VISBNEVSKI (2), LEVIT (3), FRENKEL (4), GOL'DMAN
and LUBO (5) at al.; the leading place in the study of frostbite is held by
that most deserving and active scientific worker S.S.GIRGOLAV (6) and his
pupils ARYEV t7), SHEINIS (8), GAMOV (9) at al. The researches of GIRGOLAV
and his school in this field have yielded much that is new in the patho-
genesis, clinical handling and treatment of frostbite. Under the conditions
of the Great Fatherland War the immediate importance of the question has
grown: proper acquaintance therewith and proper attention thereto is demanded
of all surgeons in the battle area and in rear establishments.
We have been carrying out studies on groups of patients suffering
from the effects of exposure to cold under severe winter conditions.
30 years.
All our patients were men, of ages for the most part between 20 and
The extent of the involvement, according to the ARYEV-GIRGOLAV
classification, was as follows:- first degree. frostbite 3.8$, second degree
frostbite 39.6%, third degree frostbite 31.9%, and fourth degree frostbite
24.7%. The percentage of first degree frostbite cases was in reality much
larger, but they were treated as ambulatory patients, and only those were
sent to us who had deep-lying frostbite of the tissues, he. second, third
and fourth degree cases; only occasionally those of the first degree. Of
the patients, 1.6% were admitted within the first 24 hours after being af-
fected, 73.6% during the second 24 hours or later.
The clinical picture of frostbite is the end result a number of
etiological and pathogenic factors of sometimes very diverse nature, and it
is always.highly polymorphic. Of the various systems at frostbite classifi-
cation, the best is that of ARYEV and GIRGOLAV.. This classification dis-
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tinguishes four degrees of frostbite. In our everyday practical work we have
been using this classification systematically; we found it to be correctly
oriented. as far as diagnostic requirements were concerned.
Most frequently frostbitten were the toes and the feet, with the
right side of the body considerably more often affected than the left. The
inequality of the involvement as between the two feet may be explained by in-
equality of size in footwear 3E Our attention was also drawn to the comparative
frequency of frostbite of the ears; here the involvement was total, usually
of the second degree, and was usually suffered while going around without a
helmet-liner. Involvements of the cheeks and nose were considerably more
than our figures show, but these cases very seldom came to us. These cheek
and nose involvements were for the most part localized, with first and second
degree frostbite predominating. Finally there was one case which was in-
teresting because of its site, namely a second degree frostbite of the ab-
dominal wall. In this case the frostbite was contracted as a result of being
obliged to stay in an immobile position on an open auto-vehicle in motion-.
Among the initial clinical symptoms, mention should be made of pain,
which in 30.8% of our patients developed during the first 24 hours, in 10.45%
on the second day, in 4.9% on the third day, and in 3.3% on the fourth day.
The absence of pain in the remaining cases may be explained by the early ap-
pearance of trophoneurogenic symptoms, a circumstance which doubtless promoted
the development of frostbite in the deeper-lying areas and tissues. In 47.8%
of the patients, pain was absent during the first five days. Marked pallor
of the frostbitten portions during the first 24 hours was noticed only in
19.25%; in the remaining 80.75% this early pathognomonic symptom was not seen.
Cyanosis and rubor of the frostbitten members was seen during the first 24
hours in 17.6% and during the second 24 hours in 23.1%. The frostbitten
members were observed to turn dark or blue or black during the first 24 hours
in 1.1% of the cases, on the second day in 10.45%, on the third day in 4.4%.
on the fourth day in 6%,-and on the fifth day in 3.3%. Pronounced edema was
observed on the second day in 53.9%. The figures reveal that in-the majority
of cases the sufferers did not notice the early symptoms of frostbite. Dis-
appearance of the edema took place at some time between the first to the
twenty-fifth day. With persons in a good state of nutrition the swelling
vanished considerably sooner than in those with pronounced symptoms of de-
ficient nutrition and bypovitaminosis. In the former the symptoms usually
disappeared in the first five days, while in the latter they subsided more
slowly and disappeared toward the end of the second or third ten-day period.
Blisters, according to our findings, most frequently appear during the first
24 hours; more rarely on the second or third day. A heightened temperature
was noted in 39.6% of our patients, an acceleration of the erythrocyte sedi-
mentation rate in 7.4%, leucocytosis in 22%, and a displacement of the
leucocytic grnety count to the left in 20.9%. The infrequent occurrence of
heightened temperatures and the leucocytic alteration in frostbite is apparently
not pathognomonic of the damage itself; rather.it indicates infective com-
plications therein. Indicative signs accompanying frostbite were, in our
patients, as follows:- In the second and third degree cases, a lowering of
the skin sensitivity in 37.4%; in third and fourth degree patients, the loss
That is, when there is an unequal involvement of the two feet in the same person, it can usually
be explained by the fact that one of his shoes was too tight. (Tr..)
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of every form of sensation was noted in 21x..2%. In numerous cases zones of
hyperesthesia were observed. Laryngitis and bronchitis were seen in 26%; they
took a relatively mild course and usually disappeared in five to seven days
time. Among the complications shown in our data we should mention 1.65%
of general infection and 17.6% of local purulent infection. The cases with
general infection followed a course of the moist gangrene type, and an ex-
tremely severe one; with shiverin fits, high temperature, leucocytosis and
displacement of the leucocytic Arnet7 count to the left; here both palli-
ative surgical intervention and radical operative treatment were necessary.
Local infection was observed as a complication in 17.6% of our patients and
took the form of phlegmons, phlebitis, purulent arthritis, lymphangitis, etc.,
accompanied not infrequently by high temperatures and requiring supplementary
surgical treatment.
The X-ray showed no gross bone-changes in particular; in certain
patients with the more serious involvements a non-acute osteoporosis was
observed in the region of the metacarpo-phalangeal joints, (as also noted
by BYKOV, GOL?DMAN, LUBO, ARYEV et al.) Degenerative destructive changes in
the phalanges were according to our findings noted in 9.7% of the patients.
These changes were detected in cases which took a grave clinical course,
during the sixth to seventh week after the frostbite was contracted. Changes
in the joint-cartilage were not observed. X-ray findings in frostbite do
not bear any close relation to the seriousness of the clinical picture and
are of only secondary assistance in diagnosing involvements of this type.
The treatment of frostbite is quite a complicated task; it varies
according to the degree and stage of the involvement. No single method of
treatment exists at present, but insofar as frostbite is accompanied by
necrosis, degeneration and inflammation of the tissues, one must strive to con-
vert moist gangrene into dry, and to promote the most rapid sloughing of the
necrosis and development of granulation and epithelialization. The polymorphism
of the clinical picture and the lack of clarity in the etiology and pathogenesis
of frostbite have led to the working out of numerous methods of treating it,
but there is no method which can completely satisfy all clinical requirements
or be employed under all circumstances.
Among the therapeutic measures used for this type of injury it is
necessary to distinguish between first aid and subsequent treatment.
First aid in frostbite has a very real importance for the further
course of the ailment. Until the stage of reactive inflammation develops,
three aims are usually pursued;- (1) re-warming of the whole body, (2) over-
coming ischemia, and (3) the prevention of secondary infection. The suf-
ferer is placed in a warm room and given hot drink (sweetened tea), alcohol,
hot food, and symptomatic medication as indicated. The fear of putting the
frostbitten patient right away into a warm room has no foundation whatever and,
as the researches of GIRGOLAV and ARYEV have shown (I0), is even a dangerous
and harmful notion. Indeed the most effective procedure is the speedy re-
warming of the frostbitten parts of the body with the aid of warm water baths
or physiotherapeutic procedures, plus sterilizing the skin with alcohol,
benzine or brilliant green, raising the affected extremities, and the repeated
use of massage.
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In the case of the head and face, re-warming and re-establishment of
circulation are secured by rubbing the affected areas with cotton wool moistened
in alcohol, or by dry rubbing if alcohol is unavailable, until erythema is pro-
duced. The earliest possible application of heat, as recommended by ARYEV and
GIRGOLAV, is undoubtedly an effective measure in frostbite; its superiority as
compared with other methods has been demonstrated both experimentally and
clinically. It is now incontestable that among the various therapeutic measures
used in frostbite first aids we must replace the use of cold by the use of
heat. (Rubbing with snow has no advantages over the use of heat; the snow is
usually contaminated, the fine ice particles found in it may scarify, and so
forth). The prompt application of heat is a method which should be brought into
the widest possible use both in first aid and in subsequent treatment of this
ailment. As FR NK 2 points out, if proper results are to be obtained after
warming up frostbite cases, the fundamental idea is not just general heating
but getting the affected tissues heated through. Measures for this purpose take
the form of warm water immersion and various physiotherapeutic procedures.
According to the "Instructions re Military Field Surge " /UKAZANIYA PO VOEI O-
POLEVOI KHIREJRGIYI of the Medical Corps Directorate LAVNOYE VOENN0-SANITARNOYE
UPRAVLENIYEJ for 1941, when there is frostbite of the extremities the temperature
of the bath should be raised from 18 to 350C over a period of 20 to 30 minutes.
In addition to the warming effect, water-baths are used as a means of mechanical-
ly cleansing dirt from the limbs, hence the immersion of arms and legs should be
accompanied by washing with soap. During the washing and after, the frostbitten
limbs should be massaged. This massage should be gentle, a stroking of the
limbs and a mild kneading of the skin and underlying tissues; the masseur should
direct his motions from peripheral areas toward the central parts of the body.
Massage while in the bath and afterwards should be done with a thick sterile
rubber glove or with clean washed hands, so as,not to introduce infection from
the hands of the masseur. The patient should be told to keep actively moving
his fingers or toes in the bath. After bathing, 70? alcohol is applied twice
in succession. Then the massage is repeated, preferably with the masseur's
hand in a sterile rubber glove liberally greased with sterile vaseline. The
time to halt the massage is determined by signs of restored circulation. Mas-
sage should be applied not only to the frostbitten area but to the whole limb.
If water-baths or physiotherapeutic procedures cannot be used, one should employ
massage and frictions first with alcohol and then dry, and use should be made
of all means for the general re-warming of the patient.
In the stage of inflammatory reaction, first aid should be directed
principally toward preventing the development of infection in the frostbitten
areas, toward the treatment of any infection already developed, and toward
promoting the speediest elimination of necrotic tissues. After the restora-
tion of the circulation and the appearance of edema, we wipe the injured
members with alcohol and apply a dry aseptic dressing. The member is re-
warmed and wrapped up, and the patient forwarded in this state to hospital for
treatment. All types of moist dressing are contra-indicated. This is as far
as first aid measures may go.. Further procedure and treatment for those suf-
fering from the effects of cold will vary according to the stage and degree
of the involvement. The treatment of first degree cases usually involves
processing the affected areas of the skin with a 5% alcohol solution of bril-
liant green, 5% tannic acid or boric solution in alcohol,3E and other such.
~t Literally "tannic or boric alcohol". .See; ase._Os ev~aatp~ry ender "Tannic- Acid" and ?"Boric Acid;"' (Tr O
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means, with simultaneous use of physiotherapeutic methods. In treating second
and third degree frostbite the blisters must be removed, after which the
energetic us_e of physiotherapy is necessary. Upon opening the blisters one
should apply tannic acid solution.
In. frostbite of the feet and hands, our procedure is to treat the whole
member repeatedly with alcohol and to remove the nails. We scarify the necrotic
areas, using incisions parallel to the axis of the member (of greater or less
depth according to the penetration of the necrosis) and in the direction of the
center of the body.
In third degree frostbite the beds of the nails should be incised
to the bone, and in especially grave cases deep incisions are made in the
interdigital webs to the tips of the metatarsal bones, and the ligaments
and skin of the sole are cut.
Necrotic tissue should be incised through the whole thickness of
the foot, but in doing so one must leave. an unincised area of dead tissue ex-
tending to a distance of one centimeter from the demarcation zone. One may
gauge the correct extent of this procedure, first of all by the complete pain-
lessness of the operation, which may be done without anaesthesia, and second,
by the,absence of any flow of blood when making the incisions, Further treat-
ment of frostbite is most profitably carried out by "open" methods 5.e. un-
bandaged under a hood. When it is impossible to use open methods, use an
aseptic dressing with alcohol, applied after swabbing as indicated, or if
alcohol is not available, use an aseptic dry dressing. Ointment dressings
should not be used during this phase of the treatment; they should be used only
after the development of granulations (MIKULICZ's or VISHNEVSKI?s ointment).
However these ointments should be employed only at the consolidation stage' of .
granulation; subsequently one should change to a bland ointment, along with
which moist aseptic dressings (hypertonic salt solution) are periodically
applied. These dressings, as our observations have shown, promote sloughing of
the necrotic areas, inhibit excessive growth of the granulation tissue, con-
solidate the granulation and accelerate the process of epithelialization, In
fourth degree frostbite (where there is complete necrosis of the soft tissues
and bones) it is essential to remove the necrotic tissues as early as possible
(necrotomy, necroectomy) a little distal to the demarcation-line.
Immediate amputation in frostbite cases is strictly contra-indicated,
since in many cases the formation of a base-stump has been observed to take
place at points vhich one could hardly have expected from initial examination.
However, if demarcation takes place along the diaphysis of the bone, then, as
ARYEV's researches and our own researches have shown, spontaneous separation of
the necrotic portions proceeds extremely slowly (on the phalanges it may not
occur for 3 - 5 months). Hence what is to be done is to carry out the correct
early processing, which in frostbite consists in prompt scarification, the
liberal incising of necrotic tissues, excision and debridement of the necrotized
area (so as to leave a small layer of necrotic tissue on the distal site of the
demarcation-line. In the early procedures, the bones should never be cut back.
Working on the bones 'would entail operating.on the living tissues, which is
contrary to the principles on which our early treatment regimen is based and
would create conditions favoring the spread of infection. (Operative) inter-
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vention of any .kind should be carried out on the necrotic tissues; it does
not require anaesthesia and is not accompanied by flow of blood.
In the opinion of ARXEV and GAMOV, early operative procedures
should be carried out just as soon as it can be indubitably determined that
the changes in the frostbitten areas are irreversible. From our observations
and from data in the literature, it may be stated that this takes two to five
days. The absence of superficial or deep sensation, the absence of blood-
flow upon making incisions or pricking, and the development of symptoms of
reactive inflammation above the demarcation line are (according to GIRGOLAV
and GAMOV) indicative of the need for surgical measures. In amputation the
aim should be to create, in the shortest space of time, base-stumps suitable
for prosthesis.
GAMOV considers that the indications for final amputation are the
formation of scab on the wound-surface of the stump, firm granulation on this
surface, or dry gangrene (the mummification of the frostbitten portion with
formation of a distinct demarcation groove). Amputation, particularly osseo-
plastic amputation, should not be carried out in the presence of well-expressed
symptoms of inflammatory reaction above the demarcation-line.
The treatment of infective complications in frostbite is carried out
according to the usual rules. Phlegmons are opened and drained. When there
are isolated suppurative arthritides, arthrotomy is used: when there are
multiple suppurative arthritides of the interphalangeal articulations, it is
in ARYEP?s opinion better to wait for spontaneous discharge because of the
difficulty in establishing local indications for multiple arthrotomy.
In treating third and fourth degree frostbite, our experience has
shown that one should from the very beginning pay proper attention to re-
storative exercise and therapeutic physical exercise (which have a very
beneficial effect on the cardio-vascular and nervous systems and prevent the
development of joints stiffened by contractures), also proper attention should
be devoted to electrotherapy in its various forms, and to ultra-high frequency
therapy (YANOSHEVSKAYA).
When there is anemia in cases of this type, repeated blood trans-
fusions should be used. BRAICSEV and RA.BINOVICH?s suggestion of repeated in-
jections of 10-15 cm3 of 20% alcohol in frostbite cases in the war area is a
well-grounded idea of which a more extensive use could be made. A.V.VISENEVSKI?s
method of non-specific treatment (novocaine block and nerve-sheath blocking),,
which we have used on a number of our patients, gave positive therapeutic
results. The patients usually reported decreased pain and improved sleep, and
in the affected extremities one could observe increased warmth, hyperemia and
an improved circulation of the blood. Academician N.N.BURDENKO also devotes
a good deal of attention to the neurotrophic apparatus in the pathogenesis of
frostbite; he arrives at the conclusion that blocking of the reflex paths
is of use during the first period of the injurious action of low temperature.
As we see it, other means which have been suggested for frostbite treatment,
fish oil (SHEINIS, ZHDANOV), tannin-mercuric-chloride bandages (KHASKELEVICH,
VASIL?KOVAN), Liigol?s solution (PUMPIANSKI), formalin-carbolic solution
(POPKOV), have a reasonable theoretical basis and need further trial.
* see page 26 (Tr;).
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In all cases cf frostbite of the lower extremities it is essential to give a
prophylactic injection of anti-tetanus serum, 1500 units in amount,
In the matter of indications for the operative treatment of frostbite
we have generally adhered to the dicta CC GIRGOLAV, ARYEV, and GAMOV; in a
number of cases we were guided by the neurotrophic concept and carried out
RAZUMOVSKI's operation. We practised blister-removal in 53.9% of the cases,
removal of nails in 42.3%, NOSSKE-type incising in 26.9%, amputation and ex-
articulation of the digits in 20,9%, amputation of the extremities in 1.1%,
incising on account of infective suppuration in 25.3%, RAZUMOVSKI's operation
in 7.1%, and skin-grafting in 11.5%. Outcome of the treatment was as follows:-
improvement noted in 12.1%, recovery in 78.1%,, discharged on furlough, 2.2%,
classed as "fit, with limitations" 3.3%, classed as "incapacitated" 3,8%,
died 0$55%.; The average number of bed-days was 49.4,
The high-percentages of recovery and improvement (90.2) and the
relatively low bed-day average we may explain by the fact that we used an
active program of combined treatments, extending even to attempts to in-
fluence the sympathetic nervous system directly. Patients discharged on
?edical~furlough were generally cases in which the injured tissues were
in process of regeneration, but in which there remained the familiar debility
of the cardiovascular system, anemia, etc,; all these patients without exception
later returned to their former duties. In the group classed as "of limited
fitness" were those whose condition was generally satisfactory and in whom the
local process had terminated, but who showed the familiar locomotor difficulties
(for the most part in the foot and toes), Patients were put in the "incapacitated"
group and dropped from the Zervic,7 rolls if they had undergone necrotomy or
necroectomy, or after amputation necessitated by the development of moist gangrene
and sepsis. One of our patients had fourth degree frostbite of both lower and
upper limbs with subsequent development of moist gangrene and sepsis; he died,
in spite of symptomatic and operative measures taken in good time. The fourth
degree frostbite in this case was contracted in a state of alcoholic intoxication
and extended not only to the hands and feet but to the shins and fore-arms also;
the involvement was exceedingly grave.
Apropos of frostbite prophylaxis, the "instructions re Military
Field Surgery" of the Medical Corps Directorate of the Red Army demand that
the wounded, particularly stretcher cases, should be safeguarded by chemical
heating devices; particular attention should be paid to warming the affected
extremities,
In the prophylaxis of frostbite great importance is to be attached
to the moderate use of alcohol for general warming of the body, to keeping the
body in movement in cold weather, to good footwear and clothing which will give
protection against getting the limbs wet and chilled, and to regular meals of
quantitatively and qualitatively adequate food,
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I) BURDENKO, Khirurgia (Surgery), Noa5 - 6, page 3, 1942,
2) VISHNEVSKI, A.V., Znacheniye nervnogo faktora v nespecsificheskoi terapii (Significance of the
nervous factor In non-specific therapy), Khirurgia (Surgery), Nos. 11-12, p,21-28, 1942.
3) LEVIT, Voenno-sanitarnoye Delo (Med. Corps Affairs) No.10, p.13, 1941.
4) FRENKEL, Sov, Med, Nose 23-24, p,19, 1941,
5) GOODMAN, O.G. and LUBO, V,K,, K klinike, lecheniyu I profilaktike otmorozheniyi, vol. 1,
Leningrad, 1938.
6) GIRGOLAV, Tr, XXIV All-union Cong. of Surgeons, Moscow-Leningrad, 1939.
7) ARYEV, Vest, Khir. (Surgical Herald), No.2, p.223, 1941.
8) SHEINIS, Trans. of the S.M,KIROV Academy of Military Medicine, vol. XXIX, p.206-216, 1941.
.9) GAMOV, V,S., Nov. Khir, Arkh, (New Surgical Record), vol XV111, 4, p.304-31O, 1941.
10) GIRGOLAV and ARYEV, Vr, Delo Lurgical Affair , No. 6, p,415, 1940
* See page 18. (Tr,).
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Translated from Voenno-Sanitarnoye Delo `Med. Corps Affair 10, PP-57-59 (1940).
THE TREATMENT OF CONGELATION' CASES IN EVACUATION HOSPITALS
Mil. Surgeon First Grade I. I. 9MIRNOV and
Mil, Surgeon Third Grade ORLOV
We have been reviewing our material relating to the treatment of cold-
exposure cases during the war with the White Finns. In classifying frostbite by
its degree, we were guided by the following symptoms: in frostbite of the first de-
gree the affected part of the body swells up and turns red; in frostbite of the
second degree it takes on a bluish-purple tinge and the skin becomes covered'with
blisters of dark-colored content; in frostbite of the third degree there is necrosis
of the skin (it turns black and comes loose),, and sometimes of the muscles and bones .
By degree, our congelation cases were distributed as follows: first-degree
cases 0.8%, second-degree cases 56.2%, third-degree cases, 43%. From these figures
it is seen that lightly affected cases (first-degree frostbite) are almost never
sent to the rear.
The treatment of exposure cases in different hospitals was conducted in
many different ways: they used dry dressings, ointment dressings, fish-oil dressings,
water-baths and so forth, in combination with light-therapy and without,
Light-therapy (mercury-quartz lamp, Sollux) was employed in 26% of, all
cases, and was not used in 74%.' The use or non-use of light-therapy was determined
by the availability of proper cabinet equipment or by the previous physiotherapeutic
experience of the individual surgeons. It was used in combination with other types
of treatment.
Table 1 shows the duration of treatment of second degree frostbite cases
in which light-therapy was not used.
Table I,
Days 20 ?25 30 35 40 45 50 60 70 80 90 to 100
to to to to to to to to to to and over
25 30 35 40 45 50 60 70 80 90
14 .21 16 5 11 6 6 3 3 5 10
The mean duration of treatment for second-degree frostbite without light-
therapy was 42 days.
The duration of treatment for third degree frostbite without light-therapy
is shown in Table 2,
* Although he is talking of frostbite exclusively, the author uses the word "obmorozheniye" Longelation or
exposure to coil, which is usually employed in a very specific sense, contrasted with "frostbite". See
page 59. (Tr..)?
F Note that this author (1940) is using the older three-degree classification. (Tr.).
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Table 2.
Days 30 35 40 45 50 60 70 80 90 to 100
to to to to to to to to and over
35 40 45 50 60 70 80 90
2.2 7.8 2.2 2.2 6.7 13.7 9 16.8 19
The mean duration of treatment for third-degree frostbite without light-
therapy was 73 days.
The duration of hospitalization of patients with second and third de-
gree frostbite when lamp treatment was used is shown in Table 3.
Table 3.
SOLLUX MERCURY-QUARTZ LAMP
Days 30 40 50 60 20 30 40 50 60
to to to to to to to to to
40 50 60 70 30 40 50 6o 70
% 42.1 31.6 15.8 10.5 .27 31 20 16 6
Mean duration of treatment, Mean duration of treatment, 35 days.
39 days.
From inspection of these tables it is seen that whereas the second-degree
group received hospital treatment for an average of 42 days, and the third-degree
group for an average of 73 days, when on the other hand Sollux treatment was given
the duration of hospital3E treatment averaged 39 days, and when mercury-quartz
lamp treatment was given, 35 days, Moreover we conclude from the tables that when
light-therapy was used no second-degree patients were hospitalized for more than
70 days, but when this treatment was not given 18% of the second-degree,group re-
mained in hospital over 70 days.
These figures, which cover a relatively large number of cases, indicate=,
the advantages to be gained from a liberal use of light therapy in frostbite cases.
Of the total number of frostbite cases, 15% underwent surgery. This in-
volved for the most part removal of the terminal phalanges or digits, and for the
most part involved the feet.
Table 4 gives some idea of the outcome of the frostbite cases.
at Literally "bed treatment." (Tr.).
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Table 4.
First deg.
frostbite
Second degree
frostbite
Third degree
frostbite
returned
discharged
1-2 months
disch.
1-2
disch.
classed
to unit
to unit
furlough
to unit
mo.
from
fit for
fur.
service
non-
active
service
0.8%
48%
52%
39%
91%
3.8%
0.9%
From this table it is seen that 3.8% of all frostbite cases were classed
as unfit for military service (all of these involving third degree frostbite).
According to our data, the number of those classed as unfit fcr military service as
a result of gunshot wounds was 1,2% of all casualties. Thus the number of those
knocked out of our ranks by frostbite was three times larger than in the case of
wounds.
Conclusions.
1) The inclusion of light-therapy in our armamentarium of frostbite-treat-
ment will considerably shorten the period of hospitalization.
2) The mercury-quartz lamp is more effective than the "Sollux" lamp.
3) Our contingent of frostbite patients finished up with three times the per-
centage of unfitness for military service as compared with the percentage for
casualties in general. This is a fact which should incline the scientific research
world to'devote as much attention to the problems of frostbite prophylaxis and therapy
as to the problem of treating wounds.
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Translated from Voenno-Sanitarnoye Delo Medical Corps Affairs, p.57-88, 11, (1941)
Preliminary Report
For the treatment of frostbite we are using a-menthol preparation. From
our observations, this medicament is more effective than any of those which are
usually employed under warfront conditions (brilliant green, painting with iodine,
rivanol dressings, VISHNEVSKI?s ointment, etc.).
We first began to use the menthol preparation in the treatment of ethyl
bromide poisoning, in the clinical symptomatology of which are symptoms of involve-
ment of the central nervous system, mainly localized in the lower section of the
spinal cord (syndrome of spastic paraparesis of the lower extremities.)
Starting from the premise that there was a general significance to this
neurovascular factor in the process of action of ethyl bromide on the organism, we
prescribed the menthol preparation internally, in conjunction with diathermy of
the lower section of the spinal cord.. The success of this treatment in more than
twenty cases of ethyl bromide poisoning has confirmed that our premise is well
founded (see the periodical "Neuropathology and Psychiatry" No.10 1937).
Subsequently we began to employ the menthol preparation as a therapeutic
agent in angio-trophoneuropathies of various origin and nature. Thus for instance
we were able to cure a patient suffering from sclerotic endarteritis* with an initial
gangrenous process of the terminal phalanx of the great toe of the right foot, ab-
sence of pulse in the a. dorsalis pedis and a. tibialis postica on both sides. We
obtained impressive results in using the menthol treatment. In two months time we
secured complete healing of the lesion of the great toe, restoration of the normal
coloring of the dermal integuments, reappearance of the pulse in the a, dorsalis
pedis and a. tibialis postica, and elimination of pain. Throughout the two years
during which the patient remained under our observation, he continued to be in
perfect health and took walks of more than 2 km without experiencing any pain.
We obtained exactly the same decisively demonstrable results in treating
moist eczema of both wrists in a stonemason patient, and in treating a number of
cases of trophic ulcers, Raynaud?s disease, and sclerodermia. In 1940 we had the
opportunity to observe six patients with symptoms-of angio-trophoneuropathy, who
were cured by our method in Wards II and III of the First Communist Hospital. In
five cases a panel of physicians headed by F.F. BEREZINSKI reported that the treat-
ment used was successful.
We now have at our disposal observational data on 25 cases of treatment
of second and third degree frostbite and 15 cases of treatment with spirit of
camphor.
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A comparative appraisal of the data obtained permits us to establish
that the following regularly occurring phenomena are observed when treating frost-
bite with menthol preparations:. elimination of pain, reduction of edema, improve-
ment in skin color, reduced amount of discharge, and a considerable acceleration of
the wound-healing process. Of course, under the circumstances of our work (military
hospital train) we were limited insofar as the period of observation was concerned
(12-13 days), nevertheless the facts in our possession are completely reliable.
Spirit of camphor (menthol belongs to the camphor group) also gives satis-
factory results, but more slowly and without the analgesic effect which is observed
in using menthol, The ordinary methods of treatment (rivanol bandages, VISENEVSKI?s
ointment, etc,), which we emplo ad in some cases, gave no noticeable effect within
the period of one round trip of the hospital tram.
What is the basis on which the use of menthol in frostbite treatment rests?
Menthol is a strong antiseptic agent. When used internally it improves the
coronary circulation and dilates the peripheral blood vessels; when acting locally,
it dilates the blood vessels, improves the local blood circulation and relieves
pain, that is, by its effect on the neurovascular apparatus it alters conditions in
respect to supply of nutrients to the tissues, (see the works of KRAKOV, SKVORCSOV,
GRAMEMICSKI et al.).
We have been using a 3-5% alcoholic solution of menthol. One may use 3-5%
01. Menthols or Ung. Menthols, but in open wounds it is preferable to employ the
alcoholic solution. If menthol is unobtainable, 3-5% spirit of camphor may be used.
A gauze cloth, liberally moistened with an alcoholic solution of menthol, is applied
to the frostbitten part of the body, it being essential to include the surrounds
healthy tissue (in frostbite for instance the toes or the whole foot). A dressing
is then applied as usual,
During a ten day period dressings with a 5% menthol solution should be
applied not less than once per day (better two or three times), On the days which
follow, the changing of dressings and the concentration of the menthol will depend
on the actual circumstances of the case.
One of the most important conditions for the success of this treatment is
to apply it as early as possible. For this purpose it is quite important that
first aid men, field medical posts and all war-front establishments of the Red
Army Medical Service should have a sufficient quantity at menthol solution on hand.
OIC Mil. Rospital Train,
Cand. -Med. A.A. KEVORK?YAN
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Translated from Sovietskaya Medicsina ZS-oviet Medicin7e , 13-14: pp.lb-18 (1940)
TOPICAL TREATMENT OF FROSTBITE WITH VITAMINS
S.L. GOLDSCBMIDT and M.F. MEREZHINSIiI
Of the Molotov Stomatoiogicai Institute
(Director S.I.VASILOV) and the Molotov
Medical Institute (Director P.P.SUMBAYEV)?.
A fair number of observations have been made, indicating that treatment
of burns and wounds with vitamine A gives positive results. One of the first re-
search workers along this line was LEER: he arrived at the conclusion that in the
practical work of the surgeon vitamin A should not be neglected, and he supposes
that under the influence of pastes containing vitamins A and D a process of
diffusion and detoxication goes on in the tissues; the unsaturated fatty acids which
are found in fish oils have an anti-infective action. The absorption of toxic
produdts may indeed not be hindered, but they lose their toxic properties,. LtJTENLOCH,
who carried on LEHR?s observations, supposes that fish oil nullifies the toxic sub-
stances formed in the decomposition of tissues. This process depends on the saponify-
ing action of the unsaturated fatty acids. On this premise LEM suggested that be-
sides using fish oil internally in the treatment of traumata it might also be used
as a topical medicament.
The use of ointment therapy must be limited to those cases where the
desideratum is a reinforcing of the regenerative processes; in cases where there
are general inflammatory symptoms, deep tissue damage on a large scale, toxemia etc.,
one should from the beginning apply a treatment designed to check these processes.
Measures of this kind include treatment with ultra-high treatment waves, the quartz
lamp and other physiotherapeutic procedures. For their part however UHF waves are
incapable of speeding up the regenerative processes, and they sometimes mummify the
weakened regions of the tissues; on this account their use should be suspended in
those cases where the inflammatory process has subsided and the necessity of ac-
celerating the regenerative processes appears. In such cases a combined treatment
is indicated, with both physiotherapeutic measures and ointments containing vitamin
A. From what we have set forth above, we consider that ointment therapy is fully
applicable and does speed up the regenerative processes.
Taking into consideration the fact that in frostbite we must establish
conditions unfavourable for the development of bacteria, improve the state of
local nutrition and reinforce the tissue-building processes, we settled upon the use
of ointments containing fish-oil, lanoline, vaseline oiler, vaseline, and wax.
We became convinced that the best therapeutic effect on frostbite is shown
by an ointment containing 35-45% lanoline, 10-15% wax, 30-35% fish oil, with vaseline
and vaseline oil to make up the remainder to 100%. One may regulate the consistency
of the ointment by the respective amounts of vaseline and vaseline oil.
The ointment is prepared by melting the wax, lanoline and vaseline in a
water bath at a temperature of 1000C and mixing them. After this the fish-oil is
Oleum vaselini, i.e. liquid petrolatum (Tr.).
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added. If necessary the lanoline, wax and vaseline may be sterilized.
According to our observations, this type of ointment,, thanks to the presence
in it of vitamins A and D, cholesterols, lecithins, unsaturated fatty acids, com-
plex esters of various kinds, and mineral substances, is conducive to:-
a) The establishment of equilibrium in the colloidal state of the tis-
sues, as a result of which surplus water is thrown off, edemata disappear, and so
forth; processes promoting a reduced concentration of the tissue-solutions and thus
favoring the operations of synthesis essential to the reparative process;
b) The immobilization of the acid products of decomposition formed
locally in the frostbitten tissues;,
c) An excitation of the local reticulo-endothelial elements when a thin
layer of the ointment is applied to the wound surface, as a result of which there
takes place a heightened absorption of necrotic areas and edemata;
d) The strengthening and speeding up of the regenerative processes and
the emergence of granulation and epithelialization.
The winter of 1939-40 was very severe everywhere, particularly in the
northern provinces of the USSR; the cold weather held for a long time and many
persons working in the open suffered from the effects of the low temperatures.
We had under our observation patients with various forms of frostbite.
In all, eight patients with first degree frostbite, forty-five with second degree
frostbite, thirty-one with frostbite of second to third degree, and thirty-four
with third degree frostbite were subjected to ointment therapy,
There were also four men with second degree burns.
For successful treatment, a preliminary processing of the affected areas
is very important; therefore each frostbite case was processed like a surgical
patient.
In second degree frostbite and in the intermediate second-to-this de ~?
gree forms of frostbite, it is important to secure the most intimate contact be-
tween the frostbitten area and the ointment applied. To this end it is essential
to puncture the blisters and send samples for a bacteria count, then to open the
blisters and remove the tops, and to remove finger or tole nails which have lost
their normal color. The eroded ulcerous surface thus exposed is treated with a
5% solution of potassium permanganate or a 2% alcohol solution of brilliant green
or a 2% solution of methylene blue. This preliminary treatment with one of these
solutions is for the purpose of avoiding secondary infection.
When there are gangrenous areas with a tendency to suppurate, they are
syringed with hydrogen peroxide and the surface wiped with dry gauze, after which
the "A-ointment" iii melted form is applied in a thin layer.
Before using, the "A-ointment" is warmed in a water bath of temperature
80?C, and carefully applied to the frostbitten areas with a gauze pad of two or
* Note that this author is using the old three-degree classification. (Tr.).
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three folds. In a minute or two the ointment on the effected areas forms a soft
film in solid contact with the wound surface. A think leyer-of ointment is built
up on the interdigital folds so that there will be no growing together of the
affected areas, After the ointment film has formed, a thin layer of gauze and
lignin is put on. The use of thick layer of cotton wool in this treatment is
contraindicated, as this causes some maceration. It is necessary to see to it
that the patient does not put too much pull on the lower extremities with his garters
or trousers-suspenders. Dressings should be changed at two or three day intervals;
in exceptional cases re-dressing should take place even earlier.
When changing the dressing, what is left of the ointment is removed from
the affected areas with ether or alcohol. Then the affected areas may be cleaned
up; when using this treatment it is very easy to remove remnants of blisters, flakes
of nail-horn and necrotic masses, sanguineous scabs and crusts.
We have been making wide use of our ointment for removing the scabby crusts
and necrotic epidermis which form after painting with potassium permanganate or
brilliant green. In.two or three days time these crusts are easily removed, while
ordinarily they take 21 to 28 days period to come off (ARYEV, page 176).
After cleaning up the affected areas, the ointment is again applied.
Those cases where a slight maceration appears in the affected areas should be treated
with brilliant green or a 5% solution of potassium permanganate.
In frostbite of the second or third degree, the therapeutic influence of
"A-ointment" on the wound surface and surrounding tissue will be already manifest
after the second dressing, sometimes even after the first. Tissue hyperemia and
edema in the vicinity cf the affected area will be decreased, the inflammatory pro-
cess will die out, and granulation-tissue of soft pink colour will emerge. The
development of granulation-tissue will proceed simultaneously with epithelialization.
No tendency to bleed will be noted in these areas, such as occurs with physio-
therapeutic methods of treatment (UHF and quartz lamp). The epithelialization pro-
cess, when the ointment therapy is used, is characterized by its comparatively
rapid course.
In third degree frostbite the process of epithelialization and the
development of granulation will, when "A-ointment" is used, proceed in the same
manner as in the intermediate forms of-the second and third degree. In cases given
the ointment treatment, the demarcation line is serrated and sloping, its edges
encroach beneath the scab-crusts; its surface does not bleed, and the granulations
are distinguished by their succulent nature and pink shade. The necrotic areas
mummify relatively more slowly as compared to the UBF treatment and the various
mummified areas progress in a less painful manner than in the case of UHF and quartz
therapy, because on the stump we already have a large part of the injury covered
over by the time the necrotic tissues separate, something which is also very im-
portant from the point of view of subsequent operative intervention.
Finally it should be mentioned that in first degree frostbite the oint-
ment therapy considerably shortened the period of treatment, indeed to approximately
half the time with ordinary methods of treatment. With the lighter forms of second
degree frostbite the healing process was complete in 8 - 12 days after removing
the blisters. In cases where the blisters were not removed and the ointment was
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applied on top at the blisters, further exudation and exfoliation of the epidermis
took place; that is, there was an aggravation of the process.
Our observation showed that the ointment. should not be put on the necrotic
areas of tissue, because under these circumstances all that takes place is a re-
tardation of the mummification-process. Ointment therapy should not be used in
cases where moist gangrene is present over large areas (lower and upper limbs).
Our observations show that in these cases it is necessary to convert the moist form
of gangrene into the dry form (by scarification or I IIF) , and then only after this
conversion from moist to dry gangrene has been effected should the ointment be
applied to speed up the sloughing of the necrotic tissues and to secure the most
rapid regeneration of the stump area.
We were able to bring out the fact that when only UHF and quartz lamp
treatment was given there was formed a "demarcation pit" which looked as if stamped
out with a punch. The wound surface had a bluish red tinge with no tendency to
granulation and epithelialization. The edge of the wound surface or, more precisely
speaking, the skin adjacent to the wound surface was crusted over with a border ring
of blood-tinged scabs. On removing these scabs a sluggish bleeding took place,
followed by re-appearance of the same kind of scabs. The subsequent scar-formation
on these areas proceeded slowly, the UHF and quartz lamp treatment failing to secure
speedy tissue regeneration.
In consideration of the fact that our basic task was to create conditions
favorable for restoring the functioning of the damaged member we have also made
use of a combination of treatments.
In three cases we treated burns caused by flash-explosions of gasoline.
During the first few days we used various ointment treatments which were unsuccess-
ful. Complete healing was secured after three successive bandagings with "A-ointment."
The above observations permit us to formulate the following conclusions.
1) "A-ointment" is a medicament which should be given a place in frost-
bite treatment on a par with other therapeutic methods.
2) First and second degree frostbite submit to treatment with "A-ointment."
3) Cases of frostbite in which it is difficult to determine the degree,
but where the arterial pulse is present in the affected area, where there is no
acute edema and where the blisters are sterile, yield to treatment with "A-ointment."
4) In evident cases of third degree frostbite with clearly marked demarca-
tion, lymphangitis and acute edema, "A-ointment" treatment is not indicated until
such time as we have got rid at the edemata and lymphangitis with other methods of
treatment.
5) In grave cases of frostbite (total gangrene), ointment therapy should
not be used during the first few days after the exposure; it may be prescribed
only when distinct separation of the gangrenous area has taken place along the de-
marcation line. In such cases the ointment is applied on the wound surface and ad-
jacent areas of healthy skin.
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In cases where there is a definite dry gangrene with distinct
sequestration, it is essential to use ointment on the areas of "live" tissue in
order to speed up the processes of tissue regeneration and epithelialization.
7) 'Ointment therapy speeds up the separation of the scab-crusts.
Molotov City,'Karl Marx Street, #3-
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Translated from Voennoye-sanitarnoye Delo- fede Corps Affairg 11-12, pp, 37-50 (1942)
Prof, S.T. PAVLOV and Assistant K.K. SMIRNOV
of the Faculty of Skin and Venereal Diseases of
the S.M. KIROV Academy of Military Medicine (Chief
of the Faculty, Brigade Surgeon S.T. PAVLOV).
Among the prophylactic measures used against frostbite, the anointing of
the skin with different fatty substances enjoys general popularity. The list of
greases, grease-like substances, and different compound ointments is too large to
enumerate. To date however the use of greases and ointments to guard against frost-
bite has had a purely empiric character and, being founded exclusively on hoary
experience and for the most part on purely popular tradition, has yet to be placed
on a scientific foundation.
Hence it is quite understandable that there should be disagreements in the
opinions we encounter in different authors, on this question at the value at greases
in frostbite1-prophylaxis generally, and on the appraisal of the value of, the dif-
ferent fatty substances in particular.
There is an evident need for more profound study of this question, which
is of such great practical importance, and for an attempt to set it on a proper
scientific basis.
The whole multitude of problems arising in this connection may be solved
only through experiment. Yet there are great difficulties in making such experiments
on humans. This is the reason why we decided, before making the needful experiments
on humans, to institute preliminary tests on animals, on rabbits in particular,
using for this purpose a cold-chamber which we constructed for exposing rabbitst ears
to frostbite.*
Before proceeding to the detailed study of the problem, it was necessary
to establish the basic premise: are various greases, grease-like substances, and
compound ointments really capable of prophylactic action against frostbite, and to
what degree are they effective? The present article is composed of material ob-
tained by us in experimental investigation of just this point.
It is necessary to mention that an attempt to study experimentally the
prophylactic action of fatty substances on rabbits' ears had already been made in
the skin clinic of the VORONEZH Medical Institute.* *However the experiments were
carried out" in a manner so imperfect from the procedural point of view that the
authors, themselves recognizing the extreme inexactitude of their tests, refuse
to draw any conclusions.
Besides tests in the chamber, we made parallel experiments in the open
* "Methods and some results In the experimental study of frostbite" (Metodika 1 nekotorye rezul?taty
eksperimental?nogo izucheniya otmorozheniyi), Works of the S.M. KIROV Academy of Military Medicine,
Vol. XXLX. 1941.
** ABRAMOVICH and ASHURKOV, Works of the Skin and Venereal Disease Clinic of the VORONEZH Medical Institute.
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in cold winter weather, for purposes of comparison and in order to bring the ex-
periments closer to natural conditions.
In-all we carried out sixty-three experiments, in the course of which
we studied the prophylactic action at eight different greases, grease-like substances,
and grease-mixtures: (1) pork lard, (2) goose-grease, (3) lanolin, (4) margoguseline*,
(5) kombizhir**, (6) lard compound, (7) American vaseline, (8) Russian vaseline. In
addition, we carried out tests on two ointments suggested as prophylactics against
frostbite and sent to us for testing (Pharmacist BABICSKI's ointment and Madame
SAMKOVA's ointment, the compositions of which are shown below), and also on one emul-
sion quite widely used at the front during the war with the White Finns.
Most of the tests (thirty-nine) were made in the chamber, with a lesser
proportion of them (twenty-four) in the open air in cold winter weather.
Without dwelling on the detailed procedure of tests made in the chamber,
which we have described in the article mentioned above, we merely note that the
tests were made on the depilated ears of rabbits, one of which in each test was
lightly massaged and then anointed with the prophylactic substance under trial; the
other ear remained unanointed but otherwise in exactly the same condition, and
served as control.
In making the open-air tests the ears were treated in this way, then the
rabbits were bound to a stand and swathed in a thick layer of cotton wool.
The results of the experiments were appraised not only on the basis of
direct observation of the animals themselves but also on the basis of thermometric
data.
It is not possible to give our experimental reports here in detail; we
shall give only short extracts from them.
Pork lard was tested in thirteen experiments, of which seven were carried
out in the chamber and six in the open air.
From the data we obtained it was evident that in only one test did the ear
escape injury when anointed with pork lard. In the majority of the tests the ear
thus treated showed some degree of frostbite. Nevertheless in eight out of thirteen
of these tests, the degree of frostbite in the anointed ear was less than in the
control ear. In three tests the anointed ears and the control ears were frostbitten
to an identical degree and, finally, in one test the anointed ear was more severely
frostbitten than the control ear.
Bringing into consideration certain tests which we made to establish that
under identical conditions, both in the chamber and under natural conditions, each
ear should be frostbitten to an identical degree, we are justified in suggesting
that the observed differences in the degree of frostbite in the test-ears and control-
ears is a result at a prophylactic influence of pork lard. It appears that this
prophylactic influence is of comparatively shot duration; it has a definite limit,
and when there is protracted exposure to a low temperature, as in our experiments #1
(nine hours at -17?), #3 (eight hours at -12.5?) and #5 (.six hours at -16?), the
effect is practically nil.
* A compound of goose-grease and laid. (Tr.).
** "Combined fat". (Tr.).
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As for the degree of prophylactic effect shown by the lard, it appears
that individual peculiarities play a definite part, a matter which needs further
study. In all likelihood it is these individual peculiarities which we should con-
sider as the explanation of the reversed effect of the lard in our experiment #2.
Goose-grease was tested in nine experiments, of which three were carried
out in the chamber and six in the open air.
The results of these tests were almost identical with the foregoing.
Only in one experiment did the ear anointed with goose-grease escape without damage.
In four cases the anointed ears showed a greater or lesser degree of frostbite, but
not so markedly as in the control-ear. In three experiments the test-ear and the
control-ear were frostbitten to an identical degree. And finally, in one experiment
we encountered the paradox of a reversed effect, just as in the case of the pork
lard.
'thus goose-grease, like lard, is capable of prophylactic action against
frostbite, but its action is limited, and when there is prolonged exposure to cold
and a low enough temperature, goose-grease is not adequately effective.
Lanoline (anhydrous). This was tried in four experiments, carried out in
the chamber.
From the data obtained, it was evident that in three of the tests the ear
anointed with lanoline was frostbitten to the same degree as the control ear, while
in one test the anointed ear showed a considerably more acute degree of frostbite
than the control-ear.
Thus, judging from our tests, which were few in number but highly con-
cordant in results, lanoline does not possess any prophylactic properties even with
a comparatively short exposure (three hours 35 minutes at -13.50).
Margoguseline with lard was tried in four experiments, three of which
were carried out in the chamber and one in the open air.
In only one test did the ear anointed with margoguseline show a lesser
degree of frostbite than the control. In two cases-the test-ear and the control-
ear were frostbitten to an identical degree and, finally, in one test there was ob-
served a more acute frostbite in the test-ear than in the control.
The data we obtained compel us to suppose that margoguseline does not
have a sufficiently marked prophylactic action.
Lard compound* was tried in four experiment s, carried out in the chamber.
Results of these tests were somewhat better than in the trials with
margoguseline. In three of the tests the ear anointed with lard compound showed
a lesser degree of frostbite; in one test both ears were frostbitten to an
identical degree. However, taking into account that the tests were carried out at
a mean temperature of -11.500 and were not of long duration (averaging 3 1/2 hours)
as compared with other tests, the prophylactic effect of lard compound may be con-
sidered as insignificant.
x See U.S.,Dispensatory under "Adeps", p. 64 (Tr.).
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We tried two grades of kombizhir, namely kombizhir #1 and high-grade
kombizhir containing pork lard. Tests in both cases were carried out in the chamber.
From the data obtained it was evident that there was a definite difference in pro-
phylactic effect as between kombizhir #1 and the high-grade kombizhir.
While in the tests with kombizhir #1 the control-ears were more severely
frostbitten than the anointed ears, in the tests with the high-grade kombizhir the
opposite result was obtained: in all three tests the ears anointed with the high-
grade kombizhir showed a more strongly developed frostbite picture than the control-
ears. We got the impression that Kombizhir #1 is capable of some prophylactic
effect on rabbits' ears, though to an insignificant degree, while the high-grade
kombizhir has no prophylactic qualities and even makes matters worse.
Tests were also made with two grades of vaseline, American and Russian.
All these tests were made in the chamber.
From the data obtained it was evident that the ears anointed with the
American vaseline showed a somewhat lesser degree of frostbite, notwithstanding the
long duration of the tests (six hours forty minutes and ten hours twenty minutes)
and the relatively low mean temperature ( - 150 and - 120),
Completely different results were obtained with the Russian vaseline.
In four tests with different exposure-times, one of- them being of insignificant
duration (three hours thirty minutes), sharply negative results were produced.
In three of the tests the ears anointed with vaseline showed a considerably
greater degree of frostbite, and only in one test were both ears frostbitten to an
identical degree. The results of these tests are of undoubted interest and by the
way are in agreement with verbal statements made by two physicians who told us
of cases they had observed in which the poor grades of vaseline showed a negative
prophylactic effect on humans.
SAMKOVA's ointment, sent to us in already made-up form for testing, has
the following composition.-
Beeswax .
25%
Vegetable oil
35%
Alcohol
25%
Castor oil.
15%
The ointment was tried by us in six experiments; two of them were carried
out in the chamber and four in the open in cold winter weather.
In not one of the tests did, the ointment show any prophylactic action,
In five cases the test-ears and the control-ears were frostbitten to an identical
degree, and in one the control-ear suffered less than the anointed ear.
Pharmacist BABICSKI's ointment, sent to us for testing, has the following
composition:-
Camphor
10%
Salol
5%
Lanoline
85%
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Thus BABICSKI's ointment is one of the so-called stimulating ointments
which are widely recommended at the present time .
, The testing of the ointment was carried out in four experiments, all of
which were performed in the open air in cold winter weather. In three tests the
anointed ear showed a more acute degree of frostbite than the control-ear, and only
in one case were both ears frostbitten to an identical degree.
Hence the ointment suggested by BABICSKI not only failed to justify its
use as a prophylactic medium, but on the contrary helped to cause a more intense
frostbite. Possibly the defect of this ointment is that lanoline was chosen as its
base.
The last series of tests was devoted to the study of the prophylactic
effect of an emulsion which was quite widely employed at the front during the war
with the White Finns.
The composition of this emulsion is:-
Formic acid spirit
70.0
Oil of mustard
20.0
Spirit of camphor
100.0
Spirit of soap*
50.0
Animal fat
30.0
The emulsion was tried out in five tests, of which two were made in the
chamber and three in the open air. A small quantity of the emulsion was rubbed
into the skin of the depilated ear.
In five cases the degree of frostbite was identical in the test-ear and
the control-ear. Only in one test was the degree of frostbite in the test ear
somewhat less than in the control-ear, but the difference was insignificant. We
unfortunately have no data on the result of using the emulsion on humans. In our
experiments with rabbits the emulsion failed to justify itself as an anti-frostbite
prophylactic agent.
Summing up our findings, we think that notwithstanding the fact that our
experiments were of a purely orientational character and that we clearly recognize
them to suffer from several shortcomings (chief among these being the varying
temperature conditions under which the tests were made in the chamber), we may
nevertheless draw some conclusions of a general nature.
First of all our experiments showed that not all fatty substances (in
pure or mixed form) are capable of prophylactic action against frostbite. Of all
the fatty substances tested by ourselves, ONLY PURE PORK LARD AND GOOSE-GREASE
SHOWED A CLEARLY MARKED PROPHYLACTIC EFFECT.
A quite insignificant prophylactic effect was noted in the tests with
kombizhir and a still less marked effect with lard compound.
Some of the fats and mixtures which we tested showed themselves to be
completely devoid of prophylactic properties and a rabbit?s ear when anointed
* Alcoholic soap solution (Tr;).
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with them got frostbitten just as severely as the control-ear, In this group we may
place lanoline and margoguseline. Nevertheless lanoline needs a more detailed
study.
Before putting pure lanoline on trial it would be proper to subject the
available "anhydrous" lanoline to a preliminary test to determine the water content,
something which was not done in our experiments.
Finally, we have made clear just what fatty substances show a reversed
effect, causing a more rapid and acute frostbite when applied to the skin. Among
the first of these we must place the poorer grades of vaseline.
The facts which we have obtained seem to us to have a very real sig-
nificance. They show how careful one must be in choosing a fatty substance for
use as a prophylactic agent. This is important not only when using some fatty sub-
stances or other in its pure form, but also when the question arises of preparing
compound prophylactic ointments.
The effect of such ointments (the tests with BABICSEI's ointment demonstrate
this very clearly) will be determined not only by the stimulating substances incor-
porated in them, but also to a considerable degree by the base used in preparing
them. If such ointments are made up on a low-grade vaseline base or on.a lanoline
base (particularly with water content), then in spite of the inclusion of any ,number
.of active substances their effect may turn out to be negative.
The second question arising from our findings is the duration, or to
speak more accurately, the time-limit of the prophylactic action of fatty substances.
Even the best of them, lard and goose-grease, showed in our tests a prophylactic
effect of short duration-only. In this connection, it is impossible to state any
definite period of time. It would be even more impossible to apply any time-period
we did find to the case of humans. A depilated rabbit's ear is too sensitive a
test-object as far as cold is concerned; it possesses an extremely labile heat-
regulat ion.
Finally, mention should be made of the likelihood of discovering in some
cases a factor in grease-prophylaxis depending purely on the individual, a_factor
which we observed in rabbits and which may possibly exist in humans.
All the above facts compel us to believe that the grease-prophylaxis
of frostbite, even when the very best substances for this purpose are used, is
not ideal, and should by no means be given first place among the various means
of frostbite prophylaxis. Nevertheless the question requires further study. First
of all we should suggest the testing of a considerably larger number of greases and
fatty mixtures, and we should establish what physical and chemical properties they
have which would explain either a positive or a negative prophylactic effect:
We indeed intend to continue our work along these lines.
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Translated from "Klinicheskaya Medicsina" ./Clinical Medicine 22, 36-42 (1944)
LUNG CHILL*
Major (Medical Corps) Mme L.M. GEORGIEVSKAYA
and
Major (Medical Corps) M.Z. KOTIK
Cold is an ever-present consideration under sub-arctic conditions: judg-
ing from our own impressions, it seems that it has a significance much greater than
we have been accustomed to ascribe to it. We are dealing with cold when we have
frostbite of the extremities: we are acquainted with death from severe exposure to
cold, that is, death from freezing. In internal clinical practice we are accustomed
to consider exposure to cold only as a catarrhal factor, which the majority of us
think of. as one merely contributing to an ailment, not as one which independently
evokes the development of a pathogenic process.
Nevertheless it has been established by many research-workers that cold,
besides its local effect, has a still greater reflex action on the whole organism.
On the basis of the work of many authors, ANICBKOV points out that the general
influence of exposure to cold expresses itself initially in a heightened body tem-
perature, muscular excitation, speeding up and deepening of the respiration, ac-
celeration of the pulse; subsequently there follows a depression of the heart action
and of the nervous system, with a lowering of the body temperature. The blood
pressure is somewhat heightened at first, but later progressively falls. The ex-
citability of the vasomotor and respiratory centers, also of the peripheral nerves,
is lowered. The quantity of glycogen in the organs decreases; the content of lac-
tic acid and sugar in the blood increases; the reserve alkalinity and the level of
the plasma proteins drops. In connection with hypoproteinemia in chills, there
occurs an acceleration of the sedimentation rate. The metabolic rate, at first
heightened (sometimes by more than 20%), is during the latter stages progressively
lowered. When the outer integuments are exposed to cold, there takes place a re-
flex dilation of the blood vessels of the internal organs, particularly those of
* Read at the Army Therapeutical Conference of the 16th of November, 9942, and at the Warfront Conference
of the 25th December, 1942.
The term OZNOBLENIYE LEGKIKH LFung chiljJ was first used by Professor TUSHINSKI, M.D., in a report to the
Leningrad Therapeutical Society in 1940, on the basis of his observations during the war with the White
Finns. We were not able to locate this work before going to press.
Translator?s Note - The word OZNOBLENIYE has often been translated "frostbite", but it is not the ordinary
word for frostbite (of the extremities), and indeed conveys quite a different idea. The word is semantically
related to OZNOB "chill, shivering fit" and to OZNOBA (ZAZNOBA) "chilblain", thus suggesting (a) surface in-
jury and (b) nerve spasm, shivering. One might translate "superficial frostbite of the lungs", "chil-
blaining of the lungs",'or, as above, "lung chill",
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the intestines and those of the upper respiratory passages, with a copious discharge
of a watery secretion, a heightened peristaltic action of the intestines and a con-
traction of the musculature of the bronchi, even to the incidence of bronchial
asthma. This effect on the respiratory passages (spasm of the bronchial musculature,
hyperemia of the mucosa, copious discharge of-mucus, hyperemia and effusion of blood
from the lungs together with the formation, in a small number of cases, of pneumonic
foci) is manifested when cold damp air is inhaled, particularly through the mouth.
All these findings have been supported by experiments on animals.
The pathological process which develops in tissues subjected to freezing
has its own unique course (see GIRGOIAV, Transactions of the twenty-fourth All-
Union Congress of Surgeons). The initial changes take place latently; no:deviations
from normal may be established even under microscopic examination. Only upon
warming up does there appear a pathogenic process, which must be categorized as
an inflammation which develops secondarily upon ground prepared by initial tissue-
changes resulting from exposure to cold.
GIRGOLAV ascribes great significance to the disturbance of blood circu-
lation in the-tissues which takes place under the influence of freezing. Initi-
ally this is accompanied (MOLDOVANOV) by spasm of the blood vessels, then by a
protracted dilation thereof, after which spasm (secondary) again follows. These
derangements of the blood circulation are, according to GIRGOLAV, of much more
influence than the direct action of the cold, as they bring the tissues much more
rapidly to destruction than does the direct action of a low temperature. Under
the influence of cold, inflammatory changes set in, to which there is later ad-
ded a secondary inflammation arising from additional infection due to lowered
resistance of the tissues.
Fatigue and overtiredness are factors contributing to the effects of cold.
Thus the action of cold, local and general, influences the whole organism.
What happens is that the respiratory passages react both to the local influence
of cold (inhaling cold damp air) and to the exposure of the external integuments
to cold, which brings after it a general cooling of the body.
We have had occasion to observe a number of involvements of the respiratory
passages, closely associated, as far as the beginning of the ailment was concerned,
with the time the exposure to cold occurred, and distinguished from ordinary ail-
ments of the. respiratory organs by a number of peculiarities. The exposure to
cold took place in connection with heavy route-marches in blizzards. The patients
complained of great general debility, fatigue, considerable shortness of breath.
They ascribed their ailment to exposure to intense cold, which sometimes had caused
them to lose consciousness.
The first examination usually disclosed a certain degree of emaciation,
sometimes a little edema and a little cyanosis of the gums; the heart tones were
muffled, pulse from 80 to 120 per minute; the breathing rate was somewhat acceler-
ated --- higher than 20 per minute; percussion over the lungs gave sounds of a
more or less tympanitic nuance; respiration was bubbly or somewhat enfeebled,
sometimes with an interspersion of dry rdles. These indications were usually not
such as to point to any serious lung-damage and did not explain the noticeable
shortness of breath (dyspnoea) already mentioned. The temperature was either
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normal or raised to 380 plus the odd tenth.. Subsequently, sometimes for a period
of hours and sometimes for a day, the dyspnoea and cyanosis grew and the lungs
developed first dry rales and then fine and medium moist rales: the latter were
at first heard in separate, often symmetrically placed areas, usually in the lower
segments, then they spread to the whole area of both lungs; respiration speeded
up to 30 or 40 per minute, the pulse in some patients remained at 80-90, in others
it was 120-140 per minute. Later the respiration became bubbly, a copious froth
was discharged from the mouth and nose (or there might be a soundless panting, the
patient "scooping air-in through the mouth"), and death ensued. Circumstances at
the time when most of the patients were admitted did not permit us to give concen-
trated attention to the study of their cases. The novelty of this pathological
phenomenon resulted in divergent, inaccurate diagnoses being made in the majority
of the cases, such as bronchitis, bronchial-pneumonia, miliary tuberculosis, car-
diac incapacity resulting from over-fatigue; consequently we have built up our
clinical picture on only ten cases which clearly distinguished themselves from all
other usual ailments. In only three cases did recovery take place; nine of them
had a fatal outcome. A pathologo-anatomic autopsy on these nine cases confirmed
our impression that the ailment was of an unusual nature.
For purposes of illustration we adduce three case-histories:-
B., born 1916. Admitted May 10th, 1942, died May 13th.
Taken ill May 3rd. Got soaked, clothing froze, developed
chill, unconscious condition about 12 hours. Complained
of hoarseness of voice, pains in chest, breathing difficult
shortness of breath, cough, phlegm streaked with blood.
Grave general condition. Cyanosis and pallor. Somewhat
lowered state of alimentation. Hoarseness of voice. Dys-
pnoea. Superficial breathing, 36 per minute. Temperature
37.60. Heart boundaries normal, tone muffled; pulse 120,
of little volume. Blood pressure 120/90. Percussive tone
in lung of tympanitic nuance, breathing labored, dry rales
interspersed, many fine moist rdles at the apices. Tongue
dry, coated, tonsils swollen and hyperemic. }Ventral.
region soft, painful; edge of the liver projecting below
the ribs for a width of one and a half fingers. Stool
normal. No alteration in urine. Leucocytosis 10400.
Sedimentation rate 42 mm. per hour. During the following
days temperature 37.40 to 38?, perspiration, debility,
poor sleep, increasing dyspnoea and cyanosis. May 11th,
moist rales extending to middle of shoulder blade; May 13th,
over the whole area of the lungs. Condition growing worse.
Pulse 116 per minute, poor volume; respiration 40 per minute.
At 17:00 hrs May 13th, respiration 44, pulse 140 per minute;
very acute cyanosis; consciousness dulled, patient sluggish
in answering questions; at 23:00 hrs., May 13th, death (the
tenth day after severe exposure to cold and beginning of
illness).
From the autopsy report: Complete disappearance of subcut-
aneous and intramuscular fatty tissue. Extensive dense
adhesion of the lungs to the subparietal pleura. Mucous
membrane of the trachea and bronchi strongly swollen, pinkish
red in color, velvety and covered with a purulent mucus.
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Lung tissue spongy, considerably emphysematous in the anterior
parts; isolated areas of consolidation found in the posterior
parts, of greyish pink tinge on section; when pressed, small
droplets of pus appear. Bronchioli filled with purulent mucus.
Spleen somewhat diminished in bulk, wrinkled, medulla of dark
red color. Heart somewhat increased in size on account of
dilated right ventricle. Epicardium devoid of fatty tissue.
Wall of right ventricle somewhat thickened. Myocardium dull
in appearance, brownish tinge. Liver somewhat plethoric.
Pathologoanatomic diagnosis: acute catarrhal laryngo-tracheal
bronchitis; purulent double bronchiolitis; a small amount of
fine pneumonic foci; emphysema of the lungs; dense pre-exist-
ing'adhesion to subparietal pleura; some hypertrophy of,the
right ventricle of the heart, general exhaustion.
In this case our attention is arrested by the spread of the process from the
larynx to the alveoli; that is, over the whole respiratory tract.
M., born 1903. Admitted May 13th, 1942, died May 15th. Taken
ill May 8th after being exposed to severe cold on route-march
in blizzard. Severe dyspnoea appeared, with edema of face and
legs. Condition very grave. Face and feet swollen. Heavy
cyanosis. Dyspnoea: bubbly respiration, 44 per minute. Heart
boundaries dilated on left, tones muted, pulse 180 per minute,
arrhythmic, poor volume. Lungs: percussive tone tympanitic,
breathing labored, interspersed with numerous dry r8les. Below
both shoulder blades, sonorous medium rdles. Cough and phlegm.
Tongue coated, moist; ventral region soft; painful edge of liver
protruding below rib arch, temperature 38.1? May 14th, tempera-
ture 36.8 -39.4?; condition very grave, but still conscious.
Cyanosis and dyspnoea still more marked; after 1600 hrs. loss of
consciousness; copious discharge of mucopurulent phlegm with ad-
mixture of blood, very acute cyanosis; died at 0200 hrs. May 15th
(seventh day after being exposed to cold and becoming ill).
From the autopsy report: Absence of subcutaneous and intra-
muscular fatty tissue. Mucous membrane of larynx and trachea
severely swollen, reddened, covered with purulent mucus.
Lymphatic nodes below bifurcation of trachea enlarged, soft,
of pinkish tinge, tissues succulent. Lungs much enlarged in
bulk (their upper portions covering the whole anterior surface
of the heart); under the pleura of both lungs numerous fine
hemorrhages were discovered. Lung tissue spongy and strongly
emphysematous. On section, droplets of purulent mucus issuing
from bronchi and bronchioli. Suprarenal glands of ordinary size,
cortical layer of uniform yellowish shade (lipoids well pre-
served). Spleen slightly enlarged, firm, medulla of dark red-
dish color. Heart somewhat enlarged by dilation of right ven-
tricle. Myocardium of flabby consistency, greyish tinge. On
the epicardium a small amount of fatty tissue remaining. Liver
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plethoric. Pathologo-anatomic diagnosis: Catarrhal laryngo-
tracheal bronchitis; double catarrhal bronchitis; severe
emphysema of the lungs; hyperplasia of the lymph nodes below
the bifurcation of the trachea; many fine hemorrhages in the
pleura of both lungs; general exhaustion.
Microscopic examination: The fine bronchi contain a consider-
able amount of polynuclears and erythrocytes. Bronchioles
filled solid with polymorphonuclear leucocytes and a great
accumulation of erythrocytes. The epithelium of the small
bronchi severely swollen; consists of 4 to 7 rows of cells and
in places forms a quite large protuberance almost completely
closing the bronchial lumen. Individual epithelial cells in
a condition of mitosis. In some areas the epithelial integu-
ment exfoliated by a large accumulation of erythrocytes. Here
and there under the epithelium, a large quantity of polynuc-
lears, spreading through the muscular wall of the bronchi and
into the external membrane and interalveolar wall of one or
two adjacent alveoli. The blood vessels of the bronchi and
bronchioli everywhere dilated to an acute degree and filled
with erythrocytes; the latter also found within the'epithe-
lium. In a number of (microscopic) sections there is visible
a penetration of leucocytes from the lumen of the terminal
bronchi into the alveoli. The alveoli over a considerable
expanse in the vicinity of the bronchi, likewise the
bronchioli, are dilated and containing only a few isolated
erythrocytes; farther toward the periphery the alveoli contain
edematous fluid. The capillaries of the interalveolar walls in
these areas are strongly dilated and filled with erythrocytes.
Within the adventitia of the blood vessels there are both small
and extensive hemorrhages, in places completely exfoliating
the external membrane.` Alveoli emptied of contents and ;.
stretched, with-their walls thinned. out, for the most part
ruptured and forming large orifices (emphysema). In the lumen
of individual blood vessels leucoQytic thromboses noted.
Findings: A mucoid-catarrhal hemorrhagic process over the
whole bronchial tree, proceeding from above downwards, and
bounded by the terminal bronchi (only two or three of the near-
by alveoli involved); wide-spread peribronchial hemorrhage with
edema in the peripherally located alveoli; acute emphysema;
perivascular hemorrhages; spreading of the inflammatory process
from the sides of the lumen of the bronchi through the muscular
wall into the surrounding tissue.
Here too the process extended to the whole of the respiratory tract, from larynx
to bronchioli.
.Z. born 1910. Admitted May 16th, 1942, died May 21st. Taken ill
May 10th, after exposure to severe cold during route-march in
blizzard. General condition satisfactory. Heart boundaries
normal, tones clear, pulse 120, satisfactory volume. Percussive
tone in lungs of tympanitic nuance; boundaries of lung dilated,
motility somewhat diminished, breathing labored and enfeebled in
the lower lungs; a considerable amount of interspersed dry rales.
Ventral region soft and not painful. Temperature 38.3?. later
on, temperature fluctuated from 38.30 to 40.4?. The patient was
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uneasy; dyspnoea and cyanosis increased. On May lath, fine reg-
ularly occurring moist rales appeared in both lungs below the
shoulder blades. From 2300 hrs. May 20th condition very grave,
respiration rattling, in both lungs a great deal of regularly
occuring medium rales. Heart completely covered by the lungs
down to its base; motility of lung edges at a minimum. From one
o'clock of the night of May 21st the patient was unconscious:
from 5 a.m. a copious discharge of foamy sanguineous fluid from
the nose; died at 0750 hrs. (on the 12th day of illness).
From the autopsy report: Condition of alimentation satisfactory:
mucous membrane of throat severely emphysematosed, swollen. Epi-
glottal folds diffusely reddened and acutely swollen. Mucous mem-
brane of larynx, trachea and bronchi markedly red and swollen,
covered with purulent phlegm. Lymphatic nodes below bifurcation
of trachea enlarged, soft, of pinkish tinge. Lungs markedly en-
larged (with their lower segments completely covering the anterior
surface of the heart). Pleura of both lungs dotted with numerous
fine hemorrhages (the largest of these located in the region of
the lower left lobe). Lung tissue uniformly emphysematous. On
section, droplets of purulent mucus appear from the small bronchi
and bronchia. Lipoid layer of suprarenals well preserved. Spleen
somewhat enlarged, firm, medulla of dark'red color, plethoric.
Heart enlarged by reason of right ventricle being considerably
dilated and filled with tangled blood-clots. Myocardium of flabby
consistency, grayish shade. Epicardium covered with a considerable
layer of fatty tissue of usual type. Liver considerably enlarged,
firm, tissue plethoric. Pathologo-anatomic diagnosis: catarrhal
pharyngitis with acute edema of epiglottal folds; acute purulent
catarrhal laryngo-tracheitis, partly hemorrhagic; wide-spread
double purulent catarrhal bronchitis and bronchiolitis: emphysema
of both lungs developed to an acute stage; numerous large hemor-
rhages in the pleura of both lobes of the lungs, particularly in
the lower'lobe; considerable dilation of the right cardiac
ventricle; congested liver and spleen.
Microscopic examination: Desquamation of the superficial layers
of the stratified flat epithelium of the suprarenals. This
epithelium considerably swollen; basement tissue of the mucous
membrane markedly disintegrated and in a diffusely saturated homo-
geneous mass. Blood vessels dilated to an acute degree and filled
with erythrocytes. In isolated areas throughout the thickness of
the edematous tissue, both small and extensive hemorrhages found.
Considerable disintegration and desquamation of the epithelium
of the treachea. On the surface of the epithelium are found small
accumulations of polymorphonuclear leucocytes and erythrocytes. .
Among the disintegrated epithelial cells a large quantity of eryth-
rocytes are present. Blood vessels of the edematous basement tis-
sue of the mucous membrane acutely dilated and filled with erythro-
cytes. Extensive hemorrhages noted in the neighborhood of the blood
vessels. Bronchi and bronchiole solidly filled with polymorphonu-
clear leucocytes, erythrocytes and flat flakes of peeled-off epith-
elium. Distributed under the remaining thickened epithelium there
are wide-spread hemorrhages. Blood vessels of the mucous membrane
acutely dilated with copious content of leucocytes, which in places
completely fills up the lumen of the capillaries and small arteries.
Alveoli in the neighborhood of the bronchi filled with fibrin and
leucocytes,, Numerous alveoli containing only a few isolated
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erythrocytes. Thinly stretched alveoli emptied of contents and
with walls thinned out, ruptured in many places (emphysema).
Considerable hyperplasia of lymphoid tissue below the bifur-
cation of the trachea, with acute hyperemia and hemorrhage.
Considerable plethora of the kidney, liver and spleen.
Findings: Descending purulent catarrhal process over whole
respiratory tube with fibrinous pneumonia of two or three
alveoli in the vicinity of the terminal bronchi; acute
emphysema; peribronchial and perivascular hemorrhages.
Here we see the same picture of the whole respiratory passage being af-
fected, and the throat also involved (pharyngitis with edema of the epiglottal
folds). The duration of the illness was longer than in the two preceding cases
(12 days); the considerable dilation of the right cardiac ventricle probably
developed in consequence of this.
In the cases of the three patients who finally recovered, the involve-
ment was not grave; moist riles extended only over the lower segments of the lungs,
and dyspnoea was less acutely in evidence.
Treatment employed was in all the cases symptomatic; confinement to bed,
hot water immersions, expectorants, camphor, caffeine, oxygen, glucose, calcium
chloride, lobeline, strophanthine, in some cases blood-letting. Treatment was
possibly effective in the three lighter cases and resulted in recovery. On the
development of the grave condition, only oxygen gave temporary improvement.
The clinical picture of these cases maybe outlined as follows: - After
a serious general exposure of the whole body to cold (often with loss of conscious-
ness), and also considerable local exposure of the respiratory canal (resulting from
deeper breathing when walking against the wind), the patients complain of great
general debility, fatigue, hoarseness of voice, shortness of breath, cough. Ob-
jective study during the first few days enables one to establish only symptoms of
laryngo-tracheal bronchitis with certain factors of respiratory insufficiency, name-
ly a little cyanosis and acceleration of breathing, with no real findings as far as
the lungs and heart are concerned which would explain this. Subsequently moist
riles will develop, most frequently in the lower posterior portions. In the next
one or two days the amount of moist riles and the area of their distribution is in-
creased., the cough is intensified, mucus is discharged more and more copiously and
an admixture of blood appears in it; symptoms of respiratory and, in some cases, of
cardiac insufficiency develop uncontrollably and rapidly (dyspnoea, cyanosis, ac-
celeration of the pulse, dilation of the boundaries of the base of the heart, pain-
fulness and enlargement of the liver).
In the final period there is general excitation with dulling of conscious-
ness, resulting apparently from oxygen starvation of the central nervous system.
Cases of medium gravity end in recovery; but when the picture of the involvement is
further developed, the most energetic treatment has no effect: even oxygen produces
only a temporary improvement.
. Our grounds for separating the twelve cases we observed from the general
mass of miscellaneous well-known lung ailments are as follows: -
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1. the close association of the beginning of the ailment
with general exposure to cold;
2. the total nature of the involvement, including the
whole respiratory tract from throat to alveoli;
3. the specific character of the involvement, in point
of intense swelling of the mucosa, copious exudation,
hyperemia and hemorrhages;
4. symmetry and simultaneity of development of the in-
volvement in each lung;
5. the particular nature of the involvement of the
lungs (scanty physical data to go on at the begin-
ning, even with dyspnoea already developed; emphysema
with a background of severe total bronchitis, with
small isolated foci of bronchopneumonia (which how-
ever do not appear in all cases);
6. initial appearance of the process in the uppermost
segments of the respiratory passages (pharyngitis,
laryngitis, tracheitis) and its gradual extension
down the bronchial tree;
7. complete ineffectiveness of the whole armamentarium
of cardiopulmonary treatment.
This all compels us to suppose that in these cases we have to do with
an acute pharyngo-laryngo-tracheal bronchitis, bronchiolitis, and emphysema,
developing in consequence of exposure to cold, that is, from the general and
local action of cold. Cold is here not an accompanying circumstance, but the
primary causative factor. The effect of this physical agency is to inflict a
cold-burn or scald and in consequence to evoke a whole series of physico-chemical
changes in the tissue of the respiratory passages, leading to the complete collapse
of the respiratory function and to the death of the patients.
On the pathogenesis of the process, the most one can do at this time
is to frame a hypothesis. it is possible that, in the degeneration of the chilled
surface layers of tissue, substances of histamine type are formed which promote the
development of a large-scale edema of the tissues, paresis of the blood-vessels and
exudation of blood from them, and cause the tissues to lose their fundamental
properties, particularly their elasticity. In consequence, large-scale exudation
occurs over the mucosa, with exfoliation thereof; there is intense edema of the
tissues, dilation of the blood-vessels and the surrounding tissues; as a result of
all this there is constriction of the respiratory canal, embarrassment in inhaling
and more particularly in exhaling, increased pressure on the walls of the alveoli,
which have lost their elasticity and become stretched; in conjunction with this,
there is secondary infection.
To sum up, we have pharyngo-laryngo-tracheal bronchitis, bronchiolitis,
small foci of bronchopheumonia, acutely developed emphysema of the lungs, all
arising from exposure of the respiratory passages to cold.
The immediate cause of death is oxygen starvation resulting from col-
lap se of the external respiratory functioning, caused by bronchiolitis and emphy-
sema.of the "luhgs. It, seems incorrect to call this ailment simply bronchiolitis
and emphysema; these terms cover only a part of the involvement and do not reflect
The ease word as In the title (see first footnote) (Tr).
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the etiology of the process. We rest on the term OZNOBENYE ("lung chill");
the introduction of this term seems to us to be useful, since it fixes our
attention on a concrete cause of the ailment, which we can combat,
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From Arkhiv Biol. Nauk ZB-iol. Recor,7, Vol. 608 3, 3-138 1940.
ON THE INFLUENCE OF GENERAL COOLING ON THE DEVELOPMENT OF
PURULENT INFECTION IN THE LUNGS OF THE RABBIT
(Mme) F. M. KHALECSKAYA*
Of the Department of Morbid Anatomy, (Leningrad Branch,
All-Union institute of Experimental Medicine. (Chief,
Academician N.N. ANICHKOV).
Received March 8, 0940.
In our previous researches (Arkhiv. Biol. Nauk, vol LIII, 2-38 1939) it
was demonstrated that only after the introduction of a large quantity of microbic
bodies (staphylococcus) into the respiratory passages could one succeed in ob-
serving the development of a purulent inflammation in rabbit s? lungs, in the form
of lung abscesses. With the introduction of lesser quantities of staphylococci,
it was not possible to produce the development of such a process. Hence, we
naturally formulated the hypothesis that the presence of pus-forming micro-organ-
isms in the lower respiratory passages and lungs does not in itself always bring
on the development of a purulent process and that, in addition to the presence of
the micro-organisms, there are supplementary contributing factors which exert an
important influence. It has long been known that general cooling of the organism
promotes the incidence of various ailments, especially those of the lungs (e.g.
bronchitis, pneumonia, pleurisy, etc), apparently through a decrease in the bio-
logical immunizing powers of the organism. LAUCHE thinks that the biological im-
munizing powers of the human organism and of animals are undoubtedly reduced under
the influence of cooling. SCHADE, TENDELOO and others think that general cooling
causes a dilation of the blood vessels in the lungs, and this disturbance of the
circulation expresses itself generally in a greater sensitivity of the organism
to infection. In NENNINGER9s opinion, the presence of pathogenic bacteria in
the lungs is not enough to cause an infectious ailment; it seems necessary that
there should also be some local predisposition. Only with the above-mentioned
two factors in combination is the development of an inflammatory process in the
lungs possible. The same opinion is expressed by LODE. In autopsies on animals
which had died after cooling, WALTHER invariably found hyperemia of the lungs,
exudation in the respiratory passages, and also a serous exudate in the pleural
cavities.
In rabbits subjected to cooling in water (to 0 - 2?C for a period of
2 - 10 minutes), DUROK.observed the development of pneumonic foci; the cooling in
this case was preceded by a preliminary warming of the animal in a heat-chamber
at a temperature of 370C. .Similar results from their own observations are in-
dicated by AFANASYEV, PUCHKOV1 ERASrOV1, WERTHEIM, BECK and others.
Investigating the limits of lung-tissue resistance to cooling, LIPARI
injected rabbits intratracheally with pneumococci; he then left some of the
animals under normal conditions and subjected the others to cooling. Inflammatory
changes in the lungs were observed only in the latter. Similar findings were
adduced by LODE, who shaved the fur off guinea-pigs, then wrapped some of them
* Co-author of article on page 43 (Tr.).
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in warm cloth and left the others clean-shaven. After inoculating all the test
animals with FRIEDLANDER?s bacillus he put them in a cold place. He observed
that the majority of the shaved animals developed pneumonia while the unshaven
ones remained in good health.
From the above findings it is abundantly evident that general cooling
of the organism favors the development of infection and intensifies it when-
ever. it is present. For this reason we thought that it would be not without
interest to trace experimentally how general cooling affects the incidence,
development and course of an inflammatory purulent process in the lungs, in-
duced by the aspiration of microbe bodies (.staphylococcus) by way of the trachea.
In addition, we endeavored to find out how the condition of the pleura might be
influenced'by the changes in the lung tissue which took place under these cir-
cumstances. Thus, with due consideration to the fact that such involvements
are very frequent in humans, we undertook the task of clarifying the effect of
cooling and infection, acting together/ as a complex factor, on the development
of experimental pleurisy. This is particularly of interest because in the litera-
ture there are hints that the overwhelming majority of exudative and purulent
pleurisies develop in conjunction. with different types of pneumonia. We used
what we knew to be slight doses of staphylococcus culture, with which in our
previous experiments neither pneumonic changes nor abscesses in the lung tissue
had ever been observed. When using rabbits, we ruled out immersion of the whole
animal in ice-water as a means of producing cooling, which was the way PUCHKOV,
DURCK, ERASPOV, LAVROV and others went about it, because, judging by data in
the literature, this kind of cooling will itself promote the development of in-
flammatory changes in the lungs.
Thirty rabbits, males, were given a 24-hour culture
of staphylococcus, concentration 50 million/cm39, byy y! Of
trachea. This culture, pathogenic for rabbits, was taken
from rabbits which had developed pleurisy as a result of
opening the pneumothorax. The intratracheal inoculation of
the rabbits was carried out in the following manner. With
proper aseptic precautions, an incision 2 cm long was made
along the median line of the neck, through the skin and the
subcutaneous tissue-, the anterior surface of the trachea
was exposed, about 2 or 3 cm down from the epiglottis. A
suspension of staphylococcus aureus was introduced with a
syringe between the cartilages into the lumen of the trachea.
The culture was diluted to a standard strength. Eight of
the test rabbits, injected intratracheally with staphylococcus,
were placed in a room at a temperature of 15 or 17?C. The
remainder (22 rabbits) were immediately after inoculation
put outdoors at atmospheric temperatures ranging from -20?C
through -17?C, -14?C, -12?C, -7?C, -6?C, -4?C. (see table).
Another eight rabbits for control purposes were subjected
to general cooling without having been inoculated as above.
.The body temperature of the rabbits under cooling fell on
the average 2 to 2.5?C. All the test-rabbits lived 8 to
20 days after this. The majority of them had to be killed
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(by a blow on the back of the neck); only a few of them died
from the infection. Pieces of the lung for microscopic ex-
amination were fixed with 10110 formalin and 960 alcohol.
Sections were stained with the usual dyes, and also by the
WEIGERT-HART method for the elastic tissue, and by the GRAM
method for the microbes.
From the attached table it is seen that the eight test-rabbits in-
oculated with staphylococcus and left in the warm room, just like the eight
controls which were merely cooled without being inoculated,did not show any de-
velopment of inflammation in the lungs., It seemed that they kept their resist-
ance both to the injections and to single short periods of cooling. These
control-animals are included in the table of our experimental results, and the
changes which took place in them should be compared with the changes observed in
the test-rabbits which were inoculated with staphylococcus and subjected to
general cooling.
The changes in the lungs of the control-rabbits in the table were on
the whole of a nature not very different from those noted in previous experiments
on intratracheal inoculation with small doses of staphylococcus culture. Under
microscopic examination, the lung-tissue of these control-rabbits was nearly
everywhere seen to be aerated, with the inter-alveolar septa thickened in some
places by edema,, in other places thinned out. The alveoli contained no exudate.
Only in isolated cases (644, 613 et al.) were there seen, both in the deep and
the sub-pleural portions, dilated lymphatic vessels in which granular leucocytes
were found. And only in one or two cases, here and there in the protoplasm of
the alveolar phagocytes, did we find the remains of phagocytized Grampositive
cocci (in a state of fine granular decomposition).
Thus we should once more emphasize that in these control-rabbits,
which were followed up for the same length of time as the test rabbits, the lung
tissues remained for the most part little changed. A completely different picture
of changes was seen in the lung-tissue of the other rabbits Jin the table which
were subjected to a general short-term cooling in addition to the intratracheal
infection with small doses of culture-staphylococcus.
In nearly all the 22 cooled and intratracheally infected animals, in
spite of the varying degrees of cooling (see table), we observed, the development
in the lungs of an inflammatory process of the interstitial pneumonia and broncho-
pneumonia type. Moreover in ten of the rabbits we observed the development of
pneumonic foci in combination with fibrin-purulent pleurisy, often on both
sides., (fig.l), and in addition lung abscesses developed in two cases.
Under microscopic examination the nature of the changes and the type
of inflammatory process in the lungs were quite diverse, but symptoms of inter-
stitial inflammation predominated. Also the interalveolar septa were consider-
ably thickened; they were impregnated with a serous exudate in which there was
quite a lot of inflammatory cellular matter of various origins. Here we could
see mononuclear 1eucocytes (polyblasts) in large numbers, cells of the nature
of alveolar phagocytes, granular leucocytes (part of them in a state of de-
composition), and also a fair number of erythrocytes. Blood vessels, for the
most part veins and capillaries, were considerably dilated, with marginal stases
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Fig.l. Double fjbrino-
purulent pleurisy
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TABLE
After intra-tracheal infection with staphylococcus culture the: test-rabbits were left at a temperature
of -2 C to -20?C for 15 minutes
Rabbit
No
Atmos.
temp.
Lived
how
many
days
How
died
Macroscopic
Microscopic
Control. Test.
601
-20
10
Killed
Fibrino-purulent pleurisy.
Symptoms of interstitial
pneumonic foci in left lung.
pneumonia. Fibrino-purul
pleurisy.
602
-20
00
Died
Double fibrino-purulent
Ditto.
pleurisy.
603
+17
10
Killed
No fluid content in pleural
Lung tissue everywhere co
cavities.
tains air.
196-a
-20
8
Died
Small abscess in the lower
Purulent. necrotic focus i
lobe of right lung.
the right lung, symptoms
interstitial pneumonia of
both lungs.
195
-20
8
Killed
Pneumonic foci in the right
Symptoms of interstitial
lung.
pneumonia.
197
+17
8
Killed
No fluid content in pleural
Lung tissue everywhere
cavities.
aerated; hemorrhagic foci
seen only here and there.
186
-17
8
Died
Pneumonic foci in posterior
Symptoms of interstitial
segments of both lungs.
pneumonia.
087
-17
22
Died
M'asslve abscess in right
Abscess of the lung, alsc
lungo
interstitial pneumonia.
188
+16
8
Killed
No content of fluid in
Interalveolar septa thick
pleural cavity
ed here and there as a re
of edema.
604
-14
II
Died
Fibrino-purulent pleurisy.
Pneumonia, in places cat
pneumonia in massive foci.
hal, in places catarrho-
purulent.
605
-14
11
Died
Ditto
Ditto
613
+16
11
Killed
No content of fluid In
Lung tissue almost every
pleural cavities
aerated, with edematous
only here and there
seen
interalveolar septa.
626
-12
12
Fibrino-purulent pleurisy.
Fibrino-purulent pleuris
Sprinkling of pneumonic
Symptoms of interstitial
foci in both lungs.
pneumonia; in places foc
of abscessed pneumonia.
627
-12
12
-
Ditto.
Ditto.
628
-12
12
-
Ditto.
Ditto.
629
-12
II
Ditto.
Ditto.
ent
n-
n
of
en-
sult
arr-
where
r
egions
1n
y.
i
97
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Rabbit
No.
Atmos.
temp.
Lived
how
many
days
How
died
Macroscopic
Microscopic
Control.Test.
625
+15
12
-
No fluid content in pleural
Lung tissue for the most
cavities
aerated; interalveolar se
only here and there infil
with edematous fluid.
98
- 7
6
Died
Fibrino-purulent pleurisy.
Fibrino-purulent pleurisy
Scattering of pneumonic
places, foci of broncho-p
foci in both lungs.
in places a considerable
infiltration of inflammat
elements in the interalve
septa.
153
+15
6
Killed
No content of fluid in
Lung tissue everywhere as
pleural cavities.
673
- 6
15
Killed
Pneumonic foci in lower
Symptoms of interstitial
lobes of both lungs.
pneumonia.
674
- 6
17
Died
Ditto.
Ditto.
675
- 6
II
Killed
Ditto.
Ditto.
676
- 6
12
Killed
Ditto.
Ditto.
679
- 4
8
Killed
Ditto.
Ditto.
681
- 4
8
Died
Ditto.
Ditto.
680
+15
10
Killed
Internal organs show no
Interalveolar septa edema
changes.
here and there; alveolar
lumina narrow at these pl
646
- 2
15
Killed
Fibrino-purulent pleurisy
Symptoms of interstitial
on right side. Serous
and fibrino-purulent pleu
pericarditis. Pneumonic
of the right lung.
foci in right lung.
647
- 2
15
Killed
No fluid content in pleural
Interalveolar septa edema
cavities.
here and there; lumina of
alveoli narrow at these
places.
645
- 2
15
Killed
Ditto.
Ditto.
644
+15
-
-
Ditto.
Lung tissue almost everyw
contains air; only here a
there interalveolar septa
infiltrated with edematou
- 98 -
part
pta
trated
. In
neumonia,
ory
olar
tous
aces.
edema
risy
tous
here
nd
s
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Fig.2. Cell mass of purulent focus
spreading to bronchial wall.
Fig. 4. Massive abscess
in left lung.
Fig-3. The same preparation, greater
enlargement. Bronchial wall destroyed
by lung abscess breaking through into
bronchus.
Fig. 5. Fibrino-purulent pleurisy,
Elastic plexus of pleura intact.
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of leucocytes here and there in the lumen. Accumulations of lymphoid and poly-
blastic matterx were not infrequently seen around the dilated vessels. Around
the larger veins and arteries, these areas infiltrated with lymphoid cells were
particularly extensive and filled with mononuclear leucocytes and erythrocytes.
As for changes on the part of the bronchi, there was no complete
uniformity. In places the lumen of the bronchi might be dilated, containing a
small accumulation of serous exudate, in which isolated mononuclear leucocytes,
some homogenous masses (apparently a secretion-product of the bronchi), and here
and there exfoliated cells of the bronchial epithelium were to be seen. The
epithelium of the bronchi was in these cases succulent, the cell boundaries sharp.
The basic connective tissue and likewise the muscular layer of the bronchial walls
showed no changes. Around these practically unchanged bronchial walls the
lymphatic vessels here and there were charged with serous fluid, and isolated
mononuclear leucocytes were seen in them.
At the foci of interstitial inflammation, such rather insignificant
changes in the bronchi were however quite rarely observed. Most often the lumina
of the medium and small bronchi contained a quite abundant cellular exudate con-
sisting of decomposing leucocytes, exfoliated cells of the bronchial epithelium,
and erythrocytes. In places the bronchial epithelium was partially or wholly
stripped away from the to pica propria. In such cases the cells of the epithelium
had a dystrophic appearance (swelling of the cells, karyolysis and so forth). In
the odd case (605, 629, 196, 602) a considerable inflammatory infiltration was
seen around the walls of the bronchus, the lumen of which was filled up with a
cellular exudate-consisting of decomposed leuco.cytes. Often one could also see a
direct passage between the exudate in the lumen and the foci of inflammatory in-
filtration surrounding the bronchus. Moreover the cell-decomposition in the
bronchial exudate was in no way distinguished from the decomposing mass of granu-
lar leucocytes in the,f oci adjacent to outer bronchial wall. In these cases the
continuity of the bronchial wall had been destroyed, and among the decomposed cells
one could still see remnants of the broken-up cells of the bronchial epithelium.
One could agree that in the latter cases exudate from the lung tissues surrounding
the bronchi had penetrated into the bronchial lumen.
The considerable leucocyte-accumulation in the lumen of the bronchi
testifies that the latter also were involved in the inflammatory process. It is
still not fully clear whether purulent bronchitis developed secondarily, or whether
inflammatory changes in the bronchi had progressed simultaneously with the symp-
toms-of interstitial pneumonia. True, in some cases the changes in the bronchi
were very feebly in evidence, while the interalveolar septa were densely in-
filtrated with inflammatory matter. Yet side by side with this it was possible
in many cases to see distinctly a passage between an inflammatory focus and the
bronchial lumen, or more properly speaking a bursting of the purulent focus into
the bronchus (figs. 2 and 3).
From this description it will be already evident that in our tests
the symptoms of interstitial inflammation of the lung were not limited to the
interalveolar septa; the quite considerable changes on the part of. the bronchi
testify that they also are involved in the inflammatory process. Furthermore
along with the symptoms of purulent bronchitis and inflammatory infiltration in
.g.e., Barge mononucgear ceggs. (Tra)
99
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the interalveolar septa, we frequently encountered foci of inflammatory edema and
catarrhal inflammation in the lungs. And in one and the same specimen, along
with thickened interalveolar septa which made the lumina either considerably con-
stricted.or quite indistinguishable, alveolar lumina were also seen which were
filled up with serous exudate containing isolated leucocytes, erythrocytes and
exfoliated cells of the alveolar epithelium. The interalveolar septa were then
somewhat edematous, and the capillaries and veins in them dilated and full of
blood. Moreover in some places one could see a. considerable accumulation of de-
composing leucocytes, that . is, in these cases there was a purulent focus de-
veloping in the lung. In the foci of inflammatory purulent infiltration which
we describe, we often found small clusters of Gram-positive cocci, in some places
free, in some places in the protoplasm of individual macrophages or alveolar
phagocytes.
In rabbit, No.605 symptoms of large-focus catarrhal pneumonia pre-
dominated, although here just the same we found thickened interalveolar septa,
infiltrated with inflammatory matter. In isolated areas of the odd lung we in-
deed observed cellular decomposition and incipient inflammation of the lung
tissue (abscess-pneumonia) .
In two cases from our material, we observed abscesses of the lungs,
which resembled each other to an extraordinary degree. In one of these cases
(196) a massive focus of suppuration, with its. center consisting of a decompos-
ing mass of leucocytes threaded through with Gram-positive cocci, was situated
in. the deep portions of the lung and only partially extended to the pleural sur-
faces. In the second case (187) the purulent focus had developed directly under
the pleura (fig-4). The necrotic zone in both cases was surrounded by a layer
of granular leucocytes, with the greater part thereof in a state of decomposition;
here and there among the leucocyte cell mass one could see cellular matter from
the bronchial epitheliums, remnants of muscle cells, aneuclear complexes of
alveolar epithelial cells, all likewise in a decomposing state, and also homogen-
ous masses which stained strongly with eosine. The intact interalveolar septa
on the boundary of the necrotic focus were impregnated with edematous fluid,
the blood-vessels in them were dilated and full of blood. Here and there lung
alveoli were seen containing air; the interalveolar septa at these points were
thin; the elastic network of the pleura was almost everywhere intact, being
considerably disintegrated and thinned out only over the necrotic focus. In
case 187 a considerable accumulation of polymorphonuclear leucocytes was seen on
the surface of the pleura; while in case 196, in spite of the fact that there
was quite a broad zone of purulent inflammation under the pleura, no accumulation
of leucocytes on the surface of the pleura was distinguishable.
Around the subpleural lung abscesses in these cases, we were unable to
observe any break-through into the pleura, nor any empyema of the pleura de-
veloped in this way.
As for changes on the part of the pulmonary pleura, quite often, along
with inflammatory changes in the parenchyma of the lung predominantly of the
interstitial pneumonia type, we observed a development of exudative pleurisy.
In most of these cases the quantity of exudate amounted to 50 - 100 em3, but we
* LobuOar (Tr.)
ws~ Suppurating pneumonia (Tr.)
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did not observe any compression of the lung on account- of the accumulation of
fluid in the pleural cavity; we never once saw a displacement of the mediastinal
organs or heart toward the unaffected side, such as had taken place in our
previous experiments with opened pneumothorax (see previous researches); that is,
we never saw any development of what was strictly definable as empyema of the
pleura.
The above-mentioned cases of exudative pleuritis were pre-eminently of
a fibrino-purulent nature. Then (and sometimes in other cases) there was a con-
siderable mass of fibrin in deposits on the surface of the pleura (fig-5).
These masses were quite densely infiltrated with granular leucocytes in a state
of decomposition. Among the mass of decomposition, clusters of Gram-positive
cocci were not infrequently found. In places the subpleural interalveolar septa
also were copiously laced with polymorphonuclear leucocytes, in the protoplasm of
which the phagocytized remains of cocci were found. The lymphatic vessels of the
.walls, under the pleura, were often dilated; a quite large quantity of granular
leucocytes could be seen in them. The elastic network of the pleura was then
nearly always intact; only here and there, in cases of very marked inflammatory
infiltration of the walls under the pleura and granulation of the tissue or in-
cipient scar-formation, did the elastic fibres take the appearance of a broken
line, or in places a dotted line. We never once observed a subpleural focus of
inflammatory infiltration to break through to the surface of the pleura, nor
a lung abscess to break through into the pleura. Only in one case did a purulent
infiltration in the subpleural regions of the lung extend so far as to come into
direct contact with the elastic fibres of the pleura. The latter became more
disintegrated and thinned out, and in places their continuity was broken, yet
on the surface of the pleura no exudation nor cellular infiltration was observed.
Our findings justify the belief that with a bronchogenic infection
under the conditions of our experiment, there is no break-through of lung abscess
into the pleural cavity; in this respect our experimental findings contradict the
statements of a number of clinicians (SPASOKUKOOSKI, CSIRLINA, UDOVIN, ZHMUR,
AKATOV, ORLOV, GRIGOROV, et al.), that all cases without except ion both of empyema
of the pleura and of purulent pleuritis are the result of minute imperceptible
abscesses breaking through into the pleural cavity. From the data of our last
series of tests, we formed the definite idea that the inflammatory infiltration
does undoubtedly get across from the lung tissue to the pleura, but this does
not take place by way of a break-through; rather, the process is propagated by
the lymphatic route and in a continuous manner. The spread of infection by
this route is fully possible under the conditions of blood and lymph circulation
in the interalveolar septa under the.. pleura and within the pleura.
From the data adduced in our most recent, and also in our previous
researches (of. our second report) it is seen that the intratracheal injection
of relatively small quantities of microbic bodies (staphylococcus culture, 1
to 50 million per cm) does not produce any acute changes in the lungs of a
rabbit, even in the later stages. The whole process manifests itself only in an
acute hyperemia and edema of the interalveolar septa. No development of purulent
DefinitQons of the concepts "purulent pleuras " and "empyema of the pleura" are given in our first
report (Arkhiv biol. nauk, vol. L, Nos. I - 2).
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foci in the lung may be detected, nor any noticeable changes of an inflammatory
character on the part of the pleura. This edema of the lung tissue is most often
a reversible condition. However, if rabbits thus treated are exposed. to general
cooling immediately after being injected, for instance if they are left outdoors
in winter at temperatures of -20, -17, -14, -100 etc. for a period of 15 to 20
minutes, then as a rule they will develop inflammatory changes in the lungs.
Most frequently the autopsy revealed symptoms of interstitial pneumonia, often
in combination with focal bronchopneumonia, and sometimes lung abscesses as well.
Cooling alone without the intratracheal infection did not produce such changes
in the lungs. This gives us a basis for supposing that cooling promotes the de-
velopment of inflammatory changes in the lungs if microbes are simultaneously in-
jecte'd intratracheally, apparently inconsequence of a lessening of the immuno-
biological resistance of the organism. It would be difficult to explain other-
wise the fact that, under identical conditions as far as infection is concerned,
animals left in a warm room did not develop pneumonia, while in animals exposed
to cooling inflammatory lung-changes were manifested in an acute degree.
The facts adduced compel us to direct more of our attention to the de-
rangement of the general state of the organism which is caused by cooling. In
this connection we must agree with the statements made by many authors (LAUCHE,
F. Ia.- CHI&OVICH, RENAUD, CSIRLINA, SKVORCSOV), who point out micro-organisms
frequently encountered in the body in a dormant state may become pathogenic and
promote the development of (for instance) pneumonia only when the organism
is subjected to some influence which seems to cause a regulatory upset in the
vascular and nervous systems. In the opinion of F. Ia. CHISTOVICH, sensitivity
may be produced even by products of the organism itself, substances which form
as a result of a cold or chill; it is well known that this state of chill lowers
the resistance of the organism. This circumstance apparently plays no small role
in the incidence of infections of the grippe type, which as is well known often
occur after general cooling (GLINCHIKOV, KONCHALOVSKI et al.., HEINRICH). MUDD
and his associates, NEDZEL et al. all mention the intimate connection between cool-
ing of the upper respiratory passages and the subsequent development of grippe
and pneumonia. Not without interest also are the observations of REINEBOTH, HINES
and'BROWN, BRAD and FELL, who point to the considerable increase in blood pressure
under the influence of a low temperature acting on the vasoconstrictors. Accord-
ing to the findings of ERASrOV, SCHADE, TENDEL00 at a1., when animals are cooled
(by putting them in water at a temperature of -0 or -2?C), a "profound physico-
chemical change in the blood and vascular walls" takes place in the lungs.
Associated therewith one may observe a disturbance of the characteristic blood
data, a heightened coagulability, and so forth. PUCHKOV and ?YAKUMEVA have shown
that the coagulability of the blood rises during cooling and falls during the
re-warming of an animal.
It is difficult to say whether general cooling always has the role of
a pre-disposing factor in the development of an inflammatory process in the lungs,
or whether it is the cooling itself which causes this process to develop. Ap-
parently it is necessary to consider both these possibilities in each individual
case of an inflammatory process developing in the lungs. It only remains to em-
phasize the fact that, in our data, the general cooling was undoubtedly a con-
dition favorable for bringing out the pathogenic powers of micro-organisms in-
jected.
-102-
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Fig. 6. Lymphatic vessels
of pleura dilated, packed
with granular leucocytes.
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Our findings relative to the development of experimental pneumonia in
the rabbit (both interstitial and bronchopneumonia) permit us to, believe that in
lung tissue under the influence of intratracheal staphylococcus infection'there
are initially symptoms of a considerable edema of the interalveolar septa, and
locally of the alveoli as well. In some of the rabbits there subsequently took
place a focal infiltration of'polymorphonuclear leucocytes and the formation of
foci of purulent inflammation. Similar changes, in the form of large-scale
edema, are mentioned by KRAUSPE and THEISS, ROBERTSON, COGGEStiALL et al. in
researches on the lungs during the period immediately after injecting pneumo-
coccus culture into the respiratory passages. CSINSERLING and SHTEIN's careful
histological investigation of material at various stages of pneumonia (both
the early and the later stages) have shown that in humans too the first, primary
stage of both croupy and bronchial pneumonia is an edema of the lung alveoli.
Quite often in our cooling experiments we found fibrino-purulent
pleurisy developing along with the pneumonia. In this case the transfer of the
inflammatory infiltration from the subpleural portions of the lungs'to the pleura
took place mainly along the lymphatic paths. The lymphatic vessels in the sub-
pleural regions were dilated; in their lumina many granular leucocytes could be
seen, and here and there individual phagocytized cocci were found. This was
particularly prominent in those regions where the surface of the pleura was free
of fibrinous deposits (fig.6). In cases where there was interstitial. pneumonia,
and when there were lung abscesses of bronchogenic origin, we were not once able
to distinguish any place where the inflammatory process had been transferred to
the pleura by way of a break-through of the subpleural foci into the, pleural
cavity. Even if we admit the possibility of such a method of propagation of the
purulent process, then the integrity of the subpleural portions of the lung-tissue
must have been damaged. Yet in all our cases of lung abscesses of bronchogenic
origin, and likewise of pneumonic foci, no necrotic decomposition or sloughing
of lung tissue could be seen.
.Often a passage .could be found between the foci of inflammatory in-
filtration and the cellular exudate in the bronchial lumen, and in some places
the wall of the bronchus was destroyed, apparently as,the result of a purulent
focus breaking through into its lumen. Evidently this is indeed the most frequent
possible method of "spontaneous" healing of a lung abscess, by way of the pus
being drawn off through the bronchi, a fact to which many clinicists have pointed
(SEAAK, TUSiINM, LINBERG, GABE, WALSEL, EDWARDS et al.).
1) Intratracheal inoculation of staphylococcus culture in small doses,
in combination with subsequent general cooling, will cause.the development of
pneumonic foci in the lungs of rabbits. When injected with the same dose. of
culture, without cooling,. and also when cooled without being inoculated, no such
changes are produced.
2.) The. first stage of this process manifests itself in the develop-
ment of a quite wide-spread edema of the interalveolar septa,, and in individual
cases of the lung alveoli as well. In the concentrations of edematous fluid
a fairly large quantity of polyblastic matter may be found. In the later stages
of the process, focal accumulations of granular leucocytes appear in the edematous
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tissue and here and there alongside it.
-3) Under conditions of both interstitial pneumonia and broncho-
pneumonia., the propagation of the inflammatory process from the lungs .to the
pleura proceeds mainly along the lymphatic channels and continuously, in' the`'
form of lymphangitic symptoms.
4) The pulmonary abscesses which are formed when intratracheal in-
oculation is combined with cooling do not break through into the pleural
cavity. In our experiments, fibrino-purulent pleurisy may be observed to de-
velop quite often, in consequence of the spread of the inflammatory infiltra-'
tion and of the microbic bodies, which takes place mainly by lymphatic routes.
5t The existence of passages from the foci of inflammatory infiltra-
tion in the tissue surrounding the bronchi to the lumina of the. latter testi-
fies to the break-through of the purulent foci of the lung tissue into the
bronchial lumen.
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1.
AKATOV, N K, Works of the Therapeutic Clinic of the Medical Institute at Gorki, 1936.
2.
ANICHKOV, N N, Arkh. Biol. Nauk, vol XLV, #2, 45, 1937-
3.
AFANASYEV, Compt.-rend, Soc. biol., XXII, 1884,
4.
BEKERMAN, L S, Sov. Khirurgia, VII, #1, 1934.
5,
Beck, Otsch. Klinik, Nr. 6-7, 8, (868.
6.
Brad H.and Fell L., Vlrch. Arch, Inner, Ned., XXXI, 121,
1937-
7o
Walther A., Virch, Arch., XXV, 414, 1862.
8.
GLINCHIKOV, M. Gos(zdat (State Press) 1922.
9.
GRIGOROV, Klinich. Ned,, vol. XV, no.8, 1937,
10. Hines and Brown, quoted by Brad and Fell,
11, Heinrich, Ned, K(inik, p.1727, .1936.
(2, DUrck, Dtsch, Arch* kiln, Ned,, LVIII, 368, 1897-
13o ERASTOV, V, Arkhly. path..anat, and path. physiol., 111, 117, 1937-
14. ZHMUR, V. A., Vest. khlr. I pogr, oblastel, XXXVI, bk. 105, 1935-
15o KONCHALOVSKI, N P, Russkaya Klinika, 1, 172, 1924.
16. Krauspe, C and The(ss, Ziegl. Beltr., XCI, 276, 1932.
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18. Lauche, A, Hdbo d, spez. pathol, Anatomle U. Histol,, III, 1, 880, 1928.
19. Lauche, A, Otsch. med. Wschr., LXIII, 165, 1937-
20. Lipari, G, Baumgartens Jahresberlchte, p.59, 1889.
21. Lode, A, Arch. Hyg,, XXVIII, 344, 1897-
22a Mudd, S. Grant, S. and Goldmann, A, J. Exp. Ned., XXXIV, II, 1921.
23, Nedzelp A. Illinois Ned, Jour,, LXVIII, 340, 1935-
24* ORLOV, Vracheb, Delo, No.5, 378, 1938,
25, PUCHKOV, N V. Arkh. path, anat, I path, physiol,, 111, 121, 1937
26. Relneboth, Dtsch. Arch. kiln. Ned., LXII, 63, 1899.
27, Renaud, M. Otsch, med. Wschr,, LXIII, 167, 1937-
28. Robertson, 0, Coggeshall, and Terrell, J. Clin. Investig., XII, 467, 1933-
29. SKVORCSOV, M.A, Pediatria, Nr,2, 193, 1937-
30. SPASOKUKOCSKI, S 1, Kiln, med. No 24, 1932,
31. SPASOKUKOCSKI,, S 8, Works of the VIIth Congress of Russian Surgeons, 1926.
32. SPASOKUKOCSKI, S I, and MIKHALEVSKI, I I,'Nov, khlr. arkhiv, 27, 105, 1932?
33. SPASOKUKOCSKI, S 1, and VINOf,RAD-FINKEL9, Nov. khir. arkhiv, XXVIII, 1, (933.
105
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34. SPASOKUKOCSKI, S I, Monograph; Medgiz Lovernment Medical Prees7, 1938.
35. Schade, H. Muench. med. Wschr., Mr. 36, 1021, 1919.
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37. UOOVIN, Nov. khlr. arkhlv, XXXV, bk. Is 1935.
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39. KHALECSKAYA, F N, Arkh. biol. nauk, vol. LIII, No.2-3, 1939.
40. CSINSERLING, V 0, Kiln. med., vol. XVII, 9-10, 1939.
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42. SHAAK, V A, Works XVIIth and XV111th Congress of Russian Surgeons, 1926; Sov. vrach.
gazeta, No.13-14, 1933.
43. SHTEIN, T A, Ob-ed. zased. Leningr. ob-va pathologov I LF VIEN (Joint session of
Leningr. Soc. of pathologists and Leningr. Branch All-Union Inst. Exper. Ned.) of
May 25, 1939.
106_
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Translated from Bull. Exper. Medicine, 15 (1-2), pp. 60-62, (1943)
ON THE INFLUENCE OF RAPID RE-WARMING ON BLOOD PRESSURE
AND RESPIRATION IN ACUTE HYPOTHERMIA
Of the Faculty of Pathological Physiology
(Director, Prof. P.N. VESELKIN) of the
State Institute of Stomatology (Director
Dozent Z.B. PIRIATINSKI). Leningrad.
In recent years the school of S.S.GIRGOLAV has initiated a revision
the seemingly unshakeable thesis of the necessity of gradual warming up in frost-
bite. A number of works by S,S.GIRGOLAV?s associates (T.ARYE'V, SHEINIS, MOLDAVANOV
and others) have demonstrated the favorable effect of speedy warming on the prog-
gress of frostbite cases. In cases of general cooling (hypothermia) too, speedy
re-warming is according to the statements of these authors less dangerous and more
effective than gradual re-waxwing.
An argument put forward against speedy re warming of an overcooled
subject is the fear that rapid dilation of the peripheral vessels under the in-
fluence of heat may lead to a sharp fall of blood pressure, or in any case to low
blood pressure, and thus aggravate the symptoms of vascular collapse, with all the
consequences thereof. Nevertheless, still earlier experiments and observations
during recent years have shown that the danger of this is in any case small.
It seemed to us that it would be of importance to test once again the
effect of rapid warming on the blood pressure in acute general hypothermia. For
this purpose we instituted tests on rabbits.
The animals (rabbits) were attached to a board and a canula
introduced into the carotid artery for purposes of registering the
blood pressure; respiration was registered by a pneumographic belt
connected to a recording drum. The temperature in the rectum was
measured with a thermocouple. The board with the animal attached
was placed in a large trough and cold water-and.-snow mixture at a
temperature of about 60C - 70C was poured in, covering the whole
body except the head and part of the thorax. In this bath the
rabbits remained until a state of acute hypothermia was reached,
when the cold water was rapidly poured off and replaced by warm
(at about 380 - 420C), the blood pressure and respiration being
registered without interruption throughout. Thirteen tests in
all were made; all of them were carried through without narcosis.
In cooling, symptoms developed in our rabbits in a typical manner and
quite swiftly. After an initial period of excitation ... heightening of blood
pressure, uneasiness, deepened respiration and (later) muscular tremor ... there
followed a depressed state. The rabbit became motionless; while the blood pressure
was still quite high a marked bradycardia developed, which progressed steadily
right to the end of the cooling period, then there appeared a lowering of the
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blood pressures a slowing up of respiration, and decline of temperature in the
rectum. In special experiments we rechecked the old finding that the bradycardia
was not corrected by injection of atropine nor by bilateral vagotomy.
Hence, vague nerve activity is not the basic cause of bradycardia in
overcooling; nevertheless we must note that in two cases of complete stoppage of
the heart at the high point of the cooling process the prompt section of both
vagus nerves evoked an immediate, even if temporary, restoration of the heart
action. Thus up to the very end of the agonal stage of hypothermia these nerves
show some inhibiting influence on the heart.
Adrenaline too in the later stages of the experiment will bring about a
sharp increase in the blood pressure, though somewhat less than that obtained with
adrenaline before cooling; the rise takes place quite gradually, but the pressure
stays up much longer. One might think therefore that in hypothermia adrenaline
is broken down in the blood much more slowly. It is interesting to note that the
rhythm and amplitude of the pulse during the adrenaline reaction remain, in the
cooled state, almost without modification.
After 1 1/2 to 2 hours the blood pressure usually dropped to 10-20 mm
of mercury, the body temperature fell to 16?C o 11F?C or lower. In this condition
there occurred in three cases a stoppage of respiration, then of the heart, and
the rabbits died. Hence this is really a premagonal stage. After reaching the
condition described, the replacement of the cold water with warm was carried out.
Within 5 to 10 minutes after pouring in the warm water, the blood pressure in the
majority of cases began to rise, and in 1+0 to 50 minutes reached two-thirds (or
more) of its initial value; the bradycardia disappeared very rapidly; within 3 to
5 minutes after putting into warm water the pulse rate picked up very much, the
amplitude of the pulse decreased, respiration speeded up and became deeper. In
not one single test did we observe any noticeable lowering of the blood pressure
which could be linked up with the transfer to the warm water. After an hour or
an hour and a half we removed the rabbits from the bath, sewed up the incisions,
dried them off and at a body temperature of 25 - 28? placed them in a light-and-
air bath for further warming up. The greater number of the rabbits soon recovered;
within an hour or two they were sitting up and showing a lively reaction to stimu-
lations. Nevertheless in spite of this, and in spite of the fact that the body
temperature was back to normal at the time warming was stopped, most of the rabbits
died next day. Some of the rabbits did not show this temporary stage of general
recovery: although after two hours of warming up their body temperature was back
to normal, they continued to lie in a state of complete adynamia and died in a few
hours' time. This "retarded death`' is probably connected with some irreversible
changes in the central nervous system.
In any case our experiments definitely show that in the stage of
maximum lowering of blood pressure, at the most intense point of the hypothermia,
rapid general re=warming does not evoke any further decline in pressure; on the
contrary it brings about a rapid rise.
One should nevertheless bear in mind that the vascular skin-reaction in
the rabbit is sharply different from the reaction in man, and one must be properly.
cautious in extending these findings to humans.
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THE FRENCH, -POLAR
RESEARCH
EXPEDITIONS 1948-1951
a report by PAUL E. VICTOR
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"The two poles have been reached. By their physical efforts and energy men
have realized the dream of generations. Modern aviation has enabled us to
confirm earlier discoveries and to fly over uncharted areas. For a moment it
seemed that the task had been accomplished and that odysseys to the Arctic
and Antarctic had been abandoned. . . . But today men's eyes are more than
ever turned toward the polar regions. The period of making records, which
were also fruitful in scientific discoveries, is closed; the period of development
has begun. The vast icy stretches of polar lands and seas hold both economic
and scientific treasures. Some of the first are already known and are being
exploited; the search for the second will lead to the discovery of others. Here
is a magnificent field of action for pure and applied science. Do we ever know
what results the most abstract studies will yield?"
Commandant Jean-Baptiste Charcot (1867-1936)
CONTENTS
PART I-ORGANIZATION AND PURPOSES Page
1-Organization 3
2-Purposes of the Arctic Expedition (Greenland Ice Cap) 3
3-Purposes of the Antarctic Expedition (Adelie Land) 4
PART 11-PRELIMINARY EXPEDITION TO THE GREENLAND
ICE CAP, 1948
4-Aims of the Preliminary Expedition
ti
5-Landing Operations
6
6-Setting up of Camp I (Coast Camp), Construction of
First Section of Uphill Road to Ice Cap
8
7-Setting up of Camp II, Construction of Cableway and
Second Section of Uphill Road to Ice Cap
10
8-Completion of Camp III (Ice Cap Camp), Reconnaissanccs,
Marking of Inland Trail
11
9-Work at Camp III, Storage of Equipment, Return journey
12
10-Transportation, Reconnaissance and Landing 13
11-Operations Between Camp I and Camp VI 14
12-Convoy to the Site of the Central Station 16
13-Installation of the Central Ice Cap Research Station 18
14-Air Operations 19
15-Convoys 20
16-Return of the Main Body of the Expedition 20
17-The Central Ice Cap Research Station 21
18-Program for 1950-1951 23
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THE FRENCH POLAR RESEARCH
EXPEDITIONS 1948-1951
Director, Paul E. Victor
Arctic: Greenland Ice Cap Expeditions 1948, 1949-1950, 1950-1951
Leader, Paul E. Victor
Antarctic: Adelie Land Expeditions 1948-1949 and 1949-1951
Leader, Andre F. Liotard
1-Organization
ACTING upon a project drawn up by Paul E. Victor, the French Govern-
ment authorized the Ministry of National Education to grant funds for
the organization of two polar research expeditions: an Arctic expedition to
the Greenland Ice Cap and an Antarctic expedition to Adelie Land.
The organization and direction of these expeditions are the responsibility
of Paul E. Victor, assisted by a six-man Board of Directors.
The research programs of these expeditions are set up by a Scientific Com-
mission headed by Charles Maurain, of the French Academy of Sciences. This
Commission also determines the methods to be employed and evaluates the
results obtained.
The Greenland Styrelse authorized the Greenland Expedition in May 1947.
2-Purposes of the Arctic Expedition (Greenland Ice Cap)
G REENLAND is covered by a desert of ice about 1,700 miles long and
600 miles wide. Its elevation is 10,000 feet and its thickness varies be-
tween 6,000 and 9,000 feet. Aside from the need for valid scientific data con-
cerning this ice sheet, by far the largest in the Northern Hemisphere, there
is urgent practical need for reliable information about the weather conditions
that prevail over it, for Greenland lies athwart several of the great air routes
of the future. Furthermore, the Greenland Ice Cap's influence on Northern
Hemisphere weather, important as it is, is still, as yet, practically unknown.
The French Arctic Expedition proposes mainly to study the Greenland Ice
Cap from the following points of view:
a) profiles of the surface of the Ice Cap by geodetical measurements;
b) profiles of the substratum by seismic soundings;
c) glaciology, especially accumulation and dissipation of the firn, and
temperatures and densities both on the surface and within the deeper
layers of the ice; .
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 d) gravimetric profiles and studies on gravity;
e) climatology and meteorology (including radiosondes) ;
f) atmospheric physics.
Secondary purpose of the Greenland Expedition is to carry on research on
certain questions in the fields of geophysics, natural sciences and biology.
3-Purposes of the Antarctic Expedition (Adelie Land)
ADELIE LAND was discovered in 1840 by the French explorer Dumont
d'Urville. No landing was made on the mainland. The hinterland was
cursorily visited in 1913 by the western group of Sir Douglas Mawson's ex-
pedition.
The purpose of the French Adelie Land Expedition is to study Adelie
Land's coast, waters and weather conditions during summer investigations
aboard ship, to land an over-winter party, and to carry on one or, if possible,
two years of exploration and research from a base camp.* Winter research is
to be in the fields of:
a) cartography;
b) hydrography and oceanography;
c) geology;
d) climatology and meteorology (including radiosondes) ;
e) atmospheric physics.
*Eleven members of the staff of the French Polar Expeditions, headed by Andre F. Liotard,
left Brest on the Expeditions' ship, the Commandant Charcot, on Nov. 25, 1948. They
sailed to within 40 miles of Adelie Land but were unable to break through the ice pack. They
gathered valuable hydrographic and meteorological data, made a landing on Sabrina Island
(Balleny Islands) and completed cartographic studies of several previously unstudied
islands. Leaving the greater part of their equipment at Hobart, Tasmania, and their sledge
dogs in the Melbourne Zoo, they returned to France in the spring of 1949 and immediately
began preparations for a second expedition.
Carrying the same group of scientists under Liotard, the Commandant Charcot again left
Brest for Adelie Land on Sept. 20, 1949. With the aid of air reconnaissance carried out by
the pilot of the Expedition, they found a break in the pack and successfully landed on
Adelie Land on Jan. 20, 1950, 110 years to the day after Dumont d'Urville first claimed the
territory for France. They have built gale-resistant barracks at Port-Martin (66' 50' S. by
141? 25' E.) and are pursuing their winter research program.
A detailed account of the Adelie Land Expeditions does not fall within the scope of this
pamphlet.
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(The above map of the Antarctic Region and the map of the Arctic Region on
the preceding page were adapted from Petrole-Progres, ler trimestre, 1950.)
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PART 11-PRELIMINARY EXPEDITION TO THE
GREENLAND ICE CAP, 1948
Leader, Paul E. Victor
4-Aims of the Preliminary Expedition
T HE Preliminary Expedition to the Greenland Ice Cap in 1948 was under-
taken to prepare the ground for the main expedition, planned for 1949-
1950. Its essential aims were:
a) to bring up to the Ice Cap the necessary equipment in order to have
it ready on the spot at the very beginning of the main expedition;
b) to bring the members of the Expedition into contact with their oper-
ating ground, so as to enable them to improve their instruments and
technical methods during the following winter;
c) to start the scientific research program.
The Expedition was to last about 5 months. Upon completion of this
period, its members would return to France and carry on the preparation of
the main expedition in the light of the facts acquired during the Preliminary
Expedition.
5-Landing Operations
AT OUR request, Eskimos made numerous dog-sled reconnaissances during
the winter. Their results, radioed to the Greenland Styrelse, as well as
information collected locally, prompted us to visit, first, the point where
Quervain landed in 1912. We hoped to find a good anchorage and fairly good
landing possibilities there. Moreover, the distance, as the crow flies, from
there to the Ice Cap was only 6 miles.
On June 1, 1948 at 10 A.M., the Force, carrying the 25 men of the Expedi-
tion and 60 tons of equipment, dropped anchor in front of the Eqip Sermia
Glacier (69? 46' N. by 50? 15' W.) in a fjord practically free from sea-ice,
surrounded by land exceptionally bare of snow (600 miles further south, the
coast was still covered with snow).
Immediately after we anchored, several parties set out to reconnoiter the
possible ways of penetration to the Ice Cap. Access immediately proved to be
very difficult owing to the exceptionally small amount of snow which had
fallen that year. It was soon evident that the route followed by Quervain in
1912 could not be used by the weasels, and other ways of access had to be
found.
After 40 hours of uninterrupted reconnaissance work, we discovered
another way which could be improved upon and which seemed to fulfill the
conditions required for our ascent. The materiel would be brought to the
foot of a 700-foot cliff, which, in turn, would later be climbed by a cableway
prepared by us for this purpose.
The reconnaissance parties advanced several miles on the Ice Cap. At this
time of year (beginning of June), the surface of the firn was rather smooth
and still practically unimpaired by the thawing.
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 Actual landing operations started on June 3 at 6 A.M. The many difficulties
encountered were due, for the most part, to the nature of the ground (steep
coast with slippery rocks), to the waves caused by the discharge of the glacier
in the sea, and to the disturbances created by floating ice blocks. In spite of
all this, our 60 tons of equipment were unloaded in 5 days (June 3 to 8)
without any accident or serious damage.
The equipment included: food for 25 men for 6 months (5,000 calories per
man per day) ; special equipment, light tents for reconnaissance expeditions
and heavy tents for base camps; 15 duraluminum sleds to be towed by our 5
weasels, 3 trailers on sleds, to be used as laboratories, measuring approxi-
mately 12 x 6 x 5, where our scientists would work in the best possible condi-
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Weasel tugging sled up the 6-mile road from Camp I to Camp II
tions; 5,000 gallons of gasoline, 3 winches, 12,000 feet of metal cables of
various diameters; and a large number of very diversified scientific instru-
ments, radio-sets, tools, repair-sheds, etc.
We erected a landing-pier and fixed a 250-foot-long winch to raise the
equipment from the coast up to the platform, about 150 feet above sea-level,
where Camp I was to be set up. This winch could lift one ton of equipment
per trip.
The unloading was carried out by all the members of the Expedition, with
the help of 15 Eskimos. The only mishap worth noting was the loss of a
reserve weasel, which sank while being unloaded (the Expedition had 5
weasels plus 2 additional reserve weasels).
The ship left the Expedition on June 8 at 4 P.M.
6-Setting up of Camp I (Coast Camp), Construction of First Section
of Uphill Road to Ice Cap
W HILE most of the personnel of the Expedition were still engaged in
carrying the equipment from the shore up to the platform or working to
set up Camp I, a reconnaissance group, composed of 2 members of the Expedi-
tion and 5 Eskimos, set off with one weasel on June 9 at 9 A.M. to stake out our
road up to the Ice Cap.
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 Lower end of cableway at base of 700-ft, cliff
a) a permanent coast camp and residence for the group dealing with
b) a camp where the equipment to be carried up to the Ice Cap would be
c) a storage depot for our reserve equipment for the 1949 Expedition.
A 6-mile road was built between Camp I and the foot of the cliff where
Camp 11 was established. This road encountered various natural obstacles,
such as ridges, lakes, steep declivities. Moreover, the ground conditions were
very diversified, and we met grassy areas, swamps, rocks, snowbanks, etc.
This road enabled us not only to transport the equipment that would be
needed on the Ice Cap (amounting to about 45 tons) but to keep our vehicles
and the materiel transported in the best possible condition.
In connection with the construction of the road, various operations were
conducted at the same time:
a) reconnaissances by small groups of men on foot. Their task was to
stake out the best paths, which would later be improved for the
vehicles;
clearing and marking of the trail selected by a small group of men
accompanied by 1 or 2 weasels. The trail was marked by cairns ap-
proximately 15 feet apart and situated on the driver's side (left, when
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going up). It was necessary to place the cairns at such frequent inter-
vals so that we could follow the road even in fog;
c) improvement of the trail, accomplished by several teams whose mission
was to clear out stones, blow up rocks and build the necessary bridges,
piers, channels (through the snowbanks), road sections, etc. The first
section of the road, 6 miles long and rising 600 feet from Camp I, was
completed in 10 days (from June 9 to 19).
7-Setting up of Camp II, Construction of Cableway and Second Section
of Uphill Road to Ice Cap
O N JUNE 20 at 9:30 A.M. the first convoy (4 weasels with a 2-ton load)
left Camp I. During the following days 15 convoys of 6 vehicles each
carried all needed equipment to Camp II. Their schedule was: 6 hours' ride,
8 hours' rest (including loading and maintenance). The transportation of the
3 trailer-laboratories took 40 consecutive hours.
At the same time, the installation of Camp II was started, together with the
building of the second section of the road, comprising:
a) a cableway to lift the equipment up to the top of the cliff;
b) a 1-mile trail, running from the higher end of the cableway to the Ice
Cap and cutting through the moraines; this trail followed a straight
line: it crossed two consecutive moraines, a lake, and a snowbank, and
was planned to permit the use of a winch;
c) a trail to the Ice Cap to be climbed by the weasels, lightly loaded.
This trail (3 miles long) was not intended to be used by several con-
secutive convoys. It cut through the most chaotic and dangerous ter-
rain we had met yet.
Bad weather conditions and the presence of countless mosquitoes rendered
very difficult the establishment of Camp II, the construction of the cableway
and of the different sections of the road.
Owing to their structure, the last moraines on the approaches to the Ice Cap
presented considerable difficulties. There were loose stones, shifting mud, etc.
The aspect of the trail changed constantly and its condition deteriorated daily,
requiring endless repairs.
Our cableway had been planned in France. On July 10 it met its first test
with excellent results. It rose 700 feet and was 2,500 feet long. The diameter
of the metal cable was 14.5 mm., and its tension was 6,000 pounds.
During the next few days, all the equipment was lifted up to the top of the
cliff without mishap or accident of any kind. The cableway carried a load of
1,000 to 1,500 pounds at a time. It took 36 consecutive hours of work to
bring up the exceptionally heavy loads (about 1,800 pounds) constituted by
the trailer-laboratories. A total of 43 tons was carried up.
After repeated attempts, rendered very difficult and slowed down by bad
weather, the functioning of the winch that was to bring the equipment from
the higher end of the cableway to the Ice Cap proved defective. We then
transported it by a series of operations: transportation by weasels from the
cableway to the border of the snow, across the lake; crossing of the snow and
of the steep side of the moraine by sleds towed by weasels (tied together by a
150-foot cable) ; transportation by weasels from the moraine to the Ice Cap.
On July 9, the first weasel reached the Ice Cap. On July 13, 34 days after
landing, the road, in all 10 miles long, was completed, and Camp III was set
up on the ice.
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 Camp III at edge of Ice Cap. Trailer-laboratory, sled and tent
On July 25, 46 days after landing, the members of the Expedition were at
last able to enjoy their first day of rest. During these 46 days, they had worked
an average of 14 uninterrupted hours per day. Several sections of our route
were accomplished by 36 to 40 hours of continuous work. An average of more
than 50 tons of equipment was handled 14 times, by hand, by the members
of the Expedition.
By July 25, all the equipment was stored on the Ice Cap without any loss,
damage or casualty.
8-Completion of Camp III (Ice Cap Camp), Reconnaissances, Marking
of Inland Trail
W RILE the equipment was being hauled from Camp II to Camp III, the
setting up of Camp III was completed, and reconnaissance parties set off
and penetrated further inland to stake out, through the crevassed area bordering
the Ice Cap, the trail we would follow later. These reconnaissance groups went
10 miles inland and explored all the ground lying on either side of the
69? 45' N. parallel and situated between the two main areas of crevasses
(created on the north by the Eqip Sermia Glacier, and on the south by the
glacier from which the Eqip Kugssua river takes its source).
On July 29, the first motorized reconnaissance group set off, with 2 weasels
towing 3 sleds and carrying a total load of about 3 tons of equipment. This
equipment was to be used for a meteorological, geophysical and glaciological
research station, which we proposed eventually to set up on the Ice Cap, some
distance away from the border.
It was already late in the year and the weather was exceptionally warm.
Therefore, the ice surface we encountered immediately after we left Camp III
was particularly rough and chaotic, the thaw having already begun to affect
the surface of the Ice Cap.
In view of all. these difficulties we decided to set up Camp III his. From
this camp, further motorized but lighter reconnaissance groups would set out.
Moreover, a certain amount of scientific research could be undertaken there.
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The advance reconnaissance party left the next day. It was composed of 2
weasels and a sled, and carried the equipment necessary to set up a light
meteorological station, to be manned by the meteorologist and the doctor.
On July 31, this advance reconnaissance group halted on the border of the
explored area. It faced a glacial valley, measuring about 10 x 10 miles, and
crisscrossed by an intricate network of rivers, lakes and crevasses. Some of
these river beds were as large as actual main rivers, measuring up to 160 feet
wide, or rushing in the bottom of impassable canyons, 30 to 45 feet deep. Nu-
merous tributaries added to the complexity of this network. The river beds
wound their way through countless meanders and disappeared under the
ice into abysses, the largest of which had a diameter of about 150 feet. The
surface of this "valley" was particularly chaotic, and progress was rendered
still more difficult by innumerable cryoconite holes with a diameter ranging
from a quarter of a yard to several yards.
After 7 days of work and in view of the difficulties encountered, it was
decided not to proceed any further. The roughest section could have been
crossed, but the obstacles were such that this crossing would probably have
taken several weeks and caused heavy damage to our equipment. It seemed
more advisable to spend the time still left to us in Greenland on scientific
research work at Camps III and III his, and to stake out, as far as possible
inland, a trail for the 1949 Expedition, running clear of the river beds and
crevasses.
By August 9 the reconnaissance party was back at Camp III.
9-Work at Camp III, Storage of Equipment, Return Journey
E XCEPT for the members of the reconnaissance group, the technicians who
did not specialize in any scientific research work were placed at the dis-
posal of the scientists as soon as the general tasks of installation were com-
pleted.
Theoretically, our ship was supposed to arrive Sept. 10. All necessary steps
were taken, so that we could board the ship on that date.
On August 27 storage operations were begun. A suitable emplacement had
been located near Camp III. All the equipment was taken apart, thoroughly
oiled and protected, and deposited there.
While the storing of the equipment in Camp III was being carried on, we
started bringing our materiel back from Camp III to Camp I. The members
of the Expedition carried down 5,000 pounds of scientific and personal equip-
ment on their backs.
On Sept. 7 we left Camp 111. Both the camp and the cableway had been
conditioned for the winter.
From Sept. 8 to 10, we stored the equipment which was to remain in
Camp I. By Sept. 10 all our work was completed. As the ship was not expected
to arrive for another 12 days, the intervening period was employed for various
types of work, material and scientific.
The Brandal arrived on Sept. 22. The loading of 4 tons of equipment and
the boarding of the men was completed within 4 hours.
Our stops during the return journey, for scientific or technical reasons,
were: Ata, Jakobshavn, Godhavn, Sukkertoppen, Godthaab, Prinzkristiansund,
Edinburgh.
The Brandal arrived at Rouen on Oct. 13, 1948 at 2 P.M.
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Part III-GREENLAND ICE CAP EXPEDITION
1949-1950
Leader, Paul E. Victor
10-Transportation, Reconnaissance and Landing
ON THE date scheduled for the departure of the 1949 Greenland Ice Cap
Expedition (April 10) reports on ice conditions received from the
west coast indicated that the winter of 1948-49 had been unusually cold and
long. The fjords north of Holsteinsborg were still locked by winter ice, and
the Labrador ice barrier cut off the approach to Disko Bay. However, we
decided not to postpone the departure of the Expedition, since the experience
of previous years had shown that the breaking up of the drift-ice usually takes
place early in May and is a very rapid process. It seemed more logical to
wait, if necessary, at the edge of the ice, and thus make sure that our working
period was as long as possible.
The Fjellberg, carrying the 36 members of the Expedition and 100 tons
of equipment, docked at Keflavik, Iceland, on April 22, 1949 and unloaded
70 tons of materiel that were eventually to be parachuted to the future Central
Ice Cap Research Station.
Inasmuch as ice conditions had not improved since the Expedition's de-
parture from France, we decided to push as far north as possible and to make
a series of reconnaissances in the direction of the Ice Cap. Our aim was to
find a means of approach that would enable a small group of technicians to
make their way, either in weasels or dog sleds, to Camp III, where the 1948
Preliminary Expedition had stored equipment in preparation for the 1949-
50 project. This group would unpack and prepare the stored materiel for
use, and thus make it possible for the 1949 program to get under way as
soon as the Expedition landed.
On May 6, the Expedition reached Sukkertoppen. Preparations for a recon-
naissance into the interior were undertaken immediately, and on May 7, with
the aid of the local authorities, a group of 20 men and 1 weasel were landed
on the ice at the mouth of the Sondre Isortok Fjord. Study of the map and
information received from local caribou hunters led us to believe that the
Sondre Isortok offered a possible means of approach to the Ice Cap that would
be accessible in weasels.
The reconnaissance party itself (4 men with 1 weasel) set out over the ice
of the fjord on May 8 at 4:15 A.M. At 1 P.M., having gone 30 miles, the
group was stopped by powdery snow some 6 feet deep. Pushing on further to
the east on skis, they found that the same conditions prevailed for miles
around. They therefore turned back and regained their point of departure at
7 P.M., having travelled more than 60 miles.
During the day, the warm weather had rotted the last 6 miles of ice, and
on May 9 the sea broke it up. The weasel was put in a safe place on a little
island. On May 10, the Fjellberg, accompanied by a boat from Sukkertoppen,
came to take this vehicle aboard.
On May 15 the east wind rose. Hoping that it would clear the coast north
of Holsteinsborg by driving the Labrador ice barrier out toward the open
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sea, and in order not to lose time, the Expedition set sail May 16 and reached
Jakobshavn without mishap on May 17. The ship immediately headed toward
Ata Sund, the approach to Port Victor, landing point of the Expedition.
On the way, two teams of dogs were taken aboard at the little settlement
of Rodebay.
On May 18 the ship was again stopped by the ice in Ata Sund which made
navigation impossible.
The same day, a reconnaissance party consisting of 2 members of the Ex-
pedition and 2 native guides with 2 sleds set out over the ice of the Pakitsoq
Fjord to reconnoiter a possible means of approach to the Ice Cap.
It turned back the same day when, at the end of the fjord, it found a strip
of land completely bare of snow and a glacier with impassable seracs.
By May 19, the ship was back at Jakobshavn. The same day a reconnaissance
party composed of 2 members of the Expedition and 3 native guides with 3
dog sleds set off to reconnoiter the interior of the Sikuijuitsoq Fjord. They
returned on the morning of May 21, having covered 56 miles. They had found
the road usable for dog sleds but not for vehicles with caterpillar treads.
Before sending out a large group which would have had to travel nearly
90 miles over the Ice Cap in order to reach Camp III, a last attempt was made
to land near the coast base camp. In the afternoon the Fjellberg set sail toward
Ata Sund, but found ice conditions unchanged.
That day a strong foehn wind arose, causing the snow to melt rapidly.
Nevertheless, we decided to attempt to reach Camp III. In the evening, a
group consisting of 6 technicians with 11 dog sleds (carrying about a ton of
materiel) set out on the trail that had been reconnoitered previously.
On May 25 this group returned to Jakobshavn, having covered only a little
more than 12 miles under exceptionally difficult conditions created by the
thaw (cascades, lakes, avalanches, etc.).
The southwest wind having risen during the night of May 26 to 27, the
Fjellberg set sail on the morning of May 27. It was able to navigate Ata Sund
with very little difficulty and cast anchor at Port Victor at about noon, for the
previous night's wind had broken up the ice. Fifteen men immediately dis-
embarked to reopen Camps I and III and put the stored materiel in working
order. The landing of the entire Expedition and its equipment at Port Victor
was completed by the evening of May 31, 1949.
11-Operations Between Camp I and Camp VI
THANKS to the installations set up in 1948, it took only one day, June 1,
to lift all the materiel up to the platform of Camp I. The first convoy of
equipment (consisting of 4 weasels) left for Camp II and the cableway on
June 2.
Certain sections of the Expedition immediately began their scientific re-
search work, especially the coast group.
During this period, the work of clearing and unpacking Camp III (located
at the end of the land road, at the edge of the Ice Cap) advanced rapidly. The
weasels ran the moment the starter was touched, without any special attention.
These weasels had been used throughout the 1948 Expedition and required
maintenance work that was undertaken immediately.
On June 7, the thaw struck the marginal zone of the Ice Cap and, in less
than 24 hours, the surface which until then had been hard and smooth, as in
winter, presented its typical appearance when in process of thaw, marked with
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 great humps, ice peaks, crevasses forming from melting snow out of which
torrents would soon gush, and slush pits sometimes several yards deep.
In order to avoid the danger of having to wait 3 weeks or a month before
being able to bring all the equipment necessary for our wintering up to an
altitude of 5,000 feet, beyond the thaw zone, we decided to transport it across
the marginal zone immediately.
On June 14, in face of the persistent and increasing thaw, we decided to
divide the Expedition into two groups (not counting the coast group) :
The Central Group (or Group A), under the direction of Paul E. Victor,
whose main task was to set up the Central Ice Cap Research Station in the
center of Greenland;
The Western Group (or Group B), under the direction of Jean Neviere,
whose task was to continue bringing up the equipment necessary for the
scientific research work of this group, to start this work and to advance toward
the interior, eventually joining the convoys of the Central Station.
On June 17, Camp IV was set up at 69? 40' N. by 40? 30' W., 19 miles
(30 km.) east of Camp III, at an altitude of approximately 3,630 feet. This
camp was still within the zone of ablation, but it was designed to serve as an
intermediate storage depot, where our equipment and materiel could be pro-
tected from the thaw. It was set up after 4 convoys from Camp III of which
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the last required 28 hours of uninterrupted work. The 40 tons of materiel
and equipment necessary to establish the Central Station were brought up to
this camp at the cost of great efforts in face of difficulties that grew more
severe with every hour that passed.
During this period the convoys between the coast and Camp III continued.
The Western Group effected 27 such convoys. In addition to the roughness
of the terrain, they met difficulties that arose from the wear and tear of the
vehicles. (The work of thoroughly reconditioning and servicing the weasels
had been interrupted by the need to start convoys immediately, in order to
avoid being caught by the thaw.)
On June 18, 1949, a reconnaissance group consisting of 6 men with 2
weasels set off to the east to find a location for our future Camp V at an alti-
tude of 4,500-5,000 feet. After advancing for 9 hours, 30 minutes, they found
a good surface cut in several spots by crevasses that were still covered with
dangerous snow bridges. They accomplished the return trip in 3 hours.
During the return journey, the foehn wind began to blow violently, causing
rapid melting of the snow at Camp IV. Once more we had not a moment to
lose. The same day the first convoy from Camp IV to Camp V set out in
the rain.
On June 23, 1949, Camp V was set up at 69? 40.2' N. by 48? 40' W., 40 miles
(65 km.) east of Camp III, at an altitude of 4,785 feet. Almost all of our 40
tons of equipment was deposited there on that date, following 3 convoys
of which the last took 61 hours of continuous work. On this convoy it was
necessary to leave part of our gasoline and food supplies in a depot, since the
caterpillar treads of the weasels were beginning to show signs of weakening
as a result of intensive use. This materiel was later brought up to the Central
Ice Cap Research Station by the Western Group's weasels, after it had re-
joined the Central Group.
By this time the Western Group had completed 42 convoys between Camp I
and Camp III.
To make sure that the thaw would not overtake us again, a convoy of 6
men with 3 weasels set out eastward from Camp V to set up Camp VI, which
was to be definitely beyond the thaw zone (at an altitude of about 5,300 feet).
12-Convoy to the Site of the Central Station
ON JUNE 30, Camp VI was set up about 50 miles (80 km.) east of Camp
III. Here we stored all equipment not scheduled to go to the site of the
Central Ice Cap Research Station with the first convoy.
On July 1, the first convoy set out from Camp V for the site of the Central
Station. It consisted of 22 men with their personal equipment, 5 weasels (1
weasel without caterpillar treads had to be left behind) and 7 sleds, carrying
17,600 pounds of materiel, and 2 trailer-laboratories.
On July 3, having covered about 68 miles (ito km.), the convoy stopped
at a point 118 miles (190 km.) from Camp III. The weather was bad and the
snow very deep. Six caterpillar treads broke on the way and were immediately
repaired with cables and frogs brought along for this purpose.
Since the treads which were still intact showed signs of weakening, a depot
of materiel was left at this spot, thus lightening our convoy. (The caterpillar
treads of the weasels had been subjected to tremendous strain. In 1948, they
had withstood 15 convoys over very difficult terrain and numerous recon-
naissance expeditions over the chaotic ice at the edge of the Ice Cap; in 1949,
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 they had carried many convoys through, the thaw zone, from Camp III to
Camp VI, in melting snow, across an area cut by crevasses, lakes and glacial
torrents. The 1949 Expedition had brought spare treads to replace those used
the previous year, but the need to push on ahead of the thaw in June, left
us no time to put them on the vehicles.)
The convoy set out again on July 5 at 1:45 A.M. It stopped on July 12 at
a point 161 miles (260 km.) from Camp III after eight stops to repair the
caterpillar treads. Each repair took 14 to 18 hours' work in temperatures as
low as -20? F.
Since we had to advance through deep snow and all the treads had had to
be repaired, some of them several times, we decided to advance the date of
the first parachute drops that were originally to have been made at the Central
Ice Cap Station.
A Liberator LB 30 belonging to SATI (Societe Aerienne de Transports
Internationaux, now known as the Union Aeromaritime de Transport), piloted
by R. Loubry and navigated by P. Comet, left Paris on July 12, at 5 P.M. Z.
After a short stop at Keflavik, Iceland, it came over the camp set up at the
161-mile (260 km.) point at 10 A.M.Z. and parachuted 6 tons of food and
gasoline for the depot, and 12 new caterpillar treads, or, rather, surplus re-
conditioned treads.
After laying down the depot of food and gasoline and putting the new
treads on the weasels, the convoy set out again on July 15 at 3:50 A.M.
On July 17, at midnight, we arrived at the site of the future Central Ice
Cap Station (254 miles, or 410 km.) from Camp III, at 70? 54' N. by 40? 42' W.
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(The position of Wegener's Eismitte station, according to the reports pub-
lished in 1930, was 70? 53.8' N. by 40? 42.1' W.)
In the meantime the Western Group brought the necessary equipment up
to the edge of the Ice Cap in 49 convoys (it was necessary to make this large
number because the condition of the caterpillar treads required light loads).
They arrived at Camp IV on July 16 and recovered the sleds, loaded with
gasoline and food, left by the Central Group. Then, they immediately began
their research work. They also sent a light reconnaissance party to reconnoiter
the trail to Camp V, so that they could eventually join the Central Group.
13-Installation of the Central Ice Cap Research Station
0N JULY 18 the Central Group pitched camp at the site of the future
Central Station and continued the research work that had been started
during the convoys.
The digging out of emplacements for the Central Station's installations
began immediately, according to the plan drawn up before the departure of
the Expedition. The entire station was dug out of the firn. A system of snow
tunnels about 330 feet long connects the living quarters, the various labora-
tories, the power house and the storerooms for fuel and materiel.
The house in which the men live was prefabricated in France. It is 16.5 x
26.5 feet. Its walls are 6.5 feet high, while the height to the roof is 8.25 feet. The
walls, specially constructed for maximum insulation, are 2 inches thick, but
provide the same insulation as 4 feet of brick. The house weighs 4,840 pounds.
It was carried overland from the coast to the center of the Ice Cap, since its
panels could be neither free-dropped nor parachuted.
The house contains: a dormitory for 8 men, a work-bench, a kitchen unit,
a large table, and a kerosene stove.
The laboratories are the following: a trailer-laboratory for radiosonde
work, at one end of the Station; a trailer-laboratory for radio-electrical work,
at the other end; a meteorological laboratory, inside the house; a photographic
laboratory, inside the house; an atmospheric physics laboratory, adjoining
the radiosonde trailer-laboratory; a laboratory for glaciology and temperature
measurements, dug in the firn, and a 24-foot pit for glaciological research.
All these installations are buried in snow, and are thus protected from the
wind. This arrangement also reduces the heating problem, since the tempera-
ture of the firn rarely goes below -35? F., while outside temperatures some-
times times reach -90? F.
The storerooms are as follows: 3 storerooms for bottles of hydrogen used
in radiosonde balloons, 2 storerooms for meteorological and radiosonde equip-
ment, 1 storeroom for general materiel and equipment, 1 storeroom for gaso-
line and kerosene, 1 storeroom for radio-telegraphic equipment.
At one end of the tunnel, there is an electric power station, including 3
generators, a battery chamber and a switchboard.
Outside installations are the following: a launching tower for radiosonde
balloons, 13 feet in diameter and 13 feet high; an igloo with an opening in
the roof for the theodolite used in radiosondes; a 33-foot tower with various
observation instruments at the top; a meteorological cabin; radio antennae; a
radio-goniometrical station for the homing of parachute supply planes.
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hydrogen
bottles
t
meteorological,
cabin
PLAN OF GREENLAND CENTRAL ICE CAP RESEARCH STATION
.
70 54'N. by 40 42'W
Altitude: 9.900 ft.
tower for launching
radiosonde balloons
radio-
sondes
living
quarters
food
stores
radio
equipment
laboratories for physics laboratory
and meteorology for radioelectricity
14-Air Operations
T HE purpose of these operations was to bring to the future Ice Cap Re-
search Station the 70 tons of materiel deposited by the Expedition at
Keflavik, Iceland, in April 1949. They were carried out by the same airplane
and crew that had made the first parachute flight on July 13 (see page 17).
Thirteen flights were necessary to complete the parachuting of the materiel.
These were facilitated by very fine weather. The plane completed 124 flight
hours in 12 days. (If weather conditions had made it impossible to land at
Keflavik, the plane would have come down at Prestwick, Scotland, 3 hours,
45 minutes of flight from Keflavik.)
The 70 tens of materiel delivered in these air operations included: 15 tons
of food and 25 tons of fuel (gasoline and kerosene) for heating, lighting and
motor power at the Central Ice Cap Station, which were free-dropped from
a height of 23 to 33 feet; 15 tons of spare parts and various other materiel
parachuted from a height of 330 to 400 feet. Part of our materiel had been
left at Copenhagen because no shipping space was available. (The plane picked
it up and delivered to us 6 tons of essential scientific equipment.)
The time required for the flight from Keflavik to the parachute area at the
Central Station was 3 hours, 30 minutes; return trip: the same. The parachute
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operation itself took one hour. The dropping was carried out at a speed of
161 mph. since the plane could not fly at less than 136 mph. without stalling.
The principal difficulties to be feared in this operation were layers of fog
and blizzards on the ground and icing of the plane's propellers and wings.
The plane was equipped with a conveyor, designed to facilitate the discharge
of the packages, and with extra tanks of alcohol to allow longer resistance to
icing. I , I I t,i
In order to make certain altimetric and glaciological studies, two detours
were made in the course of the return flights, via Scoresby Sound and King
Oscar Fjord.
Ground operations involved in the parachute drops were as follows: radio
contacts, guiding the plane from its take-off at Keflavik to its landing at the
end of its mission; picking up of materiel parachuted or free-dropped (aver-
age time: approximately one hour); sorting of materiel (average time: ap-
proximately one hour).
Losses involved in the free dropping of fuel and food amounted to less
than 2 per cent of fuel and less than 1 per cent of food. The fuel was dropped
in jerricans filled to capacity, contrary to the usual technique which is to
drop them only two-thirds full.
During this period the Western Group had begun their scientific research
program: seismic soundings, temperature measurements at Camp IV, and
geodetic surveys. Moreover, their weasels had reached Camp VI. This enabled
them to effect a junction with the Central Group.
15-Convoys
O N JULY 30, 3 weasels, with 3 empty sleds attached, set out from the
Central Ice Cap Station to collect the materiel that had been left at
Camp VI. The distance of 205 miles (330 km.) was covered in 32 hours. The
3 weasels of the Western Group joined this convoy, and on Aug. 4, the 6
weasels, dragging 5 sleds, were back at the Central Ice Cap Station. This
convoy transported 9 tons of materiel, including meteorological equipment,
radio sets and the house for the Central Ice Cap Station.
On Aug. 7, 6 weasels again left the Central Ice Cap Station, arriving at the
118-mile (190 km.) mark depot 24 hours later. This convoy then divided into
two parts, 3 vehicles returning to the Central Station with the 6,930 pounds
of materiel that had been left at the depot, the other 3 going down to Camp IV
with the parachutes recovered on the ground and the empty jerricans. The
latter weasels covered the 235 miles (380 km.) between the Central Station
and Camp IV in 46 hours.
Thus, by Aug. 10, all of the 110 tons of materiel, including equipment,
food, fuel and scientific instruments, required for the installation and func-
tioning of the Central Ice Cap Research Station, had been brought to the site
of the Station. The 40 tons of materiel brought up overland had passed
through the hands of the members of the Expedition 48 times.
16-Return of the Main Body of the Expedition
W ORK on the installation of the Central Station continued without in-
terruption during the convoys and parachute operations. By Aug. 15,
the house was completed and the radiosonde trailer-laboratory and meteoro-
logical cabins were set up. Outside temperatures had already fallen to -40? F.
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The last convoy carrying materiel and the bulk of the Expedition left the
Central Station on Aug. 24 at 4:30 P.M. after 48 hours of work in preparation
for departure. It consisted of 9 men and 3 weasels, dragging 3 sleds each of
which carried a load of one ton.
The 8 members of the over-winter party remained at the Central Ice Cap
Station under the leadership of Robert Guillard. This group still had to
complete the installation of the Station, especially the electrical installations.
The return convoy encountered bad weather all along the way: fresh snow,
blizzards, heavy fog, etc. The compass guided us over part of the way, since
the trail had been partially covered over. However, our cairns and markers
remained visible.
On Aug. 29, the convoy arrived at Camp VI. On Aug. 30 at 9 P.M., thanks
to the radio, we effected a junction with the Western Group. During the trek
to Camp IV, 2 weasels fell into a crevasse and were pulled out by the others.
On Sept. 1, having stored the materiel at Camp IV for the winter, the two
groups set out for Camp III. The party consisted of 5 weasels, 6 sleds and 19
men. The broken up terrain was somewhat improved by new-fallen snow,
and on Sept. 2 the convoy reached Camp III.
From Sept. 3 to 5, the materiel at Camp III was stored for the winter.
By Sept. 10, the Expedition was regrouped at Camp I with 3 weasels, the
others having been stored at the various intermediate camps.
On Sept. 14, the members of the Expedition with their gear embarked on
the cod-fishing vessel President Houduce (Compagnie Generale des Grandes
Peches.) After approximately one week of fishing off the Greenland banks,
the ship put the members of the Expedition and their gear ashore at Saint-Jean-
de-Terre-Neuve on Sept. 29. The heaviest part of their materiel was put aboard
the dispatch-boat L'Aventure.
On Oct. 2, the members of the Expedition arrived at Gander airport. After
an extra parachute operation at the Central Station, on Oct. 4, Roger Loubry's
airplane picked up the Expedition at Gander on Oct. 5 and landed them at
Orly airport, Paris, on Oct. 6 at noon.
17-The Central Ice Cap Research Station
T HE position of the Central Ice Cap Research Station is 70? 54' N. by 40?
42' W., at an altitude of 9,900 feet, more than 250 miles from the edge
of the Ice Cap.
As of Feb. 1, 1950, the report from the men at the Central Ice Cap Station
was as follows:
a) Living Conditions: Lowest outside temperature recorded: -86? F.;
temperature in the corridors and storerooms: between -30? and-40?
F.; temperature in the living quarters and laboratories: between 65?
and 80? F.
Health and morale of the 8 men: excellent.
Certain difficulties have been caused by the daily accumulation of
snow in the launching power and the two entrances. Every day the
members of the wintering party clear away the piled up snow.
The motors of the electric power station show signs of weakness
and have given some trouble.
b) Scientific Observations: Four surface weather observations are taken
every day and a radiosonde observation is taken whenever the weather
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++++++ Distance covered overland by weasels
Distance covered by parachute plane in direct flights
Distance covered by parachute plane in detour flights
French Expedition to Greenland 1949
permits (3 to 5 times per week). These observations are sent to the
International Weather Network by radio 4 times per day.
Atmospheric physical observations are taken regularly.
The Central Ice Cap Research Station maintains daily radio contact with
the headquarters of the Expedition in Paris.
During Christmas week, 1949, and on New Year's Day, 1950, several radio-
telephone contacts with the Central Ice Cap Research Station were made. These
enabled us to outline future operations at the Station and permitted the men
in the over-winter party to exchange New Year's greetings with their families.
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18-Program for 1950-1951
A THIRD summer expedition to the Greenland Ice Cap left Rouen on
April 13, 1950 to continue the scientific research program undertaken
in the summers of 1948 and 1949 and the winter of 1949-1950. It includes 37
men of whom 8 will eventually relieve the first over-winter party at the Cen-
tral Ice Cap Research Station. This Expedition reached Port Victor, the de-
barkation point on Ata Sund, on May 28. Unloading was completed by June
8, and by June 10 a group of scientists had reached Camp VI. The Expedition
arrived at the Central Ice Cap Station on July 1, having transported its ma-
teriel across the border zone in record time. Groups of scientists began glaci-
ological and other research work at various points between the coast and the
Central Station on June 10. Parachute drops of materiel, similar to those car-
ried out in 1949, were effected between June 17 and mid-July.
The 8 men who wintered at the Central Ice Cap Research Station in 1949-
1950 will continue their work until September 1950, when they will return to
France with the majority of the members of the 1950 Expedition.
The 8 members of the Third Greenland Ice Cap Expedition who will spend
the winter of 1950-1951 on the Ice Cap will insure the functioning of the Cen-
tral Ice Cap Research Station until September 1951.
Removing rocks from the path of weasel on the road to the Ice Cap. At left, Paul E. Victor
 Approved For Release 2004/02/19 : CIA-RDP80,-00926A0033008500014-4
The Commandant Charcot, ship of the French-Polar Expeditions, leaving Brest, Sept. 20,
1949 for her second trip to Adelie Land
PUBLISHED BY
THE FRENCH EMBASSY PCESS AND INFORMATION DIVISION
610 FIFTH AVENUE, NEW YORK 20, N Y.
1950
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Printed in U.S.A. y
Z. J. Kantin Co.
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 Approved For Release 2004/02/19 : CIA-RDP80-00926AO03300050001-1
NORTH AMERICA
The unit of currency is the Bermuda Pound. Present dollar exchange rates are
U.S.$2.79 1/2 and U.S.$2.82 to the pound. London exchange is now bought at par
and sold at the following rates:
1% premium on the first .500,
3/4 of l% on the next L2,000, and
1/2 of 1% on the excess over &2,500
Exchange and security transactions are controlled by the Currency & Exchange
Control Board which has appointed the two local banks as the only authorized
dealers in exchange. All foreign exchange, except sterling, must be sold to
the local banks for conversion to local currency. Foreign exchange can only be
purchased from the banks on approval of the Currency & Exchange Control Board
except in the case of imports as mentioned below.
A citizen of the United States, if not locally employed, may open dollar
accounts and may deposit and withdraw freely. For personal requirements he may
also operate sterling accounts in which balances duly representing proceeds of
United States dollar exchange may be reconverted to dollars. Non-British
accounts, except those of United States citizens, are authorized or disapproved
by particular rulings of the Currency & Exchange Control Board.
Sterling income on foreign-owned assets may be remitted in foreign exchange
only with the approval of the Control Board. Proceeds from the sale of real
estate, securities and other capital assets in Bermuda must be reinvested in
the Scheduled Territories. Income from subsidiaries and affiliates of American
companies may be remitted in dollars, provided the amount does not exceed their
dollar earnings surrendered to authorized banks in Bermuda. Foreign-owned
companies may not import merchandise for sale in Bermuda.
In order to import merchandise a merchant must have a permit issued by the
Bermuda Supplies Commission which in addition allocates exchange. A few items
may be imported from the Scheduled Territories only. Subject to prior approval
of the commission and when exchange has been authorized, imports are financed
under letters of credit, against collection, or occasionally on open account.
Visitors to Bermuda should carry United States dollar letters of credit or
travelers checks. United States citizens need not declare their holdings of
United States currency on arrival. Local businesses can give change in dollars
in connection with dollar expenditures by travelers. The import of United
Kingdom currency notes and the export of Bermudian currency is prohibited.
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On September 30, 1950, the Canadian Government cancelled the official rate of
exchange and set the Canadian dollar free on the world market. Despite this
development the general structure of exchange control remains unchanged. While
Canadian banks and other authorized agents may deal in foreign exchange as
principals, they will continue to act as official agents of the Foreign Exchange
Control Board for the issuance of permits and other matters relating to exchange
control established by the Foreign Exchange Control Act. Primarily, this legis-
lation applies to residents of Canada, including those who established resident
status upon entering the country.
A resident receiving foreign exchange is still required to declare it to an
authorized dealer, and then either sell it at once to such a dealer at the going
rate or deposit it in a special foreign currency account with his dealer; in the
latter case he may not make any other use of the foreign currency but is
required to sell it within a period of 90 days.
Non-resident travelers entering or leaving Canada are not required to undertake
any formalities and may carry with them into Canada any exchange they like, tak-
ing the unspent portion out of the country again in the same form. It is permis-
sible to use Canadian dollars which have been purchased in the United States for
travel expenses and limited purchases.
It has been announced that the Government has decided that most of the remaining
import prohibitions and quota restrictions on consumer goods under Schedules I
and II of the Emergency Exchange Conservation Act will be removed effective Janu-
ary 2, 1951. However, the Government has placed a special ban on the importation
of certain iron and steel products effective January 1, pursuant to,the Export
and Import Act.
On December 9 the Government announced that all commodities are subject to the
requirement of individual export permits when shipped to China, Hongkong, Korea,
Macao and Manchuria.
Canada will now provide appropriate foreign exchange in settlement of Canadian
dollars due to non-residents, as well as for services rendered and earnings of
various types, such as interest, dividends, profits, etc. As the control applies
to residents, certain techniques have been worked out to accomplish these basic
principles and it is recommended that non-residents contemplating business in
Canada make inquiry to ascertain how they will be affected.
Unincorporated subsidiaries or branches of companies in the United States are
presumed to be residents of Canada when they commence business operations in the
country, as well as individuals who maintain their homes in Canada and reside in
the country for a substantial part of the year or pay income tax as Canadian
residents. New capital for such concerns may be transferred to Canada in United
States dollars and, in certain circumstances, in Canadian dollars purchased in
the United States market. Such plans should be discussed at their inception with
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the Foreign Exchange Control Board in order to register with them the new capi-
tal investment and to provide for the return of the capital at a later date, if
so desired, and for the remittance of earnings and capital appreciation in the
event of sale of a property. In the case of earnings, conditions have been
established to provide an orderly procedure for payments, confining them to
true distributable current earnings, including interim earnings of completed
quarterly periods of the current year, after the payment or provision for all
expenses, including taxes. These payments are convertible into United States
dollars in Canada. In the case of an incorporated Canadian company with non-
resident shareholders, dividends may be declared only by permission of the
Foreign Exchange Control Board and generally the earnings of not more than one
year may be distributed in any one year.
Such firms may accept new financing in the way of Canadian dollars purchased in
the United States, but these funds are then not normally available for use to
retire accumulated debt to the United States by the remittance of United States
dollars from Canada.
Non-resident firms carrying on business in Canada by shipping goods into Canada
on consignment in their own name or otherwise may apply to the Foreign Exchange
Control Board for permission to operate a special resident Canadian dollar
account, called an NS account, with a bank in Canada in connection with such
business. This enables the non-resident firm to make collections freely in
Canada in Canadian dollars and after paying all Canadian expenses, including
Canadian income taxes if applicable, to withdraw its profits in Canadian dollars
convertible into United States dollars in Canada.
The Foreign Exchange Control Board is prepared to considerrrequests from employ-
ers to grant non-resident status for limited periods up to one year, after entry
into Canada, to employees transferred to Canada for work which, while indefinite,
may be of short duration.
Checks issued by residents of Canada in Canadian dollars in favor of non-
residents are required to be marked on their face that they have been issued with
the permission of the Foreign Exchange Control Board, the majority being marked
G/F or DIV. Government checks made out in favor of parties with non-resident
addresses are also convertible. Convertibility in Canada may only be done at the
prevailing rate of exchange which is subject to daily fluctuations.
Benevolent and personal remittances to Canada by non-residents may be made in
Canadian dollars purchased in the United States market, and Canadian residents
may now accept payment in Canadian dollars, United States dollars, or convertible
currency for services rendered to residents of the United States dollar area.
Payments for goods exported, however, must still be made in United States dollars.
Holders of unmatured Canadian securities purchased in Canada before the commence-
ment of control cannot convert such securities into United States or Canadian
dollars in Canada. They may, however, freely export them out of Canada for sale
in the United States or, if they desire, first switch them in Canada into another
security of a similar type. Some securities which have been purchased in Canada
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since control started were registered with the Foreign Exchange Control Board
and by virtue of this registration may be sold in Canada for Canadian dollars,
which may then be converted into United States dollars at the current rate
either in Canada or the United States.
SAINT PIERRE ET MIQUELON (See France)
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CENTRAL AMERICA
AND
WEST INDIES
ARUBA (See Curacao and Aruba)
BAHAMA ISLANDS
The unit of currency is the Bahama Pound. Present sight exchange rates are
U.S.42.78 1/2 and U.S.$2.81 1/2 to the pound. Exchange on London is purchased
in the Bahamas at a discount of 1/4 of l., and sold at a premium of 1/2 of 1.
A war stamp tax on all remittances from the Colony at the rate of 6d. on every
Ll0 or fraction thereof applies to all exchange sold.
Foreign exchange regulations are similar to those in the Scheduled Territories.
Approval of the Foreign Exchange Control Board is required before foreign
exchange may be purchased.
Licenses for imports and exports of merchandise are required under the Defence
Import and Export Control Regulations of 1940. Import licenses are valid for
six months and must be coupled with Foreign Exchange Control Board approval of
exchange before merchandise may. be imported. Therefore, foreign exporters to
the Bahamas are advised to request that a copy of the import license be for-
warded to them with the relative order. Export licenses are similarly required,
and hard currency proceeds of exports must be delivered to the authorized agents
of the Control Board.
Non-resident Americans may open local currency accounts with the proceeds of
United States dollars converted at official rates. If there are dollar deposits
only, balances may be freely reconverted to dollars for remittance.
Holders of foreign securities must declare them to the Foreign Exchange Control
Board and its permission is required for all foreign security dealings. The
income on foreign-owned sterling securities normally may be converted for remit-
tance, but the proceeds of securities and real estate sold may be remitted only
with Control Board consent. However, a recent relaxation of the controls favors
new hard currency investments. On new dollar investments in the Bahamas both
income and capital may be reconverted for remittance abroad.
For travel funds Americans may bring in unlimited amounts in the form of letters
of credit, travelers checks, or dollar currency without declaration and may
leave with them.
BARBADOS
The British West Indian Dollar (100 British half-pennies) is stabilized at
LO.4.2. At the official sterling rate it has a value at present equal to
U.S.$0.5833.
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Only the three commercial banks operating in Barbados are permitted to deal in
foreign exchange and all operations are subject to the approval of the Foreign
Exchange Control Authority. Future exchange contracts are permissible for
commercial transactions when supported by valid import license.
Import licenses are required for all trade with foreign countries. We under-
stand that the Control Board was issuing licenses for the importation from hard
currency areas, such as the United States and Canada, only of foodstuffs and
other items essential to the Island. Most imports are on a sight draft basis
with only a moderate portion by means of bankers credits and the latter require
Control Board approval.
All exports, with the exception of food parcels to the United Kingdom, are sub-
ject to approval of the Control Board, and proceeds of those to the United
States and Canada may be retained on approval of the Control Board. These
funds may be used in payment of imports from the respective countries when sup-
ported by import licenses.
Residents in the United States or Canada may open accounts without reference to
the Control Board, provided the amounts deposited are proceeds of United States
or Canadian dollar transactions. Such accounts can be fed by checks in British
West Indian dollars or sterling issued by banks in the United States or Canada.
Withdrawals for use within the Scheduled Territories are freely permitted.
Visitors operating accounts fed by United States or Canadian dollars may take
out the balances remaining in these currencies without reference to the Control
Board. Unused balances in accounts fed by British West Indian dollar checks or
sterling issued by banks.in the United States or Canada may be remitted by
sterling drafts negotiable in the United States or Canada.
Proceeds from the sale of foreign-owned assets are subject to control regula-
tions and permission will not be granted for their remittance to the United
States or Canada except for the following:
1) Balances of emigrants in sterling form up to &1000
spread over four yearly instalments of 1250 each,
2) Royalties, and
3) Legacies up to L500.
Remittances for prewar commercial debts owed to non-residents are dealt with by
the Exchange Authorities on their merits.
There is no limit to the amount of United States or Canadian funds that a trav-
eler may bring in whether in documentary form or currency. Importation of
British West Indian currency notes and sterling notes from hard currency areas
is prohibited. It is difficult to change sterling notes even if brought in
from the Scheduled Territories. In order for the traveler to avoid any diffi-
culty in taking out United States or Canadian funds when leaving, it is advis-
able for him to declare the amount brought in and to obtain a certificate from
the Customs Officer at the time.
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BRITISH HONDURAS
The unit of currency is the British Honduras Dollar which has a parity value of
four British Honduras dollars to one pound sterling and is currently quoted at
approximately U.S.$0.70. Foreign exchange control is based on regulations in
force in the United Kingdom. Licenses are required for practically all imports
from and exports to other than the Scheduled Territories. Provided the import
license is still valid and the drawee pays promptly, there are no delays in
settling for imports.
COSTA RICA
The unit of currency is the Colon, valued at about U.S.$0.176 (equivalent at
the official rate of Colones 5.67 to U.S.$l). Exchange and foreign trade are
governed by a law which went into effect on April 1, 1950.
Two legal markets for foreign exchange are in operation: the official market
and the free market. Official exchange will be made available only for prefer-
ential category imports, students' expenses, government services and profits
arising from registered foreign investments. All other exchange requirements
must be obtained in the free market which will be supplied by exchange accruing
from tourist expenditures, remittances, agents' commissions, diplomatic expend-
itures, unregistered capital movements and similar transactions. Sales of
exchange for any purpose are subject to a sur-charge as prescribed by law.
Imports are no longer subject to license and advance deposit requirements have
been abolished. The following five categories of imports have been established,
subject to the exchange sur-charges indicated:
Category Sur-charge
Preferential ........... 10%
First .................. 10%
Second ................. 55%
Third .................. 75%
Fourth ................. 100%
Before imported merchandise can clear Customs, the importer must produce a
certificate evidencing payment of the relative sur-charges. Exchange for pref-
erential category imports may be purchased in the official market from registered
commercial banks only against authorizations granted by the Control Board and the
authorizations must be availed of within five days of their issuance. Applica-
tions for exchange for preferred category imports are handled in chronological
order, subject to certain sub-classifications of essentiality. Commercial let-
ters of credit and advance payments may be authorized by the Banco Central de
Costa Rica, subject to adequate guarantees and solely for the purpose of facili-
tating the importation of merchandise in the preferred category. Exchange for
the first, second, third and fourth category imports must be obtained in the free
market.
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No exportation of merchandise will be permitted without a license. Foreign
exchange derived from exports and from certain other sources must be sold in
the official market to a registered banking institution which in turn may sell
it only against exchange authorizations granted by the Control Board of the
Banco Central de Costa Rica.
Foreign capital investment which is duly registered with the Banco Central de
Costa Rica and which sells foreign exchange receipts on the official market is
authorized to buy official market exchange for remittance under contract of
interest, dividends and amortization, the aggregate not to exceed 10% of the
investment annually. Foreign capital investment choosing to sell foreign
exchange on the free exchange market, if not designated contrary to the nation-
al interest by the Banco Central de Costa Rica, may be duly registered, but
will have access only to the free market to purchase exchange for remittance of
interest, dividends and amortization.
Both the United States Dollar and the Cuban Peso are legal tender at present
and at par. The parity between the two currencies is being maintained by the
Banco National de Cuba by its official buying and selling rate for dollar
exchange of 1/128% on either side of par. Under the terms of the Banco
National de Cuba law, the dollar will cease to be legal tender on April 27,
1951, which date, however, may be postponed for one year by the Executive at
the request of the Banco National de Cuba. Since the promulgation of this law,
all obligations contracted, or to be fulfilled, in Cuba, must be expressed in
and liquidated in "Legal Tender" (as defined above) with the exception of the
following:
1) Those contracted in connection with the sale of Cuban
produce or articles sold to other countries, or
individuals or firms located therein.
2) Foreign currency bank balances, other than United
States dollars, which will be payable in the currency
in which contracted. Banks may, however, pay United
States dollar deposits in United States currency or
offer the depositor the option of receiving payment
by draft on New York (exchange, taxes, etc. for
depositor's account) or in Cuban pesos at the day's
rate of exchange.
3) Public debt obligations which will continue to be
paid in the foreign currency stipulated.
L,) Obligations contracted in connection with the importa-
tion of merchandise.
5) Commercial credits used to finance and facilitate
imports, including letters of credit of all kinds.
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6) Loans secured by the pledge of obligations payable in
foreign currency which have been issued by the Cuban
Government or by a foreign entity.
7) Overdrafts, authorized by banks, in foreign currency
accounts.
All exports of funds are under control of the Office of Exchange Control and
Movement of Foreign Currency in accordance with Government Decree 2769 of
August 20, 1948.
A habitual client (one who has had a current account for six months or more) of
a bank can buy or sell exchange through his bank from or to any part of the
American continent by merely filing a declaration in duplicate with the bank.
All other exchange is subject to prior permit.
Money orders, travelers checks, drafts or letters of credit issued by any bank-
ing entity established in the Western Hemisphere, which has agencies or branch
offices in Cuba, may be paid without prior approval.
Under the Banco National de Cuba law exporters are obliged to deliver to the
Exchange Control 30% of the FAS value of their exports in foreign exchange for
which they receive Cuban pesos at par. This percentage may be increased to
100% by executive action upon recommendation of the currency Stabilization Fund
Board. At present there are no restrictions concerning the use of the remain-
ing 70% of exchange.
The tax on the exportation of exchange out of Cuba continues to be 2%. This
tax also applies on the exportation of:
1) all merchandise, including sugar, and
2) securities.
In both cases, however, the 2% will be refunded to the shipper by the Govern-
ment if the shipper proves to the satisfaction of the Authorities within 180
days from date of shipment that the proceeds of the shipment have returned to
Cuba. In lieu of the actual payment of the 2% tax, shippers usually estimate
their requirements for a year and through their bankers furnish the Government
with a bond for the total amount involved.
Remittance of the proceeds of collections, credits, clean payments and similar
transactions with the following countries are subject to a tax of 2% in addi-
tion to the 2% tax mentioned in the previous paragraph:
Bulgaria Germany Latvia Rumania
Esthonia Hungary Lithuania Thailand
Finland Japan
This is required by Decree 3343 of December 12, 1941, which concerns transac-
tions with nationals of countries then styled "enemy".
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There are no restrictions with respect to local currency current accounts of
non-residents and they may be opened and operated without approval or the inter-
vention of the Authorities with the exception,of the accounts of nationals of
Spain (see below) and those of "enemy" countries.
There are no restrictions on the transfer of foreign-owned assets or the income
derived thereon other than those applied to:
1) Spain (see below),
2) "eneny" nationals (see above), and
3) the provisions of Decree 2769 of August 20, 1948 (see above).
While no import licenses are required for the products of Spain, approval by
the Exchange Control is necessary to credit the special accounts of the Spanish
Exchange Control Board in accordance with Decree 2769. The funds thus acquired
are available to pay for Cuban products, such as sugar, tobacco, etc., imported
by Spain. Although approval by the Exchange Control does not carry with it any
undertaking to provide foreign exchange, the currency Stabilization Fund Board
has thus far provided commercial banks with all the exchange required.
The Government exercises no control over import credits, except for those cover-
ing Spanish merchandise, and importers may open such credits freely in accord-
ance with customary bank requirements. Imported merchandise may be freely re-
exported, provided it has not already been cleared through Customs.
A visitor to Cuba may bring in unlimited funds in the form of letters of credit,
travelers checks, drafts and similar types of travel funds, and no declaration
is necessary.
Travel funds, other than cash, may be taken out of the country freely. The
limit for cash, whether foreign currency or otherwise, is $50 and travelers
must sign declarations that they are not carrying more than this amount. Tour-
ists bearing tourist passes are not, however, subjected to this limitation or
formality.
CURACAO AND ARUBA
The unit of currency is the Curacao Guilder (C.fl.). The selling rate for
United States dollars remains officially fixed at C.fl. 1.905 plus C.fl. 0.005
exchange tax, while the buying rate has been fixed at C.fl. 1.885 for Curacao
and G.fl. 1.8840 for Aruba.
Import licenses are not required except for certain high-priced luxury articles
when imported from hard currency countries. For products which may be imported
without license it is not necessary to obtain approval of the Exchange Control
of the mode of payment except when payments to soft currency countries are to
be made in hard currency.
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lar
When a credit is opened covering the import of a licensed article from a dol
rd
country, or of merchandise from a soft currency country where payment in a ha
e
currency is stipulated, an import license must be shown by the importer to th
issuing bank.
re
An importer can retain the foreign currency proceeds of his exports if they a
di-
credited to a foreign currency account with one of the local banks and on con
or
tion that the balance of such an account will first be used by the importer f
f
import invoices payable in the same currency. In case of need (non-payment o
the relative draft) goods may be freely re-exported, provided they have been
stored in the government warehouse. No import duty is then charged, but the
en
storage charges will have to be paid to the Government. If the goods have be
fed
in the possession of the buyer, however, the goods having been formally impor
ort
and the import duty having been paid, an export license is required to re-exp
the goods and import duties cannot be refunded.
a
The sale of dollars for other than current'import transactions is subject to
special license, each application being considered on its merits, and transac-
tions involving the transfer of capital continue to be restricted.
Each traveler is allowed to bring C.fl. 25 in Curacao guilder notes into this
ka,
territory. Hard currencies, including United States dollars, either in chec
el-
letters of credit or bank notes may be carried without limitation. The trav
er must declare the currency upon entering and the instruments thus declared
has
may be freely taken out upon departure, provided the status of the traveler
remained that of non-resident.
DOMINICAN REPUBLIC
t to
The monetary unit of the Dominican Republic is the Peso Oro (RD$), equivalen
fates
0.888671 of a gram of fine gold, which places it on a par with the United S
dollar (law promulgated October 9, 1947). The peso oro is divided into 100
equal parts called centavos.
must
The law of July 28, 1942, set up certain formalities with which an importer
but
comply to secure exchange for the payment of goods brought into the country,
our banking correspondent assures us that normally, where bona fide transactions
the
are involved, licenses are issued within twenty-four hours of the filing of
application..
is
The Ministry of National Economy (Secretaria de Estado de Economia National)
The
in charge of issuing necessary permits for the importation of merchandise.
s,
advance:- lard for culinary use, oils (except olive oil), rice, cattle, goat
the
hogs and lamb on the hoof, the meats which come from them, fowl and meats of
same and empty bags of any type.
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GUADELOUPE
The monetary unit is the French Franc (Continental Franc). Dollar exchange is
bought and sold at the Paris free. market rate, subject to a small commission
charge. All dealings in foreign exchange go through the channels of the
Exchange Control Board and the operations must be effected by an authorized
bank.
Subject to approval by the Exchange Control Board, bank current or savings
accounts in francs may be opened for non-resident foreigners. Debits to such
accounts do not require the approval of the Exchange Control Board, but all
credits must have its prior approval on the assumption that the non-resident
foreigner is furnishing foreign exchange for credit after conversion into
francs.
Income from or the proceeds from the sale or redemption of securities or other
assets held for foreign account may not be transferred without the approval of
the Exchange Control Board.
Imports and exports from and to foreign countries must be licensed by the
Economic Affairs Committee, even where the operation involves no payment and is
made on a gift or barter basis. The granting of such license implies that
exchange will be made available.
In exceptional cases an exporter is permitted to retain 15% of the proceeds of
his export, but the exchange he retains may be used only to import priority
merchandise. The re-export of merchandise must have the authorization of the
Economic Affairs Committee.
Travelers no longer need declare funds in their possession when entering or
leaving Guadeloupe.
Since Guadeloupe is now an integral part of France, i.e., one of the Overseas
Departments, see France, page 67, for further details.
GUATEMALA
The monetary unit is the Quetzal which is divided into 100 centavos and has a
value equivalent to U.S.$l. We are informed that with the exception of flour
and commercial printed material there are no import or export control regula-
tions in effect at present. No restrictions exist on exchange transactions
other than a provision that sales and purchases of foreign exchange be made
through qualified banks. Minor exchange transactions of tourists and travelers
are excepted from this provision.
There are no exchange restrictions in Haiti. The Gourde is by law exchangeable
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on demand for United States dollars at the fixed rate of Gourdes 5 to U.S.$1.
With the exception of the importation of arms and ammunition, which is con-
trolled by the Army of Haiti, no regulations or restrictions exist in connec-
tion with imports into Haiti.
The same may be said for exports though from time to time, when shortages occur,
certain local food crops may temporarily be barred from export. The re-exporta-
tion of machinery requires a permit which is sometimes withheld.
United States currency circulates freely throughout the Republic. United States
dollar letters of credit, travelers checks and actual United States currency may
be carried without limitation.
HONDURAS
The unit of currency is the Lempira which is tied to the United States dollar
and has a value of U -S 40.50.
The Banco Central de Honduras was inaugurated July 1, 1950, at which time the
Commission which controlled the purchase and sale of exchange was abolished.
There are no exchange restrictions in effect at present.
Incoming foreign exchange must be offered to local banks for account of the
Banco Central de Honduras. Exchange may be purchased from local banks without
restriction, but for statistical. purposes buyers are required to file an appli-
cation stating how the exchange will be used. A maximum selling rate of
Lempiras 202 per U.S.$l00 has been fixed by the Banco Central de Honduras
effective until further notice.
There are no restrictions on the importation or exportation of merchandise.
Providing the drawee acts promptly, proceeds of foreign drafts are remitted by
banks without any delay.
The unit of currency is the Jamaica Pound. Present sight exchange rates are
U.S42.78 3/4 and U.S32.81 1/4 to the pound. Foreign exchange transactions
require prior approval of The Jamaica Defence (Finance) Board. Forward
exchange contracts can be made only on evidence of firm orders and licenses for
import or export duly issued by the Trade Administrator. Exchange will be sold
by authorized banks in payment for duly licensed imports.
An import license must be obtained from the Trade Administrator before merchan-
dise can enter and before payment for imports can be remitted. Exceptions to
this requirement are:
1) Imports from the United Kingdom/British Colonies group,
as authorized by open general license of August 5, 1949, and
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2) Bona fide personal gift packages with CIF value of not
more than $20.
Import permits for merchandise from hard currency countries are now being issued
only for essential foodstuffs, pharmaceuticals and agricultural and industrial
machinery when not available in soft currency countries.
An export license must be obtained prior to the shipment of merchandise, and
the foreign exchange proceeds must be surrendered immediately to one of the
authorized commercial banks. Imports may be fully re-exported in cases where
the accompanying draft is dishonored or where license is applied for and refused
after the goods have arrived.
Bank accounts of non-residents can be opened in Jamaican currency under three
categories:
Domestic, in which are authorized deposits in local currency
and withdrawals for payment to local persons or firms.
American, in which are authorized local currency deposits
resulting from American remittances in dollars or Jamaican
pounds and from which balances can be reconverted for remit-
tance to America, (but should local funds be deposited, such
accounts are reclassified as Domestic).
Blocked, on which approval of the Board is required to open,
deposit and withdraw, and in which are usually deposited
funds refused remittance to hard currency areas.
Visitors from America may carry unlimited funds in letters of credit, travelers
checks, drafts or United States currency, all of which must be declared on
arrival. On departure the traveler cannot take out more dollar exchange than
was declared on entering. The import or export of Jamaican currency notes is
forbidden and will be confiscated. Sterling currency notes declared on entrance
will be impounded against receipt during the visitor's stay and returned to him
at the time of his departure. Sterling notes not declared are subject to confis-
cation.
MARTINIQUE
The monetary unit is the French Franc (Continental Franc). Dollar exchange is
bought and sold at the Paris free market rate, less or plus a small commission.
However, exchange is provided at the rate of Frs. 350 for the settlement of
imports under the Marshall Plan, except for the import of live cattle for which
exchange is provided at Frs. 214.71. All sales of foreign exchange must be
authorized by the Exchange Control Board; purchases may be made freely, but must
be reported to the Exchange Control Board.
Non-residents may use four types of bank accounts:
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1) Accounts in Foreign Currencies - These accounts are
practically free, provided withdrawals are converted
into francs at the official rates of exchange. Trans-
fers to foreign countries in the currency of the
accounts are permitted.
2) Free Franc Accounts - deposits to these accounts may be
made from
a) foreign currency or foreign exchange of the
country of the depositor,
b) another Free Account of the same national-
ity, or
c) proceeds of authorized imports, the import
license stipulating that payment will be
made to a Free Account.
Accounts in the name of foreigners whose currencies are
quoted in the free market are called Free Accounts.
Those in the name of foreigners whose currencies are
not quoted are called Britannic Account in Francs,
Canadian Account in Francs, and so on. These accounts
are freely convertible into the currency of the country
of the depositor.
3) Suspense Accounts - deposits to these accounts must be
authorized by the Exchange Control Board and can be
used within the limits of the territory for personal
expenses at the maximum rate of Frs. 2.000 daily for
one individual and Frs. 100.000 monthly for a family.
4) Capital Accounts - these accounts can be credited with
the proceeds of the sale of French bonds regularly
imported or deposited in the name of a non-resident or
with the proceeds from the sale of real estate. They
can be debited with the cost of the purchase of bonds
and real estate and of living expenses in France of the
depositor and his family up to Frs. 10,000 per day and
Frs. 500,000 per month.
Income from or the proceeds from the redemption.of securities held in foreign
accounts are payable in foreign currency, provided the owner had been registered
prior to 1939; if regularly imported or purchased after 1939, the income and
proceeds from the sale of securities, real estate or other capital assets are
credited to a Capital Account.
All imports are subject to license. The issuance of an import license carries
an authorization to purchase the necessary exchange in the free market.
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Acceptance of provisional deposits in local currency is not legally mandatory.
Merchandise may be freely re-exported without incurring any penalty if the
necessary steps are taken in time with Customs (Admission temporaire).
An exporter may retain from 10% to 20% of the proceeds of his exports, but this
foreign exchange must be used for imports of goods or machinery needed by the
industry producing the item exported from Martinique.
Travelers are allowed to carry any amount of money in the form of specie,'
drafts, travelers checks and letters of credit. These holdings must be
declared on entering the country and must be exchanged through a bank or author-
ized (recognized) medium. Travelers may take with them any unused balance when
they leave.
Since Martinique is now an integral part of France, i.e., one of the Overseas
Departments, see France, page 67, for further details.
The unit of currency is the Peso, valued at U.S.$0.1157 which is equivalent to
the official selling rate of Pesos 8.65 to U.S.$1, the official buying rate
being Pesos 8.64. Established by decree on June 18, 1949, these rates have
been maintained to the present time. There are no restrictions on foreign
exchange transactions.
Bank accounts can be opened in the names of non-residents and operated freely.
There are no restrictions on the purchase and sale of securities by foreign
holders, except that the control of local companies is subject to governmental
permission. The purchase of real estate by foreigners also requires such
approval.
The importation and exportation of certain articles is subject to license.
Individuals visiting Mexico on business or pleasure can take in pesos or dol-
lars without limit as to amount.
NICARAGUA
The monetary unit is the Cordoba which is equal in value to U.S.$0.20.
A law effective November 9, 1950, established new regulations governing inter-
national exchange operations. The official value of 5 cordobas to the dollar
has not been changed, but its use is limited to government transactions which
are not to exceed 20% of all exchange receipts. Basic rates quoted below are
established for imports and exports. All foreign exchange must be sold to the
Banco National de Nicaragua or other authorized banking institutions.
Imports are classified as follows:
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First Category - merchandise considered to be essential.
Second Category - merchandise considered to be semi-
essential.
Third Category - merchandise considered to be non-
essential.
When placing an order abroad for merchandise, importers must obtain a prior
permit and deposit with a bank the equivalent of the amount of the order in
cordobas. The law provides that import permits will be valid for a period of
six months. A copy of the import permit must be furnished to the exporter
abroad as this will be required to obtain the consular visa on shipping docu-
ments.
The basic rates for import transactions and other payments is Cordobas 7 to
U.S.$1, sur-charges of Cordoba 1 and Cordobas 3 being made on second and third
category imports respectively. As a result, for first, second and third cate-
gory imports the rates are Cordobas 7, 8 and 10 per U.S.$l respectively.
Remittances of exchange for other than imports of merchandise are classified
under third category and are therefore subject to the exchange sur-charge of
that group. The sale of exchange representing a transfer of capital out of the
country is prohibited.
Exporters must tender export declarations and commit themselves to return
export exchange to the country within 60 days before the Banco Nacional de
Nicaragua will issue the requisite export certificates. Exchange resulting
from exports is converted at the rate of Cordobas 6.60 to U.S.$l.
PANAMA. REPUBLIC OF
The unit of currency is the Balboa which is equivalent to U.S.$l. There are no
exchange, import or export controls or restrictions in the Republic of Panama
with the exception of the re-export of merchandise for which a permit is
required. United States currency notes circulate freely, and local currency is
represented only by the silver balboa and by subsidiary coin. No approval is
necessary at present for the opening and operation of bank accounts in the name
of non-residents. There are no transfer restrictions on any kind of foreign-
owned assets, and travelers when entering may carry currency, letters of credit,
travelers checks, etc., without limitation. Such holdings are not subject to
declaration upon entering or leaving the country.
EL SALVADOR
The monetary unit is the Colon, valued at U.S.$0.40. There are neither exchange
control restrictions nor export and import control regulations in effect at
present.
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TRINIDAD AND TOBAGO
The unit of currency is the British West Indian Dollar (100 British half-
pennies) which is stabilized at 10.4.2. At the official sterling rate it has a
value at present equal to:
Buying
Sew
U.S.$0.58616 (sight and cable)
U.S.$0.58004
U.S.$0.59171 (currency notes)
U.S J 0.59382 (coupons)
U.S.0.58479
Transactions between residents of the Colony and those outside the Scheduled
Territories, which involve remittances of funds to the latter, are subject to
government control. Regulations in force in the Colony, which are subject to
change from time to time, are basically those applying in the United Kingdom.
Apart from gift parcels of small value, for which no currency is remitted in
payment, and some goods produced or manufactured in the United Kingdom or
British Colonies, no goods may be imported from any source unless the importer
has first obtained an import license. Goods arriving in the Colony which are
not covered by a valid import license are liable to confiscation.
If exporters wish to satisfy themselves regarding the issue or extension of
import licenses, they should ask importers to supply them with the copy of the
license, or memorandum of extension, specially provided for the purpose.
Import licenses are granted in accordance with the policy of the Control.
Foreign exchange to pay for imports can, with the approval of the local Control,
be arranged by letters of credit. In establishing letters of credit, however,
the local banks usually require on board bills of lading. Importers may arrange
to cover foreign exchange forward to the extent of and within the validity of
import licenses held.
Upon arrival imported goods are discharged to a government warehouse where, if
not cleared before, they may remain for approximately ten days. Theoretically,
they are then transferred to the government bond for want of entry where they
are allowed to stay for two years. Due to congestion these transfers have not
always been effected promptly. At the expiration of the two years the goods
are sold by the Government to cover warehouse expenses. Goods of a perishable
nature may remain in bond for two months only. Warehouse rent begins to accrue
four or five days after arrival of goods.
Unless the Control exercises its power of confiscation in the event of goods
arriving without license, goods may be reshipped without difficulty in case of
rejection by consignees.
Banks in Trinidad cannot accept bills of lading to their order or split bills of
lading covering imports into the Colony. A separate bill of lading made out to
the order of the shipper or the importer is required to cover each purchaser's
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goods. Shipments to various purchasers should only be grouped on one bill of
lading if consigned to the order of the shipper's local agent who will arrange
delivery to the individual buyers. Where such bills of lading accompany bills
for collection, the collecting bank should be given definite instructions to
release the bills of lading to the agent free against his undertaking to pro-
duce separate delivery orders instead.
Sight and unaccepted bills may be protested within a reasonable time, This
period is not clearly defined by law. An unpaid acceptance must be protested
before the close of business on the day succeeding the one on which it matured.
All goods exported, except gift parcels of small value, require an export
license. In the case of goods exported to countries other than the Scheduled
Territories, the resulting foreign exchange must be brought into the Colony and
delivered to one of the local banks, which certifies on the export license that
this has been done. The latter is then returned to the Control Board which
keeps a regular check on outstanding licenses.
With approval of the Exchange Control, exporters may retain foreign currency
proceeds of exports to the extent of valid import licenses in the same currency.
Such foreign currency must be held for the exporter by an authorized bank which
must be furnished with a Form E, approved by the Exchange Control, when the
funds are required for payment of imports.
At present the provision of foreign exchange for travel to countries other than
the Scheduled Territories is strictly controlled. Each application is treated
on its merits by the Control Authorities, but generally speaking approval will
only be given in cases of travel for essential medical reasons or necessary
business trips of short duration. Non-residents from other than Scheduled
Territories may bring with them any amount of United States currency or Canadian
currency which must be declared in regard to the amount of cash only upon
arrival and departure; when leaving, the traveler is free to depart with an
amount of currency equal to that which was declared on entry. Such non-
residents should not bring Bank of England notes or currency notes of other
Scheduled Territories as they will not be able to exchange them or use them in
payment of services.
Applications for exchange to remit to countries other than the Scheduled Terri-
tories for maintenance or other personal reasons are treated on their merits by
the Control Authorities, no definite policy being ascertainable.
Residents are not permitted to make investments in the securities of countries
outside the Scheduled Territories unless they are able to acquire such securi-
ties from other residents of the Scheduled Territories. Persons residing out-
side the Scheduled Territories will usually be permitted to invest in local
securities or real estate, and the income from such investments may be remitted
to the investor. It is believed, however, that withdrawal of the investment
will now be permitted under the Aid to Pioneer Industries Ordinance, provided
that, at the time the funds are brought into the Colony, permission is obtained
from the Financial Authorities.
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Local banks are permitted to open accounts for non-residents, provided such
accounts are fed in a certain way. For example, a resident of the United
States may open an account, which would be designated an American Account,
provided it is fed with United States dollars or sterling from another American
Account. Funds in such an account would be available for payments either local-
ly or to residents of any country in the American group.
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ARGENTINA
SOUTH AMERICA
The unit of currency is the Argentine Paper Peso (m$n).
The foreign currency equivalent of the invoice value of all exports, except up
to 6% of the FOB value which may be paid to agents abroad, must be sold, either
on a spot or forward basis, to an institution authorized to deal in foreign
exchange; the consular value of imports may in general be purchased, spot or
forward, from authorized institutions. All foreign exchange transactions are
subject to the regulations of the Central Bank of the Argentine Republic.
On August 28, 1950, the Central Bank announced a reduction in the number of
exchange rates to three, as follows:
1) Official Market - basic buying and preferential selling,
i$n 500 per U.S.$100 or 20? per paper
peso*
a) The basic buying rate is applicable to the FOB
value of the bulk of exports, including such
products as chilled and frozen beef, mutton,
raw hides, wool, wheat, corn and linseed.
b) The preferential selling rate applies only to
imports of essential fuels - coal, coke,
petroleum, fuel-oil and certain of their by-
products.
2) Official Market - preferential buying and basic selling,
m$n 750 per U.S.$100 or 13 1/30 per
paper peso,
a) The preferential buying rate applies to a wide
variety of exports, such as casein, cheese,
tanned hides and quebracho, which may need the
advantage of the preferential rate to compete
in world markets.
b) The basic selling rate applies to imports which
are considered essential to the economy of the
country.
3) Free Market - currently quoted at about m$n 1,380 per
U.S.$100 or approximately 7 1/4? per paper
peso.
a) In the case of exports, this rate is applic-
able to those products, such as fresh and
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dried fruit and various metals and manufac-
tured goods, the export of which is being.
encouraged.
b) The free rate will also be made applicable to
certain non-essential imports, but no list of
such products has as yet been published.
Export permits are generally required before merchandise may be shipped abroad.
The Argentine Trade Promotion Institute (IAPI), a government entity, has been
granted a monopoly on the exportation of most of the basic export products of
the country, including meat and some by-products, practically all grains,
quebracho extract, vegetable oils and cakes and most hides and skins. Wool is
a notable exception.
In order to facilitate the exportation of Argentine products on the one hand,
and to assure herself of adequate supplies on the other, Argentina has entered
into bi-lateral agreements with 28 different countries. Trade agreements are
at present in force with Austria, Belgium and Luxembourg, Bolivia, Brazil,
Bulgaria, Chile, Czechoslovakia, Denmark, Finland, France, Holland, Hungary,
Israel, Italy, Norway, Poland, Japan, Paraguay, Peru, Portugal, Rumania, Spain,
Sweden, Switzerland, United Kingdom, Uruguay, Western Germany and Yugoslavia.
In some cases these include payment arrangements in artificial currencies and
in other cases in the currency of one of the countries involved. Several of
them provide for reciprocal credit limits. Any transaction with one of the
above-mentioned countries in a currency other than that specified in the corre-
sponding agreement requires special authorization from the Central Bank.
Permits from the Central Bank are required for all imports. From time to time,
in accordance with the requirements of the country and exchange availabilities,
lists are published of goods for which applications for permits may be filed.
In the case of certain goods, such as coal and coke, refractory materials, some
electrical materials, wire, abrasives, worked and unworked iron, tinplate,
medicinal products and some metals and chemicals, permits are automatically
granted if imported from specified countries when requested by registered
importers, provided they have been importers of such goods for any 3 years
since 1937 or by industrial users if registered as importers when the goods are
to be used in their plants. All other applications are subject to prior study
on the part of the Central Bank. Such permits as may be accorded must be
accepted or rejected by the importer within 45 days. Once a permit has been
definitely issued, a fine of 20% must be paid if at least 90% of the permit is
not utilized. Shipments in excess of permit amount or quantity are not toler-
ated. Permits are valid for a period of 9 months commencing with the first
working day of the calendar month following date of issuance. Customs clear-
ance of merchandise must be initiated prior to expiry of import permits. Per-
mits granted at one of the official rates automatically assure the importer of
the rate of exchange ruling on the day on which the permits are granted. Inter-
est at the rate of 2 1/2% per annum is charged for this rate insurance from the
date the import permit is granted until time of liquidation or maturity of the
respective clearance certificates. All permits must carry a bank undertaking
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24
attachment upon court order. In accordance with Central Bank regulations, all
payments on account are subject to the same treatment as accorded other deposits
received by local banks and must, therefore, be transferred to the Central Bank,
which institution is solely responsible for them under the guarantee of the
Argentine nation.
It is general market practice for local importers to delay taking delivery of
documents until after the carrier has reached the Argentine port of discharge.
Accordingly, instructions regarding protest of drafts for non-payment of the
peso equivalent or for non-acceptance should authorize the collecting bank to
defer taking such action until after the arrival of the merchandise. Also, it
frequently occurs that acceptors of time bills have not been able to effect
liquidation at maturity owing to unforeseen delays in obtaining their clearance
certificates enabling them to apply for official exchange. Under the circum-
stances it is customary market practice to accept provisional deposits in pesos
at maturity together with drawees' undertaking to remain responsible for any
eventual difference in exchange, and drafts are not protested if drawees have
complied with these requisites, but it is always preferable for remitters to
authorize the collecting bank to follow this procedure.
In accordance with regulations of the Customs, importers are allowed a period
of 15 days, beginning with the date the carrier is given official entry to a
port, to initiate clearance of the merchandise or to declare the goods in their
name; failure to do so results in the application of a 2% fine on the value of
the goods. As banks are not registered importers, they cannot initiate clear-
ance of the goods, but they can make the declaration in their name to avoid the
fine of 2%. Therefore, it is advisable that remitters specifically instruct
collecting banks to make such declaration for the remitter's account and
responsibility, as all banks upon declaring merchandise in the Customs in their
name must sign an undertaking whereby they become responsible for the immediate
reshipment of the goods in the event no covering import permit is available,
and they also become liable for all accrued warehouse charges and other expenses
incurred in connection with the merchandise. Please note that our branches do
not make such declaration unless specifically authorized to do so by the remit-
ter who undertakes to remain responsible for any and all expenses and risks. A
subsequent declaration as to contents of the shipment for classification must
be made within 23 days after entry of the carrier, otherwise a fine is levied
of 5% on the duties payable. Banks cannot make this declaration as they do not
know the contents of the shipment and heavy fines may be imposed by the Customs
for erroneous information. Clearance of shipments must be initiated within 60
days after the date the carrier is given official entry to a port, and all
accrued storage expenses and other charges must be paid within this period or
the merchandise may be sold at public auction. The proceeds of such sales are
applied against accrued charges, including duties payable, and any shortage is
for account of the registered owner. Collecting banks are not informed when
the auction is about to take place nor of the results obtained therefrom. Con-
sequently, banks cannot be held responsible for not claiming reimbursement of
any surplus proceeds that may remain after auction of the goods.
Up until November 15, 1950, all customs duties on merchandise entering Argentina
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whereby the bank becomes responsible for the compliance by the importer with
his obligations in connection with exchange rate insurance.
Import permits assure importers that the merchandise covered thereby will be
allowed to enter the country and indicate the type of exchange which will event-
ually be sold to the importer, i.e., official - basic or preferential rate, or
free market exchange. Merchandise which arrives in the country without an
import permit must be re-exported. Exporters to Argentina should, therefore,
satisfy themselves that the buyer holds a valid import permit and that the ori-
gin, quantity and quality of goods shipped are in agreement therewith. They
should also satisfy themselves as to the conditions under which such permits are
issued, as the Central Bank grants some permits with restrictive clauses; for
instance, some permits carry the provision that payment is to be spread over a
period of years commencing one year after clearance of the merchandise, whereas
other permits may be issued with the stipulation that no foreign exchange will
be granted at any time.
Upon clearance of merchandise through the Customs, importers are given clearance
certificates, against which any authorized bank, acting on behalf of the Central
Bank, can sell them the corresponding exchange for subsequent transfer abroad.
Remitters of documentary drafts should refrain from instructing collecting banks
to deliver documents against payment, as under existing regulations it is not
feasible for drawees to pay in the currency of the draft upon presentation since
official exchange in cover of merchandise imports is made available only after
the Customs clearance certificate has been obtained by the importer. According-
ly, instructions relative to delivery of documents should be furnished along one
of the following lines:
1) Against simple receipt with no reservations.
2) Against receipt specifying that the purpose is for clear-
ance of the merchandise and stipulating that payment of
the peso equivalent and application for exchange is to be
made within a period of ..... days.
3) Against payment on account of the peso equivalent of the
accompanying draft at the exchange rate corresponding to
the category of merchandise importation together with
drawee's written agreement that the clearance certificate
is to be cancelled and application for exchange is to be
made within a period of ..... days, as well as to remain
responsible for any difference in exchange.
4) Against acceptance.
According to some legal opinions, deposits as payments on account made in lieu
of and pending the acquisition of official exchange cannot be withdrawn by
drawees; it appears, however, that deposits of this nature are subject to
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cannot assume any responsibility for the eventual remittance of any claim under
these circumstances nor for any difference in exchange resulting therefrom.
With a few exceptions, a permit must be obtained before banks can sell free
market exchange not related to merchandise imports. The only exceptions at
this time are those reported below, but before banks can transfer the funds
abroad, details of the transactions must be reported to the Central Bank for
their perusal and approval:
1) Cable and postage expenses, banking charges and commis-
sions and interest owed by authorized institutions to
their correspondents abroad.
2) Payment of fees and expenses for renewal of trade marks
and patents.
3) Remittances from Embassies, Legations and Consulates
accredited to the Argentine Government covering consular
revenue.
4) Transfers up to m$n 50 per remitter per month for sub-
scriptions to and the purchase of magazines and books of
a technical or scientific nature.
5) Pensions up to
n 250 per month per beneficiary.
6) Remittances for family aid to Spain and Italy for vari-
ous amounts depending upon the relationship of benefi-
ciary to remitter, length of remitter's residence in
Argentina and remitter's income, but in no case exceed-
ing $n 600 per month per beneficiary (to be reduced to
n 400 per month per beneficiary in March, 1951).
Foreign capital is free to enter Argentina without restriction. Central Bank
Circular No. 1312 of August 28, 1950, authorizes the remittance of not more
than 5% of net profits, income, interest or other returns on such investments,
which correspond to fiscal years closed after August 28, 1950, with transfer to
be made in four equal quarterly installments. Such transfers must first be
approved by the Central Bank. The method for establishing the amount of invest-
ment has not as yet been announced and we have heard of no remittances being
effected under the provisions of this circular.
There are no limitations at present as to the amount or farm of travel funds in
foreign currencies which travelers may bring into the country, but the importa-
tion of Argentine currency requires the prior authorization of the Central Bank.
It is not necessary for travelers to declare currency holdings on arrival or
departure. Recent regulations allow departing visitors to carry with them a
"reasonable amount" of merchandise of Argentine origin.
Argentine peso accounts in the name of persons or firms domiciled abroad may be
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were calculated on a fixed tariff valuation basis, for the most part well below
actual value of the goods. On that date, however, new regulations went into
effect, whereby duties are levied in general on the CIF value of the merchan-
dise, at rates ranging from 3% to 60%.
It is important that exporters to Argentina bear in mind that merchandise which
arrives without a valid permit cannot be cleared and must be reshipped. Also,
in order to avoid delays and possible fines, all shipments under present regula-
tions should be accompanied by bills of lading, consular invoices in duplicate
and two commercial invoices legalized by an Argentine consulate, one of which
should be marked "pare estadistica"; in this connection it is well to note that
banks can no longer issue guarantees in lieu of missing shipping documents.
Finally, exporters should exercise special care that shipments agree 100% with
the description of the merchandise on, and the amount of, the import permit, as
otherwise difficulties in clearance may be encountered and importers may be
unable to obtain clearance certificates entitling them to apply for exchange.
Under existing regulations insurance on imports and exports, when the merchan-
dise travels at the risk of the Argentine importer and exporter, may be placed
only with insurance companies admitted to do business in Argentina. Infrac-
tions are subject to a fine equivalent to 25 times the premium paid to admitted
underwriters. It is generally considered that the risks of transport of all
goods entering the country are for account of the receivers with the following
exceptions:
1) When the goods have been purchased FOB for a place in
the interior of Argentina.
2) When merchandise is sent to Argentina on consignment.
3) When merchandise is brought to Argentina for sale
through representatives or agents of the foreign firm,
provided that importation is for the foreign firm's
account and the importation is being carried out by the
firm itself.
Merchandise covered by a marine insurance policy issued by a company admitted
to do business in Argentina is at present automatically protected against the
risks of fire for a period of 15 days, from midnight on the day on which unload-
ing from the carrier is completed. Consequently, when the documents attached to
a collection item have not been withdrawn by the drawee by the end of this peri-
od, the insurance protection against risk of fire automatically ceases. Should
remitters desire protection beyond the initial 15 day period, in the event that
a collection is unattended, specific instructions to that effect should be fur-
nished with each bill. It is well to note that only the risk of fire can be
covered. Policies may be issued in either Argentine pesos or in foreign cur-
rency. In the case of total or partial loss, the regulations provide that the
Customs issue a special clearance certificate to the importer upon presentation
of the shipping documents, import permit and insurance policy; this clearance
certificate will entitle him to apply to the Central Bank through an authorized
bank for remittance abroad of the foreign funds. However, collecting banks
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opened only with the prior approval of the Central Bank. As in the case of
deposits received for local firms, all funds received for the credit of the
depositor's account must, in accordance with local legislation, be transferred
to the Central Bank, which institution is solely responsible for them under
the guarantee of the Argentine nation. Also, any movement of funds over such
foreign domiciled accounts, even for payment of expenses within the country,
must have the prior authorization of the Central Bank regardless of the amount
involved. Banks abroad, however, may open Transferable accounts, which are fed
with the sale of freely convertible foreign exchange or the transfer of funds
from another Transferable account. Debits to these accounts, without prior
Central Bank approval, are permitted for strictly local payments, the transfer
of funds to another account of the same nature in the name of the same or of
another bank domiciled in the same country, or transfers in the corresponding
currency to the country of the bank in whose name the account is registered.
BOLIVIA '
The unit of currency is the Boliviano.
Control of imports, exports and foreign exchange transactions is centered in
the Banco Central de Bolivia. Prior permits for both imports and exports are
required, and with certain exceptions all exchange resulting from exports must
be delivered to the Banco Central de Bolivia.
There are two rates in effect - the official rate which is Bs. 60 buying and
Bs. 60.60 selling per U.S.$l and the free rate of Bs. 100 buying and 101 sell-
ing per U.S.$l.
The official rate of Bs. 60 shall apply for the following purposes:
a) Requirements of the Federal and Municipal Governments or
their agencies, public services, including transporta-
tion, light and power companies, universities and the
payment of students' scholarships.
b) Importation of those food products, raw materials and
manufactured articles included in a preferential list
prepared by the Minister of Finance,
c) Payment of customs, import and export duties.
The free rate of Bs. 100 shall apply to the following transactions:
a) Importation of articles which do not appear in the pref-
erential list nor in the list of articles the importa-
tion of which is prohibited.
b) Other purchases of foreign exchange by private companies
and individuals.
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c) Exporters of certain. products, the production of which
it is desired to stimulate, are permitted to sell
stipulated percentages of the value of their exports at
this free rate.
Prior import permits are valid for 180 days. Bolivian consuls abroad require
the original of the import permit in order to visa documents. The permit
entitles the importer to official exchange at the rates mentioned and at the
bank designated in the permit.
The sale of exchange for purposes other than those indicated requires special
authorization and, if approved, would presumably be at the free rate. Opera-
tions in future exchange are not allowed. Current accounts in local currency
may be-opened in the name of a foreign domiciled concern or individual, subject,
however, to the approval of the Exchange Authorities. We are informed that very
few irrevocable credits are being opened by the commercial banks and that most
imports are on a sight collection basis, documents against payment. Until quite
recently a considerable volume of merchandise was being imported under barter
arrangements. Also, some import permits were being issued providing for payment
by the importer with his own exchange.
Travelers checks appear to be the medium preferred by travelers for carrying
funds into Bolivia.
The currency unit is the Cruzeiro and the official rates for United States dol-
lars fixed by the Banco do Brasil S.A., to which all banks dealing in exchange
must adhere, are as follows:
BUYING SELLING
U. S. dollars ....... ...cable......... .Cr18,38.......... Cr 18,72
.......... sight ......... .Cr(t18,38.......... Crr18,72
These rates are net after stamp taxes and brokerage of approximately Cr$0,12.
EXCHANGE CONTROL
Exchange control with variations has been in force for the past sixteen years,
but the following is a general resume of the present system.
Before any product may be exported from Brazil for sale abroad the relative
foreign exchange must be sold to an authorized bank. All purchases and sales of
exchange regardless of origin, destination or nature, and whether in hard or
soft currencies, must have approval of the Exchange Control and must be executed
through banks authorized to deal in exchange. Export and import transactions in
cruzeiros are permitted in certain cases but subject also to approval of the
Exchange Control.
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the expenses of the return trip.
c) Remittances destined for the maintenance of
persons living abroad, who are either relatives of the interested
party or economically dependent upon him, within the limits estab-
lished by the Exchange Control and after proof of payment of the
income tax has been established by the remitter.
Fourth Category: Importation of merchandise classified in import
license Category Non-preferential (see comments under heading
PREVIOUS LICENSES).
FIFTH CATEGORY: a) Transfers of amounts in excess of those permit-
ted by the fixed percentages established for the remittance of inter-
est, profits, dividends and the return of capital invested in the
country.
b) Remittances in the nature of aid or charity, as
well as those destined for other permissible purposes.
(Transfers for practically all classifications of these
Categories are at present largely in suspense.)
Note: From time to time when export cover is in short sup-
ply, the Exchange Control has also subjected certain of the
soft currencies to the above procedure. At this time Pref-
erential, First and Fourth Category liquidations are sub-
ject to only nominal delay.
PREVIOUS LICENSES
The following types of transactions do not require license and, where imports
are concerned, will be accorded priority in allocation of exchange.
1) Imports of:
a) Milk in emulsion or powder of a nature exclusively for
infant feeding.
b) Medicines and raw material for the pharmaceutical indus-
try as per detailed list issued by the Ministry of
Health and Education.
c) Barbed wire, insecticides and fungicides, fertilizers,
seeds, seedlings, pure-bred animals, machines or spare
parts and other implements for agriculture and the
industrialization of farm and ranch, as well as mineral
products, as per list issued by the Ministry of Agricul-
ture, (parts embodying rubber products subject to spe-
cial legislation).
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EXCHANGE PRIORITY (Hard Currencies)
The existing system of exchange priorities came into force in June, 1947,
(Instruction No. 25) and was designed to make available hard currency exchange
primarily for payments covering essential imports. The present regulations
permit banks to use 100% exchange purchased for the purpose of liquidating
approved exchange Requests released periodically by the Exchange Control. How-
ever, should purchases by banks exceed the Requests allocated for liquidation,
the balance of exchange must be resold to the Banco do Brasil S.A. within forty-
eight hours.
Application for exchange to the Exchange Control is initiated by the purchaser
rather than by the selling bank. These Requests, when approved, are filed by
the Exchange Control in chronological order by Categories, and a central control
for all Brazil is maintained through the Exchange Authorities in Rio de Janeiro,
which provides for a uniform delivery of exchange Requests by Categories to the
selling banks. In other words, no particular locality and no bank within a
locality normally has an advantage to the extent of obtaining exchange more
promptly than banks in the same or in other localities. The Categories under
which approved exchange Requests are filed in chronological order are the fol-
lowing:
Preferential Category: Covering importations of agricultural machin-
ery, fuels, lubricants, aluminum, lead, zinc and other scarce metals,
as well as pharmaceutical-products not manufactured in the country.
First Category: Importation of essential raw materials, goods of
prime necessity and products of national interest, such as those
included in import license Category Preferential (see comments under
heading PREVIOUS LICENSES), as well as importations not subject to
previous licensing. Also in this Category are included insurance
indemnities, as well as expenses of an unpostponable nature connected
with importation or exportation of merchandise.
Second Category: Remittances of royalties, interest, profits, divi-
dends and the return of capital, in accordance with the provisions of
Articles 6 and 8 of Decree-Law No. 9025 of February 27, 1946. ("Re-
mittance of interest, profits and dividends shall not exceed 8% of
the value of the registered capital, and excess over this percentage
shall be considered as transfer of capital" - which may be remitted
over a five-year period at 20% per year; see Fifth Category below.)
Third Category: a) Transfer of the proceeds of sales of passenger
tickets by authorized companies; remittances corresponding to the net
income of foreign telegraph and radio-telegraph companies and remit-
tances destined for the payment of cultural, scientific and educa-
tional services, as well as commercial information services.
b) Transfers destined to cover travel expenses
abroad within the limits fixed by the Exchange Control, presentation
of the passport and ticket being required, and remittance to cover
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3)
d) Maps, books, newspapers, magazines and similar publica-
tions of a technical, scientific, religious, didactic
and literary nature, written ina foreign language, as
well as works printed in Portugal in the Portuguese
language when by Portuguese or Brazilian authors.
e) Motors, parts and accessories for airplanes, including
specific tools where authorized by the Ministry of
Aeronautics.
2) Imports by the Government or related Ministries properly author-
ized by the Executive Power.
4) Exports, when payment is effected in hard currencies, of nationally
produced:
Provided no exchange coverage is required, articles for Diplomatic
missions and Consular offices for their awn use where similar
treatment is accorded Brazilian representatives abroad; also goods,
machines and instruments owned by technical immigrants, as well as
articles brought by passengers from abroad which are classified as
baggage in accordance with the Customs House regulations.
coffee
carnauba and ouricuri wax
sawed and processed lumber
and plywood
cotton
corn
sisal
mate
tea
cocoa
tapioca
diamonds and other pre-
cious and semi-precious
stones, cut or uncut
Brazil nuts
oil bearing fruits and
their respective oils
and residues
hides and skins
tobacco and its manufac-
tured products
fresh, candied, dried and
preserved fruit
caroa
piacava
cotton, wool, silk and
rayon textiles and yarn
refractory material
(bricks, refractory
parts and refractory
cement)
iron and steel rolled
plates
machines
scales
rock crystal, mica, carbon-
ates
china and glass for all
purposes, including
insulators, sanitary
ware and tiles
iron ore, cutlery, steel
drums
ceramic products of terra
cotta and sandstone
fish and vegetable preserves
The following importations, while requiring license, will receive special prior-
ity consideration both as to the granting of licenses and the allocation of
exchange.
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1) Fuels and lubricants.
2) Foodstuffs of primary necessity.
3) Cement and the products required for public works and
services.
L,) Scientific and hospital apparatus.
5) Raw materials, machinery and equipment for national
industry.
6) Railway equipment and chassis for trucks and busses and
all accessories and spare parts, (parts embodying rubber
products subject to special legislation).
7) Paper and all material, including machinery for the
printing of books.
8) Paper for the printing of newspapers and magazines, inks,
dry mats, blankets or flex for rotary presses, metal
alloys for linotypes and stereotypes, plates and material
for photoengraving, linotypes and type and printing
presses, their parts and accessories, if imported for the
exclusive use of publishers of magazines and newspapers.
9) Specific replacement and consumption material for motion
pictures and radio, if imported for their exclusive use
by producers of national moving pictures or film process-
ing laboratories, firms owning radio broadcasting sta-
tions and by the national radio transmission industry.
10) Devices, parts and accessories, the purpose of which is
to prevent labor accidents, either isolated or adapted to
machines or engines.
The issuance of an import license does not imply that exchange has been ear-
marked to liquidate payment of a particular import.
Import licenses, when authorized, will be stamped either Preferential or Non-
Preferential to indicate the classification of the merchandise in relation to
exchange priority.
The Advisory Committee for Foreign Trade establishes general policy with regard
to the operation of the previous license system, and from time to time various
supplementary regulations are issued by the Import Export Control. However,
the basic exemptions indicated above can only be modified through act of Con-
gress and Executive approval.
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COMPENSATION (BARTER) TRANSACTIONS
In order to encourage and/or support the production of exportable native pro-
ducts, where the world market price may have been temporarily affected adverse-
ly through exchange devaluation or other causes, the Import Export Control has
been approving so-called barter transactions wherein a specific export is tied
in with.a specific import, with the premium being paid directly by the importer
to the exporter. The effect has been that these operations in many cases per-
mit the importation of less essential merchandise for which an import license
would otherwise not be approved.
EXCHANGE QUOTAS RELATIVE TO IMPORTS EXEMPT FROM PREVIOUS LICENSE
Although certain types of imports are exempt from previous license, it has been
found necessary to establish a system of control over such imports in order to
set up an adequate budget of exchange requirements. The procedure in this con-
nection is for the importer to make application to the Exchange Control for
quotas applicable to anticipated imports of license-exempt merchandise. When
these quotas are approved, one copy of the authenticated application form is
dispatched to the exporter abroad who must present it at the time of requesting
Consular visa of the shipping document.
PAYMENT OF FREIGHT (ON IMPORTATIONS) IN CRUZEIROS
Effective March 1, 1950, regulations were issued calling for the payment of
freight in cruzeiros on importations from abroad. The procedure in general
calls for payment of the relative freight charge by the importer to the ship-
ping company's agent in Brazil. Depending on whether the import has been.cov-
ered by a commercial credit or a sight draft basis, the Exchange Control will
furnish exchange covering the freight either immediately or for delivery in 30
days. Accordingly, drafts covering imports should only include cost and insur-
ance. Certain types of transactions of a special nature have been subsequently
exempted from the foregoing regulation.
COMMERCIAL CREDITS
The opening of commercial credits is subject to authorization of the Exchange
Control which in turn will require presentation of import license in all cases
where the latter is called for under Decree No. 24,697-A (Previous License).
The application for relative exchange will take its turn in accordance with the
priority system explained above and which is determined by the Category in
which the merchandise falls. No import credit can be issued until the corre-
sponding exchange has been allocated and closed. It is understood that the
Brazilian Consulates abroad are authorized to permit a maximum tolerance of 5%
over the approximate value indicated in the import license, but where the rela-
tive merchandise is negotiated on the basis of weight and the latter is in
excess of the amount indicated in the license only nominal tolerances will be
permitted. The Exchange Control on the other hand, for instance, in cases
where no previous license is required, will permit supplemental application for
exchange up to a 10% excess, in conformity with the established commercial
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credit practice where the amount is mentioned as approximate.
EXCHANGE REMITTANCE TAX
A 5% exchange tax is collected on all remittances of funds abroad relative to
payment of imported merchandise, freight or other charges, maintenance of fami-
ly abroad and all other transfers with the following exceptions:
1) Services on Brazilian Federal, State and Municipal
external debt.
2) Return of foreign capital, as well as interest and divi-
dends thereon (exemption up to limits authorized by
Decree-Law No. 9025. The Brazilian Congress has now
before it a recommendation of the President and the
Minister of Finance to extend the same privilege to
profits).
3) Payments for food products of prime necessity (those
exempt from previous license).
4) Fuel, lubricants, duty-free newsprint paper and imported
books.
5) Payments to Diplomatic missions, Consular departments
and other authorized departments of the Ministry of
Foreign Affairs.
6) Authorized transactions between banks.
REGISTRATION OF FOREIGN CAPITAL
In accordance with Article 18 of Decree-Law No. 9025 of February 27, 1946, the
registration of foreign capital with the Exchange Control is required before
remittance of interest, dividends or profits thereon will be authorized. For-
eign capital entering the country, or capital in Brazil which may be acquired
by firms or persons resident abroad, subsequent to October 7, 1947, must be
registered within 30 days of entry or acquisition. Foreign currency Brazilian
external debt obligations need not be registered, but all cruzeiro obligations
or certificates representing cruzeiro capital either held abroad or locally
must be duly registered in order that remittance of relative income may be
authorized.
In addition to the 5% exchange remittance tax mentioned above, there is an
income tax of 15% on all income earned in Brazil by residents abroad. This tax
becomes payable prior to the remittance or in any case not later than 30 days
from date of income credit. Income has been interpreted to include foreign
bank collection commissions when paid by the local drawee. This tax must also
be deducted from the amount of interest payable to foreign entities for funds
advanced.
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SPECIAL EXCHANGE AGREEMENTS
The Brazilian Government and/or the Banco do Brasil S.A. have concluded a num-
ber of special arrangements with neighboring and other countries to facilitate
trade interchange. At the present time these agreements provide for liquida-
tion of transactions in the currencies of the countries mentioned, as follows:
Argentina (cruzeiros); Austria (U$S Aust.); Belgium and the Grand Duchy of
Luxembourg and all territories and countries under the control and mandate of
Belgium (Belgian francs); Bolivia (cruzeiros); Chile (Chilean pesos); Czecho-
slovakia (U$S-Tch.); France and all territories and countries under the control
and mandate of France (French francs); Federal Republic of Germany (U$S Alm.);
Iceland (pounds sterling); Iraq (pounds sterling); Italy (U$S-Ital.); Occupied
Japan (U$S-Jap.); Paraguay (cruzeiros); Portugal WS-Port.); United Kingdom
and all territories, protectorates, colonies and dominions except Canada
(pounds sterling); and Yugoslavia (U$S-Iug.).
There are also certain stipulations as to the currencies applicable to transac-
tions with: Denmark (exports - any hard currency; imports - Danish kroner);
The Netherlands (cruzeiros); Spain (exports - any hard currency; imports, for
specially designated products - any hard currency, otherwise pesetas); and
Sweden (exports - cruzeiros or Swedish kronor; imports - Swedish kronor).
Transactions with Western Hemisphere countries other than those mentioned above
would normally be liquidated in United States dollars. For European and other
Eastern Hemisphere countries not listed above operations would also be in
general effected in dollars or other hard currency. In certain cases, exports
to specified countries outside the sterling area have been authorized in pounds
sterling.
OTHER LOCAL REGULATIONS
Exporters are required to invest the equivalent of 20% of the FOB value of
their exports in 120-day national Treasury Notes.
Banks authorized to deal in exchange are required from August 1, 1948, to
deposit in special account with the Official Bank an amount equivalent to the
daily deposits received from importers under Decree No. 24.038.
With the exception of direct exchange operations-between authorized banks, all
transactions in excess of Cr$5.000,00 (equivalent) must pass through an author-
ized broker and be evidenced by a formal contract. Brokerage is 1/8% to 3/16%
depending on the locality.
Exchange transactions (other than inter-bank) are also subject to proportional
stamps at the rate of Cr$5,00 per thousand cruzeiros (equivalent) as well as
other graduated stamp charges determined by delivery and amount involved.
Authorized banks in Brazil may carry cruzeiro accounts for foreign domiciled
individuals and entities, subject to authorization and supervision of movement
by the Exchange Control. On these accounts, however, no overdrafts are
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permitted under local regulations. All credit and debit entries over foreign-
domiciled accounts carry a stamp tax of Cr$5,00 per thousand cruzeiros (equiva-
lent), except entries arising from actual exchange operations and entries
representing income or expenses on local assets belonging to the owner of the
account.
The free delivery of travelers checks received from abroad to individuals local-
ly is subject to authorization of the Exchange Control and, if exceptionally
authorized, will generally only be approved in nominal amounts.
Securities held for foreign-domiciled accounts are also subject to supervision
of the Exchange Control, and all movement over such accounts must be officially
authorized. There are no restrictions with regard to the entrance into the
country of foreign currency securities or foreign currency bank notes; however,
shipment of such securities and bank notes from within Brazil to the exterior
can only be made upon authorization of the Exchange Control with the exception
that travelers are permitted to take out the equivalent of Crr1.000,00 in for-
eign currency bank notes without prior approval.
The importation of gold bars, coins, etc., is subject to previous license and
exportation continues prohibited under the terms of an old Decree issued
October 19, 1933. Of locally mined gold 20% must be sold to the National
Treasury at the official market price, but the remaining 80% of local production
may be disposed of freely in the local market.
Rates of exchange quoted by authorized banks for commercial transactions must be
the same as the official rates fixed by the Banco do Brasil S.A. These rates
make allowance for expenses of tax stamps, brokerage, etc. While banks are
required under existing regulations to quote rates similar to those of the Banco
do Brasil S.A., a trading element becomes involved owing to the requirement that
exporters must purchase 20% of the value of their exports in National Treasury
Notes. As it is not generally convenient for exporters to carry such investment,
the burden of discounting this paper falls on the commercial banks (other than
the Banco do Brasil S.A. which is prohibited by law to discount or rediscount
them), and the discount rate at'which Treasury Notes are taken varies as the
respective banks may have greater or less need for cover.
BRITISH GUIANA
The unit of currency is the British Guiana Dollar (100 British half-pennies).
Based on the official sterling rate, it has a value at present equal to
U.S.4t0.5833. Sales of foreign exchange, including forward operations, are per-
mitted with the approval of the Exchange Control.
All imports from foreign countries require import licenses. Issuance of an
import license is, in itself, an approval by the Exchange Control for the pur-
chase of the necessary foreign exchange. Provided the permission of the
Exchange Control is obtained first, credits can be established without further
formalities. Where merchandise has been refused and not cleared from the Cus-
toms Warehouse, it may, if necessary, be reshipped without payment of import
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duty; however, a license to re-export is required. It is not legal to make a
provisional deposit in local currency in cover of a United States documentary
collection.
All exports must be covered by export permits. In certain cases exporters may
retain the foreign currency proceeds of exports, provided the approval of the
Exchange Control is obtained; subsequent use of the funds also requires author-
ization.
The opening of accounts for residents outside the Scheduled Territories is sub-
ject to the approval of the Exchange Control. Debits are allowed for local
payments. No transfers may be made in foreign currency without the approval of
the Exchange Control. Credits arising from the purchase of foreign exchange
are permitted. Credits arising from local sources are subject to approval of
the Exchange Control.
Income from or the proceeds from the redemption of securities held in foreign
accounts may be remitted. Proceeds from the sale of securities, real estate or
other capital assets cannot be transferred, but they can be reinvested in the
Colony with the approval of the Exchange Control. Remittances for royalties
and inheritances may be made in certain instances, subject to the approval of
the Exchange Control. Payments for services are permitted.
Visitors may bring in any amount of British Guiana dollars, as well as United
States dollar letters of credit, travelers checks and currency notes without
limitation. Such holdings should be declared on arrival, and travelers may
carry these instruments out of the country in amounts up to, but not in excess
of, the funds brought in. The amount of British Treasury notes a traveler may
bring in or take out is limited to 1-5 per person.
CHILE
The unit of currency is the Peso. The basic official parity rate is 31 pesos
to the United States dollar, equivalent to 3.2 cents per peso.
A new Exchange Law (Law 9.839) effective on December 4, 1950, replaced most of
the provisions of Law 5.107 of April 19, 1932, and Law 8.403 of December 29,
1945, and through its regulations reorganized the National Board of Foreign
Trade and the procedure for the handling of import, export and non-commercial
exchange operations. There are two broad categories of exchange, the one in
which various official rates established by the National Board of Foreign Trade
are applied and the other in which rates are free as determined by supply and
demand. All importable merchandise is classified into four groups, designated
A-1, A-2, B-1 and B-2, except that which is importable under the gold-law or
under the "wine dollar" arrangement which will be discussed below.
A-1 merchandise may be imported in unlimited quantity by an individual or legal-
ly established firm at the free rate. This free exchange market is legally
established, and operations may be carried on by banks and duly authorized
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exchange and securities brokers at rates resulting from supply and demand. At
the beginning of 1951 rates for buyers and sellers were 72 and 72.50 pesos to
the dollar. No import permits are required for merchandise in the A-1 group,
but before merchandise can be cleared from the Customs, the shipping documents,
including an invoice in Spanish, must be visaed by the National Board of Foreign
Trade. This requirement applies to all incoming merchandise regardless of clas-
sification.
A-2 merchandise may also be imported in unlimited quantity but will be paid for
at one of the fixed rates of exchange - 31, 43, 50 or 60 pesos to the dollar to
be determined by the Board. An import permit will be required for merchandise
in this classification and as a general rule they will be issued only to manu-
facturers and responsible wholesale importers duly inscribed in a special regis-
ter. Consular visas abroad will be given only if the confirmation of the import
permit is presented.
B-1 merchandise can be imported with free market exchange against an import per-
mit, but the quaptity will be controlled. Importers are limited to industrial-
ists and importers who have paid their municipal license fees. To obtain the
visa of the Chilean Consul abroad it will be necessary to present the confirma-
tion of import permit.
B-2 merchandise will be imported at one of the official rates - 31, 43, 50 or 60
pesos to the dollar - in controlled quantity, subject to an import permit. The
other requirements are similar to those for B-1 merchandise.
There is also a list of merchandise that can be imported only against so-called
gold dollars. The gold dollars result from the exportation of nationally mined
gold and are presently quoted at 145 pesos to the dollar. This list includes,
among other luxury items, automobiles and accessories. An import permit is
required and the quantity is thereby controlled.
The remaining list of importable merchandise falls under the "wine dollar" cate-
gory. These dollars are created by the exportation of wine on which the Exchange
Board specifies rates between 111 and 126 pesos to the dollar, depending on the
country to which shipment is made. The new regulations covering the list of
merchandise and the modus operandi are being published separately.
All exports of goods from Chile require permits. Full details on exports sale-
able at the official rates, predominately copper and nitrate, are still being
awaited. The principal items that can be liquidated at the free rate are:
metallic and nonmetallic mineral concentrates of the medium and small mining
companies, most agricultural products, certain manufactured goods, fish in vari-
ous forms and crude petroleum. Wine exports are made at a special rate to pro-
mote the exportation of this product. As stated before the dollars created by
these exports are used to import certain luxury goods.
The free exchange market can also be used for certain exchange transactions not
involving the importation or exportation of merchandise. Individuals, as dis-
tinct from legally established business firms, may buy or sell such non-foreign
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trade exchange freely through banks or authorized dealers. Business firms may
sell exchange to banks when the exchange is created by commissions, royalties,
freight payments and interest. Exchange may be purchased by commercial firms
covering such items as expenses abroad and profit remittances, but these trans-
actions require a permit from the National Board of Foreign Trade.
Foreign capital may be brought into Chile at the free rate by individuals with-
out restriction or permission, and the capital or profits may be withdrawn
freely through the free market. With the approval of the Board, business firms
may also.bring foreign capital into the country at the free rate by registering
the new capital with the Banco Central de Chile. This capital can be withdrawn
in whole or in part at the free rate by surrendering the relative certificate
of the Banco Central de Chile; interest and profits produced by this capital
can also be remitted at the free rate, approvals for which will be given pref-
erence over other profit remittances.
Current accounts in pesos may be carried in the banks in Chile by both resident
and non-resident individuals and firms without restriction for handling expenses
and other disbursements in Chile. Transactions involving remittances out of the
country would be subject to the exchange law regulations given above. Foreign
currency accounts may also be carried in banks in Chile, but all transactions
passing over such accounts would be subject to the exchange regulations.
Compensation agreements covering exports and imports between Chile and various
foreign countries are in force. These agreements generally call for a minimum
annual volume of trade between the two countries with the settlement of balances
being made by the Banco Central de Chile and the corresponding bank abroad. The
unit of currency generally used is the dollar for bookkeeping purposes and the
rates in effect are the same as those in use for trade with the United States.
The same classifications of merchandise of A-l, A-2, B-1 and B-2 apply to trade
under compensation agreements.
Travelers and tourists may bring into Chile letters of credit, travelers checks
and other negotiable instruments without restriction and likewise can take such
instruments with them when leaving the country. Drafts under travelers letters
of credit, travelers checks and miscellaneous checks may be cashed at commercial
banks and authorized exchange brokers at the free rate without limit as to
amount. Travelers checks or letters of credit can be purchased through banks
either with dollars or with pesos at the free rate.
COLOMBIA
The unit of currency is the Colombian Peso, valued at about U.S.$0.51. The
official buying and selling rates of the Banco de la Republica are Ps. 1.95 and
Ps. 1.96 to the United States dollar respectively. Purchases and sales of for-
eign exchange are effected by the Banco de la Republica or by commercial banks
as its agents. Sales may only be made against permits issued by the Exchange
Control. As a rule there are no forward operations.
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All foreign funds derived from the following sources must be converted at the
official rate:
1) Exportation of coffee, bananas, silver, platinum; jewelry
or other articles made with gold, silver, and platinum;
precious stones, plain textiles and products of national
manufacture containing more than 10% foreign raw mater-
ials.
2) Funds destined for use in the petroleum industry.
3) Funds destined for payment of insured losses.
4) Profits earned by Colombian capital invested abroad.
5) Funds representing importation of capital.
6) Payments of life insurance or any other type of insur-
ance.
The system of Exchange Certificates also exists, the Certificates being issued
by the Banco de la Republica and commercial banks against delivery of foreign
exchange derived from gold production, exports other than the above and various
other miscellaneous sources, including exchange sold by travelers. The Certif-
icates are valid for approximately sixty days from date of issue and are freely
marketable but only convertible for remittance abroad with the approval of the
Control for the following purposes:
1) Payment of expenses of residents abroad, no fixed amount;
each case is decided on its merits by the Control. Usu-
ally limited to $500 per month. Exceptions are made for
diplomats, persons requiring medical attention abroad and
students, all of whom are eligible for exchange within
limits at the official rate.
2) Remittance to foreign airline and steamship offices in
cover of passages from Colombia abroad when such passages
are paid in pesos.
3) Payment of machinery and equipment destined for expansion
or creation of new factories of benefit to the national
economy over and above the quotas granted for importation
at the official rate.
4) Importation of luxuries and non-essential articles
determined by the Control, such as wines, liquors,
fumes, cigarettes, etc.
5) Payment of services and similar items,
as
per-
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6) For reimbursement of foreign capital imported into the
country during the existence and under the conditions of
Section 2, Article 8, Decree 1949 of 1948 (authorized
importation of capital through conversion into Exchange
Certificates).
If a Certificate is not used within its validity, the holder's only recourse is
to deliver it to the Banco de la Republica for redemption in pesos at the offi-
cial buying rate. Open market quotations of Certificates fluctuated during the
last few months of 1950 from Ps. 2.90 to Ps. 3.35 to the dollar, depending upon
the supply and demand.
Imports are controlled by import licenses and there are three types as regards
the Control's exchange commitment ("reembolso"): ordinary, gradual and non-
reimbursable. An indication of the type is shown on the license. Application
for exchange against an ordinary license may be made as soon as the required
documents are available; in the case of a gradual reimbursement license, appli-
cation for exchange can be made as the installments mature. No exchange will
be supplied against non-reimbursable licenses, shipments against them being
considered as capital importations without the right to re-export the principal
or the income.
The validity period of an import license is approximately 5 months except for
special machinery and equipment, in which case the license may be extended at
the discretion of the Control, depending on the time required for manufacture.
The original copy of the license is retained by the importer for foreign
exchange purposes, and the duplicate must be presented by the foreign exporter
to the Colombian Consular agent at the port of shipment. Subject to the excep-
tions noted in the next paragraph, the issuance of licenses is determined by.a
basic annual quota granted each importer - commercial samples are excluded from
quotas. Percentage allocations are based on estimates of the country's exchange
position. Allocations not utilized through failure to take out import licenses
are forfeited. No excess tolerance is permitted on shipments.
Occasionally licenses are authorized beyond quota limits in the case of criti-
cal materials or if the importation appears essential. Also, the validity of
licenses is sometimes extended upon presentation by the Colombian importer of
satisfactory documentary evidence that the license could not be used during the
initial period of validity; blanket extensions of 30 to 60 days have likewise
been granted in periods of cargo congestion at Colombian ports.
Import licenses are required for shipments by air express or parcel post,
regardless of the article or its value. Books, magazines and periodicals
brought in under subscriptions are excepted as being a personal service.
Resolution No. 17 of 1949 authorized the granting of gradual reimbursement
licenses for the importation of specified commodities. The amounts that may be
so licensed correspond to 20% of the amount of the annual quota of an importer
if the time limit for payment is 1 year, 40% if the limit for payment is 2
years, 60% if the limit for payment is 3 years, 80% if the limit for payment is
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4 years and 100% if the limit for payment is 5 years. Provision is made for
payment in equal quarter-annual installments, first payment to be due 3 months
after the date of the customs manifest which evidences the clearance of the
merchandise through the Customs and the payment of the corresponding duties.
Exchange remittances in cover of such installments are classified in category
9 of the priorities set up in Resolution No. 7 of 1949 for the granting of
exchange licenses. This facility does not give the importer who may avail him-
self of it any additional import quota rights as the 20% corresponding to each
year will be charged to the allocation of quota which may be available to him
during that year. It merely provides the importer a means of anticipating
allocations of his import quota so that he may bring in at one time a quantity
of merchandise which he could not otherwise bring in excepting over a longer
period of time if he were to arrange his imports depending entirely upon his
normal allocations of quota.
Commercial credits may be opened by banks, subject to the prior approval of
the Control, for certain goods, principally raw materials, spare parts, agri-
cultural machinery, fertilizers, seeds, surgical and pharmaceutical instruments
and building materials. Subject to the exceptions mentioned below, the credit
must provide that payment will be made only against ocean shipping documents -
in addition to other required documents. Availments against certificates of
manufacture, warehouse receipts, railroad bills of lading and other similar
inland documents are not permitted, although exceptions are made for credits
covering iron and steel products, subject to United States or other foreign
export quotas. The Control may also authorize banks to open commercial credits
with cover by Exchange Certificates for machinery or equipment destined for
plant expansion or new factories. Anticipated remittances payable with Exchange
Certificates covering special machinery, some raw materials and certain merchan-
dise are sometimes permitted, provided a bond is put up to guarantee the future
presentation of documents evidencing the completion of the importation.
Instructions accompanying collections should include authorization to accept
provisional payment in Colombian pesos against the drawee's written agreement
(1) to supply the documents required for an exchange application and (2) to
respond for any adverse exchange difference which might occur when remittance is
effected. Items drawn on government entities should carry instructions to
deliver the draft and documents for examination against drawee's receipt for
that purpose.
To obtain an exchange permit in the normal way, in cover of imports, the follow-
ing documents must be submitted with the application:
Original customs manifest,
Original import license, and
Original signed commercial invoice.
Before the original customs manifest is available and in order to expedite the
remittance, the applicant may, at his option, submit a bank undertaking to
deliver the manifest at a later date - the undertaking carries a 40% penalty for
non-compliance - in which case the application must be accompanied by:
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Original import license..
Original signed commercial invoice,
Copy of consular invoice,
Non-negotiable copy of the bill of lading, and
Bank undertaking (as indicated above).
The importer must qualify from a credit standpoint in order to obtain such bank
undertakings, and as a commission is charged by the banks for giving undertak-
ings, most importers prefer to wait until the manifest is at hand.
Resolution No. 8 of 1949 as amended provides that the holder of an import
license is obliged to submit documentary evidence of the extent to which the
license has been utilized and of the amount of the underlying debt, and to
apply for the registration of the corresponding exchange application within 60
days following the date of the expiration of the validity period of the respec-
tive license. In case of non-compliance with this formality, the Control will
delay granting the exchange permit and in certain circumstances will decline to
grant the permit. If because of the approaching time limit under this Resolu-
tion, or for other reasons, it is desired to register an exchange application
without waiting for the customs manifest or putting up a bank undertaking, the
following documents will be accepted for that purpose:
Original commercial invoice,
Original import license,
Copy of consular invoice, and
Copy of ocean blading (may be non-negotiable).
Final approval of the application will not be forthcoming until the customs man-
ifest - or bank undertaking in lieu of manifest before the latter document is
available - is delivered to the Control. While there is no clear ruling on the
point, we are informed that the consular invoice may be a simple copy prepared
on the usual printed form.
In the event the original customs manifest is lost or destroyed, it may be sub-
stituted by an authenticated copy and a bank undertaking valid for 6 months to
assure that the original will not be used,
According to Resolution No. 13 of 1949, the Control will not allow in an import
license, nor grant exchange to cover, the amount of premium for any insurance
which can be contracted with insurance companies legally established in Colombia.
A subsequent ruling clarified that it was permissible to insure a shipment of
merchandise with insurance companies not legally established in Colombia when
goods are sold on the basis of CIF Colombian port.
Resolution No. 7 of 1949 set up priorities in the following order for the grant-
ing of exchange licenses:
1) External debt service.
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2) Dividends and earnings on imported capital duly
registered as such.
3) Official requirements of National Departmental and
Municipal Governments.
4) Debts for which exchange has been guaranteed by the
Control.
5) Royalties and patents.
6) Re-insurance premiums.
7) Banking services - commissions, interest, etc.
8) Indispensable technical services.
9) Merchandise imported against gradual reimbursement
licenses.
10) Students' expenses abroad.
11) Consular expenses abroad.
12) Reimbursement of bankers irrevocable letters of credit.
13) Merchandise imports not covered by letters of credit.
14) Insurance premiums.
15) Other payments not included above.
The resolution also provided that authorizations for release of exchange within
each priority group would take into account the date of the respective debt to
be determined by the date of the consular invoice or of the customs manifest.
Exports require a prior license of the Control, and the proceeds in foreign
exchange must be delivered to the Banco de la Republica, direct or through
authorized banks, within 30 days from the date of the export license. Except
where eligible for Exchange Certificates, as previously mentioned, such exchange
must be sold at the official rate.
Taxes are imposed on all transactions that result in the exportation of foreign
exchange, in decrease of foreign currency reserves or that prevent or restrict
the increase of such reserves. A tax of 4% - computed on the equivalent in
pesos converted at the official buying exchange rate - is imposed on all types
of remittances, including those for merchandise, and in addition the following
taxes are applicable on remittances for the purposes indicated:
6% for payment of royalties for exhibition of films,
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6% for payment of remuneration to theatre companies,
circuses and similar talent (with exception of athletes
and concert artists, exempted), and
30% on remittances for expenses of Colombians abroad or
of foreigners from funds received or earned in Colombia
(income on, and principal of, registered imported foreign
capital excepted).
Travelers checks and travelers letters of credit may be issued by banks in
Colombia on instructions from their correspondent banks or Head Office abroad,
free of tax on delivery, if issuance and delivery is effected free of payment.
Such instruments under like conditions may be sent from abroad to banks in
Colombia for delivery to the beneficiaries without payment of tax. This facil-
ity is available only to beneficiaries who are transients in Colombia and not
to residents of the country. Travelers (transients) are usually not required
to declare their funds either upon entering or leaving Colombia, but it is
advisable to take that precaution upon entering the country.
Capital in the form of foreign exchange and/or industrial, agricultural or min-
ing machinery may be brought into Colombia, subject to prior license of the
Control. If the capital is for a new industry, a favorable ruling of the
Ministry of Commerce & Industry must be obtained. In order to qualify for
remittance of income and for eventual re-export of principal, the capital must
be registered as such with the Control at the time of import, and if the impor-
tation is made in foreign exchange, it must be sold at the official rate to the
Banco de la Republica or to an authorized commercial bank as agent.
By Resolution No. 51 of 1950 the Control suspended the issuance of licenses for
the importation of capital in the form of merchandise but with the exception
that licenses may be issued for the importation of certain types of raw materi-
als for their own use as capital by industries established hereafter with
imported capital. Raw materials so imported as capital may not exceed 100% of
the value of machinery or foreign exchange brought in as capital for the indus-
try. Furthermore, licenses may be issued to new industries to import, as part
of working capital, finished goods in the same lines as the industry is to pro-
duce, up to a prudent amount to be fixed in each case by the Control. The value
of the raw materials or finished goods imported as working capital will not be
eligible for registration at the Control as imported capital. Consequently,
such unregistered capital will not be eligible for subsequent repatriation, nor
will its earnings be eligible for remittance abroad. The provisions of Resolu-
tion No. 51 do not apply to the petroleum and mining industries.
Resolution No. 59 of 1950 provides that remittances in foreign currency will be
authorized at the official rate in payment of royalties on trademarks, patents,
industrial drawings and models, provided they are used in manufacturing articles
in which more than 90% domestic raw materials are used. In all other cases
remittance of royalties will have to be covered through the exchange certifi-
cate market.
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Remittance of royalties, as mentioned above, will only be authorized, provided
the corresponding contracts shall have been previously approved by the Control.
Remittances of royalties under contracts approved prior to the effective date
of Resolution 59 will continue to be made on the basis authorized in such
approval until the end of the yearly period for which the respective contract
was approved.
Exchange Control Accord No. 17 of 1949 reads in part as follows:
1) The Control will grant licenses for the remittance of
profits which arise directly and exclusively from capital
imported and registered at the Control as legally capital-
ized;
2) When the capitalization is made in practice, but without
prior approval of the Control, the interested parties must
request the approval of the Control which may approve and
permit registration, if the profits are eligible for
exportation, or disapprove if the capitalization should
not be in the national interest. In this last instance
the Control must grant exchange permit for the exportation
of the profits, provided the holder is entitled to it;
3) The amount authorized, whether to capitalize profits or to
remit them, shall be in the (same) ratio to capital
imported, plus subsequent authorized capitalization of
profits, as the total profits bear to the patrimony;
4) It is understood that the oil companies and those which
engage in the exploitation of gold, silver, and platinum
mines have the rights granted to them by the respective
laws, resolutions and decrees;
5) The remittance of profits or their capitalization must be
requested within the semester following the year in which
they were earned.
The re-export of capital brought into Colombia prior to February 19, 1935, or
of capital not registered with the Control, and the remittance of income on
such capital, are not authorized as such. However, under the heading of remit-
tances for expenses of residents abroad that may be covered by Exchange Certif-
icates, the Control is willing to consider applications up to U.S.500 per
month against funds blocked in non-resident accounts.
Withdrawal of funds from nor.-resident accounts are subject to the 4% stamp tax
and the 30% non-resident tax, except:
a) Where the account has capital and income export rights
in which case only the stamp tax, 4%, is imposed, or
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b) Where the funds withdrawn are to be invested in Colombian
securities in which case no tax is imposed on the with-
drawal. However, securities thus purchased are of neces-
sity also blocked.
Cash funds or securities, whether in foreign currency or in any way controlled
by persons or entities outside Colombia, are included in the definition of
foreign exchange, and all transactions therein are subject to the prior approv-
al of the Control. Non-resident investors are required to file an income tax
declaration annually either personally or through a registered Colombian lawyer.
Any infraction of laws and regulations concerning exchange, importation and
exportation is punishable with a fine of up to 300% of the amount involved, and
suspension of import or export licenses for a term of one year.
ECUADOR
The monetary unit is the Sucre.
The Emergency Law of June 5, 1947, covering exchange, imports and exports
expired November 30, 1950, and was supplanted by Decree-Law No. 1864 of the same
date. This new law devalued the Sucre, setting the new official parity at
0.052447 grams of fine gold or 15 sucres to the dollar. The change in the offi-
cial rate was accompanied by the elimination of the multiple taxes and sur-
charges previously applying to import permits and the establishment of new ones
as indicated further on. The Banco Central del Ecuador continues to control
exports, imports and foreign exchange under the law and all transactions at the
official rate are concentrated in that bank.
With certain exceptions all exports require a prior permit, and the proceeds
must be sold to the Banco Central del Ecuador at its official buying rate of
Sucres 15 per U.S.$l.
The new exchange law again revised the classification of merchandise that may be
imported into the country. As heretofore the classification is in three groups -
List ,A representing indispensables; List B, useful goods and List C. luxuries.
In addition, with the consent of the Authorities certain merchandise may be
brought in under a system of compensation. Prior import permits are required,
the original to be forwarded by the importer to the shipper who must present it
to the Ecuadorian Consul to obtain his visa on the shipping documents. Imports
under Groups A and B are liquidated at the official selling rate of Sucre 15.15
per U.S.$l. Those importing Group B merchandise must pay a tax of 33% on the
value of the import permit. At the present time 60% of this tax is payable
prior to obtaining the import permit and 40% on liquidation of the exchange
after arrival of the documents. Group C merchandise is liquidated at the free
market rate, about Sucres 18.50 per U.S.$l at this time, and the corresponding
foreign exchange must be purchased in the open market and deposited in the Banco
Central del Ecuador prior to obtaining the import permit. Also, a tax of 44% on
the value of the import permit must be paid - in this case 100% of the tax is
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payable in advance. The rate for compensation imports, like the free market
rate, reflects the interplay of supply and demand but normally is higher than
the free market rate. Compensation merchandise bears the same 44% tax as Group
C merchandise.
The Banco Central del Ecuador is obliged by law to.supply exchange at the offi-
cial rate for all goods classified as indispensable and useful (A and B) upon
receipt of an exchange application from the collecting bank or the importer as
the case may be, providing the application and corresponding documents are
accompanied by a proof of deposit in the Banco Central del Ecuador of the
equivalent amount in local currency. The validity of the import permit is for
125 days for goods from the United States and 180 days for other countries,
both subject to extension if circumstances warrant.
Import commercial credits in foreign currency may be opened only by the Banco
Central del Ecuador; however, imports are also facilitated through the medium
of letters of guaranty issued by the local commercial banks. Unlike a commer-
cial credit such a guaranty does not provide for payment in foreign currency
but is intended to assure that the relative import permit has been obtained and
that the equivalent in local currency will be deposited to cover the foreign
exchange required. Transshipment of goods free of customs duties is permis-
sible under certain conditions.
Incoming capital for investment in the country, which is registered with the
Banco Central del Ecuador, must be sold to the Banco Central del Ecuador at its
official buying rate of Sucres 15 per U.S.$l. Dividends, profits, interest and
amortization on such capital is entitled by law to be remitted abroad at the
official rate. Where incoming capital is not so registered, the free market
must be used for both the incoming and the outgoing operations.
In addition to imports included in Lists A and B. the Banco Central del Ecuador
will sell official exchange for the payment of interest and amortization on
loans contracted abroad and registered with the Banco Central del Ecuador, as
well as for payments indispensable to Government entities and expenses of stu-
dents. Incoming exchange to pay salaries, taxes and other expenses of foreign
companies established in the country must be sold to the Banco Central del
Ecuador at the official rate.
Included among the sources of free market exchange other than non-registered
incoming capital are the exports of gold and certain other mining products,
repatriation of Ecuadorean capital, receipts from foreign insurance companies,
commissions, foreign exchange brought in by diplomats, tourists, students and
foreign families in Ecuador.
Deposit accounts in foreign currency domiciled abroad are permissible with the
Banco Central del Ecuador and are freely operated under their jurisdiction.
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FALKLAND ISLANDS
British West Indian 1, = U.S.$2.80.
Exchange control based on regulations in force in the United Kingdom.
All goods require import licenses, other than those of United Kingdom origin
which, with the exception of foodstuffs, may be imported under open general
license.
Export licenses are required for certain domestic products.
FRENCH GUIANA
The monetary unit is the French Franc (Continental Franc). Dollar exchange is
bought and sold at the Paris free market rate, subject to a small commission
charge. Exchange operations and foreign trade are under official control and
imports must be covered by license.
As French Guiana is an integral part of Continental France, i.e., an Overseas
Department, and is governed by the French exchange regulations, see France,
page 67, for further details.
PARAGUAY
The monetary unit is the Guarani.
All dealings in foreign exchange are controlled by the Banco del Paraguay, and
under legal provisions currently in force all purchases and sales of foreign
exchange must be made exclusively through the Banco del Paraguay or through
other institutions authorized to handle foreign exchange for account of that
bank.
Exporters are required to sell all the foreign exchange resulting from exports
at the corresponding official rates for the commodities involved. These export
rates are as follows:
1) 3.059 guaranies per dollar (about 33? per guarani) for
certain Government receipts.
2) 4.92 guaranies per dollar (about 20? per guarani) for
basic exports, such as hides, quebracho extract, certain
woods, cotton, rice and some meat products.
3) 6.02 guaranies per dollar (about 16? per guarani) for
products difficult to sell outside of Paraguay, such as
petitgrain oil, some vegetable oils and tobacco.
4) 7.99 guaranies per dollar (about 12-? per guarani) for
non-commercial transactions, such as investment capital
and diplomatic funds.
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Importations into Paraguay are divided into four categories for which the fol-
lowing rates of exchange have been established:
1) 3.121 guaranies per dollar (about 32? per guarani) for
certain Government financial services and Group I
imports, such as petroleum and fuel oil and some of
their by-products, wheat flour and refined mineral oils.
2) 4.9821 guaranies per dollar (about 20? per guarani) for
Group II imports, such as certain agricultural seeds,
salt, medicinals and some chemicals.
3) 6.0821 guaranies per dollar (about 16-? per guarani) for
Group III imports which include tires, some wool textiles,
newsprint, agricultural equipment, hardware, industrial
machinery, iron and steel products and many raw materials.
4) 8.0521 guaranies per dollar (about 12 ? per guarani) for
Group IV (a) imports, such as building materials, electric
motors and equipment, automobile spare parts, bicycles,
typewriters, cameras, film and glassware. This same rate
also applies to Group IV (b) imports which consist of all
those products not included in any other Group and which
are not considered as being essential to the economy of
the country.
Before placing orders abroad, importers are required to close exchange purchase
contracts which are issued for a maximum period of 270 days. Under existing
regulations this contract serves the double purpose of an import license and an
undertaking on the part of the Banco del Paraguay to sell the corresponding
exchange at the rate fixed thereon once the merchandise has been cleared
through the Customs. Before obtaining their exchange contracts, importers must
make a deposit in guaranies with the Banco del Paraguay, which varies with the
category of goods to be imported; in the case of Group I goods, the deposit is
10% of their value; Group II - 15%; Group III - 20% and Group IV - 25%. At the
request of the importer these deposits may be transferred to a bank to be
applied in part payment of the bill covering the merchandise or may be returned
to the importer if the goibds have been cleared through the Customs and the cor-
responding exchange contract has been cancelled.
Provisional deposits in local currency in connection with collections are not
compulsory, but it is customary market practice to request such deposits before
surrendering documents. Drawees are unable to apply for the transfer of funds
abroad in payment of imports until the completion of all formalities in the
Customs.
Imports into Paraguay may be financed under documentary letters of credit which
local banks are authorized to open on behalf of those customers who hold valid
exchange purchase contracts. Before letters of credit can be opened, importers
must make minimum deposits in guarantee as follows: 25% of the value of the
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goods if included in Group I, /+0% if in Group II1 75% if in Group III and 100%
if in Group IV.
As shipment to Paraguay must be transshipped from ocean steamer to river
steamer at either Montevideo, Uruguay, or Buenos Aires, Argentina, our corre-
spondents in Asuncion suggest the advisability of prior agreement between the
buyer and the seller upon the port of transshipment, the.name of the forwarder
and the documentation required.
Persons entering the country may carry with them any amount or kind of foreign
or local currency, letters of credit, travelers checks, etc., but lawfully may
only negotiate in such foreign exchange through the Banco del Paraguay or the
institutions authorized to handle foreign exchange on its behalf. There are no
restrictions against carrying any unused portions of such values upon leaving
the country.
The monetary unit is the Sol. The basic exchange law is No. 11208 of November
11, 1949, which suspended the old official parity of the sol (6.50 to the dol-
lar) and left all exchange subject to free market conditions.
Two classes of exchange exist - that arising from exports of merchandise which
is designated certificate exchange and that arising from all other operations
which is referred to as free exchange..
All exports require a prior permit; these are issued only after the exchange
corresponding to 100% of the foreign currency value of the shipment has been
delivered to the Banco Central de Reserva del Peru. In return for this exchange
the Banco Central de Reserva del Peru issues foreign currency certificates valid
for 60 days; these are transferable by endorsement to one bank only and are sold
to importers at the prevailing rates for such certificates. The Government,
however, is given preference for the purchase of certificates and those that
have not been used within their validity date will be purchased by the Banco
Central de Reserva del Peru at a 2% discount. Of late the Government has been
actively supporting both the certificate and the free market dollar rate by pur-
chasing any excess exchange at S/.14.95.
Import permits are not required, but with the exception to be noted below only
merchandise included in the permissible list may be imported freely and may be
paid for through the purchase of foreign currency certificate exchange or by the
purchase of exchange in the free market. Foreign exporters can obtain full
details of the items figuring on the permitted list from the nearest Peruvian
Consul. Any merchandise not on the permitted list, which might arrive at Peru-
vian ports, is subject to confiscation by the Customs. Decree-Law No. 11076 of
August 5, 1949, provides, however, for the importation of all merchandise,
including articles not on the permitted list, from countries not having freely
convertible currencies when the balances of such currencies are declared to be
in excess. Sterling and Argentine paper pesos have been declared in excess and
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while the situation exists, merchandise of all types may be imported freely from
Argentina, the sterling area or other countries where sterling transfers from
Peruvian accounts are authorized by the Bank of England and the Banco Central de
Reserva del Peru.
With the prior approval of the Minister of Finance, foreign currency certifi-
cates may also be used to remit profits of foreign companies to their home
offices, amortizations for depreciation, administration expenses and other for-
eign currency obligations, including payments to foreign technicians or special-
ists who have come to the country for special services. Remittances to cover
these categories may also be made through the free market.
In particular reference to commercial credit availments to be liquidated through
the medium of foreign currency certificates, the regulations further provide
that if for reasons beyond the control of the importer, the merchandise is not
shippdd within the usance of the credit, the Banco Central de Reserva del Peru
has authority to issue a new certificate for the amount outstanding. However,
90 days is the limit of time during which a commercial credit opened on the
basis of foreign currency certificates may remain outstanding, although exten-
sions may be granted at the discretion of the Superintendent of Banks.
As heretofore travelers may enter or leave Peru with unlimited amounts of for-
eign currency and no declaration is required. Banks are permitted to issue
travelers checks, drafts or pay foreign currency against letters of credit, that
is, to exchange dollar for dollar in any form. There are no restrictions on
deposit accounts in soles for persons domiciled outside of Peru. Accounts in
foreign currency are also permitted, and Decree-Law No. 11208 of November 11
further stipulates that the Government will guarantee the free availability of
such foreign currency deposits.
Foreign currency, checks, drafts and transfers may be made in the free market
without restriction as to the purpose for which the exchange is required. Banks,
brokers, hotels and others are permitted to deal in free exchange without limita-
tions.
Under date of July 14, 1950, the Government issued a decree providing for the
liquidation of old pending import engagements in official exchange at the ex-
official rate of S/.6.50 per U.S.$1, or its equivalent in other currencies, pro-
viding the obligations are duly inscribed in the registry established for that
purpose. The payment of these recognized obligations will be in local currency
at a rate to be fixed by the Government, corresponding to each currency involved
and within a time limit of 4 years. The budget just approved for the present
year includes a provision of S/.13,000.000 for meeting the payments of the first
year under the plan. The regulations governing the modus operandi of the decree
of July 14, 1950, remain to be issued.
SURINAM
The unit of currency is the Surinam Guilder (Fl.) which is currently quoted at
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U.S.$O.5249.
The exchange rate of the United States dollar is officially established at Fl.
1.86 1/2 buying and Fl. 1.90 1/2 selling. All transactions involving foreign
currencies are strictly controlled and must have the consent of the Foreign
Exchange Committee.
The Government controls the importation of merchandise. It is prohibited to
bring in certain items and others are on a restricted basis. Generally speak-
ing, goods on the prohibited and restricted lists are luxuries and those on the
unrestricted list are foodstuffs and other essentials. All imports are subject
to license granted to importers on a quota basis. We are informed that exchange
is automatically available for all imports covered by license. In other words
the issuance of a license implies the allotment of the required exchange.
To protect himself an American shipper can obtain proof from his customer in
Surinam that the necessary license has been secured. For this purpose the
Import Control Board supplies the importer, after his application for license
has been approved, with a copy of his order duly authenticated by the Import
Control Board. This order-copy shows the number of the license which covers the
importation in question. Import licenses are valid for eight months, but where
necessary applications for extensions are given consideration.
We understand that the Government refuses import licenses to importers who have
drafts outstanding for more than 3 months. The names of importers having
unpaid drafts past due more than 3 months are put on a black list until such
time as they have cleared the outstanding drafts.
As of March 1, 1950, the importation of Surinam bank notes as well as currency
notes was prohibited.
The unit of currency is the Uruguayan Peso.
Exporters are required to sell the foreign exchange value of exports at rates
established by the Banco de la Republica Oriental del Uruguay. These rates,
together with some of the principal products which have been assigned to them,
are at present as follows:
1) Controlled market cable rate of Urug. $151.90 per U.S.$100
(about 65.8? per peso) for basic exports, such as greasy
and washed wool, most meat products, livestock, sheep
skins, salted and dried hides, linseed, wheat and wheat
flour and oleaginous seeds in general.
2) Free controlled market cable rate of Urug. $235 per
U.S.$100 about 4 per peso) for such products as combed
wool tops, knitted wool articles, pork products, tanned
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and semi-tanned hides and manufactured products.
3) A combination of 68% of controlled exchange
(Urug. $151.90) and 32% of free controlled exchange
(Urug, $235), which results in a net cable rate of
around Urug. $178 per U.S.$100 (about 56.2? per peso)
for certain exports, such as linseed oil, wild animal
hides, some packing house products, expellers and
oleaginous cakes.
4) Exporters of some products, principally manufactured and
semi-manufactured which normally move out at the above
rates, are sometimes given a premium to assist them in
marketing such goods abroad. The amount of this premium
and the length of time for which it is granted varies in
each case.
Imports must likewise be settled at established rates which currently are as
follows:
1) Controlled market cable rate of Urug. $190 per U.S.$100
(about 52.6? per peso) for raw materials and other essen-
tial merchandise.
2) Free controlled market rate of Urug. $245 per U.S.$100
(about 4Q.8? per peso) for non-essential but needed
imports and some luxury items.
3) Compensated rate which represents the free controlled
rate (Urug. 6245) plus a premium to be determined in
each case for products considered to be luxuries, prin-
cipally automobiles and electric refrigerators. This
premium is paid at present to exporters of edible oils,
the system having been developed at a time when there
were relatively sizeable quantities of edible oils
available for export but which could not be placed
abroad at world market prices without a more favorable
export exchange rate. It is generally believed that
this compensated rate is a temporary measure.
A prior import permit is not required for the importation of first-category
goods - which are those considered essential to the economy of the country,
such as agricultural and industrial machines and spare parts, rubber, tinplate,
carbon black, fuel oil and petroleum, sundry iron products and some medicinals -
from the Argentine, Belgium, Canada, France, Germany, Holland, Italy, Japan,
Sweden, Switzerland, and the United States; importers must, however, make a
sworn declaration to the Export and Import Control Board within 48 hours after
the order has been closed abroad indicating all pertinent details as to the
transaction involved, such as origin and type of merchandise and value. Import-
ers must obtain an import permit prior to closing an order abroad for first-
category goods to be imported from countries other than those mentioned above,
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as well as for all second and third-category goods which consist of not so
essential but needed imports.
While such sworn declarations and import permits do not bear indication of a
formal guarantee or undertaking on the part of the Exchange Authorities to
allocate the necessary exchange, it is generally understood that the corre-
sponding cover is set aside and earmarked for the specific purpose declared by
the importer at the time the sworn declarations are filed or the permits are
issued. Should merchandise arrive without the corresponding sworn declaration
having been filed or import permit granted, a fine is imposed on the importer.
Importers must present to the Export and Import Control Board an application
for Customs clearance of merchandise within 360 days of the date of issuance of
the import permit or date of presentation of the sworn declaration except in
the case of imports from bordering countries (Argentina, Brazil and Paraguay)
when such applications must be made within 180 days. An extension of this
period will be considered if shipment has been delayed for certain justifiable
unforeseen reasons and evidence to that effect obtained from the Uruguayan
Consulate is submitted to the Authorities. The following regulations also
affect the validity of import permits:
1) When an import permit expires after the merchandise
has been shipped, the expiration date will be
automatically extended up to the arrival of the
merchandise.
2) In every case the application for Customs clearance
of the merchandise must be presented within 90 days
after arrival of the merchandise at the Uruguayan
port of discharge, even when the import permit does
not expire within this period.
Banks must have in their possession the sworn declaration or the import permit
and the relative shipping documents - or have such documents submitted to them
by the importer - prior to selling the exchange, whether on a spot or a future
basis,'and such documents should consist of: a) commercial invoice, b) bill of
lading, airway bill or parcel post receipt and c) consular invoice. Banks are
required to issue a certificate of sale of exchange on all controlled or free
controlled exchange sold; this certificate together with the bill of lading and
other documentation is essential for clearance of the merchandise from the
Customs.
While a great number of imports are financed under commercial credits, a large
percentage continue to arrive on a documentary sight collection basis as under
present regulations banks can effect remittance abroad upon arrival of the
documents and presentation by the importer of the corresponding sworn declara-
tion or import permit. Uruguay does not require a provisional deposit in local
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currency covering documentary collections prior to the clearance of merchandise;
such merchandise can only be cleared by the importer through the presentation of
the shipping documents together with a certificate of sale of exchange from a
bank. No duties are applicable to merchandise which is shipped to Uruguay in
transit and which is not cleared through the Customs. It is necessary to obtain
permission from the Authorities for the re-exportation of any merchandise -
except in transit - shipped direct to Uruguay.
Uruguay has payment agreements at present with Argentina, Belgium, France,
Germany, Holland, Sweden and the United Kingdom. As a result of these agree-
ments all transactions with those countries must be settled in the currency of
the respective countries, with the exception that operations with France and
Germany are executed in so-called agreement dollars for clearing purposes under
the trade agreements.
The free market, which at this time is quoted at Urug. $206 per U.S.$100 (about
48 1/2? per peso), is used for all transactions which do not involve either the
export or import of merchandise. Sales of dollars in the free market covering
transfers to the United States or to any other North, Central or South American
country, except Argentina, may be made without limitation, provided they do not re-
present merchandise payments. Remittances to Argentina and Europe must be
previously authorized by the Banco de la Republica Oriental del Uruguay, with
the exception of small transfers in Argentine paper pesos, Belgian francs,
florins, French agreement dollars, pounds sterling and Swedish crowns for sums
not exceeding Arg. Paper Pesos 200, Bel. Frs. 4,000, Fls. 100, French agreement
dollars 60, .1,20, and Swed. Crowns 200. These small remittances can be effected
freely in accordance with standing regulations of the Banco de la Republica
Oriental del Uruguay and within the terms of existing payment agreements between
the Uruguayan Government and the Governments of Argentina, Belgium, France,
Holland, Sweden and the United Kingdom for transactions with Argentina, the
Belgian Franc Monetary Zone, the French Monetary Zone, the Florin Monetary Zone,
the Swedish Crown Monetary Zone and the sterling area. All remittances to
Germany under the German-Uruguayan agreement must be previously authorized by
the Banco de la Republica Oriental del Uruguay.
All restrictions have been eliminated on the inflow of capital or funds coming
from abroad, with the exception of purchases of Argentine paper pesos, Belgian
francs, florins, French agreement dollars, German agreement dollars, pounds
sterling and Swedish crowns, since a prior permit is required from the Banco de
la Republica Oriental del Uruguay for purchases of these currencies when the
amounts of any individual transaction exceed Arg. Paper Pesos 200, Bel. Frs.
20,000, Fls. 200, French agreement dollars 290, L25, and Swed. Crowns 200.
Purchases of German agreement dollars must be previously authorized in all cases.
All other currencies, including payment orders in Uruguayan pesos, are freely
permitted to enter the country, and a prior permit is not necessary for effect-
ing the relative payments to the beneficiaries. Since August, 1948, accounts of
foreign domiciled depositors in pesos or in dollars have been freely operative
without the necessity of obtaining the prior approval from the Authorities. All
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movement over such accounts, whether deposits or withdrawals, is subject to a
tax of 1/20 of 1%.
A tax of 3/4 of one per mille is applicable on all funds remitted outside of
the country and a tax of 1/2 of one per mille is applied on all incoming funds.
Visitors to Uruguay are not required to declare their holdings of travel funds
upon entering the country and as a consequence may bring in travel funds in the
form of letters of credit, travelers checks and currency without limitation.
Likewise the traveler may carry such instruments freely upon leaving the coun-
try.
VENEZUELA
The monetary unit is the Bolivar, valued at about U.S.$0.30.
The Banco Central de Venezuela, has established various exchange rates which
have the effect of stabilizing exchange with relation to the United States dol-
lar. It sells exchange freely to the commercial banks at Bs.3.33 1/2 per
U.S.$1 and the commercial banks in turn sell to the general public at Bs.3.35
sight on New York and Bs.3.36 cable on New York. The Banco Central de
Venezuela buys dollars from the petroleum companies for account of the Govern-
ment at Bs.3.09; however, if at the end of the year the Banco Central de
Venezuela has not been able to sell all the dollars purchased from the petro-
leum companies, the latter will refund the difference between Bs.3.09 and
Bs.3.02 for the excess. It also buys for Government account dollars arising
from the export of cocoa at Bs.4.25 and dollars arising from the export of cof-
fee at Bs.4.25 for "thrashed" and Bs./+.80 for "washed". In effect the ship-
pers of cocoa and coffee have enjoyed an exchange subsidy. The dollars
acquired by the Government in this manner are resold to the Banco Central de
Venezuela at Bs.3.32. An exporter can freely dispose of the foreign currency
proceeds of his shipments, but in the case of coffee and cocoa exports the for-
eign currency must be sold to the Banco Central de Venezuela if he desires to
take advantage of the special rates mentioned above. Such sales may be either
directly to the Banco Central de Venezuela or through one of the banks operat-
ing in Venezuela, but shipping documents must be produced. For some time,
however, due to the high prices of coffee, which are above the limits fixed as
subsidy for coffee producers, the Banco Central de Venezuela has not been
negotiating coffee drafts. The holdings of the Banco Central de Venezuela in
dollar exchange and gold are ample, and dollar exchange is available at present
without restriction for all the country's needs.
A number of items are still subject to an import license to be obtained from
the Comision Nacional de Abastecimientos. Such quota limitations are primarily
to protect local industries, and no exchange allocations are involved. Where
these commodities are concerned, Venezuelan import license numbers should
always be shown on consular invoices. Importation of merchandise is customar-
ily effected on sight or time draft basis. Bankers commercial credits are also
used to some extent, but usually when required by sellers or when a price
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advantage to the buyer makes such basis acceptable to him. There are no special
formalities required for commercial credits as exchange is freely available.
Bills of lading issued to "order blank endorsed" are not acceptable by law in
Venezuela. Merchandise imported into the country must be consigned to individ-
uals or firms, and it is required that one signed copy of the bill of lading and
three copies of the consular invoice be visaed by the Venezuelan Consulate. It
is general practice for importers in Venezuela to accept time drafts or pay
sight drafts only after the merchandise has been received in their own establish-
ment; therefore, before shipping there should be a clear understanding between
the exporter and the importer as to how the goods are to be consigned, and wheth-
er the consignee may release the goods to the drawee before payment or acceptance
of covering draft. Merchandise can be re-exported in case of need, but duties
are not refunded.
The Ministry of Finance through the Department of Customs recently notified all
the Venezuelan Consuls that exporters to Venezuela, in order to protect their
interests and to avoid the possibility of importers taking possession of the
merchandise - by means of a bond or guaranty lodged with the Customs Authorities -
without paying for the relative draft, should mark in red ink on all copies of
the consular invoice the following: EMBARQUE CONTRA DOCUMENTO MEDIANTE PAGO DE
GIRO A LA VISTA, ENVIADO AL BANCO ..... which translated means "Shipment against
documents subject to payment of sight draft, sent to ..............".
(name of bank)
Persons contemplating business or pleasure trips to Venezuela may carry travel
funds in foreign currency without limitation as to amounts in travelers checks,
travelers letters of credit or foreign currency bills. Travelers are not
required to declare such personal holdings upon entering or leaving the country.
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BELGIUM AND LUXEMBOURG
At the end of 1950 the United States dollar was quoted at Francs 50 to U.S.$l.
All dealings in foreign exchange are under the control of the Belgian-Luxembourg
Exchange Institute. Under this control transactions may be executed in line
with general or particular licenses by the approved banks and to a limited
degree by some authorized brokers. The National Bank of Belgium alone is
entrusted with the import and export of gold. Forward operations in exchange
are permitted through the approved Belgian banks in connection with import and
export business only, and among the authorized forward transactions are dealings
in United States dollars. Contracts are made for periods not in excess of 6
months. When justified, the contract is susceptible of renewal or extension.
NON-RESIDENT ACCOUNTS
Approved banks may carry non-resident accounts in foreign currency (United
States dollars) and in Belgian francs or Luxembourg francs. The accounts in the
local currencies are designated Foreign accounts and the two classifications are
Foreign B and Foreign Banknote.
Foreign B account funds of Americans can be freely used for payments in the
Belgian Monetary Area, including payments for exports of merchandise, and can be
converted upon request into United States dollars. Balances in American B
accounts may also be transferred to other B accounts regardless of nationality.
Foreign Banknote accounts may be credited with franc amounts transferred from
Banque Nationale de Belgique covering remittances of Belgian bank notes received
by that bank from remitters abroad. Also eligible for credit to Foreign Bank-
note accounts are transfers from other Foreign Banknote accounts, but transfer-
ability from country to country is limited to those whose owners reside in coun-
tries which are members of the E.P.U. (European Payments Union). Debits may be
passed over such accounts for certain payments in the Belgian Monetary Area,
including payments covering goods to be exported from the Belgo-Luxembourg
Economic Union. However, Foreign Banknote accounts may not be utilized for the
purchase of foreign currency, crediting a Foreign B account, or the purchase of
Belgian, Luxembourg and Colonial securities.
EXPORTS AND IMPORTS
All exports and imports are subject to control of the Exchange Institute. Goods
may be divided into two categories, namely, those which may be imported or
exported under bank declaration, and those for which an import or export license
or priority certificate is required. Bank declarations for imports are known as
forms F and G. Form F is the declaration form required if the importer (a) does
not possess the foreign exchange necessary to pay for the importation of the
merchandise or (b) possesses the necessary foreign exchange on a Belgian bank
account. Importers may submit this form for visa to any authorized commercial
bank, but in the case of a certain number of specified articles, if payment is
to be made in United States dollars, Canadian dollars or Belgian francs to an
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exporter of the so-called dollar area (United States and dependencies, Mexico,
Central and South America except Argentina, Brazil, Chile and Colombia), author-
ized banks are allowed to give the visa, provided the seller resides in the
country from which the goods are exported. Form G is used by the importer if he
possesses a bank account in the country of the seller in the national currency.
In the case of goods for which a license or priority certificate is required,
the form is issued by the Office Central de Licences et Contingents. Under both
(a) and (b) as mentioned above in connection with form F. the document, which is
issued automatically, carries with it authorization to effect payment in line
with the terms stipulated in the document. Approved banks are allowed to open
commercial credits on production of the declaration form or import license with
priority certificate and no other formalities are required. The import may also
be financed under collection terms, either delivery of documents against payment
or delivery of documents against acceptance, on a consignment basis or by pay-
ment on receipt of documents or receipt of the merchandise. Re-export of goods
can be arranged.
E.R.P. TRANSACTIONS
All importations of merchandise into Belgium and Luxembourg from the Western
Hemisphere, involving payment in United States dollars in amounts exceeding $500
(transshipments excepted), are subject to the regulations of the Economic
Cooperation Administration as to documentation. In connection with this regula-
tion it must be observed:
1) That the Exchange Institute repealed the previous requirement that
shipments for a value exceeding $5000 can be settled only on a
documentary letter of credit basis.
2) That for all importations subject to the above regulation, whether
they are to be settled on a letter of credit basis or on a docu-
mentary collection basis, shippers will be required to submit the
following additional documentation, all of which must bear the ECA
Procurement Authorization and sub-authorization numbers which
should be furnished by the Belgian importer:
a) A supplier's certificate in the form provided for by the
ECA.
b) A copy of the supplier's invoice, duly receipted, show-
ing quantity, quality, prices and conditions of delivery
(C&F, CIF, FOB, FAS) of the goods. (Where conditions of
delivery are on a C&F or CIF basis, the amount of the
freight, insurance premium and other accessory expenses
must be shown on the invoice.)
c) One copy or photostat of the ocean bill of lading, char-
ter party bill of lading or airway bill of lading or any
other documents relating to the transport of the goods
from the country of origin to Belgian or Luxembourg ter-
ritory. (Where the point of disembarkation in Europe is
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situated outside Belgian or Luxembourg territory, the
sea or air transport documents must be marked "For
transshipment to Belgium or Luxembourg".)
3) That imports of raw cotton are subject to special provisions.
TRAVEL
Travelers may bring into the Belgo-Luxembourg Economic Union, Belgian or foreign
currency in bank notes or other means of payment without limit. However, if
they wish to re-export in bank notes (Belgian or foreign) an amount exceeding
the equivalent of Belgian Francs 10,000, the amount carried upon entry must be
noted in the passport at Customs. In no case may Belgian bank notes for an
amount exceeding Belgian Francs 10,000 be re-exported; the surplus must be
placed in a Foreign B account. On the other hand, Belgian bank notes for which
evidence can be produced that they have been withdrawn from a Foreign B account
or are the proceeds of the sale of foreign instruments of payment may be cred-
ited to a Foreign B account. Approved Belgian banks may cash any instruments of
payment drawn by their correspondents against their Foreign B accounts, as well
as any checks drawn by the holders of Foreign B accounts during their stay in
Belgium.
Local L = U.S.$2.80.
Exchange control based on regulations in force in the United Kingdom.
Most United Kingdom goods may be imported under open general license. All other
imports are subject to import license.
Export licenses are required in a few cases.
CZECHOSLOVAKIA
At the end of 1950 the official quotations for the United States dollar were:
Buying: Czechoslovakian Crowns 49.85
Selling: " if 50.15
In general, sales and purchases of foreign exchange and payments to be made
abroad are subject to license of the Ministry of Foreign Trade when the settle-
ment of goods is concerned; for other transactions the license is issued by
Statni Banka Ceskoslovenska. No forward operations are permitted on behalf of
non-residents.
Bank accounts in the name of.non-residents in foreign exchange may be opened and
carried without formality. Balances are usable according to the restrictions of
the country involved or within the regulations mutually agreed upon. For dollar
accounts there are no restrictions. Non-resident individual accounts carried in
local currency require license for all entries. For banks, however, debits and
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credits may be freely passed if the items concern banks located in the same for-
eign country. Payments from such bank accounts to residents in Czechoslovakia
and the country of residence of the account owner are freely made, but remit-
tances to other countries from such bank accounts are subject to license. Like-
wise, a license is required to credit such account of a bank if the remittance
originates from an account of a resident of a country other than that in which
the owner of such account is located.
Exports and imports require special licenses. An import license includes
authority to acquire foreign exchange under conditions stipulated in the license
and authority to effect payment abroad without further formalities. It is
advisable for American exporters to have financial transactions confirmed
through Statni Banka Ceskoslovenska with a view to assuring themselves that the
particular matter before them is in accordance with the current regulations. In
case of need the American exporter is at liberty to approach that institution to
obtain information in doubtful cases. We are advised that this service is ren-
dered without charge.
Visitors to the country may carry travel instruments in foreign currency without
restriction. However, local currency, including coins, may not be carried into
the country by the traveler in amounts exceeding Kcs. 500 in denominations of
not more than Kcs. 50. All such holdings must be declared upon entry, and the
document used for this purpose must be certified by the Customs Officer. This
formality is very important as the certificate serves as record of sales of for-
eign exchange to be entered thereon by an authorized bank. The document is
inspected by Customs when the traveler leaves the country, and the funds
recorded as having-been spent must be in proportion to the costs of living dur-
ing the stay and of proved purchases of merchandise. Amounts confirmed as hav-
ing been imported, less adequate expenses, may be re-exported by virtue of the
above certificate within 3 months. After expiration of such period a special
license is required. The export of local currency upon departure is restricted
to Kcs. 500 as above. Selling of exchange in other than official markets is
strictly forbidden.
DENMARK
At the end of 1950 the official selling rate for the United States dollar was
Kroner 6.92 to U.S.$l.
Dealings in foreign exchange with foreign banks may take place only after a
special permission has been obtained from Danmarks Nationalbank, and consequent-
ly Danish banks have no authority to convert one foreign currency into another.
Danish banks may, however, sell Danish kroner to foreign banks against United
States dollars or Swiss francs; they may also sell Danish kroner to countries
with which Denmark has concluded monetary agreements against the currency of the
country in which the foreign bank in question is situated. Forward operations
in foreign currencies may only be executed after obtaining permission from
Danmarks Nationalbank. However, the Danish banks may contract forward opera-
tions with their domestic clients, provided this takes place in connection with
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the importation and exportation of goods to and from Denmark.
Accounts in Danish kroner for foreign banks may be opened without approval of
the Authorities. Accounts in Danish kroner for persons and firms living abroad
may be opened by Danish banks only with permission from Danmarks Nationalbank.
Bank accounts in favor of non-residents may be divided in the following catego-
ries:
Account No. 1 - Broadly speaking, this category comprises all current
accounts carried for foreign banks. These accounts
may be used for current payments between Denmark and
the foreign country in question, with the exception
of the investment of capital which calls for permis-
sion from Danmarks Nationalbank.
Account No. 2 - These accounts may only be opened through transfers
from an Account No. 1 belonging to a bank of the same
nationality, and transfers back to such an Account
No. 1 may be made. These accounts may be used for
current payments in Denmark and only for account of
the country in question.
Account No. 31- This category comprises all accounts in favor of for-
eign insurance companies opened with a view to regu-
late reinsurance payments. Transfers between any two
such accounts may take place irrespective of nation-
ality. Transfers from an Account No. 3 to an Account
No. 1 belonging to a bank of the same nationality may
also take place.
Account No. 4 - To these accounts are credited amounts which may not
be transferred to the foreign country in question
without permission from Danmarks Nationalbank. Such,
accounts may, therefore, be carried for banks and
insurance companies as well as for other companies
and individuals. Generally, one may expect permis-
sion from Danmarks Nationalbank to invest such bal-
ances in Danish bonds payable only in Danish kroner.
The balance of an account carried for individuals or
firms in the United States may be used to defray
expenses incurred by the owner of the account during
his stay in the country. Benevolent payments may be
made for his personal account, and he is also able to
make payments from his account for the maintenance of
insurances effected in Denmark.
As a rule interest and dividends may be transferred to the foreign country in
which the owner of the bonds or shares in question is resident. Interest and
dividends provisionally credited to an Account No. 4 may as a rule be trans-
ferred within 3 months of the passing of the credit entry. For transfer at a
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later date the sanction of the Danmarks Nationalbank will be required. Should
the owner be a Danish subject, transfer can only take place if he is permanently
resident abroad and has not been permanently resident in Denmark since April 9,
1940.
The proceeds of all drawn Government and Municipal bonds, and also of drawn
Credit Association and Hypothek-Association bonds, may as a rule be transferred
to the foreign country in which the owner is permanently resident. Should the
owner be a Danish subject, transfer can only take place if he is permanently
resident abroad and has not been permanently resident in Denmark since April 9,
1940.
Proceeds from the sale of securities, real estate, etc., belonging to non-
residents of Denmark will be credited to an Account No. 4 in the name of the
owner, and in ordinary cases it will not be possible to have these balances
transferred to the foreign country in question. If, however, proof is submitted
to the Danmarks Nationalbank to the effect that the owner is without means or
income, the Danmarks Nationalbank may permit the transfer of small amounts for
living expenses. As a rule the transfer of inherited money will be permitted
for amounts up to Kr. 25.000.
When residents of Denmark immigrate, they are as a rule permitted to take with
them only a small amount in United States dollars. Later requests for remit-
tances will be dealt with by the Danmarks Nationalbank and each case decided on
its merits.
Royalties due to authors of books and the like may be transferred, and payments
for services are also normally transferrable.
Royalties in connection with the manufacture of goods, rent of foreign machinery
and profit emanating from the manufacture of goods for foreign account, as well
as royalty in connection with motion pictures, may only be transferred with the
sanction of the Directorate of Supplies.
Proceeds of goods which have been legally imported into Denmark may be trans-
ferred to foreign countries according to the agreements concluded with the indi-
vidual countries. As far as the United States is concerned, such transfers may
take place in dollars. Generally, one may expect permission to pay prewar com-
mercial debts.
Most imports and exports require permission from the Directorate of Supplies.
When goods which call for import license, as well as those which do not, are
customs cleared, an exchange permit is issued, which entitles the importer to
demand the foreign exchange in question. The issuance of an import license or
Exchange Control approval does not carry with it an undertaking on the part of
the Authorities to allocate the necessary exchange at settlement date.
With respect to United States dollar documentary collections, the banks are
allowed to receive payment for such collections only in case the importer is in
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possession of a valid import license which under ordinary circumstances means
that the bank is in position to transfer the amount to the United States. In
case of non-payment of a documentary collection and if the relative goods have
not cleared Customs, it is unlikely there would be any difficulty in arranging
for transshipment after payment of storage charges, etc. A considerable quan-
tity of merchandise imported into Denmark is financed through documentary col-
lections, as well as bankers commercial credits. The importer may open commer-
cial credits when in possession of a valid import license. Imports must reach
the port of destination before the expiration of the time limit stipulated in
the import license as extension of the license cannot be expected in all cases.
Foreign cash may be imported without limit by travelers along with Danish bank
notes and coins up to Kr. 100. The traveler may also bring in checks, travelers
checks, letters of credit, bills, etc., issued in Danish kroner or foreign cur-
rency without limit. The same amount of kroner as mentioned above can be
exported by the traveler when leaving the country, and in addition he may carry
with him foreign cash, provided he brought it in with him or proves through
entries in his passport.that the exchange was legally purchased.
FINLAND
The official selling rate for the United States dollar at the end of 1950 was
Finmarks 231 to U.S.$1.
All dealings in foreign exchange are subject to the approval of Finlands Bank.
IMPORTS
Foreign exchange for the importation of goods may be granted and payment per-
mitted only to the extent of and on those conditions which may he assumed from
the valid import license issued by the Authorities. While such import licenses
are granted for the period. corresponding to delivery terms according to con-
tract, in case of need and on request the Authorities can authorize an extension.
It is customary for the import license to state the nature and quantity of the
goods, as well as the amount of foreign exchange involved for payment thereof,
calculated at the FOB value in the foreign port of shipment. Authorized banks
are permitted to grant foreign exchange for settlement of freight, insurance and
other necessary charges beyond the amount provided for in the license and which
have been incurred in direct connection with the delivery of the goods.
NON-RESIDENT ACCOUNTS
Accounts in finmarks may be carried by Finnish banks for non-residents.
Described below are the three categories of accounts available to non-residents.
Exchange Mark Accounts - This type of account may receive credit for
the counter-value of foreign exchange,
insurance and reinsurance premiums and trans-
fers from an account of the same type the
owner of which is domiciled in the same
country. Any other credit entry must have
the approval of Finlands Bank. Debits may
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be freely passed for payments within the coun-
try, but conversions into foreign currencies
require permission of Finlands Bank.
Inland Mark Accounts - Prior to January 16, 1950, these were known as
Blocked Accounts. Credits to such accounts
are passed only with approval of Finlands
Bank. Balances may be freely disposed of in
Finland for purchase of bonds and shares,
gifts, taxes and living and travel maintenance
within the country. Transfers may be made
from this type account to others in the same
category regardless of the country of domicile
of the owner. However, permit of Finlands
Bank is necessary for transfers to Exchange
Mark Accounts or Travel Mark Accounts. Checks
may not be drawn, it being required that writ-
ten or telegraphic instructions be directed to
the bank involved giving the reason for the
payment.
Travel Mark Accounts - Only foreign banks and bankers may maintain
this type of account. Such accounts may be
credited with the counter-value of Finnish
notes and coins purchased from travelers from
Finland. Balances in these accounts are trans-
ferable to accounts of similar type irrespec-
tive of domicile of the owner of the account.
Travel marks may be freely disposed of by
checks, travelers letters of credit or payment
orders for travel and maintenance costs in
Finland. However, this refers only to travel-
ers domiciled abroad traveling to Finland and
having foreign nationality.
BLOCKED ASSETS
With the exception of bank accounts, all other assets and property in Finland
belonging to persons domiciled abroad (accounts and claims with private persons
and firms, securities and other property which are held in the safe custody of
a bank) are called Blocked Assets. Finnish banks on the instructions of their
clients may realize for reinvestment property which is held in safe custody by
them, as well as effect such reinvestments without the permission of Finlands
Bank.
If the object of the realization is to provide funds for the crediting of an
account, the permission of Finlands Bank should previously be obtained. The
yield of Blocked Assets held in the safe custody of a bank may be credited to an
Inland Mark Account.
In all other respects Finlands Bank shall determine in every individual case
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regarding the utilization of Blocked Assets.
TRAVEL
Travelers may bring into the country and take with them when departing Finnish
notes and coin up to a maximum of Finmarks 20,000. For children under sixteen
years of age this limit is Finmarks 10,000. There is no restriction as to
denomination. Any foreign means of payment may be brought into the country by
a traveler. A non-resident traveler may also bring in checks issued by foreign
banks for payment by Finnish banks in finmarks, travelers checks and travelers
letters of credit. Non-resident travelers on leaving the country may, without
special permission and within 3 months from the date of arrival, take out only
that amount in Finnish currency and foreign means of payment which was carried
upon entry. The traveler should be able to prove to the Customs by means of a
bank receipt that the foreign currency used in the country has been sold to an
authorized bank.
FRANCE
At the end of 1950 the United States dollar was quoted at Francs 349.80.
The United States dollar is dealt in exclusively on the free exchange market as
are the Belgian franc, the Canadian dollar, the Djibouti franc, the Portuguese
escudo and the Swiss franc. All other foreign currencies are traded in on the
official market within selling and buying rates fixed by the Banque de France,
which rates are adjusted, when necessary in order to keep the parities of these
currencies in line with the United States dollar. Present parities are based
on the dollar at Frs. 350.
Rates on the free exchange market are determined by the law of supply and
demand, although because purchases are still subject to license, it cannot be
said that this is a free market in the strict sense of the term.
The free market is fed by the foreign currency proceeds of exports, freight,
transportation costs, insurance, port charges invoiced in United States dollars
or other currencies quoted on the free market, as well as by the amount of such
currencies derived from any other sources, including sales of foreign currency
by tourists and movement of capital into France.
Escudos, Belgian, Djibouti and Swiss francs, and Canadian and United States dol-
lars finding their way to the free market are available for the payment of the
invoice value of imports for which import licenses have been issued, as well as
for the payment of freight, transportation costs, insurance and port charges
relating to such imports and in general for all duly authorized transfers of
funds out of France. The same rule applies to the official market for curren-
cies traded on that market.
As stated above, all purchases for merchandise imports or transfer of funds are
subject to license. Except in extremely rare instances, it is unlikely that
licenses will be issued for capital exports.
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When exchanging escudos, Belgian, Djibouti and Swiss francs, and Canadian and
United States dollars, the banks impose the following commission charges:
2 0/00 for the first Frs. 10,000,000 or equivalent thereof,
1 o/00 between Frs. 10 and 20,000,000 or equivalent thereof, and
3/4 0/00 on amounts over Frs. 20,000,000 or equivalent thereof.
These charges are reduced as follows for transactions on the official market:
1 1/4 0/00 for the first Frs. 10,000,000 or equivalent thereof,
1 o/00 between Frs. 10 and 20,000,000 or equivalent thereof, and
1/2 %0 on amounts over Frs. 20,000,000 or equivalent thereof.
The currencies of the French Franc Currency Area are at present being exchanged
against the Continental franc on the following basis:
Algeria, French Guiana, Guadeloupe, Martinique, Monaco,
Morocco and Tunisia
Fr.C.F.A. (French Colonies in Africa)
1 Fr.C.F.A, - Frs. 2
French West Africa, French Equitorial Africa, Madagascar,
Reunion Island, French Mandates in the Cameroons and Togo,
Saint Pierre et Miquelon
Fr.C.F.P. (French Colonies in the Pacific)
1 Fr.C.F.P. = Frs. 5.50
New Caledonia, New Hebrides, Etablissements Francais de
110ceanie
1 Piastre - Frs. 17
1 French Rupee = Frs. 73.50
Etablissements Francais de l'Inde
(Syria and Lebanon no longer constitute part of the French
Franc Currency Area. The Saar is now included in this area.)
French Somaliland enjoys full liberty as to exchange operations, and the
Djibouti franc is freely convertible into United States dollars at Djibouti on
the basis of Djibouti Francs 214.392 to the dollar. The Djibouti franc is dealt
in on the free exchange market in Paris and the movement of funds from the
French Franc Currency Area to French Somaliland is subject to the same
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regulations as are transfers to foreign countries.
The following operations are subject to the prior authorization of the French
Office des Changes:
1) The export of goods from the French Franc Currency Area,
as well as the export of gold, bank notes, checks, trav-
elers checks, letters of credit, credit instruments,
securities, titles to properties, etc.
2) The execution of foreign exchange operations in foreign
countries by French nationals residing in France.
Foreign exchange operations must be executed through an "approved bank" (une
banque agreee).
All residents of France are authorized to deal in gold, including its transpor-
tation within the French Franc Currency Area, but imports and exports of gold
are prohibited.
Special import licenses may be obtained only on condition that the gold be
simultaneously sold to the Banque de France against French francs. The purchas-
ing price of gold by the Banque de France is at present $35 per ounce, dollar
proceeds being exchanged against francs at the prevailing rate of the dollar on
the free exchange market, but the proceeds of sale of gold cannot be exported.
Non-residents may upon justification obtain permission to export gold which they
owned prior to September 9, 1939.
Foreigners residing in France are free to dispose of their assets abroad, but
are specifically prohibited from transacting, directly or indirectly, any opera-
tion which, in violation of the exchange regulations, would facilitate the
acquisition, sale or disposition by a resident of French nationality of any
assets in francs or foreign currency, whether located in France or abroad.
Residents of France (foreigners as well as French nationals) must repatriate
within 1 month after due date all foreign currency exchange derived from the
export of goods or other sources of income from abroad. The full amount must be
sold through an approved bank at free market rates in the case of currencies
quoted on that market and at the official market rates for other foreign curren-
cies.
TRANSFERS OF FUNDS FROM THE FRENCH FRANC CURRENCY AREA
TO THE UNITED STATES
Upon proper justification the Office des Changes may authorize residents to
transfer funds to persons or companies in the United States, if such transfers
cover normal and current payments and do not represent the export of capital.
If the authorization specifies that the transfer is to be effected in dollars,
payment will be made in that currency in the United States. On the other hand,
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if the authorization specifies French francs, these will be credited to a Free
Franc Account (Compte Francs Libres) in France.
Payments or transfers of funds covering the following are considered as normal
by the Office des Changes:
1) Imports of merchandise into the French Franc Currency
Area.
2) Port services, warehousing, customs duties and other
charges attached to the movement of merchandise.
5)
3) Charges and profits derived from the transportation
business.
4) Commissions, brokerage, publicity and representation
expenses.
Installation expenses, repairs, work on a commission
basis and similar services.
6) Insurance-and reinsurance premiums and indemnities.
7) Expenses attached to freight or passenger transportation
by land, sea or air by one country on behalf of another.
8) Wages, salaries and fees, social security contributions
and indemnities, pensions and other income derived from
a regular employment contract or having the character of
a governmental obligation.
9) Royalties, manufacturing patents and authors' rights or
moving-picture film rentals.
10) Taxes, fines and court expenses.
il) Periodical settlements by postal, telegraph and tele-
phone administration as well as public transportation.
12) Travel expenses, research, hospitalization, subsistence
and relief.
13) Maintenance expenses of diplomatic and consular posts
and other official missions.
14) Proceeds of interest and dividends, mortgage interest,
interest from real estate securities, rents, operating
profits of commercial enterprises and income from life
annuities as well as other periodic income.
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15) Proceeds of contractual debt redemptions and the reim-
bursement of short-term credits covering the financing
of commercial or industrial operations.
16) Proceeds of the liquidation or sale of investments made
after August 31, 1949, in the French Franc Currency Area
(Indochina excepted) by residents of the United States
(see under "INVESTMENTS MADE IN THE FRENCH FRANC CURRENCY
AREA BY RESIDENTS OF THE UNITED STATES").
17) All other payments which by their nature can be classi-
fied in one of the categories mentioned above.
The usual supporting documentation for such categories of payments must be sub-
mitted to the Office des Changes with each application for authorization to
transfer funds, and the Office des Changes reserves unto itself complete freedom
of action in passing upon the adequacy of the justification presented.
Transfers to the United States will be executed either by free market purchases
of United States dollars or by crediting a franc account classified as a Free
Franc Account (Compte Francs Libres) (see below for details concerning these
accounts).
ACCOUNTS AVAILABLE TO RESIDENTS OF THE UNITED STATES
A. Franc Accounts
1) Free Franc Accounts (Comptes Francs Libres)
2) Internal Accounts in the name of non-residents (Comptes
I.N.R.)
3) Suspense Accounts (Comptes d'Attente)
4) Capital Accounts (Comptes Capital)
B. Foreign Currency Accounts
FRANC ACCOUNTS
Free Franc Accounts (Comptes Francs Libres)
All residents of the United States are permitted to open Free Franc Accounts
(Comptes Francs Libres). Such accounts can be opened in any part of the French
Franc Currency Area except Indochina, Etablissements Francais de l'Inde,
Etablissements Francais de 1'Oceanie, New Caledonia and New Hebrides.
The following operations can freely pass over such accounts:
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CREDITS
1) Proceeds of the sale of dollars on the free market.
2) Transfers from other Free Franc Accounts.
DEBITS
1) Transfers to other Free Franc Accounts or to Franc Foreign
Accounts (Comptes Etranger en Francs).
2) All payments in France.
3) Conversion into United States dollars at free market rate.
Internal Accounts in the name of Non-Residents (I.N.R.)
Subject to the prior authorization of the Office des Changes, such accounts may
be opened on the books of approved banks in the name of:
1) French civil servants or military personnel stationed
abroad, as well as French personnel of French firms
abroad.
2) Persons who previously resided in the.French Franc Cur-
rency Area and whose residence abroad is not of a perma-
nent nature.
3) Persons habitually residing abroad, whose residence in
the French Franc Currency Area is temporary, as well as
foreign services or organizations temporarily established
in the French Franc Currency Area.
The owner of the account must undertake in writing to use the account exclusive-
ly for his personal needs, not to sell the credit balances in the account to
individuals or. companies residing abroad and finally not to use the funds stand-
ing to the credit of the account to effect payments for account of non-residents.
Once the account is opened it may be utilized only for collectipns and payments
within the French Franc Currency Area. Balances in such an acfcjpunt cannot be
transferred abroad nor can they be converted into foreign currency, but other-
wise they may be as freely used as balances in internal French franc accounts in
the name of residents.
The following operations can pass over such accounts:
CREDITS
1) Funds derived from the sale of foreign currencies to the
Stabilization Fund.
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3)
2) Funds transferred from a foreign account.
Collection of all income of whatever nature derived with-
in the limits of the French Franc Currency Area.
4) Deposits made by the paymasters of allied military admin-
istrations in favor of nationals, organizations or agen-
cies of these administrations in service abroad and tem-
porarily assigned to France.
5) Collection of coupons, proceeds of redeemed bonds depos-
ited in a I.N.R. custodian account and settlement of
securities transactions as indicated under the heading
SECURITIES,
1) Payments of living expenses in France and/or of expenses
relative to the administration of the assets of the owner
and his family in France.
2) Payments of expenses incurred by foreign services or
organizations temporarily established in France (when the
account has been opened in their name).
Suspense Accounts (Comptes d'Attente)
These accounts may be opened in French francs in the name of non-resident owners.
Deposits therein may be effected without the authorization of the Office des
Changes. They may be used exclusively for the purchase of or subscription to
French securities (see under SECURITIES).
Capital Accounts
A new category of account, entitled Capital Account, was established in late 1949
to facilitate the handling, negotiation and utilization in France of old foreign-
owned assets which have been and still are non-transferable abroad.
Capital Accounts can be opened individually in the name of a non-resident person
or company or globally in the name of a non-resident foreign bank. It should be
noted, however, that the opening of Capital Accounts in favor of persons of
French nationality require prior approval of the Office des Changes. As a conse-
quence, funds owned by such persons cannot be credited to an account in the name
of a non-resident foreign bank under the global arrangement mentioned above.
CREDITS.
(The geographical classification of the account credited
must correspond to the country of residence of the person
for whose account the transaction is effected.)
Funds derived from any one or more of the following sources can be credited
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without permission of the Office des Changes to a Capital Account, provided the
geographical classification of the relative account corresponds to the country
of residence of the owner:
1) The proceeds of the sale of French securities on a stock
exchange in France (the securities sold must be either
withdrawn from a foreign depot identified geographically
with the country of residence of the owner or imported
from such a country. In the latter instance the securi-
ties imported must be accompanied by a certificate of
ownership which will furnish the basis for placing them
in a depot in the proper geographic category).
2) The proceeds of the reimbursement of French securities
under a contractual agreement. The securities must ful-
fill the conditions mentioned in 1 above. (This privi-
lege is of interest only if the owner for some reason
does not avail himself of the opportunity to receive
francs which can be transferred abroad).
3) The proceeds of anticipated retirement of French securi-
ties, provided such securities fulfill the conditions
described under 1 above.
4)
The proceeds of the sale of real estate or real estate
rights located in France, the sale to be transacted
through the intermediary of a French notary.
The real estate or real estate rights must be in the
name of a non-resident of foreign nationality or a non-
resident of French nationality owning an individual
Capital Account and the ownership must either have pre-
dated September 10, 1939, or have been acquired subse-
quent to that date, either through inheritance or as a
result of rights in existence prior to September 10,
1939, or as a result of a transaction or act entered
into after September 10, 1939, with the approval of the
Office des Changes.
Furthermore, the purchaser of the real estate rights
must be either a resident of France or a non-resident of
foreign nationality residing in the same country as the
seller, or a non-resident of French nationality owning
an individual Capital Account identified geographically
with the country of residence of the seller.
It is also necessary that the funds representing the
proceeds of the sale be paid into the account by the
French notary whose services were utilized in effecting
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the sale. The latter is entrusted with the responsibil-
ity of issuing a certificate showing the name, address
and nationality of both purchaser and seller, as well as
the location of the property sold, and the sale price
mentioned in the contract.
5) Funds derived from a Capital Account in the same geo-
graphic category as the account to be credited, whether
or not the payment involves a transfer of title.
All other transactions or any transaction mentioned above not meeting all the
conditions stipulated are subject to a special license issued by the Office des
Changes.
DEBITS
(The geographical classification of the account debited must
correspond to the country of residence of the person for
whose account the transaction is effected.)
1) Purchase of French securities on a stock exchange in
France.
2) Subscription to capital increases of French companies
whose shares are quoted on a stock exchange.
3) Purchase through the intermediary of a French notary of
real estate or real estate rights located in France.
The seller must be either a resident of France or a non-
resident of foreign nationality residing in the same
country as the purchaser, or a non-resident of French
nationality owning an individual Capital Account identi-
fied geographically with the country of residence of the
purchaser.
It is also necessary that the funds withdrawn from the
account to purchase the real estate be paid to the
French notary whose services as intermediary have been
utilized in closing the real estate deal. The notary is
entrusted with the responsibility of issuing a certifi-
cate showing the name, address and nationality of both
purchaser and seller, as well as the location of the
property purchased, and the price mentioned in the con-
tract of sale.
4) Payment of the following expenses:
a) Safe custody charges and commissions concerned
with securities deposited in a foreign depot
of the same geographic classification as the
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Capital Account to be debited.
b) Maintenance expenses and repairs, real estate
taxes and insurance concerned with real estate
meeting the conditions stipulated under 4 of
CREDITS. Proper justification for such dis-
bursements must be furnished.
5) Extension of French franc loans to resident persons or
companies under the following conditions:
a) The letter exchanged between the borrower and
the lender must stipulate that at the time of
reimbursement the funds will be paid direct by
the borrower to the intermediary on whose books
the account is carried.
b) The loan agreement must stipulate the rate of
interest (maximum l above the central bank
rate); duration of loan (maximum 3 years);
amount of the loan (max. Frs. 10,000,000);
penalties designed to protect the lender in
case of the failure of the debtor to meet his
obligation; the nature of the mortgage guaran-
tees, if any, and other clauses resulting
therefrom and identity of person or persons,
company or companies guaranteeing reimburse-
ment.
c) In spite of the fact that it is obligatory to
credit the proceeds of reimbursement of
advances to the Capital Account originally
debited, a special license from the Office des
Changes is required before the reimbursement
can be effected.
d) The amount of interest due can be either paid
into a Franc Foreign Account in the same geo-
graphic category as the Capital Account orig-
inally debited, or paid into the Capital
Account debited at the time the loan was made.
6) Withdrawals from Capital Accounts in names of individuals to
finance the expenses of the relative individuals and their
families during their sojourn in France. For the purpose of
this regulation members of the family are defined as husband
or wife and their direct ascendants or descendants and the
amounts so withdrawn are limited to Frs. 10,000 per person,
per day, with a maximum of Frs. 500,000 per month for any
one family during its sojourn in France. Withdrawals from
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Capital Accounts in the name of banks and companies to
finance the living expenses of individuals of foreign
nationality during their sojourn in France within the
limits set forth above and provided the individuals be
residents of the same country as the owner of the
account.
7) Transfers to another Capital Account in the same geo-
graphic category as the account debited, whether or not
the transfer involves change of ownership of the funds
so transferred.
All other operations, or operations mentioned above but not fulfilling all
stipulated conditions, are subject to the prior approval of the Office des
Changes.
It should be mentioned that French securities (other than short-term bonds)
purchased under the conditions stipulated under 1 and 2 above can be placed in
a foreign depot corresponding to the geographic classification of the Capital
Account debited for the purchase.
Short-term bonds must be placed in a Capital depot in the same geographic clas-
sification as the account debited for the purchase.
The proceeds of coupons collected, as well as the proceeds of the sale or
retirement (contractual or anticipated) of the securities above-mentioned, must
be paid into a Capital Account of the same geographic classification as the
Capital Account originally debited at the time of the purchase.
(On two occasions, namely, on August 3 and October 9, 1950, Office des Changes
authorized the transfer of balances standing to the credit of Capital Accounts
to regular accounts of same nationality (Free Franc Accounts for the United
States).
FOREIGN CURRENCY ACCOUNTS
With the exception of banks, Foreign Currency Accounts may be freely opened in
favor of foreigners not residing in France. The operations which can pass over
these accounts without necessity of applying for Office des Changes' permission
are as follows:
CREDITS
1) Transfers in foreign currency effected by a non-resident
in favor of the owner of the account.
2) Proceeds of the collection of checks and/or travelers
checks payable at the counters of a bank abroad and
remitted by the owner of the account.
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DEBITS
1) Sales against francs on the French market through an
approved bank..
2) Transfers abroad in favor of the owner of the account,
the transfers to be made in the currency of the account.
SECURITIES
The proceeds of coupons or of securities (amortized or redeemed) remitted to
France from the United States for collection, may with the permission of the
Office des Changes be credited to a Free Franc Account (Compte Francs Libres).
However, in order to furnish the Office des Changes with justification in sup-
port of the application for approval, the foreign remitting bank should enclose
with the coupons and/or securities an ownership certificate signed by it to
certify that the coupons and/or securities are the property of a person not
residing in France or an enemy country. If the owner is of French nationality,
the ownership certificate should include the date of his last departure from
French soil and the circumstances under which the coupons and/or securities
were acquired by him. The Office des Changes is inclined to withhold non-
residential status from French nationals who left France since 1940 and who
they feel might be only temporarily abroad.
The lodgment of securities in a non-resident depot requires permission from the
Office des Changes (except when lodged in a "suspense depot"). However, secur-
ities may be lodged in a non-resident depot without permission of the Office
des Changes under certain conditions, such as securities which were purchased
with funds derived from the sale of United States dollars.
Letters from abroad containing French or foreign bank notes, securities, cou-
pons, etc., should be addressed to an approved bank in France. Prior author-
ization is required to dispatch letters from France to a foreign country when
these contain bank notes, securities, credit instruments, orders of disposition
abroad or powers of attorney authorizing disposition of foreign assets belong-
ing to French nationals residing in France.
TRAVELERS
There is no limitation as to the amount of French franc notes and/or French
Colonial franc notes which may be taken into France by travelers who, however,
cannot take out more than Frs. 50,000 per person. Amounts in excess of this
limit must be left in the custody of the customs collector at the point of exit
against a receipt issued to the traveler. The owner may repossess such notes
upon his return to France or he may, if he desires, appoint a mandatory. In
the latter event he must authorize the Customs in writing to pay his mandatory.
When the deposit with the Customs has been recorded in the name of a non-
resident, repayment is subject to the prior approval of the Office des Changes.
Limitations are imposed as to the amount of foreign currencies and denominations
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which travelers coming from certain countries are allowed to import and to nego-
tiate in France, but United States dollars may be imported from any country
without limitation as to either amount or denomination.
Travelers upon entering French territory may be requested by the Customs Office
to declare orally all foreign moneys, travelers checks, checks, letters of
credit and other credit instruments in their possession. Such declarations are
not recorded in the travelers' passports.
Travelers are under obligation not to dispose of foreign exchange when in France
by any means other than through approved channels. When leaving French terri-
tory, travelers may be requested by the Customs Office to make an oral declara-
tion of the credit instruments in their possession and to confirm that the
instruments represent the unused portion of what was actually imported when com-
ing into the country.
Leading hotels have been delegated authority to negotiate travelers checks and
foreign bank notes. Travelers checks may also be used to pay for certain per-
sonal purchases effected by non-residents when on a trip to France. Such pur-
chases, provided they are paid for in dollars and taken out of the country with
the luggage of the travelers, are considered by the French Authorities as
"invisible exports" and as such are exempted from interior taxes amounting to
13j%. The sellers are expected to pass on the benefits of such exemptions in
the form of a rebate to the purchasers.
It is not possible for non-residents of France to purchase foreign currency bank
notes or checks without prior approval of the Exchange Authorities.
EXPORTS
A large number of French products may be exported without licenses but only
against the exporter's undertaking, termed an Engagement de Change, to repa-
triate the foreign currency proceeds of the merchandise sold abroad. This must
be done within 1 month after due date.
The Engagement de Change requires the approval of the Office des Changes before
the goods may be exported. The Office des Changes control is concerned with
prices, currency and terms of payment. Exports to the United States are
invoiced in United States dollars or in francs (payable through a Free Franc
Account).
IMPORTS
Imports from the United States are effected within limits fixed as to quantity
and nature of the goods. This is done under a general import plan through:
1) Groupements d'importation.
2) Private firms or individuals.
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All imports are subject to import licenses issued by the Service Central des
Licences and approved by the Office des Changes. The licenses are valid for 6
months and automatically, entitle the beneficiary to acquire the necessary for-
eign exchange from the approved bank (with whom the import has been domiciled
for control purposes, the bank being selected by the importer) or to transfer
to the credit of a Foreign Account the franc amount required to pay for the
import if invoiced in French francs. The transfers must be effected only on
due date fixed by the commercial contract.
Should the importer feel that the execution of an order placed abroad is likely
to require more time than is provided by the import license, which has a maxi-
mum validity of 6 months, he should apply for a prior authorization ("Autorisa-
tion prealable").
The prior authorization is a guarantee that the regular import license will be
granted in due course.
INVESTMENTS MADE IN THE FRENCH FRANC CURRENCY AREA
(INDOCHINA EXCEPTED) BY RESIDENTS OF THE UNITED STATES
Office des Changes authorize the transfer abroad of the proceeds of the liquida-
tion or sale of investments made after August 31, 1949, in the French Franc Cur-
rency Area (Indochina excepted) by individuals or companies residing in the
United States, provided the investments have been:
1) effected in conformity with French exchange regulations,
more particularly in those cases where investments
require prior approval of the French Authorities (see
explanatory note below as to operations having to do
with investments, whether or not requiring prior
approval),
2) made under one of the following forms:
a) subscription to French securities or to capi-
tal shares of French companies; subscription
made either at the time of the constitution
of the company or at the time of subsequent
increase of capital;
b) purchase in the French Franc Currency Area of
French securities inclusive of short-term
bonds and short-term bills;
c) acquisition from a French resident of real
estate and/or of real estate rights and/or of
commercial business situated on the French
Franc Currency Area;
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d) French francs and/or dollar loans granted to
residents on condition that the interest rate
stipulated be in line with those normally
applied on the French market for the type of
operation under consideration,
3) made with either United States dollars sold on the free
market or with French francs derived from a Free Franc
Account or both, and
4) recorded with an approved bank ("Intermediaire Agree"),
the latter to report to Office des Changes within 10
days. Subsequent amendments likely to alter the char-
acter of the investment are to be also recorded and
reported as above.
The transfer abroad will be authorized, provided there has been no change in
the ownership and upon justification that the conditions stipulated above have
been respected. Transfer will have to be effected in the currency used at the
time the investment was made.
INVESTMENT TRANSACTIONS NOT REQUIRING PRIOR APPROVAL
1) Purchase on the stock exchange of French securities
officially listed.
Subscription to the same type of securities.
2). Sale on the stock exchange of French securities acquired
under the conditions enumerated under general heading
INVESTMENTS MADE IN THE FRENCH FRANC CURRENCY AREA (INDO-
CHINA EXCEPTED) BY RESIDENTS OF THE UNITED STATES.
INVESTMENT TRANSACTIONS REQUIRING PRIOR APPROVAL
1) Purchase of French securities not listed officially.
2) Purchase of capital participations in French companies.
3)
Subscription to French securities not listed officially.
Subscriptions entered at the time of the formation of a
French company consequently require prior approval.
Office des Changes' decision is notified, after consul-
tation with the Commission Interministerielle des
Investissements when importance of the deal justifies
such consultation.
4) Subscription to capital participations in French compan-
ies by other means than through the purchase on the
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stock exchange or subscription to French securities
officially listed.
5) Purchase of real estate, real estate rights or of the
good will of French enterprises.
6) Granting of loans.
7) More generally, all operations other than those listed
under 1 and 2 in preceeding paragraph.
GERMANY, WESTERN
At the end of 1950 the official exchange rate was Deutsche Marks 4.20 to U.S.$l.
Purchase and sale of foreign exchange other than dollars is handled on the basis
of exchange rates fixed by Bank Deutscher Laender. Forward exchange operations
are permitted in certain currencies, including United States dollars, for duly
licensed imports up to a term of 3 months. Extensions for a similar period may
be granted.
Accounts in foreign currencies are not permitted for banks and individuals resi-
dent abroad, but banks in the United States may carry so-called Remittance
Accounts in Deutsche marks, through which certain payments may be made but not
for commodity and service transactions. In general, accounts in the name of
non-resident individuals and firms are blocked and may be carried only in local
currency. However, following the pattern of restrictions governing the opera-
tion of blocked accounts, certain debits and credits may be passed without spe-
cial permission, although the opening of the account requires approval of Bank
Deutscher Laender. Information as to whether a specific transaction is eligible
for entry over such blocked accounts will be furnished on request.
The income or proceeds from the redemption of securities may not be transferred;
the funds instead are blocked. Similar status is accorded the proceeds from the
sale of securities, real estate or other capital assets.
The question of disposition of prewar debts is still subject to further study,
but certain payments relating thereto are eligible for credit to blocked
accounts. Balances in accounts of persons emigrating from Germany to the United
States are blocked as in the case of all other foreigners. Inheritances may be
credited to blocked accounts without approval. Remittance abroad of any funds
covering royalties are subject to special licenses. Subject to submission of
justification and eventual approval of the Authorities, remittances may be made
in foreign exchange. These include payments in cover of advertising expenses
(advertisements in newspapers, periodicals, films, posters and radio), partici-
pation in trade fairs, court expenses, membership in foreign economic organiza-
tions, machine repairs, transportation, insurance premiums and agents commis-
sions.
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Imports and exports are subject to license. In the case of imports the issuance
of the import license warrants the allocation of exchange needed to pay for the
goods. Commercial credits may not be opened on a date earlier than 60 days
before the expected shipment of the merchandise.
Payment of collections is made on the strength of import licenses which must be
presented in each case. It is important that the license be issued prior to the
conclusion of the transaction or contract since the importer, when applying for
the license, must give his assurance that the transaction is to take place subse-
quent to the date of issuance of the license. In case of need goods may be
transshipped without payment of duty.
Non-resident travelers holding an entry permit may bring into the country foreign
currency and travel funds, including German travel funds, without limitation but
may carry local currency in notes and coin of a value up to only Deutsche Marks
40. These holdings must be declared and when leaving the country, the traveler
may take out funds so recorded, including the same amount of German notes and
coin if desired.
GIBRALTAR
The legal currency is that of the United Kingdom.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required for few United Kingdom goods, but merchandise from
outside the Scheduled Territories is subject to license.
GREAT BRITAIN (See United Kingdom
At the end of 1950 the official rate for the United States dollar (including the
Foreign Exchange Certificate described below) was:
Drachmai 15,000 to U.S.$l.
Exchange transactions in Greece are under the control of Bank of Greece. The
commercial banks are authorized to deal in foreign exchange at official rates
under regulations issued by Bank of Greece. No forward transactions are allowed
at the present time.
Accounts may be opened in the name of foreign residents without official approval
when the relative drachmai amount is derived from conversion of foreign exchange.
Withdrawals are subject to license by Bank of Greece. The transfer abroad of
income or the proceeds from the redemption or sale of securities and the sale of
other capital assets are also subject to license.
Imports and exports are subject to licenses. The issuance of an import license
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84
usually carries with it an undertaking on the part of the Authorities to allo-
cate the relative foreign exchange on settlement date.
Sellers of foreign exchange to banks, i.e., exporters of goods from Greece,
beneficiaries of payment orders from abroad and others, are granted in payment,
in addition to the drachmas equivalent at the official rate of exchange, Foreign
Exchange Certificates issued in amounts equal to the foreign exchange sold, thus
obtaining a total local currency amount of about Dr. 15,000 for one U.S.$l at
the end of 1950. Foreign Exchange Certificates issued in United States dollars
are valid for a period of 60 days from the date of issue and are negotiable at
the stock exchange in Athens. Importers are required to buy these Certificates
for an equal amount at the prevailing price in the market, in addition to the
amount of foreign exchange needed to pay for the relative importation at the
official rate of exchange. While the official rate has not been changed, the
Government, following the devaluation of the pound sterling, decided to realign
the drachma, and the rate for the dollar expressed above gives effect to an
increase in the price of the Foreign Exchange Certificate. Basic commodities
imported by the Government are exempt from this plan.
Imports into Greece can be paid for by documentary letters of credit. In order
to open such credits, the Greek importer must deliver to one of the authorized
banks the relative import license together with a pro-forma invoice visaed by
the Chamber of Commerce of the importer's district. These same formalities are
required for payment of documents sent for collection to a Greek bank. Greek,
exporters must repatriate the-foreign exchange proceeds of their sales abroad.
When entering Greece, a traveler may carry with him-Drachmai 20,000 in that cur-
rency. United States dollar currency, travelers checks and travelers letters of
credit issued in dollars or other foreign currency may be taken into the country
without limitation but must be declared at the point of entry. These instru-
ments may be freely taken out when leaving Greece, but the traveler must produce
an authorized bank's certificate evidencing the amounts used while in Greece.
ICELAND
At the end of 1950 the official rates for the United States dollar were:
Buying: Kronur 16.26
Selling: Kronur 16.32
The sale of foreign exchange by the banks, except certain payments on behalf of
the State, the Municipalities and the banks, are subject to license by the
Economic Board. The Landsbanki Islands and the Utvegsbanki Islands have the
exclusive right to buy and sell foreign exchange. Residents must repatriate all
foreign exchange which they may acquire. It must be delivered to one of the
above-mentioned banks for conversion at the official rate. Transfer of income
from foreign-owned assets and of property the value of which is expressed in
kronur is subject to license from the Trade Committee. The export and import of
securities is subject to approval of Landsbanki Islands.
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The Economic Board issues combined exchange and import licenses for imports, but
for all other payments separate exchange licenses are issued. Importers and
others concerned are not permitted to enter into contracts with non-residents
without license from the Board. Licenses are issued for certain periods but
normally.may be renewed in case of need. Issuance of an exchange license does
not carry with it an undertaking on the part of the banks to allocate the
exchange at settlement date. In case the banks are unable to supply the
exchange, a special Interbank Committee decides the order in which the exchange
licenses shall be honored by the banks.
Bankers commercial credits play\an important part in the financing of imports,
especially in trade with the United States. A commercial credit cannot be
opened unless the importer has the necessary exchange and import license, if
such license is required for the commodity involved. On the other hand, some
commodities are on the free list requiring neither exchange nor import license,
but the general rule that exchange cover must be secured before the goods are
shipped is also applicable to goods on the free list.
Accounts of non-residents which are credited with the proceeds of foreign
.exchange sold to either of the above banks may be freely debited for payments to
residents. Balances may also be converted into the currency of the country of
residence of the account owner without exchange license. Payments from resi-
dents to the credit of accounts of non-residents are subject to license issued
by the Economic Board.
The export and import of Icelandic bank notes is forbidden, but foreign travel-
ers may bring foreign exchange into the country without limitation. Upon
departing, they may take out the unused amounts in foreign currency if declared
on entry.
IRELAND
At the end of 1950 the official rate for the United States dollar was Irish -bl
to U.S.$2.80.
Dealings in foreign exchange are under control of the Government Authorities and
the regulations are on lines parallel with those in force in the United Kingdom.
No person may buy, sell, lend or borrow gold or foreign exchange without the
sanction of the Minister for Finance.
Non-residents (persons outside the Scheduled Territories) may open accounts only
with the approval of the Minister for Finance who indicates the status of the
account on the relative application, that is, whether Free Foreign Account or
Blocked Foreign Account. This depends normally on the type of value received.
For example, the equivalent of a United States dollar draft would be authorized
for lodgment in a Free Foreign Account. Likewise available for such an account
is sterling transferred from an account holder of the same residential status.
Transfers out of Free Foreign Accounts may be freely made to residents of the
Scheduled Territories or to the country of residence of the account holder in
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either Irish currency, sterling or foreign currency (United States dollars for
American residents). Normally the Minister for Finance will not permit a Free
Foreign Account to be overdrawn.
The opening of a Blocked Foreign Account is subject to approval of the Minister
for Finance. Without reference to the Minister a bank may permit payment of
funds from a blocked account for maintenance of the account holder and his fam-
ily for any period of their stay in Ireland. All other payments require offi-
cial approval. The Minister for Finance is prepared to consider applications
for permission to invest blocked funds in Irish Government securities or securi-
ties guaranteed by the Irish Government, provided the securities are not subject
to redemption by periodic drawings or otherwise within 10 years. Where securi-
ties have been purchased from blocked moneys with his permission, the Minister
will ordinarily be prepared to allow interest to be lodged in a Free Foreign
Account, but an application (Form E4) must first be submitted. The Minister is
also prepared to consider applications to use blocked funds for care and main-
tenance of property in Ireland owned by the account holder. Transfers outside
the Scheduled Territories from blocked accounts will only be permitted in excep-
tional circumstances, that is, for living expense of the account holder who is
shown to be in needy circumstances.
Where one party of a joint account is resident within the Scheduled Territories
and the other party is resident outside that area, the account is regarded as an
Irish account (resident account). Credit entries are permissible, but debits
require the Minister's approval. If the Irish resident's name is withdrawn from
the account, application is made on Form E4 for future designation of the
account.
Irish nationals emigrating to the United States are permitted to take up to L250
with them on departure and to receive 3 subsequent annual transfers not exceed-
ing L250 each year. After this 4 year period only income arising out of any
further assets remaining in the country may be remitted to the United States.
Likewise permission is given freely to transfer income on their securities in
Ireland to other non-residents. In general, proceeds from the redemption of
securities may be transferred where this can be done without disturbing the bal-
ance of payments position of the country. Generally speaking, transfers of cap-
ital (sale of securities, real estate or other capital assets) belonging to non-
residents are not permitted, and such funds are normally approved for lodgment
in a Blocked Foreign Account. However, when proved to be genuinely required for
maintenance, the transfer of the proceeds or part thereof is approved.
Transfer abroad of bona fide current profits of subsidiaries and affiliates of
American companies arising out of business activity is normally permitted on
verification of the profit figures.
Permission is given freely for the remittance of royalties under old established
agreements. Proposals for new agreements are in general sanctioned if benefits
will accrue to the country's economy. However, agreements involving payments
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relating to non-essential goods will not necessarily be approved.
Inheritances from persons who at the time of decease resided in Ireland are
normally permitted to be transferred abroad to the beneficiaries, provided the
estates are realized within a reasonable time.
Permission is normally given for the transfer abroad of funds covering payment
for services, such as those incidental to the transport of goods for which for-
eign exchange facilities have been approved, for the processing, finishing and
repair of goods abroad, for technical assistance rendered abroad and for com-
missions, brokerage and advertising.
In general, imports are subject to license, but whether or not an import license
is required from a State Department, permission must be obtained from the Depart-
ment of Finance before orders may be placed for goods originating outside the
Scheduled Territories. The permission must be a specific one to be secured in
connection with each transaction or a general permission relating to particular
classes of goods from specified countries. Issuance of an import license does
not imply that the necessary Exchange Control approval to effect payment will be
made available by the Department of Finance. Import licenses, where necessary,
are normally issued by the Department of Industry and Commerce if the goods are
of an industrial nature, and by the Department of Agriculture if the goods are
agricultural in character. Merchandise not paid for may be re-exported without
penalty unless entered for Customs or placed in bonded warehouse in which case a
license, usually freely issued, must be obtained.
Travelers are not legally restricted as to the amount of Irish currency notes
they may bring with them upon entering Ireland, but if a large amount of such
notes is carried, the traveler is liable to questioning, possibly intensively,
by the Customs because of the ban on the exportation of Irish notes beyond a
limit of &5. United States dollar currency and travel instruments of payment
may be brought in without limit. These holdings do not have to be declared, but
if the traveler desires to take out a portion of them when departing, the full
amount of currency holdings should be declared. This forms the basis for
approval to export the currency when he does leave the country.
The official rate of exchange is fixed daily by the Italian Foreign Exchange
Bureau (Ufficio Italiano dei Cambi - Cambital). At the end of 1950 this rate
was Lit. 624.81 to U .S .$1.
Firms and individuals of Italian nationality domiciled in Italy must surrender
to the Italian Foreign Exchange Bureau (Ufficio Italiano dei Cambi - Cambital)
through an authorized bank such foreign currencies as they may acquire, includ-
ing foreign bank notes (gold and silver excluded). However, exporters and other
beneficiaries of remittances in United States dollars are allowed to keep 50% of
the exchange. The remaining 50% must be surrendered to Cambital. That retained
is credited to a special account and may be utilized by the owner within 60 days,
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counting from the first day of the month following the date of credit, for pay-
ment of imports or for travel expenses of Italian citizens going abroad, the
latter subject to approval of Cambital. If the beneficiary is unable to utilize
the exchange, it may be sold'to a bank or to an importer, and the sale is exe-
cuted at the so-called export rate which is quoted daily on Italian stock
exchanges on the basis of actual transactions. The foreign exchange thus
acquired by the importer cannot be resold by him and if not used within the 60
day term, it must be surrendered to Cambital at the official rate with a 20%
discount as penalty. The official rate is fixed daily by Cambital and corre-
sponds to the average of the closing export rates on the Milan and Rome
exchanges on the same day. Forward operations are available only in currencies
involved in the transactions mentioned above whereby 50% is sold at the export
rate but these are infrequent. There are no forward operations at the official
rate. A commission of 6/10 of 1% is payable to Cambital on surrender of dollars
at the official rate.
The transfer abroad of income from Italian subsidiaries or affiliates of Ameri-
can companies, as well as any other foreign-owned asset, is subject to approval
of the Exchange Control Authorities. (For the treatment of income on invest-
ments from funds in Accounts - Ministerial Decree No.'211 of March 2, 1948 see
below). Balances belonging to former residents of Italy who have emigrated to
the United States are not transferable. Persons in this category are considered
as foreigners, and the status of their accounts upon leaving the country and
taking up residence in the United States is changed to so-called Foreign
Accounts, subject to regulations applicable to these accounts as described below.
Transfer abroad of royalties, funds representing payment for services and inher-
itances are also subject to approval of the Exchange Control Authorities.
CURRENT ACCOUNTS
The main classification of accounts in the name of non-residents are Foreign
:Accounts (Conti Esteri), Accounts-Ministerial Decree No. 211 of March 2, 1948
(Conti D.L. 2/3/48 N. 211) and Free Accounts in Free Currency (Conti Liberi in
Valuta Libera). The Ordinary Non-transferable Accounts (Conti Intrasferibili
Ordinari), the Special Non-transferable Accounts-Funds Constituted in Advance
(Conti Intrasferabili Speciali-Fondi Precostituiti) and other accounts of minor
importance have been united in one category denominated Foreign Accounts (Conti
Esteri), grouped according to country.of residence of the banks, firms and indi-
viduals in whose name the accounts are carried. Foreign Accounts - Northern
America are those in the name of residents of Alaska, Canada, Canal Zone, Guam,
Hawaiian Islands, Mexico, Midway Islands, Oceania Possessions, Panama, Puerto
Rico, Sandwich Islands, Samoa Islands, the United States and Virgin Islands.
Foreign Accounts may be credited with:
1) interest accrued on sums credited to the account,
2) lire funds representing income from real estate or from
securities, investments or the proceeds from their sale,
as well as sums standing under any title to the owner of
the account except as otherwise governed by current
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Exchange Control Regulations or International Agreements,
3) remittances in free-transferable currency (United States
dollars or Swiss francs) or, subject to specific authori-
zation by Cambital, in other currencies or with transfers
through clearing, or
4) only as regards accounts of Authorized Foreign Banks
held with Authorized Italian Banks (Bank of Italy,
Agents and Aggregate Banks) with transfers from other
Foreign Accounts in the name of owners residing in the
same country or group of countries where the foreign
bank is established.
Transactions described in paragraphs 1) and 3) require no authorization of
Cambital.
Concerning the credits mentioned in paragraph 2), authorization is not required
for the crediting of income from securities or of the proceeds from the sale of
securities of a Securities Foreign Account with the same Italian bank in the
name of the same owner; in other cases the authorization is required when the
transaction exceeds Lit. 100,000.
Foreign Accounts may be utilized for investment in securities and real estate
under certain conditions which require the approval of Cambital only when the
amount exceeds Lit. 5,000,000 monthly. There is no limitation for Italian
Government securities. Balances may also be used by banks for tourist checks
issued to travelers going to Italy and for emigrant remittances. Additionally,
balances in Foreign Accounts may be used for donations, gifts, etc., and for
living expenses of the owner while in Italy, as well as like expenses for mem-
bers of his family or the owners and officials of the firms in whose name the
account is carried up to Lit. 300,000 per calendar month for each beneficiary.
Moreover, payments may be made from such accounts for a maximum of Lit. 300,000
against submission to the Italian bank of documentary evidence on behalf of the
owner for such items as taxes and similar expenses, interest on loans to perma-
nent Italian residents, premiums payable to insurance companies for contracts
in lire, judiciary expenses, indemnities for damages, professional fees, wages
and salaries, magazines, periodicals, etc., and purchases for non-commercial
purposes of books published in Italy. Transfers from Foreign Accounts and from
Foreign Securities Accounts in the name of individuals and firms may be made in
favor of an Authorized Foreign Bank, provided the bank is established in the
same country or group of countries in which the owner of the account resides.
Such transfers are also allowed from the accounts in the name of a foreign bank
in favor of another bank, provided the two banks are established in the same
country or group of countries. Foreign banks are allowed to utilize their For-
eign Accounts and Foreign Securities Accounts for the above-mentioned purposes
for the benefit of their customers residing in the country or group of coun-
tries where they are established. Balances in Foreign Accounts, however, may
-not be used to pay for merchandise to be exported from Italy.
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Accounts - Ministerial Decree No. 211 of March 2. 1948 (Conti D.L. 2/3/48 N.211)
These accounts may be fed with the lire proceeds of free currencies (United
States dollars or Swiss francs) remitted to Italy for investment purposes and
they may be freely used for investments in the account owner's name.
Income from investments may be transferred abroad at a maximum rate of 1% above
the legal interest rate which at present is 5%. The re-export of capital
invested in Italy is permitted for the same amount of foreign exchange original-
ly imported. Transfer abroad of 50% of such capital is allowed after the first
2 years and the balance after the second period of 2 years.
Free Accounts in Free Currency (Conti Liberi in Valuta Libera)
These accounts may be fed only with legitimate remittances from abroad in free
currencies (United States dollars or Swiss francs). Balances may be used freely
in Italy and transferred abroad without prior approval of Cambital. (Free
Accounts in Free Lire have been abolished.)
SECURITIES ACCOUNTS
The main classification of securities accounts in the name of residents abroad
are the following:
Securities Foreign Accounts (Depositi Esteri)
The Untransferable Ordinary Securities Accounts (Depositi Intrasferibili
Ordinari) and other securities accounts of minor importance have been united
into one category denominated Securities Foreign Accounts (Depositi Esteri) and
classified according to the foreign country or group of foreign countries of
residence of the owner irrespective of the latter's nationality.
The following are eligible for transfer to these accounts:
1) Securities purchased with funds available in Foreign
Accounts pertaining to the same owner in the name of
which the securities are registered or with funds
supplied by a bank of the same country or group of
countries as that of the owner of the account.
2) Securities originating from other Securities Foreign
Accounts when the beneficiary is a foreign bank estab-
lished in the same country or group of countries as
that of the owner of the Securities Foreign Account
from which the securities originate.
3) Securities originating from a Securities Foreign
Account held by an Authorized Foreign Bank with an
Authorized Italian Bank when the beneficiary is an
individual or a firm residing in the same country or
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group of countries as that of the bank requesting the
transfer.
4) Securities authorized to circulate abroad duly remitted
from abroad through the Bank of Italy, or an agent bank,
to an Authorized Italian Bank.
5) Securities of other unspecified origin.
While Italian banks may lodge securities directly under paragraphs 1), 2) and
3), prior authorization of Cambital is necessary for depositing them under para-
graphs 4) and 5). In case of the sale of securities from such accounts, banks
are authorized to effect the sale directly, provided that the proceeds thereof
are utilized as indicated above for funds in Foreign Accounts.
Securities Accounts - Ministerial Decree No. 211 of March 2. 1948 (Depositi D.L.
2/3/48 N.211)
Securities purchased with balances in Accounts - Ministerial Decree No. 211 of
March 2, 1948 (Conti D.L. 2/3/48 N.211) may be deposited in such accounts.
Securities held in such accounts may be exported abroad or sold in Italy; in the
last case proceeds from the sales are to be credited to an Account - Ministerial
Decree No. 211 of March 2, 1948 (Conto D.L. 2/3/48 N.211).
Free Foreign Securities Accounts in Free Currency (Depositi Liberi di Titoli
Esteri in Valuta Libera)
United States dollar and Swiss franc securities issued abroad, coming from
abroad or from another such account, may be deposited in a Free Foreign Securi-
ties Account in Free Currency. These securities may be freely transferred for
any operation to be effected abroad (cashing of coupons, etc.). Foreign
exchange proceeds deriving from the income or from the sale of such securities
abroad may be freely utilized abroad or credited in a Free Account in Free Cur-
rency (Conto Libero in Valuta Libera).
IMPORTS
An import license issued by the Ministry of Commerce is required before certain
goods can be shipped into the country, but some others may be imported with
direct authorization of the Customs Authorities upon presentation of a bank con-
firmation with responsibility to settle against funds in a Foreign Exchange
Export and Remittances Account (United States dollars for shipments from the
United States). Whether or not an import license is required, payment for the
goods is effected in foreign exchange purchased in the market at the export rate
and no exchange permit from Cambital is required. If a license is required in
connection with the import of a particular commodity, it is advisable for the
importer to secure such license before placing his order so as to effect the
shipment of the goods into the country without difficulty. Temporary imports,
as well as the re-exportation of imported goods, is permitted but duties paid
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American travelers entering Italy may freely carry with them Italian bank notes
but only in denominations not exceeding Lit. 1000. The traveler may carry into
the country any amount of foreign currency in bank notes or checks in addition
to checks or letters of credit which might be issued in accordance with clearing
agreements with Italy. Upon entry, all currency holdings must be declared on a
special form stamped by the Customs Authorities. This document permits the
traveler to re-export the foreign currency brought in or any balance not used
during his sojourn in the country. Travelers may freely negotiate United States
dollar bank notes, bankers checks, travelers checks and letters of credit, 50%
at the export rate and 50% at the official rate. Upon leaving the country,
travelers may carry with them Italian bank notes up to a maximum of Lit. 30,000
in denominations not exceeding Lit. 1000.
LIECHTENSTEIN, PRINCIPALITY OF
The Swiss franc is the legal currency in the Principality of Liechtenstein,
where the Swiss regulations are applicable in their entirety.
Local -L = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Import and export licensing regulations based on the United Kingdom system; at
present very few goods are available for export. Import licenses are required
for all goods.
MONACO (See France)
At the end of 1950 the official rates for the United States dollar were:
Buying: Florins 3.79k
Selling: Florins 3.8O2-
Exchange transactions are under control of Nederlandsche Bank N.V. Forward
exchange operations with non-residents are not permitted.
which no permit is required for opening or crediting the following:
1) Proceeds of the sale of United States dollars.
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2) Income or the proceeds of contractual redemptions of
Dutch securities held by-United States citizens.
3) Amounts originating from duly licensed imports from the
United States.
4) Transfers from other American Accounts or from T
Accounts in the name of individuals resident in the
United States.
5) Interest on bank accounts.
The following debits may be passed without license:
1) Conversion into United States dollars.
2) All payments in The Netherlands.
3) Transfer to other American Accounts.
For individuals in the United States, local currency accounts are divided into
four categories known as T (transferable), K (non-transferable), N (non-
transferable for persons of Dutch nationality) and Z (enemy property, etc.)
Accounts. Further information regarding these accounts will be furnished upon
request.
Prewar commercial debts owed to residents of the United States are remittable
only under special license, the application for which is considered on its
merits. This is also true in the case of royalties, payment for services and
inheritancies. Balances of emigrants to the United States are transferred to
an N Account and then to a K Account when he becomes a citizen.
Income or the proceeds of contractual redemptions of Dutch securities held by a
citizen of the United States can be transferred or credited to an American
Account or a T Account of a resident of the United States without permit of
Nederlandsche Bank N.V. Income of subsidiaries or affiliates of American com-
panies can also be transferred; however, if above 10% per annum a special per-
mit from Nederlandsche Bank N.V. is required.
Sales of non-exportable Dutch securities by non-residents are permitted only
with the proviso that the proceeds be reinvested within 6 exchange-days in
other Dutch securities, only the proceeds of so-called internationally negotia-
ble shares being permitted to be reinvested in securities of this category.
Permission will be granted to non-residents for the retransfer of the proceeds
of the sale or liquidation of share capital invested in an industrial enter-
prise established in and exercising its main function in The Netherlands, pro-
vided:
1) the participation has been effected in the form of
shares;
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2) these shares have been acquired by virtue of an invest-
ment license granted after November 1, 1950;
3) the payment of these shares has been effected by means
of transfer from abroad or to the debit of a transfer-
able credit balance (American Account or T Account),
and
4) at least 3 years have elapsed since paying for the
shares.
The amount that is considered for retransfer is the net
proceeds in case of the sale of the shares or upon
liquidation of the undertaking, unless the said proceeds
should exceed the sum total of the value of the shares
based on the price of issue and the portion, allocated
to these shares, of the reserves created by the profits,
in which case the said sum only is considered for re-
transfer.
If the amount to be retransferred should be in excess of
Fls. 5.000.000, it may be prescribed that the retransfer
be apportioned over 3 consecutive years with a minimum
of Fls. 5.000.000 per annum.
Imports and exports are subject to license by The Netherlands Foreign Exchange
Control. At present most imports from the United States are financed under the
European Recovery Program. When filing application for an import license, the
importer has to produce a pro-forma invoice. If circumstances justify the
granting of a permit and the import will be financed under the Marshall Plan by
means of the reimbursement procedure, the relative government bureau delivers a
so-called "binding promise" to the importer. This implies the production by
the importer of four copies of the contract between importer and exporter.
After verification of this contract, the relative government agency grants the
import and foreign exchange license in duplicate, one copy for Customs on
arrival of the goods and the other for the authorized bank to serve as author-
ity to make payment to the supplier, provided all further documents required
for reimbursement by the Economic Cooperation Administration are likewise
available.
Exporters are required to sell to Nederlandsche Bank N.V. 90% of the proceeds
of their exports to Canada and the United States. The balance of 10% is at
their free disposal to purchase goods in the United States and in other coun-
tries or to defray hotel and travel expenses incurred abroad.
The importation of Dutch bank notes in excess of Florins 100 and the exporta-
tion in excess of Florins 100 (in denominations smaller than Florins 100) are
prohibited. Non-residents and members of their families traveling in the coun-
try are permitted to use their T Accounts without limitation and of their K and
N Accounts up to Florins 60 per person, per day, during their stay. There are
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no restrictions on the amounts American banks may pay to such travelers either
by dollar checks or to the debit of their American Accounts. Non-resident
travelers are permitted to bring into the country unlimited amounts of foreign
currency in travelers checks, letters of credit, checks and bank notes but
these holdings must be declared at the point of entry in order to be able to re-
export them or the unused balance on leaving the country.
NORWAY
At the end of 1950 the official rates for the United States dollar were:
Buying: Kroner 7.13
Selling: Kroner 7.15
Exchange transactions are under the control and supervision of Norges Bank.
The opening of bank accounts in favor of non-residents is subject to the approv-
al of Norges Bank, unless the initial deposit is derived from United States dol-
lars or a United States bankers check in Norwegian kroner. In principle, debits
and credits over non-resident accounts must bear the prior approval of Norges
Bank, but under the payment agreement between Norway and the United States cer-
tain types of transactions can be executed without the necessity of seeking such
approval.
Income or the proceeds from the redemption of securities held for foreign
account may be used in full or part payment of new securities but are transfer-
able out of the country only with permission of Norges Bank. The sale of secu-
rities by a non-resident is also subject to approval of Norges Bank. Proceeds
of the sale of securities, real estate and other capital assets are credited to
a blocked account and transfer abroad is subject to license. However, funds
derived from the sale of securities may be used for the purchase of new securi-
ties as in the case of proceeds of redeemed securities.
Royalties are transferable abroad subject to the contract having been signed
prior to April 9, 194,0, and the amount does not exceed Kroner 5,000.
Inheritances in favor of persons resident in the United States are transferable
against certificate issued by the Probate Court involved showing the amount
inherited, the maximum being Kroner 10,000 or its equivalent.
Payments for services in connection with the import or export of goods are usu-
ally transferable. This ruling also applies to patent fees and taxes and
duties due the United States Government.
Transfers of funds belonging to emigrants to the United States are subject to
license, each case being considered on its merits.
All imports with the exception of private moderate gifts require licenses. Issu-
ance of an import license does not grant an importer the right to acquire the
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dollar exchange needed to pay for the goods to be shipped from the United States.
The import license must be submitted by the importer with his claim for United
States dollars to the Exchange Allocation Committee through his bankers when
desiring to pay for goods by means of a commercial credit or otherwise. However,
there is at present no delay in obtaining allocations of the exchange. Exports
are also subject to license by the Norwegian Ministry of Commerce.
Travelers may take Norwegian bank notes into Norway in an amount not exceeding
Kroner 50 per person. Dollar letters of credit, travelers checks and other for-
eign means of payment may be carried without limit, but they should be declared
upon entering the country to avoid difficulty in carrying out unused portions
when leaving.
PORTUGAL
At the end of 1950 the official rates for the United States dollar were:
Buying: Escudos 28.60
Selling: Escudos 28.902
Dealings in foreign exchange are regulated and supervised by Banco de Portugal.
Forward dealings are not completed by Banco de Portugal, but other banks can
handle this type of business. In general, however, it is limited to sales which
are made at a rate slightly higher than the rate for spot transactions. Commer-
cial banks may freely sell foreign currencies not exceeding the equivalent of
Esc. 2,500, provided the purchaser engages in writing to furnish Banco de
Portugal documentary proof, if later required, of the purpose for which the
exchange is to be used.
All sales of foreign exchange for payment of imports are subject to the presenta-
tion of an import registration bulletin. Imports and exports must be registered
with the Corporate Technical Council and the so-called bulletin of registration
is prepared in multiple form so as to provide copies for
1) Customs,
2) Banco de Portugal,
3) the Corporate Technical Council, and
4) the exporter or importer involved.
Upon presenting a copy of the bulletin of registration approved by the Authori-
ties to any banker authorized to sell exchange, an importer may acquire the for-
eign currency specified in the document. The funds so acquired must be used
solely for the payment of the respective goods.
Accounts may be opened in favor of non-residents in both escudos and foreign cur-
rency. In general, debits to such accounts require the approval of the Exchange
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Authorities. However, transfers among accounts of the same country may be
effected freely. Balances representing proceeds of the sale of United States
dollars and Swiss francs may be operated freely.
Transfer abroad of the proceeds from the sale or redemption of securities is
also subject to approval of Banco de Portugal. Documentary collections are pay-
able at the rate of exchange prevailing at the time of presentation, and the
drawee must present the collecting bank with the relative bulletin of registra-
tion. Goods may be re-exported if licensed by the Ministry of Economy. Portu-
guese exporters are required to sell the foreign currency proceeds of their
exports to their bankers.
Travelers entering the country may carry with them any amount in escudos, and
there is no limit to the amount of foreign currency that may be brought in.
Foreign currency holdings may be declared upon entry and upon leaving the coun-
try. Foreign currency in bank notes may be sold freely in amounts up to the
equivalent of Esc. 1,000; for sales in excess of that amount it is necessary to
have authorization of the Exchange Authorities. This is easily obtainable if
the currencies arp United States dollars or Swiss francs.
The official basic buying rate for the United States dollar at the end of 1950
was Pesetas 10.95. However, the rate. in the so-called free exchange market in
Madrid was approximately Pesetas 40 to U.S.$l.
Through the medium of a multiple exchange rate system there are in addition
special rates in force for certain imports and exports. These rates are fixed
by Instituto Espanol de Moneda Extranjera which controls exchange transactions
and the rates are published in an official bulletin.
By decree of July 21, 1950, the Government announced the establishment of the
above referred to free exchange market, effective August 1, 1950. Transactions
are handled through the official and the private Spanish banks. The regula-
tions provide for the sale of foreign exchange from sources, such as:
1) A certain percentage of the proceeds from the sale of
Spanish goods abroad as specifically authorized in the
relative Spanish export license.
2) Funds paid by a foreign company or person for harbor and
airport charges, storage expense, dock expense, Spanish
transport services (land, sea and air), commission,
brokerage and representatives' expenses and funds
expended for manufacture, refinement, repairs, etc., for
foreign account.
3) Capital transferred from abroad into Spain, including
repatriated Spanish capital, funds invested by Spanish
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subjects domiciled abroad or that invested by foreigners
with approval of Instituto Espanol de Moneda Extranjera,
funds of tourists for travel and living expenses and
living expenses of foreigners domiciled in Spain, income
from foreign capital. and labor, including that from
patents and authorship rights, payments for family sup-
port or benevolent payments, pensions, etc., insurance,
premiums, rents, damages, etc.
Foreign exchange from other sources, provided approved
by Instituto Espanol de Moneda Extranjera.
The currencies presently eligible for trading in the free market in the form of
checks, transfers or deposits, are:
United States dollars
Dollars in German account
Dollars in Cuban account
Dollars in Greek account
Dollars in Italian account
Pounds sterling
French francs
Moroccan francs
Swiss'francs
Belgian francs
Escudos
Florins
Swedish crowns
Danish crowns
Owing to certain regulations with respect to export and import of bank notes in
various countries, trading until further notice will be limited to bank motes
of the following currencies:
United States dollars Belgian francs
Swiss francs Escudos
Purchases of exchange in the free market, which are subject to the prior approval
of Instituto, may be made in general for the following purposes: duly licensed
imports, expenses for foreign travel, payments to persons abroad of funds derived
from income in Spain on capital, remittances for family aid, certain transporta-
tion expenses, repairs-to Spanish property abroad, fees due brokers or represen-
tatives abroad, insurance premiums, Spanish capital to be invested abroad subject
to official approval and any other remittances for which approval is grantad by
the Ministry of Commerce and the Instituto.
As regards the special rates prevailing for imports and exports, it is understood
that these rates are applicable only to the sales or purchases of foreign
exchange effected by importers or exporters in Spain in connection with transac-
tions there. It is further understood that Spanish exporters of merchandise to
the United States continue to invoice in dollars.
The Instituto Espanol de Moneda Extranjera publishes only buying rates. However,
for sales of United States dollars it adds Pesetas .27 to the particular rate
involved to cover its commission on the transaction.
All import and export transactions are subject to license by the Ministry of
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Industry and Commerce. All applications for import licenses, after being
approved by the Ministry of Industry and Commerce, are sent by that body to the
Instituto Espanol de Moneda Extranjera. The license will be definitely issued
to the importer by the Instituto at the time it has the relative exchange avail-
able. The period of validity of the license begins on that date. In certain
instances authorization to open commercial credits may be obtained from the
Control.
The accounts of non-residents with banks operating in Spain are subject to
Decree 313 which stipulates that all entries over such accounts must bear the
prior approval of the Exchange Control. However, non-residents are permitted to
maintain so-called Free Accounts which can be credited only with the peseta pro-
ceeds from the sale of free foreign currencies and can be debited without the
approval of the Authorities for all payments within Spain, with the exception of
those which represent settlement of exports.
Income from foreign-owned property, as well as the proceeds from the redemption
of foreign-owned securities, must be credited to an account in the name of the
owner, such account being subject to Decree 313. This means that disposition
for any purpose is subject to the prior approval of the Exchange Control. The
same applies to the proceeds from the sale of foreign-owned capital assets.
Non-residents visiting Spain are permitted to take United States currency into
the country without limitation, but they are expected to declare the amount and
details on a printed form issued to them by the Customs Authorities for that
purpose. Upon leaving Spain, each traveler will be permitted to take out the
amount brought in, less expenditures during his stay, which must be indicated on
the form given to him at the time of his entry. Up to Pesetas 10,000 may be
brought into the country in bank notes by a traveler, but when leaving he may
carry out only Pesetas 2,000.
SWEDEN
The official exchange rates for the United States dollar at the end of 1950 were:
Buying: Kronor 5.17
Selling: Kronor 5.18
Exchange transactions are under the control of Sveriges Riksbank which has
authorized certain of the Swedish banks to deal in foreign exchange within the
terms of existing regulations. Forward operations are permitted in United States
dollars and pounds sterling.
Approved Swedish banks are authorized to carry the following categories of
accounts for non-residents.
Regular Accounts - These are accounts the balances in which under former regula-
tions were considered freely transferable. Such accounts in favor of residents
of the United States can be credited without the prior approval of the Exchange
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1) Another Regular Account in the name of a United States
resident.
2) Swedish kronor checks drawn to the order of a United
States resident by the Sveriges Riksbank or another
Swedish bank authorized by them to deal in foreign
exchange.
3) The equivalent of dollars supplied by a United States
resident for replenishment of the account.
4) Payment by a resident of Sweden for Swedish account to a
resident of the United States in settlement of imports
from the United States or certain other specified trans-
actions in limited amounts.
These accounts can be debited without prior approval for transfers to another
Regular Account of a United States resident, payments in Sweden representing
expenses connected with the administration of the Swedish property of a United
States resident or payments to a Swedish resident relating to certain specified
transactions, including reasonable travel and living expenses. Under certain
conditions this type of account may also be debited for payment of exports and
for the purchase of Swedish bonds.
Limited Accounts - These are accounts the balances in which were not freely
transferable under the previous regulations. The prior approval of the Exchange
Authorities must be obtained for all credits to such accounts. Debits for a few
specified purposes are permitted without the necessity of obtaining such prior
approval.
Blocked Accounts - These accounts as a rule may be credited without the approval
of the Exchange Authorities, but all debits are subject to license.
In principle, the sale of foreign-owned securities and the transfer to the
United States of the proceeds of such securities, foreign-owned real estate or
other capital assets is prohibited and exceptions are made only for weighty
reasons. The transfer of the proceeds of redeemed securities is also subject to
approval of the Exchange Office, but permission is normally granted on produc-
tion of an affidavit of ownership and residence. Income from securities is nor-
mally transferable, provided such affidavit can be produced. Income of subsidi-
aries or affiliates of American companies may be transferred to the United
States only with the approval of the Exchange Office, each case to be determined
on its merits.
Remittances to the United States in dollars covering prewar debts are also sub-
ject to approval in each specific case. This is also true with respect to bal-
ances of emigrants from Sweden to the United States, but those who took up resi-
dence in the United States prior to January 1, 1944, are in a .more favorable
position.
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Royalties, inheritances and payments for services are also subject to approval,
but applications for the foreign exchange to be remitted abroad are normally
approved.
Exchange covering imports from the United States is allocated without a special
permission in each case of duly licensed imports or when the merchandise appears
in the Swedish free import list (Books form an exception when the total value
exceeds Kr. 500 and then require special permission of the Exchange Office).
However, the transfer of advance payments is subject to special permission when
the amount involved exceeds Kr. 2000 or in the case of machines one-third of the
invoice value.
Exports are also subject to license, unless the particular commodity appears in
the free export list which is extensive. When exporting goods on the free list,
the exporter must give a written guarantee that payment according to contract
will be made within 6 months from date of exportation. Swedish exporters must
surrender to the Sveriges Riksbank the proceeds of their sales abroad, if
received in United States dollars, Swiss francs or Argentine paper pesos.
A traveler may freely carry any funds into the country, ekcept that in the case
of Swedish currency the limit he may import is Kr. 100 in denominations of Kr.
50 or smaller. Such holdings must be declared upon entry, and the declaration
serves as a license, valid for 3 months, for their export when leaving the
country.
SWITZERIAND
At the end of 1950 the free rate of exchange was Swiss Franc 1 to U.S.$0.2334.
There are no restrictions on dealings in foreign exchange, including those
involving forward contracts and none with respect to assets of residents of the
United States. Bank accounts in the name of residents and non-residents of the
United States may be opened and operated freely without sanction of the Swiss
authorities.
Exports require no license, but for imports there are varying degrees of control
with respect to agricultural products.
UNITED KINGDOM (AISO CHANNEL ISLANDS AND ISLE OF MAN)
At the end of 1950 the exchange rates fixed by the British Control for the
United States dollar were $2.79 7/8 - $2.80 1/8.
The Exchange Control Act 1947 continues, with necessary alterations, the control
system brought into being in 1939. The United Kingdom grouped with the Dominions,
Colonies and certain overseas countries were originally designated the sterling
area but are now known as the Scheduled Territories.
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The main controls provide for
a) sale to the Control of gold and specified currencies
held by residents,
b) dealings in foreign exchange and gold to be concentrated
in authorized channels,
c) classification of sterling accounts,
d) control over transactions involving non-residents and
borrowings by resident corporations which are controlled
by non-residents and over borrowings guaranteed by non-
residents; control of new capital investment in the
United Kingdom by non-residents,
e) supervision over commercial transactions, travel and
emigrants, and
f) control over the issue and transfer of securities where
non-residents are concerned and control over foreign and
bearer securities.
Specified or requisitioned currencies (a) are those which must be offered by
residents for sale to the British Treasury through an Authorized Bank and
include the following:
Argentine paper pesos
Belgian francs
Brazilian cruzeiros
Canadian dollars
Congolese francs
Francs of Metropolitan France
Francs of French Somaliland (Djibouti francs)
Indochinese piastres
Lebanese pounds
Luxembourg francs
Guilders of The Netherlands, Surinam and The Netherlands Antilles
Panamanian dollars
Philippine pesos
Pondicherry rupees
Portuguese escudos
Swiss francs
Syrian pounds
United States dollars
Uruguayan pesos
Sales of exchange (b) are normally made to residents for legitimate trade require-
ments, such as payments for approved imports, freights, agents' commissions, roy-
alties, insurance treaties, premiums and claims and income from investments,
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including profits on companies controlled or partially controlled abroad, etc.
Forward exchange transactions are permitted covering firm commercial contracts
involving a movement of goods.
American and other non-residents who are going to be domiciled in Great Britain
and Northern Ireland for a period extending over 5 years are granted exemption
upon application from (a) in respect of their own currencies, but not as regards
other specified currencies which are subject to normal regulations affecting
residents of the United Kingdom.
Sterling accounts are classified (c) according to the residential status of the
beneficial owner and are grouped by the Exchange Control as follows:
1) Scheduled Territories (Sterling Area)
The United Kingdom and the Dominions (except Canada
which includes Newfoundland), the other countries in the
British Empire, the British Mandated Territories of
Cameroons, Nauru, New Guinea, South-West Africa,
Tanganyika, Togoland and Western Samoa, the British
Protectorates and Protected States, Burma, Eire,
Hashemite Kingdom of the Jordan, Iceland and Iraq.
These accounts are available for payments anywhere within
the Scheduled Territories, but not outside them, without
official approval.
2) American Account Countries (Dollar Area)
The United States of America and any territory under its
sovereignty, Bolivia, Colombia, Costa Rica, Cuba,
Dominican Republic, Ecuador, El Salvador, Guatemala,
Haiti, Honduras, Mexico, Nicaragua, Panama, Philippines
and Venezuela.
Transfers between the countries of the American group are
allowed as are also payments to the Other Countries group
and to the Transferable Account group. Transfers from
these groups to the American group are not allowed except
with prior permission from the Bank of England.
3) Transferable Account Countries
Anglo-Egyptian Sudan, Austria*, Chile, Czechoslovakia,
Denmark (including the Faroe Islands and Greenland),
Egypt (including Palestine), Ethiopia, Finland, Greece*,
Iran, Italy (excluding the Vatican City - but comprising
The Republic of Italy, Italian Somaliland, The Republic
of San Marino and The Free Territory of Trieste), The
Netherlands Monetary Area (that is to say, The Nether-
lands, Indonesia and The Netherlands West Indies), Norway,
Poland, Spanish Monetary Area (that is to day, the Penin-
sular territories of the Spanish State, the Balearic and
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104
Canary Islands, Ceuta and Melilla, the Spanish Zone of
Morocco and the Spanish Colonies), Sweden, Thailand, and
the Union of Soviet Socialist Republics.
The purpose of Transferable Accounts is to widen the
extent of the availability of sterling as between dif-
ferent countries in respect of current transactions.
Direct transfers may be made freely, therefore, between
Transferable Accounts irrespective of country. Such
accounts are generally confined to banks, and the finan-
cial agreements between the United Kingdom and the
respective Transferable Account countries provide for
the monetary authority or Exchange Control of the partic-
ular country concerned to exercise supervision of the
operations passing through Transferable Accounts in order
to ensure that these relate to current transactions only.
*Effective as of January 19, 1951.
4) Bilateral Countries
Argentina, Belgian Monetary Area (that is to say, Belgium,
Luxembourg, Belgian Congo and the Mandated Territory of
Ruanda Urundi), Brazil, Bulgaria, Canada which includes
Newfoundland, French Monetary Area (that is to say, Metro-
politan France including Algeria and Corsica, Monaco,
French West Africa, French Equatorial Africa, Madagascar
and its dependencies, La Reunion, French Guiana, Martinique,
Guadeloupe, Saint-Pierre et Miquelon, French India, Viet
Nam, Laos and Cambodia, New Caledonia, French Oceania, New
Hebrides Condominium, Morocco and Tunisia, Togo and
Cameroon which are territories under Trusteeship and Saar
Territory), French Somaliland, the Western Zones of Germany
(including the American, British and French Sectors of
Berlin), Hashemite Kingdom of the Jordan, Hungary, Israel,
Japan, Lebanon, Paraguay, Peru, the Portuguese Monetary
Area (that is to say, Portugal and the adjacent islands,
Cape Verde Islands, Gulf of Guinea, Angola, Mozambique,
Portuguese Guinea and Goa), Rumania, Switzerland and
Liechtenstein, Syria, Tangier, Turkey, Uruguay, Vatican
City and Yugoslavia.
The setting up of these accounts arises from agreements made
between the United Kingdom and the. Governments of those
countries enumerated in this group, and payments are
restricted to transfers made to resident accounts or to
transfers from one account in an individual member country
of the group to another account belonging to the same coun-
try. There is no transferability between accounts listed in
this group.
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The accounts of residents of China (including Manchuria)
and of Formosa are described respectively as Chinese
Accounts and Formosan Accounts and are included with
Bilateral Countries. However, with the exception of
certain payments of a strictly personal nature, mostly
of a recurring type, which have been regularly made in
the past, all payments and transfers require permission
of the Exchange Control. It should be noted that Hong-
kong remains in the Scheduled Territories, but special
restrictions are placed on the disposal of assets of
residents there.
5) Other Countries include
Afghanistan, Albania, Andorra, Cyrenaica, Eritrea,
Southern Korea, Liberia, Nepal, Saudi Arabia, Somaliland,
Tripolitania and the Yemen.
This group is not subject to restrictions as to transfers
between the countries named or to transfers to United
Kingdom Resident Accounts. Similarly, transfers from,
but not to, American Account and Transferable Account
countries are permitted.
Payments from accounts in all the foregoing categories may be made freely to
residents of the Scheduled Territories and without need for official permission
from a non-resident account to another non-resident account of the same country
or area. Payments may be made from American Accounts to Transferable Accounts,
but payments from Transferable Accounts to American Accounts are not permissible
under existing conditions.
CANADA - In consequence of the recent decision of the Canadian Government to
permit the exchange rate for the Canadian dollar to fluctuate in accordance with
supply and demand, the Bank of England will no longer publish official rates for
Canadian dollars. Authorized Banks may effect transactions with customers and
with other Authorized Banks at market rates. Although Canada is not included in
the areas to which Transferable Account arrangements apply, payments may be made
from Sterling Accounts of specified Canadian banks to Sterling Accounts of resi-
dents in other countries outside the Scheduled Territories, providing the Cana-
dian banks certify payment to be eligible for credit to the type of account to
which payment is to be made. The Canadian dollar remains a specified currency.
It is not permitted to provide United States dollars in exchange for Canadian
dollars or sterling from a Canadian Account.
NON-RESIDENTS - Sterling transfers from the account of a resident in the Sched-
uled Territories to a non-resident require official authority which is normally
given on the same lines as for sales of exchange.
New accounts in favor of non-residents require official permission. In the case
of temporary visitors, accounts can be opened without delay subject to reporting
to the Authorities. These accounts are subject to restrictions, that is to say,
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funds credited thereto must emanate from the type of Sterling Account appro-
priate to the normal country of residence of the visitor, the accounts being
subsequently designated accordingly. Accounts designated as American, Canadian
or Swiss Accounts may be credited additionally with the sterling proceeds of
sale to the Bank of England of Canadian and/or United States dollars or Swiss
francs (travelers checks, letters of credit, drafts or notes).
Subject to certain requirements, Authorized Banks may approve applications to
transfer sterling to non-resident accounts or to purchase foreign currency on
behalf of residents of the Scheduled Territories (other than the United Kingdom)
without restriction as regards the amount involved for the purpose of the trans-
fer. Further, subject to certain requirements, Authorized Banks may approve
payments to non-residents for imports into the Scheduled Territories (other than
the United Kingdom) financed or arranged through merchants in the United Kingdom.
Overdrafts or other forms of credit to non-residents are not permissible without
official authority. United Kingdom residents may not borrow under the guarantee
of a non-resident without the prior sanction of the Control, e.g., a British com-
pany may not borrow under the guarantee of an American parent company without
permission. Also, the terms of the Exchange Control Act stipulate that official
permission is required before resident British companies which are controlled
outside the Scheduled Territories can borrow. Conversely, United Kingdom resi-
dents may not guarantee the extension of facilities to firms or parties resident
outside the Scheduled Territories without first receiving authority from the Bank
of England.
Firms and persons resident in the Scheduled Territories, who desire to enter into
an agreement with a firm or person resident outside that area whereby monies are
payable in respect of a service, e.g., royalties, should obtain the prior approv-
al of the Control as otherwise it cannot be taken for granted that foreign
exchange for such payments will always be forthcoming.
NEW CAPITAL INVESTMENT IN THE UNITED KINGDOM BY NON-RESIDENTS - Capital directly
invested after January 1. 1950, by non-residents in projects approved by the
Exchange Control Authorities may be repatriated at any time thereafter to the
extent of the original investment and from the proceeds of that investment.
The investment may be made in one or more of the following ways:
1) By means of the sterling proceeds of specified currency
appropriate to the country of permanent residence of the
investor.
2) By sterling from an appropriate non-resident banking
account.
3) By sterling eligible for remittance to the non-resident
investor.
4) By goods and services from the country of permanent
residence of the investor.
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This concession will be operated as follows:
1) It will not normally apply to the purchase of shares on
a stock exchange, unless this forms an integral part of
an approved investment project.
2) The amount available for repatriation will be restricted
to the amount of sterling originally invested. In the
case of investment by means of goods or services, the
amount will be the sterling value of such goods or serv-
ices as recorded in the books of the company at the time
of investment.
3) Where the investment does not require permission under
existing Exchange Control regulations, e.g., where it is
through a branch in the United Kingdom, the investor
will not qualify for the concession, unless he obtains
Exchange' Control approval of his project at the time of
making his investment.
4) Approval for repatriation will take the form of Exchange
Control permission for the credit of the agreed sterling
amount to the appropriate non-resident sterling account.
5) Repatriation will only be allowed to the country from
which the investment originated.
It is important to note that all projects must receive the prior approval of the
Exchange Control Authorities, this being obtained ordinarily through the bankers
of the interested party.
COMMERCIAL TRANSACTIONS
Commercial Credits may be opened to take care of shipments of goods to or from
the United Kingdom. Except where no transfer of funds out of the Scheduled
Territories is in question, credits opened require approval of the Control and
in the case of exports are subject to the proceeds being returned to this coun-
try in the appropriate manner, e.g., in the case of exports to the United States,
reimbursement must be provided through an American Account or by means of United
States dollars. In the ordinary way, credits should not exceed 9 months duration
and terms should provide for drawings at sight or up to a maximum of 120 days.
Direct Credits - Approval Registration is no longer required of
a) credits in respect of exports from the Scheduled Terri-
tories (other than the United Kingdom), which are to be
opened direct by banks in countries outside the Sched-
uled Territories in favor of beneficiaries in the
Scheduled Territories (other than the United Kingdom)
covering goods originating in the Scheduled Territories,
or
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b) credits in respect of imports into the Scheduled Terri-
tories (other than the United Kingdom), which are to be
opened direct by banks in the Scheduled Territories
(other than the United Kingdom) in favor of beneficiar-
ies in a country outside the Scheduled Territories cov-
ering goods originating in that country, if a bank in
the United Kingdom acts solely in the capacity of a
reimbursing agent and is in no way committed under any
advice of receipt of reimbursement instructions.
Import licenses must be held and valid for the period of the credit. In excep-
tional circumstances licenses may be granted for periods longer than 9 months
on application to the Import Licensing Department and when granted, the Exchange
Control would most likely be willing to authorize credits for the validity of
any such license. Where it can be evidenced that goods of United Kingdom origin
have been paid for in United States dollars and resold to another country, per-
mission can generally be obtained from the Control to credit proceeds of sale to
American Account.
Freights Payable - It is the practice of the Bank of England to provide foreign
exchange cover against commitments payable in a foreign currency in respect of
freight on specific shipments of goods on production either of documentary evi-
dence of a firm contract expressed in the currency in question or of a close
estimate properly documented and acceptable to the Bank of England of the cur-
rency liability involved.
The Bank of England is prepared to consider applications by or on behalf of
United Kingdom residents acting as principals to purchase forward United States
dollars in respect of freights payable in sterling but which in accordance with
Conference rules are calculated on a United States dollar basis.
A forward contract must be closed out and the dollars resold at the Bank's
appropriate official buying rate on the day on which settlement for the freight
charges is effected. Forward cover will be provided under these arrangements on
the understanding that the dollars will not be delivered and that, if settlement
for the freight is not effected by the forward maturity date, the contract will
be extended on a swap basis.
Refinance Operations - The Control's approval for the refinancing of specified
commodities can be obtained only by special application. Refinance drafts must
relate to specific shipments and be drawn by the purchasing merchant on the
London banker; drafts must not exceed 120 days sight.
TRAVEL - During the year May 1, 1950, to April 30, 1951, persons regarded as
resident in the United Kingdom (but not persons who have emigrated) will be
entitled to a basic allowance permitting them to purchase the appropriate for-
eign currency or to transfer sterling to the appropriate type of non-resident
account up to an amount of 1100 for adults and 170 for children under 15 years
of age. For the present this applies to the following countries: Argentina.,
Austria, Brazil, Chile, Cyrenaica, Czechoslovakia, Egypt, Eritrea, Ethiopia,
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Finland, France (including Algeria and Corsica), Monaco, French Morocco and
Tunisia, Greece, Iran, Israel, Italy (the mainland of Italy, Sardinia, Sicily
and the adjacent islands), The Republic of San Marino and the Vatican City, The
Netherlands, Paraguay, Peru, Portugal (including Madeira and the Azores), Saudi
Arabia, Somaliland (Italian), Spain (including the Balearic and Canary Islands,
Ceuta, Melilla and the Spanish Zone of Morocco), Sudan, Switzerland and
Liechtenstein, The Free Territory of Trieste, Tripolitania, Turkey, Uruguay,
Western Zones of Germany (including the American, British and French Sectors of
Berlin), and Yugoslavia.
Special arrangements in respect of travel in Denmark and the Faroe Islands,
Norway and Sweden whereby persons, regarded as resident in the United Kingdom
(but not persons who have been granted emigration treatment), may be granted
facilities up to a maximum of L250 per individual during any 12 months ending
February 28 as shown by the entries on the relative passports. The basic travel
allowance and allowances for travel in the above countries are not available to
persons who have been granted emigration treatment, whether or not they have
left the United Kingdom. Applications for an allowance in excess of L250 per
person in any 12 months ending February 28 will receive consideration.
Special allotments of exchange will be granted in respect of expenses incurred
on business or official journeys outside the Scheduled Territories and may also
be granted in exceptional'circumstances for travel on health, compassionate or
educational grounds or other reasons. For taking a car abroad, an additional
allotment of exchange to the value of &20 may be obtained, subject to certain
conditions.
Travelers from America and other foreign countries and residents returning to
the United Kingdom may not bring into the United Kingdom sterling notes in
excess of L5. There is no limitation as to the amount of hard currency notes
which may be brought in, but travelers should arrange to have all such sums of
currency marked in their passports on arrival. Soft currencies are very severe-
ly restricted as to the amount which may be brought in. Similarly, persons
leaving the United Kingdom may take out J-5 in sterling notes without permission
and, in addition, foreign currency notes not exceeding the equivalent of 110.
Except where an appropriate entry has been made in the traveler's passport at
the time of entering the United Kingdom, authority must be obtained to take out
larger sums (e.g., where an American wishes to take out United States notes for
an amount larger than $28) or for valuables, such as securities, life policies,
documents of title or gold. Exchange granted in respect of travel may be made
available only in the form of travelers checks, letters of credit or other
facilities in sterling or foreign currency which are encashable abroad only on
the personal application and identification of the traveler or in foreign cur-
rency notes within the limit of L10 mentioned above. No permit is needed by
non-residents to take out travelers checks or cash letters of credit.
Sterling notes may not be sent through the post into or out of the United King-
dom. There are no restrictions on the import and export of sterling bank notes
or foreign currency notes as between the United Kingdom and the Channel Islands
and Eire, but it should be noted that both the Channel Islands and Eire impose
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restrictions (similar to those in force in Great Britain) on the import and
export of sterling bank notes and foreign currency except in the case of travel-
ers to and from the United Kingdom.
It is illegal for residents to cash outside the Scheduled Territories checks
drawn on their sterling accounts or on any foreign currency accounts at their
disposal, unless appropriate permission has been obtained through a United King-
dom bank to do so. It is also a serious offense to borrow foreign currency or
to enter into any other agreement to obtain foreign currency except with permis-
sion obtained through a bank in the United Kingdom. It is illegal to enter into
arrangements under which residents make payments in the United Kingdom in con-
sideration for or in association with payments made outside the Scheduled Terri-
tories on such residents' behalf, (e.g., hotel bills, etc.).
EMIGRANTS - The term emigrant is used to refer to any individuals or families
husband, wife and dependent children) who are regarded for the purposes of the'
Exchange Control Act as resident in the United Kingdom and who intend to take up
permanent residence in a country outside the Scheduled Territories except Cana-
dians returning to Canada and persons who are not nationals of a country within
the Scheduled Territories returning to the country of their nationality. The
term United Kingdom refers to the United Kingdom, the Channel Islands and the
Isle of Man. During the 4 years following their departure, emigrants may apply
to have the following allowances made available to them in their new country out
of their total assets, including foreign currency assets;
Not more than -L5,000 transferable in 4 equal annual install-
ments; but if total assets are less than X2,000, up to -L500
per annum will be transferable.
These allowances refer to emigrants to the following countries: Austria, Coun-
tries in the Belgian, Dutch and Portuguese Monetary Areas, Countries in the
French Franc Currency Area, Denmark, the Faroe Islands and Greenland, Greece, The
Italian Republic, Italian Somaliland, The Republic of San Marino and The Free
Territory of Trieste, Norway, Sweden, Switzerland and Liechtenstein, Turkey and
Western Zones of Germany.
Emigrants to any other country have allowances made available to them of not
more than 11,000 which will be transferable in annual installments up to x,250.
Anticipation of part or all of the installments due in subsequent years may be
allowed if the funds are required for some purpose essential to the applicant's
emigration plans. At the end of the 4 year period emigrants will be regarded on
application as residents of the country to which they have emigrated, and any
remaining sterling capital will remain in the United Kingdom, but any income
then accruing on that sterling capital or from other sources in this country
will be transferable. Non-sterling assets of such emigrants will be at their.
free disposal insofar as United Kingdom regulations are concerned.
Exceptionally, emigrants to Denmark, the Faroe Islands and Greenland, Norway and
Sweden may be allowed to receive an increased allowance for essential purposes
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and after 4 years residence abroad may obtain certain privileges following the
change in their residential status.
SECURITIES - Securities may be purchased to the debit of a United States or
other non-resident account appropriate to the country of residence of the new
owner, and with permission these securities may be sold for the purpose of rein-
vestment in other securities within the limitations outlined below. Alterna-
tively, when the securities are payable solely in sterling, application may be
made for permission to sell the securities and have the proceeds credited to a
Blocked Sterling Account which is subject to restrictions for investment already
described.
Subject to certain conditions, residents of Denmark, the Faroe Islands and
Greenland, Norway and Sweden may obtain permission to sell securities and have
the proceeds credited to an account appropriate to the country of residence of
the owner.
For a certain period in the past it was possible to sell securities with author-
ity to credit the proceeds to the same type of account as that originally deb-
ited, but this privilege is no longer obtainable. Where such an authority in
the form of the special license issued during that period is still in existence,
it may be implemented. Should there have been a change of residential status
since the issuance of the license, application must be made to the Bank of
England before the license can be utilized.
Securities purchased through a United Kingdom stock exchange may be registered
in the name of the owner or in the name of a United Kingdom nominee. Alterna-
tively, they may be registered in the name of a nominee who is a non-resident,
provided the nominee is a resident of the same country as the beneficial owner.
In all cases where securities are registered in the name of a nominee, the c oun-
try of residence of the beneficial owner must be disclosed on the appropriate
declaration. When securities are deposited with a bank to be recorded for
account of a non-resident who is not the owner, the address of the non-resident
must be in the same country as that of the beneficial owner.
The following types of securities, when held in the United Kingdom, whether
belonging to residents of the United Kingdom or Scheduled Territories or to non-
residents (including residents of the United States), must under the Exchange
Control Act 1947 be deposited with an Authorized Depositary:
bearer securities (with minor exceptions),
securities where interest or dividends are payable by
coupons,
registered certificates issued outside the Scheduled
Territories, and
registered certificates, with certain exceptions in the
case of Canadian securities, issued within the Scheduled
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Territories which can be transferred to a register outside
the Scheduled Territories.
Any securities of the foregoing categories held abroad for residents must also
be brought under the control of an Authorized Depositary, and until securities
to which this regulation applies have been so deposited they may not be sold,
transferred or otherwise dealt with.
Depositable securities may no longer be accepted by an Authorized Depositary
without giving the Bank of England a satisfactory explanation as to the reason
why the securities were not previously deposited, and also details of where
they have been held since October 1, 1947.
Income by way of interest, dividends, etc., on investments in the United Kingdom
may be credited with little formality to American or other non-resident accounts
(or remitted in dollars, etc-.) in favor of the beneficial owner. This provision
enables the transfer of dividends declared out of profits earned by American-
owned subsidiaries, but specific approval is required in each case.
Capital, however, may not be sent out of the United Kingdom without official per-
mission, and applications to remit may result in the funds being directed to a
Blocked Sterling Account, subject to the restrictions for investment already
described.
When a non-resident desires to sell a security of the Scheduled Territories for
the purpose of reinvestment, application must be made to the Bank of England for
a switch license on Form L. This license will normally be granted when the
security to be purchased is payable solely in a currency of the Scheduled Terri-
tories and is not redeemable earlier than 10 years from the date of purchase or
in the case of issues with fixed maturity dates, the security to be purchased is
not shorter dated than the security to be sold.
Permission is required before transfers of securities can be effected between
non-resident owners or between a resident of the Scheduled Territories and a
non-resident. Residents may with official permission effect certain transac-
tions on foreign stock exchanges.
Applications on Form L must contain satisfactory evidence that the security to
be sold has been in the possession of a resident of the same country as the
present beneficial owner since September 1, 1950. This particularly effects
securities registered in the names of foreign or United Kingdom bank nominees or
those held in London in bearer form for account of foreign banks.
Permission is required for the import into the United Kingdom and for the export
from the United Kingdom of all securities (irrespective of currency of denomina-
tion or whether cancelled or not) and any document certifying their destruction,
loss or cancellation, except registered certificates in respect of securities on
which interest or dividends are not payable by coupon and which are registered in
a register in the Scheduled Territories which is not a subsidiary register.
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When permission has been granted for the import of bearer securities payable in
a currency of the Scheduled Territories in respect of which there are facilities
in the United Kingdom for registration as to both principal and interest or div-
idends, this permission will be conditional upon the securities (except drawn or
matured securities) being so registered immediately after importation. Permis-
sion will not normally be granted for the export of sterling bearer securities
of any type. In certain circumstances, however, such as the overstamping of
bonds, permission can be obtained to import and export the bonds in bearer form.
The Control is also prepared to give consideration (each case being'treated on
its merits) to the transfer to American or other non-resident account of monies
derived from the following:
a) capital repayments in respect of mortgages or drawn or
matured securities (normally, capital funds resulting
from the redemption or drawing of a security in accord-
ance with the terms of the original issue are remittable
to the beneficial owner),
b) distributions from the estates of deceased persons who
at their death were residents of the Scheduled Terri-
tories. (In the case of American or Canadian Accounts
permission will normally be granted when the amount does
not exceed L500. Amounts in excess of that figure will
be directed to a Blocked Sterling Account),
c) distributions under settlements created by residents of
the Scheduled Territories,
d) profits of companies resident in the Scheduled Territo-
ries and service charges due from such companies,
e) sales of real estate and personal effects,
f) distributions on the sale or winding-up of companies,
g) surrender of life or endowment policies, or
h) withdrawals from accounts with Building Societies.
BLOCKED STERLING ACCOUNTS are not linked with any other type of non-resident
accounts and are opened under direction from the Bank of England. The purpose
of such accounts normally is to receive capital funds which the Authorities will
not permit to be held at the free disposal of the account-holder.
Funds in such accounts are available only for investment in securities payable
solely in currencies of the Scheduled Territories and which are quoted on a
recognized security market in the Scheduled Territories. Such securities must
not be redeemable earlier than 10 years from the date of purchase.
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114
OFFSETTING OF CAPITAL ASSETS - The Bank of England is prepared to consider
applications for permission to exchange blocked sterling balances and/or sterl-
ing securities owned by non-residents for blocked foreign currency balances
and/or blocked foreign currency securities owned by United Kingdom residents,
provided
a) any sterling securities involved are valued at the cur-
rent price on a stock exchange in the United Kingdom and
any foreign currency securities at the currerit price on
the appropriate market abroad, and
b) the official rate of exchange is used to compute equiva-
lent values of the assets to be exchanged.
It must be understood that the respective parties have agreed to the exchange
before application is made to the Bank of England.
GENERAL INFORMATION
PATENTS, DESIGNS & TRADE MARKS - Authorized Banks may now approve applications
submitted by residents of the United Kingdom to make payments to persons resi-
dent outside the Scheduled Territories in respect of professional services,
viz., the cost of obtaining or maintaining the grant or registration of patents,
designs and trade marks and the normal professional charges and fees incurred in
doing so, including the cost of searches.
H.M. FOREIGN SERVICE OFFICERS, OTHER H.M. CIVIL SERVANTS AND MEMBERS OF H.M.
FORCES SERVING OUTSIDE THE SCHEDULED TERRITORIES - The term H.M. Foreign Service
Officers includes all United Kingdom based staff paid by the Foreign Office of
H.M. Embassies, Legations and Consulates, whether established or temporary; mem-
bers of the Office of the United Kingdom High Commissioner in Canada; and except
as otherwise provided Service Attaches and their Assistants accredited to H.M.
Embassies and Legations. Arrangements have been made to regulate the extent to
which persons in the above-named categories, who are regarded, for all purposes
of the Act, as resident in the United Kingdom, may draw on their resident sterl-
ing accounts for local requirements during their term of service in countries
outside the Scheduled Territories.
DIPLOMATS are treated for all purposes of the Exchange Control Act as residents
of the country which they represent and their accounts designated accordingly.
PURCHASE TAX SCHEME - To facilitate sales to Canadian and United States visitors
to Great Britain, who wish to buy goods for use here but are unwilling to pay
the ordinary price, inclusive of Purchase Tax, the Treasury approved a scheme
which came into force August 22, 1949, and which was revised as from April, 1950.
Any person holding a Canadian or United States passport, who encashes not less
than the equivalent of L15 in Canadian and/or United States dollars or a similar
sterling amount derived from a Canadian and/or American Account, will be enti-
tled to one sheet, comprising 5 Purchase Tax Coupons which carry the right to
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purchase goods free of Purchase Tax. Additional sheets may be issued for every
extra -L15 encashed up to a maximum of 36 sheets, i.e., 180 coupons per person
during any period of 12 months. If a man and wife together encash sufficient
exchange, then up to 36 sheets may be issued to each of them, provided entries
are made in both passports, or two entries in one passport if it covers both
persons. Similarly, up to 36 sheets may be issued in respect of each child not
having a separate passport, provided sufficient additional exchange is encashed
by parents and entries are made in the parents' passports. The Purchase Tax
Coupons may not be sent to an applicant by post, but only handed out against
personal application at a bank counter.
EXCHANGE CONTROL ARRANGEMENTS FOR PARTICIPATION IN THE COFFEE MARKET SCHEME -
Under Defence Finance Regulations 1939 the Bank of England set in motion a
scheme which regulated the way in which coffee importers and exporters were to
conduct their business. Each participant receives from the Import Licensing
Department a license authorizing him to import coffee into the United Kingdom
for resale abroad or to any holder of a similar license, or to a person specif-
ically authorized by the Ministry of Food to buy coffee. Coffee may be imported
into the United Kingdom under the terms of such license and held in bond until
re-export, or it may be held abroad in the country of origin, or elsewhere, and
shipped direct to buyers; in the latter case, sales in the United Kingdom may be
made only to any participant in these arrangements or to a holder of a valid
import license.
Participants are required to open with their bankers a Coffee Receipts Account
to which must be credited payments received by them in respect of coffee sold to'
buyers in countries outside the Scheduled Territories, including the sterling
proceeds of any such payments received in foreign currency. Once such amounts
have been credited to a Coffee Receipts Account they will be at the free dispos-
al of the account holder and, consequently, may be drawn off at will. The Bank
of England is interested solely in the credit entries on the account, the pur-
pose being to establish that all coffee sold outside the Scheduled Territories
is paid for with non-resident funds. A special return must be made by the
trader to the Bank of England each month giving the details of the transactions
which have passed over the special Coffee Receipts Accounts.
IMPORT AND EXPORT LICENSING REGULATIONS
Licenses are required for many imports except (a) bona fide trade samples, (b)
goods, excluding diamonds (other than rough diamonds) mounted or unmounted and
jewelry containing diamonds, manufactured or produced in the United Kingdom,
which after being exported to a country within the Scheduled Territories (Sterl-
ing Area) are returned to the sender by parcel post in the same state as that in
which they were exported, (c) goods imported for repair and re-export, (d) per-
sonal or household effects and (e) bona fide unsolicited gifts. Transshipment
licenses are no longer required for goods (with certain exceptions, mainly but-
ter, fats and oils (edible and non-edible), including shortening and margarine,
oil-bearing seeds, soap, meat - fresh, frozen, pickled, salted, smoked, canned
and dehydrated meat (excluding fresh and frozen poultry, game, rabbits and veni-
son), and rabbit skins, which are imported and entered with His Majesty's
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Customs for exportation after transit through the United Kingdom or by way of
transshipment. A system of open general licenses is in force for many goods.
This system allows such goods to be admitted without the need for individual
license if consigned from and originating in any country other than Albania,
Argentina, Bolivia, Bulgaria, Canada, Colombia, Costa Rica, Cuba, Czechoslo-
vakia, Dominican Republic, Ecuador, El Salvador, French Somaliland, Russian
Zone of Germany, Guatemala, Haiti, Honduras, Hungary, Iran, Japan, Korea,
Liberia, Liechtenstein, Mexico, Nicaragua, Panama, Philippines, Poland, Rumania,
Tangier, United States, Union of Socialist Soviet Republics, Venezuela, and
Yugoslavia.
LIST OF COUNTRIES INCLUDED IN THE
SCHEDULED TERRITORIES
Basutoland
Bechuanaland Protectorate
Gambia (Colony & Protectorate)
Gold Coast -
Ashanti
Colony
Northern Territories
Togoland under British Mandate
Kenya (Colony & Protectorate)
Mauritius
Morocco Agencies
Nigeria -
Colony
Protectorate
Cameroons under British Mandate
Anguilla
Bahamas
Barbados
Barbuda Islands
Bermuda
British Guiana
British Honduras
Falkland Islands and Dependencies
Jamaica (including
Caicos Islands
Cayman Islands, Turks Island)
Northern Rhodesia
Nyasaland Protectorate
Perim
St. Helena and Ascension
Seychelles
Sierra Leone (Colony & Protectorate)
Somaliland Protectorate
South West Africa
Southern Rhodesia
Swaziland
Tanganyika Territory
Uganda Protectorate
Union of South Africa
Zanzibar Protectorate
AMERICA
Leeward Islands -
Antigua
Montserrat
Nevis
St. Christopher (St. Kitts)
Virgin Islands (British)
Trinidad and Tobago
Windward Islands (Dominica)
Grenada
St. Lucia
St. Vincent
Tristan da Cunha
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Aden (Colony & Protectorate)
Andaman Islands
Bahrein Islands
Brunei
Burma
Ceylon
Cyprus
Hashemite Kingdom of the Jordan
Hongkong
India
Iraq
Kuwait
Labuan
Malayan Federation
Johore
Kelantan Perlis
Malacca
Negri Sembilan
Pahang Kedah
Penang
Perak
Selangor
Sungei Ujong
Trengganu
Maldive Islands
Muscat
Nicobar Islands
North Borneo
Pakistan
Perim
Persian Gulf Territories
Adu Dhabi
Ajmen
Dubai
Kalba
Muscat
Oman (including Gwadur)
Qatar
Has Al-Khaimah
Shargah
Umm U1 Quwain
Sarawak
Singapore
Sokotra
Channel Islands
Gibraltar
Great Britain
Iceland
Irish Republic
Isle of Man
Malta
Northern Ireland
AUSTRALIA AND THE PACIFIC
Australia and Tasmania
British New Guinea
British Solomon Islands
Cook Islands
Aitutaki
Niue
Rarotonga Penrynn Islands
Fiji
Kermadec Islands
New Zealand
Pacific Islands
Friendly Islands
Gilbert and Ellice Islands
Nauru
Tonga
Western Samoa
Papua
Pitcairn
Samoa
Santa Cruz
Union Islands
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ALGERIA (See France)
BASUTOLAND
Local I = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Import license system is based on South African control.
Export licenses are required in most cases.
BECHUANALAND PROTECTORATE
Local -L = U.S.$2.80.
Exchange control is based on regulations,in force in the United Kingdom.
Import license system is based on South African control.
Export licenses are required in most cases.
BELGIAN CONGO
At the end of 1950 the official rate for the United States dollar was Congo
Francs 50 to U.S.$l.
The purchase of exchange is subject to license by the Exchange Control. Imports
are also subject to license, but it is understood that the Authorities are lib-
eral in granting approval. The issuance of an import license carries with it an
authorization to purchase the exchange required to pay for the goods. Forward
exchange operations are permitted.
Travelers may.enter Belgian Congo with unlimited amounts of foreign currency,
letters of credit or travelers checks. Such holdings must be declared upon
entry and may be freely exported when leaving the country. The import or export
of local currency is subject to approval of the Exchange Authorities.
At the end of 1950 the official rate for the United States dollar was Egyptian
-L1 to U.S.$2.88.
All exchange transactions are governed by regulations. These include dealings
resulting from the movement of goods, securities or any transfer of funds abroad.
Subject to approval of the Exchange Control, non-residents may carry 4 types of
accounts, as follows: Non-resident, Blocked, Provisionally Blocked and
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Non-resident Export Accounts.
These accounts are designated according to the country of residence, unless the
country concerned is part of a monetary area, in which case they will be named
according to that area, e.g., sterling area accounts or American accounts.
Non-resident Accounts may be credited with transfers from accounts of other non-
residents of the same monetary area following the pattern of United Kingdom
regulations; any other transactions are subject to special or general licenses
under the regulations.
Certain debits may be passed over this type of account, such as those covering
payments to residents, including payments for exports to the monetary area of
which the account holder is resident, transfers to non-resident accounts of the
same monetary area and direct remittances in the currency of the monetary area
of which the account is designated non-resident.
Blocked Accounts are credited with any payment to a non-resident, which is not
remittable under the regulations. As the name implies, balances carried in such
accounts are restricted, but also following the pattern of United Kingdom regu-
lations, Blocked Account funds can be used for investment in certain Egyptian
securities.
The sale of securities purchased with funds from a Blocked Account may be
allowed, but the proceeds may only be recredited to a Blocked Account. The pro-
ceeds of any securities purchased with funds from such an account, which are
drawn or redeemed, cannot be remitted but must be recredited to a Blocked
Account. Interest on securities purchased with funds from a Blocked Account may
be freely remitted to a non-resident beneficiary or credited to a Non-resident
Account. An amount of up to &1000 may be released in any 1 year to the holder
of a Blocked Account in person to cover his expenses while staying in Egypt.
Provisionally Blocked Accounts are in a category special to some countries for
which profits and revenues are. provisionally non-transferable in view of the
scarcity of the currency of residence of the account holder, such as Canada,
Portugal and the United States. However, balances in these accounts may be used
for investment in securities in Egypt under the same conditions as indicated for
Blocked Accounts, travel expenses for the account holder while visiting Egypt,
as well as maintenance allowance for his close relatives in the country and for
maintenance allowances to the account holder in his country of residence upon
submission of evidence of need.
Non-Resident Export Accounts - These accounts, carried in Egyptian pounds, were
designed for use in connection with the settlement of goods imported from hard
currency countries and bear mention of the monetary area to which the owner
belongs.
Payments to the credit of these accounts were not possible heretofore except
upon the production of shipping documents in respect to the underlying goods,
and payment in advance on the basis of documentary credits were not allowed.
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However, a new regulation now permits credits to such an account, under a docu-
mentary credit, before the production of shipping documents. The formalities
to be completed and. the obligations and guarantees to be assumed in this con-
nection are outlined below:
1) Formalities - An Application for Exceptional Terms is to
be submitted to the Central Exchange Control for each
documentary credit separately, supported by proper docu-
mentary evidence, such as license, order note, etc.
2) Obligations - The bank in Egypt must see to it that not
more than a proportion of 80% of the amount approved for
payment in advance - and consequently credited to an
Export Account - is utilized or transferred to another
Export Account before the goods to be received are dis-
patched. The remaining 20% cannot be utilized or trans-
ferred to another Export Account except on production of
on board bills of lading.
3) Guarantees - The bank in Egypt must provide the Central
Exchange Control with a guarantee to the effect that in
case of non-dispatch of the merchandise within 6 months
from the date of approval of the payment in advance, it
undertakes to repatriate to Egypt, in United States dol-
lars at the official rate of exchange, the counter-value
of all amounts utilized or transferred in favor of
another Export Account to the extent of the 80% allowed
and referred to above.
Funds paid into these accounts are restricted as to use and are not eligible
for the settlement of Egyptian exports to the following: Argentina, Belgium,
Brazil, Bulgaria, Canada, France, Germany (the Western Zones), Hungary, Japan,
Poland, Portugal, Saudi Arabia, Switzerland, the United States and Yugoslavia.
However, they may be debited in cover of (a) transfers to Export Accounts of
soft currency countries, even if they are not part of the same monetary areas,
and (b) payments to residents in Egypt. Accounts of this nature do not bear
interest.
Imports from the United States are subject to license and the issuance of a
license entitles the applicant to allocation of the exchange involved, obtain-
able either as spot or forward. The bulk of imports is financed through bank-
ers commercial credits, but settlement is also made by documentary collections,
provided the import license is produced by the drawee. In case of need and
subject to authorization of the Export Permit Office, goods may be re-exported,
provided the counter-value has not been paid abroad.
All travelers entering or leaving Egypt may hold up to the equivalent of L20 in
bank notes in Egyptian pounds and/or foreign currency. If such holdings exceed
that figure, the total must be declared and registered with the Customs Author-
ities when entering the country. This forms the basis for authority subse-
quently to take out an amount not exceeding that which was declared upon entry.
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FRENCH EQUATORIAL AFRICA (See France)
FRENCH MANDATES (See France)
Camaroons
Togo
FRENCH MOROCCO
French Morocco is considered a part of the French Franc Currency Area. In a
legislative sense it is quite independent from Continental France, but its laws
in their main outline resemble those of the mother country. It follows from
this that foreign exchange regulations in French Morocco are patterned after
those in force in Continental France, Algeria and Tunisia. Foreign exchange
control is centered in the Office Marocain des Changes which is in turn subject
to the jurisdiction of the Caisse Centrale de la France d'Outre-Mer.
The French Moroccan franc is at par with the Continental franc. There is no
distinction between the two; in other words, the present value of the French
Moroccan franc in terms of United States dollars is around Fcs. 350 per U.S.$l.
Financial relations between French Morocco and countries outside the French
Franc Currency Area are governed by instructions issued through the Caisse
Centrale de la France d'Outre-Mer which body generally reissues the same notices
published by the Office des Changes, the foreign exchange control organization
for Continental France.
Accordingly, persons or corporate bodies resident in the United States are per-
mitted to open Free Franc Accounts on the books of an approved bank in French
Morocco. Such accounts can be freely fed only in one or two ways, namely, (1)
by the proceeds of dollars sold on the free market in Paris and (2) by transfers
from other Free Franc Accounts. Francs in Free Franc Accounts are freely recon-
vertible into dollars by purchasing them on the free market in Paris.
Foreign trade accounts between French Morocco and the United States can be set-
tled either in dollars if the commercial contracts are in that currency, or in
francs credited or debited to a Free Franc Account in the event that the commer-
cial. contracts are expressed in francs.
As indicated above, the United States dollar (as well as the Canadian dollar,
Portuguese escudo and Swiss.. Belgian and Djibouti franc) is traded in on the
free market in Paris by approved banks. All other currencies must be bought or
sold on the official market in Paris at rates which, in view of the parity
between the French Moroccan and French Continental franc, are the same in terms
of either of these monetary units.
American nationals residing in Morocco may import, under import licenses "with-
out payment", certain goods listed in the French-United States agreement of
December 31, 1949.
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There are no limitations placed on the amount of francs and franc credit instru-
ments which persons can take with them in traveling directly between France and
French Morocco.
Travelers coming into French Morocco from outside the French Franc Currency Area
are allowed to take in with them as many francs as they will, but in leaving
French Morocco for a destination outside the French Franc Currency Area, travel-
ers are not permitted to take out with them more than Fcs. 50,000 per person.
The same applies for travelers between France and French Morocco when in transit
by Spain or calling at Lisboa or Tangier.
Facilities accorded to American residents wishing to invest in the French Franc
Currency Area (reconversion into dollars for transfer abroad of the proceeds of
the liquidation or sale of the investments) are in force in French Morocco.
It should be mentioned that Tangier is considered as being outside the French
Franc Currency Area.
FRENCH SOMALILAND (See France)
FRENCH WEST AFRICA (See France)
GAMBIA
Local -b - U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom. With
the exception of some foodstuffs, all United Kingdom goods are admitted under
open general license. Non-sterling area imports require license.
Export licenses also required for many goods.
GOLD COAST
Local & = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom. Import
licenses are required for most goods, although many United Kingdom goods are
imported under open general license.
Export licenses are also required for some goods.
KENYA
Local 1 = U.S.$2.80.
\1
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Exchange control is based on regulations in force in the United Kingdom.
Import and export licensing system is based on United Kingdom procedure. Goods
from the Scheduled Territories not covered by the "suspended" (prohibited),
"programmed" or "scheduled" lists may be imported freely. Imports from
other sources are subject to license.
Licenses are required for some exports.
LIBERIA
The United States dollar is legal tender in Liberia.
No foreign exchange controls or restrictions are in force and with the excep-
tion of the export of gold which is handled by Bank of Monrovia Inc., as agents
under a government monopoly, no licenses are required for either exports or
imports.
Travelers may carry travel instruments of payment with them without restriction
as to amount, as well as any currencies whatsoever, and such holdings need not
be declared on entering or leaving the country.
MADAGASCAR (See France)
MAURITIUS
Rupee = U.S.$0.21.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required for some goods from the United Kingdom and for all
foreign goods. Other United Kingdom goods are free under open general
license.
Export licenses are required in some cases.
NIGERIA
Local -L = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are not required for most United Kingdom goods; imports from
other sources are subject to license.
Export licenses are also required for many goods.
NORTHERN RHODESIA
Local & = U.S.2.80.
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124
Exchange control is based on regulations in force in the United Kingdom.
Import licensing regulations are based on United Kingdom system, requiring
licenses for goods from all sources outside the Scheduled Territories, the
latter qualifying for open general license treatment.
Export licenses are required for certain goods.
NYASALAND PROTECTORATE
Local L = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Goods from the Scheduled Territories not covered by the "suspended" (prohib-
ited), "programmed" or "scheduled" lists may be imported freely. Imports
from other sources are subject to license.
Licenses are required for some exports.
PORTUGUESE EAST AFRICA (See Portugal)
Mozambique
PORTUGUESE WEST AFRICA (See Portugal)
Angola
REUNION ISLAND (See France)
ST. HELENA & ASCENSION
& Stg. = U.S.42.8O.
Exchange control is based on regulations in force in the United Kingdom.
Import and export licensing ,regulations are based on United Kingdom system,
i.e., some goods under open general license and some others including United
Kingdom under license.
SIERRA LEONE
Local -L = U.S. 2.8O.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required for some United Kingdom goods and all other imports.
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SOMALILAND PROTECTORATE
Local L = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Import and export licensing regulations are based on United Kingdom system; all
imports are subject to license.
SOUTH WEST AFRICA
Local L = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Licensing system is similar to that of Union of South Africa.
SOUTHERN RHODESIA
Local & = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required only for goods from all hard currency sources.
SUDAN (ANGLO-EGYPTIAN)
Currency is the same as that of Egypt.
There is an open general license for imports from the Scheduled Territories and
certain other sources (excluding Aden), subject to certain exceptions. All
other imports require licenses.
Export licenses are required in certain cases.
SWAZILAND
Local -L = U.S.62.80.
Exchange control is based on regulations in force in the United Kingdom.
Import license system is based on South African Control.
Export licenses are required in most cases.
TANGANYIKA TERRITORY
Local -L = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Goods from the Scheduled Territories not covered by the "suspended" (prohibited),
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"programmed" or "scheduled" lists may be imported freely. Imports from other
sources are subject to license.
Licenses are required for some exports.
TANGIER
There are no restrictions or regulations in Tangier affecting foreign exchange
operations or the movement of merchandise into or out of the country. Moreover,
there are no restrictions as to the amount or type of currency which may be
brought in, and it is not necessary for a traveler to declare his holdings.
The Spanish peseta and the Moroccan franc circulate freely in Tangier. At the
end of 1950, the peseta and Moroccan franc were quoted as follows:
Pesetas 52.85 to U.S.$1
Moroccan Francs 386 to U.S.$1
TUNISIA (See France)
UGANDA PROTECTORATE
Local -L = U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Goods from the Scheduled Territories not covered by the "suspended" (prohib-
ited), "programmed" or "scheduled" lists may be imported freely. Imports
from other sources are subject to license.
Licenses are required for some exports.
UNION OF SOUTH AFRICA
At the end of 1950 the official exchange rate was South African &1 to
U.S.$2.78 3/8 - $2.80 1/8.
Exchange transactions are subject to Emergency Finance Regulations which are
administered by the South African Reserve Bank. Forward exchange facilities are
available for the payment of all imports,, provided the purchaser has entered
into a fixed exchange commitment and the related goods are covered by an import
permit. The period of the forward contract is limited to the period of validity
of the permit and may not in any case exceed six months. Moreover, new forward
contracts may not be entered into nor can existing contracts be extended once
the goods have been shipped to the Union.
Imports into the Union with few exceptions are subject to permits issued by the
Director of Imports and Exports. Imports from hard currency countries during
the first half of 1951 will have to be covered by "general" permits (styled
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Universal Permits during the year 1950). Until such permits are available, let-
ters of authority prefixed "L.A.G." are being issued to enable importers to
place orders. Such letters will be replaced, however, by general permits at
which time the former will cease to have any value. Import permits issued in
respect to the first half of the year are to be available until September 30,
1951. Credits may be established on the strength of either letters of authority
or general permits but must stipulate that the shipment must be effected not
earlier than January 1, 1951, nor later than June 30, 1951. Credits may never-
theless expire July 31, 1951 and hard currency exchange (United States dollars,
for example) will be made available to holders of general permits up to that
date. The importation of hard currency goods from soft currency countries
against the so-called "restricted" import permits requires the approval of the
Control, which is granted only in most exceptional circumstances. Re-exports
from the Union of goods originating in hard currency countries may now be made
to Northern and Southern Rhodesia against import licenses issued in the terri-
tory concerned specifying the hard currency country of origin. Goods imported
into the country may not be returned to suppliers, however, without approval of
the Control. Optional bills of lading and shipments via a port in a country
other than the country of destination are not permissible.
Securities acquired with funds remitted from the United States since October 1,
1948, may be negotiated freely, and the proceeds may be returned to the United
States without restriction.
Control over dealings in other securities have been relaxed to the extent that
non-residents may now switch their holdings into any security quoted on a reg-
istered stock exchange in the Union; in addition, non-residents may now sell
other sterling area securities, either locally or in London, and purchase Union
securities with the proceeds. The previous requirement that switches were to
be confined to approved securities has been dispensed with.
Transfer of the income of subsidiaries or affiliates of American companies is
limited to current dividends declared or profits actually earned in the Union,
as disclosed by audited statements. This is in accordance with a general ruling
applying to all principals or investors domiciled in countries outside the
Scheduled Territories. Remittances of profits earned outside the Union are sub-
ject to Control approval, and this applies particularly to profits on exports of
goods manufactured in the country under license from and for account of non-
sterling area principals.
Union residents genuinely emigrating to the United States require the Control's
approval in each case before any capital transfers are permissible; thereafter,
income accruing to them from Union investments may at present be transferred
within a.limit of L1,000 per annum.
The remittance of royalties in terms'of bona fide agreements entered into prior
to January 1, 1949, is permissible but the Control's prior approval is required
before payments under agreements subsequent to that date may be remitted.
Legacies or distributions from intestate estates may be transferred to hard
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currency countries to the extent of X1,000 per beneficiary from the estate of a
person who was a permanent resident of the Union.
Payments for services rendered would normally require the Control's sanction,
but selling commission on exports nay be remitted in the currency in which pay-
ment was received to an agent in the country to which the goods were exported
at a rate regarded as reasonable in the particular trade.
ZANZIBAR PROTECTORATE
Local -L e U.S.$2.80.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required for certain goods, known as "programmed imports"
and there are also prohibited imports constituting "suspended" merchandise.
Goods from the United Kingdom and Scheduled Territories not so affected may
be imported freely under open general license. Imports from other sources
are subject to license.
Export licenses are required in some cases.
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NEAR EAST
Local Rupee = U.S.30.21.
Exchange control is based on regulations in force in the United Kingdom.
Import and export licensing regulations are based on the United Kingdom system,
import licenses being required for some, but not for most, United Kingdom
goods which are admitted under open general license.
The currency unit is the Iranian Rial and the official exchange rate for the
United States dollar at the end of 1950 was Rials 32.50 to U.S.$1.
The Exchange Control Committee at its discretion will issue licenses entitling
the holder to purchase exchange for non-commercial uses which include expenses
of Iranian students studying abroad and expenses of persons going abroad for
medical treatment.
Exchange available for imports is derived from the repatriation of proceeds of
payment in foreign funds which the Iranian exporters receive for goods sold
abroad. Within a limited time an Iranian exporter must sell the foreign
exchange to an authorized bank or use it to pay for imports. If he decides not
to purchase goods abroad, he is able to dispose of his exchange by selling it
as stated above and he receives a premium of Rials 16.25 to the dollar in addi-
tion to the equivalent in local currency at the official buying rate of Rials
32 to the dollar. The total the exporter receives under such circumstances
would be Rials 48.25 and if an importer desires to purchase dollar goods, he
would pay for them on the same basis except for the added small difference
between the official buying and selling rate or Rials 0.50 to the dollar. This
premium of Rials 16.25 is paid by the importer for permitted goods classified
as non-essential. For certain goods on the so-called essential list, the
Authorities permit the sale of exchange at the official rate of Rials 32.50
plus a premium of only Rials 7.50, according to the latest quotation. As in
the case of the basic rate, the premium rates are fixed by government decree.
These premium rates are understood to be of a permanent nature and not affected
by supply and demand. However, they may be altered by government decree without
prior notice.
Imports are subject to control, but the regulations governing certain commodi-
ties and merchandise have been relaxed recently to the point where most imports
are not subject to the customary quota reservation for a period up to March 20,
1951. This was done by government decree dated December 10, 1950. The list of
goods affected by the decree is rather extensive, but for goods not so listed,
the Iranian importer must obtain the quota reservation before placing an order.
It is understood that the quota reservation is the document of importance, but
in addition an import license is required for all goods. However, the import
license is generally issued without difficulty after the goods have arrived.
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Nevertheless, it has been emphasized that the license is not issued unless the
shipping documents are in order. The requirement to include the date and number
of the quota reservation in documents sent to Iran for collection has been
rescinded.
IRAQ
The official rate of the currency unit at the end of 1950 was Dinar 1 per
U.S .I2.80.
All sales of foreign exchange require approval of the Exchange Control Authori-
ties, but within certain limits licensed banks are authorized to grant approval
on behalf of the Control. As a general rule, however, any clean payment and
every transfer of capital requires special approval of the Control.
Imports from the United States must be licensed and while the issuance of an
import license does not at present officially engage the Exchange Control, in
practice the necessary exchange is normally granted. Imports are financed
largely through bankers credits, although shipments are made upon a documentary
draft basis. In the latter case it should be kept in mind that the collecting
bank cannot deliver documents unless an import license has been obtained and
the exchange permit has been granted by the Exchange Control. Provided goods
have not been cleared through Customs, they may be re-exported in case of need
when a license has been obtained; in connection with such re-exportation no
expenses are incurred except those for normal demurrage and handling charges.
A traveler may carry letters of credit and travelers checks into Iraq without
limitation, but the regulations forbid bringing in foreign or local notes hav-
ing a value in excess of Dinar 15. A traveler may declare his holdings when
entering the country in order to avoid difficulties upon his departure.
ISRAEL
At the end of 1950 the official rate of exchange was Israeli -b per U.S.$2.80.
All transactions in foreign exchange without exception are subject to approval
of the Controller of Foreign Exchange. The regulations with respect to the
transfer of income or the proceeds from the redemption of securities and other
capital assets of non-residents are similar to those in force in the United..;
Kingdom. Accounts in the name of non-residents can be opened only with the
approval of the Exchange Authorities and such approval is also required for all
operations over the accounts.
Licenses are required for all exports and imports, and in the case of imports
the issuance of an import license carries with it an undertaking on the part: of
the Authorities to allocate the necessary exchange at settlement date. General-
ly, imports from the United States are financed by documentary bank credits, and
the importer must submit an import license and exchange permit to his banker
upon applying for the establishment of a credit. With respect to the
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presentation of United States dollar documentary collections, the acceptance of
a provisional deposit (equivalent in local currency) is mandatory. The re-
export of merchandise is subject to approval of the Authorities, but it is
usually granted in bona fide cases.
A traveler may bring only Israeli L25 in local currency into the country, but
may carry with him United States currency, travelers checks, letters of credit,
etc., without limitation. These holdings must be declared upon entry, and the
declaration forms the basis for freely exporting them when departing, but any
difference in the amount declared must be evidenced by official receipts of
sales of the foreign currency to authorized dealers.
JORDAN, HASHEMITE KINGDOM OF THE
The currency unit is the Jordan Dinar which replaced the Palestine pound. The
latter ceased to be legal tender on September 30, 1950, but Palestine coin
remains legal tender until further notice. The official rate of exchange is
Dinar 1 per U.S.$2.80.
All sales of exchange are subject to approval of both the local and United
Kingdom Exchange Control. No forward operations are permitted. All exchange
acquired by residents must be surrendered to an authorized dealer.
The opening of all bank accounts in favor of non-residents is subject to approv-
al of the Exchange Authorities. Transfers of funds from such accounts may be
made without approval only to resident accounts in the country or to accounts of
the same residential status. All other debits must be officially approved. The
only permitted credits are those from accounts of the same classification; all
others require approval of the Authorities.
Exports and imports are subject to license and as a first step preliminary to
,opening a credit, an import license must be obtained from the Import Committee.
Once the license is acquired, the buyer of the goods may apply to the Controller
of Exchange for the foreign currency permit. Documentary credits for benefici-
aries in the Scheduled Territories are opened direct without the authorization
of the Exchange Control in the United Kingdom. All other documentary credits,
that is, opened in favor of beneficiaries outside the Scheduled Territories,
require the approval of the United Kingdom Exchange Control.
When imports are financed on a documentary collection basis, it is essential
that the importer secure the import license before the arrival of the goods.
Subsequently and in order to effect settlement, application is made to the. Con-
troller of Exchange for the necessary exchange permit which is normally auto-
matically granted on the strength of the import permit. Such transactions are
subject to the approval of the Exchange Control in the United Kingdom, unless
the beneficiary of the payment resides in the Scheduled Territories. Should
goods arrive in the country without the issuance of an import license, entry may
be refused and the importer is liable to a fine. In connection with a United
States dollar transaction the fine at present would amount to 50% of the invoice
value of the goods.
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Travelers are permitted to bring United States currency and credit instruments
into the country without limitation. These holdings are declared upon entry
and none in excess of the declared holdings may be taken out upon leaving the
country.
LEBANON
At the end of 1950 the official rates for the United States dollar were:
Buying: Lebanese Piastres 219
Selling: Lebanese Piastres 221
There is also a free market and at the end of 1950 the rate of exchange was
about Piastres 377 to U.S.$1. A*Foreign Exchange Stabilization Fund established
in 1949 is authorized to buy and sell all kinds of foreign exchange in the free
market for the purpose of stabilizing rates.
With the exception of French francs and the foreign exchange acquired through
settlement for exports (which may be freely used by the exporter), as well as
exchange of certain countries not appearing in the official list of the Exchange
Office, all exchange originating from abroad, such as checks, payment orders,
transfers, credits and coupons for which credit is passed to a free account, is
subject to sale of 10% of its value to the Exchange Office at the official rate.
The balance may be held without conversion or sold by the owner in the free mar-
ket. Foreign currencies not listed by the Exchange Office, and bank notes and
coin of any country may be brought in and sold without restriction. Foreign
exchange purchased in the free market may be transferred abroad without limita-
tion. The foreign currencies named below are those which comprise the official
list of exchange quoted by the Exchange Office:
Belgian franc French franc Swiss franc
Canadian dollar Irakian dinar United States dollar
Egyptian pound Pound sterling
A license is required for all import operations whatever they may be. When the
importer files an application with the Exchange Board for foreign exchange at
the official rate, he must have the import license in his possession. On the
other hand, if the importer purchases the exchange in the free market, he is
entitled to file application for license only upon arrival of the merchandise at
the Customs.
Accounts for non-residents may be opened and operated without restriction.
PERSIAN GULF SHEIKDOMS
The responsibility for exchange control in the following Skeikdoms has recently
been transferred to H.M. Government's Political Resident there:
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Bahrein Adu Dhabi Ras al-Khaimah Qatar
Kuwait Shargah Umm ul Quwain Muscat
Dubai Ajman Kalba Oman (including Gwadur)
Banking facilities are established at Bahrein, Kuwait, Dubai and Muscat and may
be available at the other places by arrangement. The currency in circulation
throughout the territory is the Rupee with a current exchange rate of Rs.13.26
to Ll, or approximately U.S.$0.21115 per rupee (calculated at U.S.$2.80 1/8 for
sterling).
There is no system of import licensing in the Sheikdoms nor, in the normal
sense, any question of local control approval. Instead, all applications to
make payments outside the Scheduled Territories out of official exchange
resources must be supported by a numbered Letter of Recommendation issued by or
on behalf of the Political Resident. Certain authorities in connection with
the approval in London of such applications have been given to the Eastern Bank
Ltd. and the British'Bank of Iran and the Middle East, their branches being the
only banks operating in the territories. Applications submitted to other United
Kingdom banks should be passed to the Bank of England for approval.
SAUDI ARABIA
The currency unit is the Saudi Riyal which was subject to fairly wide fluctua-
tion during the year 1950. For dollar exchange the rates varied between Riyals
3 1/2 and 4 3/4 to U.S.$1.
At the present time there are no restrictions on the transfer of funds abroad.
The currency is the Syrian Pound and the official exchange rate for the United
States dollar is fixed at Syrian Pounds 2.19 to U.S.$l. There is also a free
market in which exchange rates are subject to wide fluctuation. The most recent
quotation for the dollar in this market was about Syrian Pounds 3.50 to U.S.1.
Export of capital from Syria by transfer of any foreign currency is under con-
trol of the Exchange Board to which such supporting evidence as the Board may
demand must be submitted with the application for official exchange. Approved
banks, which are designated yearly by the Board, are authorized to sell the
official exchange on the strength of a permit issued by the Exchange Board.
The opening of accounts for non-residents is also subject to approval of the
Exchange Board and if permit is granted, the account must be carried at an
approved or authorized bank.
All debits to such accounts must be licensed except those involving the follow-
ing:
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1) for payment of merchandise purchased in Syria or for
debts to residents,
2) for the purchase of foreign currency if approved by the
Exchange Board, and
3) for withdrawals during the sojourn of the owner in
Syria.
Credit entries in accounts of non-residents may not be passed without license
except those covering
1) payment of goods imported to Syria under license which
provides for this mode of payment,
2) payment of debts of residents contracted prior to
December 3, 1938, or if since that date subject to
licensing by the Exchange Board,
3) the equivalent of foreign exchange sold to the Exchange
Board, and
4) deposits by the account owner himself.
The opening of security accounts for non-residents is also subject to approval
,of the Exchange Board.
All exports and imports must be licensed, and in the case of imports official
exchange to pay for the goods can be purchased only with a permit issued by the
Exchange Board in accordance with the available supply. The validity of a
license covering imports from the United States is 4 months, but extensions may
be granted by the Authorities upon proper justification. The exporter may use
free market exchange to pay for imports or cede it to other residents who can
use it only for import of goods designated by the Authorities. An import
license is also required when free market exchange is used to pay for the mer-
chandise.
Travelers, whether resident or non-resident, upon entering or leaving Syria
must declare at Customs such capital assets as are carried with them. Travel-
ers are not authorized to import in the form of bank notes or coin any sums in
excess of the limit fixed by the Exchange Board. All foreign currency or other
assets declared at point of entry are noted in the passport and if when leaving
the country, the traveler's holdings are in excess of that declared when enter-
ing, he must produce a permit from the Exchange Board. If there is a shortage,
it must be supported by evidence of sale to an approved bank.
TURKEY
At the end of 1950 the official rate for the United States dollar was Turkish
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Pounds 2.80 per U.S.$l.
The purchase of United States dollars against local currency is subject to
approval of the Exchange Control Office. An exchange permit is generally issued
by the Authorities for payments arising from services, such as commissions,
freights, insurance, etc., in connection with normal business transactions.
Income from or the proceeds from the redemption of foreign-owned securities held
by Turkish banks, proceeds of the sales of such securities or of foreign-owned
real estate or other capital assets are paid to the Central Bank of Turkey for
credit to a blocked account until approval is granted by the Authorities to
transfer the funds abroad.
Accounts may be opened for non-residents in local currency, and balances therein
may be used without permission except in the case of conversion of funds into
United States dollars as indicated above.
In order to import goods into the country, the Turkish importer must apply in
advance to the Central Bank of Turkey for the allocation of the required
exchange. Once this allocation has been granted, the importer is at liberty to
request his bank to establish a documentary letter of credit to finance the
shipment. If paid for against documentary draft, the relative documents are
delivered usually on payment accompanied by the Foreign Exchange Allocation
Certificate issued by the Central Bank of Turkey. Documents may also be deliv-
ered to the drawee against an equivalent deposit in local currency if the
Turkish bank is so authorized by the remitting bank. The deposit, however, is
held in a blocked account in favor of the exporter until the Allocation Certif-
icate is delivered to the collecting bank by the drawee. The system of issuing
provisional import licenses of 45 days duration subject to proof of issuance of
United States export license has been discontinued.
Non-resident travelers upon entering the country must declare the amount of for-
eign currency in their possession in bank notes or travel instruments. On leav-
ing the country, they are permitted to take out the unused balance.
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AND
PACIFIC
At the end of 1950 the official exchange quotations by Australian banks were as
follows:
1 Australian Pound could be purchased for U.S.$2.2425
1 Australian Pound sold would produce U.S.$2.2275
Foreign exchange dealings are subject to license, and the control is adminis-
tered by the Commonwealth Bank of Australia which is the central bank. Commer-
cial banks act as agents for the Exchange Control, and it is a basic condition
that all dealings are confined to banks. Forward operations are permitted only
for genuine trade transactions where a definite exchange risk is being carried
by the Australian exporter or importer. Foreign exchange acquired by residents
must be sold to a bank within stipulated periods.
Accounts of non-resident banks may be used freely for effecting approved pay-
ments to and from the country in which the non-resident bank is located.
Exchange control approval is necessary, however, for all entries over accounts
of non-residents other than banks.
Applications for capital transfers to the United States arising from the sale
of securities, real estate or other capital assets, although not normally
approved, will receive special consideration according to individual merits.
Applications for foreign exchange covering any type of current income, such as
dividends, profits, interest, etc., due to persons resident in the United
States, usually receive favorable consideration. Approval is normally granted
for remittance of legacies to permanent residents of the United States up to a
limit of the dollar equivalent of Pounds Sterling 500, provided (1) the legacy
is from the estate of a person who prior to his death was a permanent resident
of Australia and (2) the funds have recently become available for distribution.
Provided the relative agreements have been submitted to and approved by the
Exchange Control, approval is normally given to transfer royalties or funds
representing payment for services.
Import and export transactions with the United States must be licensed. Appli-
cations for import licenses for goods to be shipped from dollar areas are sub-
ject to rigid scrutiny, and generally the issuance of licenses is being limited
to,goods considered essential to the Australian economy. The issuance of an
import license does not necessarily imply that the exchange to pay for the
import will be forthcoming, but in view of the present policy of restricting
imports to actual needs of the country's economy, it seems probable that
exchange will be allocated for any imports covered by a license.
Travelers may bring in Australian currency notes and actual United States cur-
rency without limitation. The holdings are declared upon entry, and a copy of
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the declaration is given to the visitor to serve as authority for the export of
funds upon his departure. However, without formal approval the traveler may
not take out local currency notes and coin in excess of Australian L1O.
The unit of currency is the Rupee which has a current value of approximately
U.S.$0.21. All. dealings in foreign exchange, except in cases where the import
or export license has been lodged with a bank authorized to deal in foreign
exchange, require the prior approval of the Exchange Controller.
A system of import licensing is in force similar to that followed in India.
Some items are free of restriction under open general licenses, but all imports
from the United States require an import license. Most imports into Burma are
financed by the usual bankers commercial letters of credit and this is the
recommended procedure for shipments to this area. Merchandise once landed is
generally not allowed to be re-exported.
All exports from Burma are controlled by the license system. Exporters are not
permitted to retain the foreign currency proceeds of shipments.
Subject to the approval of the Authorities, non-residents may maintain accounts
with banks in Burma. Except in isolated cases, operations over such accounts
require the prior approval of the Authorities.
Travelers entering Burma may take with them United States dollar funds in the
form of travelers checks or travelers letters of credit without limitation.
CEYLON
The unit of currency is the Rupee which has a current value of about U.S.$0.21.
All remittances in foreign currency require the prior approval of the Ceylon
Exchange Control.
No goods may be imported from the United States without an import license and
if landed without a license are liable to confiscation. Import licenses for
goods in respect of shipments from the United States are very difficult to
obtain. For import control purposes articles have been divided into three cate-
gories, as follows:
1) Those which are prohibited from any country whatsoever.
2) Those which are prohibited if they originate from Canada
or any territory not forming part of the British Empire.
Items originating in Empire territories other than
Canada are regulated by import licenses.
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3) Those which are permitted subject to import license,
irrespective of the country of origin.
For all goods requiring import licenses and not covered by an open general
license, an individual import license is necessary and must be obtained before
an order is placed. Import licenses are usually stamped on indents in quadru-
plicate, two of which are returned to the importer: one to be sent to the
supplier and the other for production to the Customs on arrival of the goods.
The issuance of an import license carries with it the right of the importer to
apply to an approved bank for the relative foreign exchange. It should be
noted that although articles may appear on the exempt list, the prior approval
of the Controller of Exchange is required for their importation if they are of
foreign or Canadian origin. Failure to have this approval may result in the
necessary foreign exchange being refused. Recent advices indicate that all
imports into Ceylon are financed by bankers commercial letters of credit.
In general, export licenses are required for all commodities, although there
are a few for which no license is required. Exporters are not permitted to
retain the foreign currency proceeds of their shipments. The proceeds must be
turned over to the Authorities within 6 months of export.
Non-residents may maintain bank accounts in Ceylon subject to approval of the
Controller of Exchange. Payments from such accounts to residents in Ceylon for
amounts not exceeding Rs.500 and deposits, representing dividends and interest
on securities, may be made without the approval of the Authorities. However,
all other transactions require the prior approval of the Ceylon Exchange Con-
trol as is the 3ase in remitting the proceeds arising from the sale of foreign-
owned assets.
There is no restriction on the amount of foreign funds a traveler may carry
with him when entering Ceylon in the form of travelers checks, travelers let-
ters of credit or United States currency. However, holdings of currency notes
and coins should be declared to the Customs upon entry, otherwise difficulty
may be experienced when leaving the country.
ETABLISSEMENTS FRANCAIS DE L'INDE (Pondicherry - See France)
ETABLISSEMENTS FRANCAIS DE L'OCEANIE (Tahiti - See France)
FIJI
Fiji L . U.S.$2.535.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required for all goods from countries outside the Scheduled
Territories and in a few cases, according to national needs, for goods from
countries included in the Scheduled Territories. Otherwise, a system of
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open general license for some goods from Scheduled Territories is in force.
Export licenses are also required.
HONGKONG
The unit of currency is the Hongkong Dollar, based on sterling at a rate which
may fluctuate between 1 shilling 3 1/32 pence and 1 shilling 2 27/32 pence
which, at the present United States dollar-sterling cross rate, gives a value
of about U.S.$0.175. More important than the official rate, so far as United
States dollars are concerned, is the rate quoted in the open market which oper-
ates quite freely and legally. During 1950 open market rates were quoted as
high as HK$6.65 and as low as HKK5.96 to U.S.$l and at the year end the rate
was HKX6. Aside from the open market in United States dollars there is little
interest in other currencies.
Hongkong's Exchange Control is based on the United Kingdom Exchange Control
with certain slight variations to permit the continuance of the entrepot trade
which accounts for about 90% of the total. In general, the Authorities permit
imports freely, provided importers obtain their own exchange; little official
United States currency exchange is given, although bona fide American companies
with head offices in the United States are given exchange for profits and divi-
dends, shipping companies operating American vessels receive official exchange
for freight earnings from this port and American film companies get a certain
amount of official exchange on a graduated basis, depending upon the spread
between the official and the open market rate for dollars. As from June, 1950,
all financial transactions for any amount between Hongkong and the Scheduled
Territories have required the prior approval of the Exchange Control, unless
the bank is satisfied that they are in respect of:
a) Bona fide imports into Hongkong from other Scheduled
Territories or bona fide exports from Hongkong to other
Scheduled Territories.
b) Dividends and interest payments.
c) Banks may pass sundry small bank charges without refer-
ence. Banks are required to obtain permission from the
Exchange Control to open accounts for non-residents.
Regulations covering the conduct of such accounts are
similar to those applied by the Bank of England.
With the exception of a small list of items, either under world allocation or
in short supply in Hongkong and the British Empire, imports are under general
license. Other than on spirits, tobacco, pharmaceutical and American motor
cars, there is no import duty. Only a few items, such as narcotics, gold and
firearms are prohibited. Exports are relatively free with the exception of a
few items which may be prohibited for reasons of short supply or political
considerations. Exporters to United States dollar areas are permitted to sell
the proceeds of their export bills in the open market with few exceptions.
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With regard to the majority of exports of China origin to the United States,
its possessions and the Philippines, exporters are ordinarily permitted to
retain all the foreign currency proceeds. Important exceptions are woodoil on
which the Control insists on a surrender of 15%; on tin, lead and silver 25%
must be surrendered. All exports originating in other Scheduled Territories or
in any country other than China and Korea can be re-exported, provided only
that all the foreign currency is surrendered. In this way Hongkong helps to
maintain exchange and export controls in other parts of the sterling group.
Exchange and import regulations are subject to change and it is recommended
that exporters insist upon irrevocable confirmed letters of credit to cover
their shipments.
The Rupee is the unit of currency and it has a value of approximately U.S.$0.21.
The Government through the Reserve Bank of India exercises a strict exchange
control, based on United Kingdom procedure. Subject to certain restrictions,
Exchange Banks can settle forward exchange contracts with customers. The
Reserve Bank of India is the control agency for the Government relative to
exchange.
Remittances from India
1) Remittances covering savings, insurance premia, support
of families abroad, etc., by foreign individuals resi-
dent in India, have been allowed by the Control in the
currency of the national's country in amounts considered
reasonable by the Control which bases the amounts
granted on the individual's income in India.
2) The Control has permitted the remittance of dividends of
locally incorporated companies to foreign holding cor-
porations. However, Indian law limits dividends of pub-
lic limited liability companies (no limitation, however,
for private limited liability companies at present) to
the average annual amount during the two-year period
commencing April 1, 1946, to March 31, 1948, or 6% of
paid-up capital, whichever is higher.
3) Branches of foreign firms have been allowed to remit
profits.
4) The Control in considering remittances of dividends and
interest on shares and securities in India held by pri-
vate individuals resident outside the country considers
the nationality of the owner, the length of residence
outside India and the reasons for residing abroad.
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5) Remittances of a capital nature to purchase securities,
properties, annuities, etc., are prohibited. Similarly,
applications for transfers of a capital nature, such as
the sale proceeds of shares, property, etc., will not
ordinarily be allowed, even to foreign nationals resi-
dent in their own countries.
Prior approval of the Control is required for the five types of remittances
listed above.
Remittances to India from abroad
1) No prior approval to make payment is required by the
Control for rupee or other sterling area currency items
if covering (a) exports from India, (b) miscellaneous
items below Rs.20,000 or & 1,500 and equivalent (unless
purpose is for capital investment) or (c) interbank
transfers in rupees between two bank accounts of the
same monetary area.
Prior approval is required for (a) miscellaneous items
over Rs.20,000 or L 1,500 and equivalent and (b) for
purposes of investment in India. It is recommended that
for rupee and sterling currencies the remitter inform
the paying bank as to the purpose of payment.
2) For incoming payments in other foreign currencies (out-
side the Scheduled Territories) no prior approval is
necessary to effect payment, but the Control requires
the Exchange Banks to convert the amounts into local
currency. If a resident foreigner wishes to receive
payment in foreign currency, he must apply to the Con-
trol.
IMPORT REGULATIONS
All imports must be covered by individual import license or open general
license. Both types automatically entitle the importer to purchase the rela-
tive exchange. No prior approval by the Control is necessary for remitting
payment if the collecting bank in India has the shipping documents except in
the following cases:
1) Shipments made under individual licenses marked "CG"
(i.e., Capital Goods), "HEP" (i.e., Heavy Electrical
Plant) or "CGPW" (i.e., Capital Goods Post War). How-
ever, banks before opening import letters of credit
against such licenses obtain the Control's approval,
thereby obviating the need of prior approval for remit-
tance when the documents arrive.
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2) In cases, either under individual or open general
licenses, wherein the exporter is located in one country
(other than the United Kingdom) and the goods are
shipped from or originate in another country.
3) Where remittances are to be made in any other currency
than the currency of the exporting country. (Sterling
payments are, however, permitted both to soft and hard
currency areas.)
Advance payments against import licenses is refused by the Control. Exceptions
are sometimes made where essential capital goods (more particularly heavy
machinery) are involved, and the foreign manufacturer will not start production
without an advance payment of part of the cost.
Open general license is applicable only to shipments from the soft currency
area, and the number of items is severely restricted. For goods not included
thereunder the importer must apply for individual licenses which are seldom
granted for exports from the hard currency area, unless the goods are not avail-
able elsewhere and are considered essential for India's economy. The prohibited
list of merchandise is extensive and includes grain and flour, although for
these two commodities the Government itself does the foreign purchasing.
The situation is most unsatisfactory in cases where goods are imported without a
license or without an adequate license or are on the prohibited list. There is
danger of confiscation and while in theory the merchandise can be re-exported,
in practice this is difficult if not impossible. In some cases, more particu-
larly for, goods from the soft currency area, the Customs allow importation
against payment of very heavy fines, in which case the Control may or may not
grant the exchange. If the goods are not cleared promptly, the port authorities
may sell the merchandise to cover duties and charges. Consequently, the best
assurance to exporters abroad of avoiding difficulty is to insist on the estab-
lishment of irrevocable letters of credit.,
EXPORT REGULATIONS
The export controls are strict and subject to change from time to time. At
present only a few important products can be exported freely, such as cashew
nuts, coir products and cotton waste. Most commodities are subject to licens-
ing and quota arrangements, and the regulations often favor shipments to hard
currency areas. Exports of certain commodities are prohibited, such as the bet-
ter grades of raw cotton.
NON-RESIDENT ACCOUNTS
Prior approval of the Control is necessary to open a non-resident account, and
in practice it is found that the Control requires prior approval of virtually
all entries over the account. In cases wherein part of the signers on an
account are non-resident and the others are resident, the Control treats the
account as non-resident only as regards the operation of the signers abroad.
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NOTE: Even resident accounts of foreign nationals are
subject to certain restrictions by the Control.
TRAVEL FUNDS
Travelers coming to India are strongly advised to bring an ample supply of trav-
elers checks. These are preferable to travelers letters of credit if a person
is traveling extensively in the interior. Travelers have no difficulty in
bringing travelers checks and travelers letters of credit into and out of India.
When instructions are received from abroad by a bank in India to issue travelers
checks or travelers letters of credit to a traveler, the delivery can be
effected with nominal control formalities if the person is not an Indian nation-
al.
Currency notes must be declared on a Customs form when a traveler enters the
country, and when he sells the notes, he should have the relative authorized
exchange dealers endorse the sale on the form which is to be presented to the
Authorities upon leaving the country. Recently the Authorities have allowed
American travelers to bring in fairly substantial amounts of United States cur-
rency notes, but as regulations vary from time to time, we recommend that trav-
elers restrict the amount of currency notes to a minimum. Regarding sterling
notes and the notes of sterling currency countries, travelers at present can
bring in only L5 or the equivalent. Travelers can sell foreign funds only to
authorized dealers, i.e., Exchange Banks and specially licensed money changers.
Hotels are not authorized dealers nor are they allowed to accept foreign funds
in payment of hotel bills.
INDOCHINA
The unit of currency is the Indochina Piaster. Foreign exchange obtained in the
free market may be used for all import transactions involving the following cur-
rencies: Belgian, Djibouti and Swiss francs, Canadian and United States dollars
and Portuguese escudos. These are the currencies traded in on the free market
in Paris.
In Indochina the Paris free market actually represents the official rate. On
the basis of the present rate of Fr. Frs. 350 equals U.S.$l and Fr. Frs. 17
equals Piaster 1, the resultant local rate is Piasters 20.588 equals U.S.$l.
All transactions in foreign currency are subject to the prior approval of the
Exchange Office of Indochina.
In general the import and export licensing system in Indochina is based on the
-;procedure followed in Continental France.
INDONESIA. REPUBLIC OF
The unit of currency is the Guilder and the official rate is Guilders 3.80 to
U.S.$1.
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1"
The multiple system of exchange rates is employed in Indonesia on all export and
import items. The foreign currency proceeds of all exports from Indonesia must
be surrendered to an Authorized Exchange Bank for which the exporter receives
the official rate plus 50% (in special cases 100%) in negotiable certificates.
These certificates are valid for 30 days and may be disposed of at an Authorized
Bank. The present buying rate for such certificates is Guilders 1.99 per guild-
er certificate. In paying for imports, in addition to the guilder amount calcu-
lated at the official rate, the importer must produce certificates, for the
equivalent in guilders computed at the Authorized Bankts selling rate, for 100%
(in special cases 50%) of the exchange required. Certificates for this purpose
are presently selling at Guilders 2.00 per guilder certificate. Applying the
foregoing, the effective rate in January, 1951, for exports is U.S.$1 = Guilders
7.56 and for imports U.S.$1 = Guilders 11.43.
Imports are under strict governmental regulation, and a purchase license must be
obtained before an importer may apply for the necessary foreign exchange liceng e.
The method of financing imports is principally left to arrangements agreeable to
the importer and exporter with the one restriction that payment may be effected'
only after the financing bank in Indonesia, or its correspondent abroad, has
received concrete evidence that the merchandise described in the relative for-
eign exchange license has been dispatched to Indonesia. Because of this restric-
tion it is the customary and recommended practice to have all shipments financed
by the usual irrevocable letter of credit. Shipments may be made without a let-
ter of credit, but it should be borne in mind that the importer must obtain an
exchange license before he can apply for the necessary foreign exchange. We
recommend that this be ascertained before making shipment.
All exports to the United States must be financed under irrevocable documentary
letters of credit providing for drafts to be drawn thereunder with a usance not
to exceed 7 days sight. Exports are not allowed to be invoiced in guilders
(without special license of the Foreign Exchange Control Board) and should be
invoiced in the currency of the country of destination.
Bank accounts may be maintained by non-residents upon approval of the Authori-
ties, and all subsequent transactions are subject to their supervision. Pro-
ceeds arising from the sale of foreign-owned assets in Indonesia can be remitted
only after obtaining a special license from the Foreign Exchange Control Board.
Before disposing of such assets, it is recommended that the approval of the
Authorities to do so be obtained first. On the granting of this approval,
application to remit the proceeds may be made to the Foreign Exchange Control
Board.
Persons visiting Indonesia are not permitted to import Indonesian currency with-
out a special license approved by the Foreign Exchange Control Board. There is
no limit on the funds a traveler may take in with him in the form of travelers
letters of credit, travelers checks and/or foreign currency, providing his stay
does not extend over a period of 3 months. Such funds must be declared when
entering the country.
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JAPAN
The unit of currency is the Yen and the official rate is -Y360 equals U.S.$l.
The Foreign Exchange Control Board has established the following rates of
exchange for use of the Foreign Exchange Banks:
Buying Selling
y 358.45 - U.S .$1 Y 361.05 - U .S .$l
31,003.66 = Ll Y1,010.23 = Ll
Effective as of July 1, 1950, all non-occupation personnel in Japan were placed
on a yen basis. United States dollar and sterling balances on the books of
local banks in the names of such individuals and business organizations were
required by order of the Minister of Finance to be converted to Convertible Yen
Accounts or remitted out of the country prior to July 31. Dollar and sterling
balances-not converted prior to July 1 have been blocked until such time as
application is filed for a Convertible Yen Account.
Convertible Yen, so-called, is represented by balances on the books of local
banks derived from the proceeds of dollar and sterling remittances from outside
Japan or deposits of Convertible Yen checks circulating in the form of "order"
checks; such checks retain their convertibility when deposited by the payee
into his own Convertible Yen Account. The convertible privilege is lost when
such checks carry endorsements in addition to that of the original payee.
Arrangements have been made for two types of convertible accounts. Convertible
A Accounts represent the proceeds of dollar conversions and may be remitted
from the country in the form of dollar instruments. Convertible B Accounts
represent the proceeds of sterling conversions and when remitted abroad are in
the form of sterling instruments.
Imports into Japan are subject to license. The importer must submit an appli-
cation to the Ministry of International Trade and Industry (MITI) for an import
permit. The Foreign Exchange Control Board will only grant the relative for-
eign exchange upon production of the MITI import permit. Exports are also sub-
ject to a MITI license, and all exchange received from exports must be paid to
the Foreign Exchange Control Board.
Bilateral trade agreements have been entered into between Occupied Japan and
some twenty foreign countries. By the terms of these agreements Japan imports
needed raw materials and exports manufactured goods.
A Foreign Investment Law has been passed for the purpose of encouraging foreign
firms to invest in Japan and provides for the remittance of profits abroad in
approved cases. The policy will be to give every encouragement to foreign
investment which will contribute to the development of the Japanese economy.
The Government is now planning the establishment of an Export Bank with a
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capital of 315 billion. The purpose of the bank will be the encouragement of
exports through the extension of financing to manufacturers for the production
of goods for export.
Japanese Overseas Agencies have been established under direct control of the
Japanese Foreign Office to exercise limited trade promotion and quasi-consular
functions in New York, San Francisco, Los Angeles and Honolulu. Permission has
also been obtained from SCAP for the establishment of further agencies in the
following cities: Paris, Rio de Janeiro, Stockholm, New Delhi, Calcutta,
Bombay and Karachi.
Any one coming to Japan on business or pleasure should carry his funds in the
form of United States dollar letters of credit and/or travelers checks. Such
travel funds may be carried into the country and retained without limitation
but must be declared on entering the country. United States currency notes may
also, for the present, be brought in without restriction subject to declaration
at time of entry. We would, however, recommend that the amount of currency
notes be kept at a minimum.
NEW CALEDONIA (See France)
NEW HEBRIDES (See France and Pacific Islands)
NEW ZEALAND
At the end of 1950 the official exchange quotations by New Zealand banks were
as follows:
1 New Zealand Pound could be purchased for U.S.$2.7991
1 New Zealand Pound sold would produce U.S.$2.7586
All remittances from New Zealand must be approved by the Minister of Finance
who has delegated authority to the Reserve Bank to which all applications are
addressed. In practice, applications are submitted through commercial banks
and the Post Office. Forward operations in foreign exchange covering genuine
trade transactions are permitted with a maximum period of 6 months.
Accounts may be opened in the name of non-residents, but transfers out of such
accounts may be made only with the approval of the Reserve Bank if the funds go
beyond the Dominion. Income arising in New Zealand on securities in the
Dominion owned by persons resident abroad together with the proceeds from
redemption may be remitted to the country concerned, provided the owner is per-
manently resident in that country. At present, however, the Reserve Bank is
not prepared to authorize remittance of the proceeds from the sale of New
Zealand securities to persons. resident outside the Scheduled Territories. The
same is true of the proceeds from the sale of other capital assets except in
the case of the remittance of proceeds from the sale in New Zealand of the
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house and furniture owned by the non-resident up to 15,000 or the amount
expended on the purchase of the property which may be approved under certain
circumstances.
Exports and imports are subject to license. The issuance of an import license
carries with it permission to secure the foreign exchange required to pay for
the goods. A New Zealand exporter may not retain the proceeds of exports nor
can he hold such funds to be used as offsets for goods coming into the country.
Instead exports and imports must be dealt with separately.
Imports not entered at Customs may be re-exported under transshipment without
penalty as to payment of duty and without requiring an application for permit.
If the duty has been paid, an application may be filed for refund. When the
need for re-export stems from non-payment of the relative draft, there would be
no objection to the shipment and normally the permit would be granted.
Travelers entering the country may carry United States dollars with them in
actual currency, letters of credit and travelers checks without limitation, and
it is not necessary to declare the holdings. There are no restrictions on trav-
elers taking the unused portion of such funds with them-when departing. Normal-
ly there is no limit on the amount of New Zealand currency travelers may bring
into the country, but if the amount is substantial, it will be necessary to
satisfy the Reserve Bank that the notes were acquired through normal banking
channels. Carrying New Zealand bank notes out of the country in excess of -L5
is prohibited, unless the traveler is proceeding to the United Kingdom.
NORTH BORNEO
Straits $ - U.S $0.332.
Exchange control is based on regulations in force in the.United Kingdom.
All goods are subject to import license, with the exception of many United
Kingdom goods which qualify for open general license facilities.
Export licenses are required in some cases.
PACIFIC ISLANDS (Gilbert & Ellice Islands, Br. Solomon Islands,
Tonga, New Hebrides and Pitcairn)
Australian & _ U.S $2.24.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required for all goods from other than the Scheduled Terri-
tories and in all cases, according to national needs, for goods from the
Scheduled Territories.
Export licenses are also required.
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PAKISTAN
The currency unit of Pakistan is the Rupee. The par value as against the
British pound sterling is about two shillings two and one half pence. One
Pakistan rupee is worth about U.S.$0.30 1/4.
Pakistan is one of the Scheduled Territories, and its foreign exchange regula-
tions are based on those prevailing in the United Kingdom.
Banks in Pakistan are not permitted to grant loans or overdrafts to overseas
borrowers without the prior permission of the Exchange Controller.
As to the import and export of currency notes, it is permissible to bring in or
take out of Pakistan, Pak.Rs.50 at any one time, but foreign currency notes,
excluding Indian, may be imported without limit. However, only the equivalent
of Pak.Rs.50 may be exported. Travelers from the United States may bring funds
in the form of travelers letters of credit or travelers checks without limita-
tion. Such holdings must be declared at the time of entry.
Import licenses are required for imports. Currently, only such articles as
machinery, chemicals, medicines and some types of motor vehicles are freely
licensed. The best assurance an exporter has that all requirements have been
complied with is the establishment of an irrevocable letter of credit.
Theoretically, merchandise if bonded may be re-exported, but the Government
retains the right to prohibit the re-export of articles which it considers of_
urgent need. If the import duty has been paid, only seven-eights of the amount
paid is recoverable in the event of re-export.
Non-resident bank accounts may be opened in Pakistan only with the prior approv-
al of the Exchange Control Authorities.
Australian L _ U.S.$2.24.
Exchange control is based on regulations in force in the United Kingdom.
Import licenses are required for all goods from countries outside the Scheduled
Territories. No licenses required for imports from the Scheduled Territo-
ries.
Export licenses are also required.
PHILIPPINES
The unit of currency is the Peso which has a current value of approximately
U.S .0.50.
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All transactions in foreign exchange are subject to licenses issued by the
Central Bank and must be effected through an Authorized Agent (banks licensed
to do business in the Philippines). No forward operations are permitted.
Fixed deposits and current and savings accounts in pesos may be opened in favor
of non-residents but are subject to prior approval by the Central Bank. The
following types of credits to non-resident accounts (other than banks) are per-
mitted without prior approval by the Exchange Control Office:
1) Transfers from the account of a non-resident bank.
2) Dividends and interest on securities owned by the holder
of the account.
3) Refunds of amounts previously debited or overcharged.
4) Proceeds of small checks, provided the aggregate credits
during a calendar month do not exceed Pl,000 and no
individual credit is in excess of P400.
5) Balances of a non-resident switch transaction or pro-
ceeds of the sales of securities approved by Authorized
Security Dealers (institutions, companies and firms
appointed by the Central Bank).
The following types of debits to non-resident peso bank accounts (other than
banks) are permitted without prior approval by the Exchange Control Office:
1) Local payments for postal and telegraph charges, stamp
fees, storage and safe custody charges, payments to
servants, insurance premia, taxes, allowances to rela-
tives, minor repairs to houses and other local payments,
provided the aggregate debits during a calendar month do
not exceed P2,000 and that no single payment is in
excess of P200.
2) Debits in reversal of previous credits.
Accounts designated in foreign currencies opened prior to exchange control, and
all interest earned thereon, may be liquidated without the prior approval of
the Exchange Control Office but only against payment in pesos. Payments of for-
eign exchange in settlement of such accounts will not ordinarily be allowed by
the Central Bank.
Subject to the foreign exchange position of the Central Bank at the time appli-
cation is made and in accordance with the merits of each case, the Central Bank
may:
1) Permit firms to transfer abroad earnings and/or capital
up to 30% per annum of their capital investment in the
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Philippines as of December 31, 1949. Capital investment
for this purpose is considered as fixed assets or capi-
tal stock outstanding, whichever is larger. In the case
of corporations, the percentage of fixed assets to be
considered as capital investment is in relation to the
foreign participation in the capital stock; in the case
of companies and other firms, in relation to the foreign
participation in the organization. Earlier a Central
Bank ruling limited the remittance of profits and divi-
dends to 10% of the net profits after taxes or to 10% of
the capital stock, whichever is higher, provided, that
in no case could such remittances exceed the average
amount of profits and dividends remitted in the previous
two years.
2) Permit proceeds from the sale of securities, real estate
or other capital assets, prewar commercial debts owed to
non-residents, royalties, inheritances and payment for
services to be licensed for remittance on the basis of
periodic installments.
3) Permit intending emigrants to be licensed to take a por-
tion of their assets in United States dollars at the
time of departure, the remaining balance, if any, to be
remitted in periodic installments.
All imports and exports are subject to license and must be coursed through the
medium of an Authorized Agent of the Central Bank.
Republic Act No. 426 - An Act to Regulate Imports and for Other Purposes - was
approved by the President on May 22, 1950, and repealed previous import control
laws. Pertinent features are:
1) Importers are required to file an application for a
quota allocation against which licenses may be issued.
For an old importer the application must be executed
under oath and shall contain, along with other informa-
tion, his name, address, nationality, a statement of the
quantity on hand of the goods applied for, and the
amounts imported by him during 1946, 1947 and 1948. If
a new importer, his application must contain a statement
of his financial resources.
2) From time to time the Central Bank certifies to the
Import Control Board the amount of exchange available
for import purposes for any specific period. The former
grants exchange to cover all licenses duly issued by the
latter, but all import and exchange licenses are revoca-
ble at any time.
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3) All imports are controlled and are classified under two
categories - items subject to quota allocations and
those not subject to quota allocations. The former is
further divided into four groups: prime imports,
essential imports, non-essential imports and luxury
imports. Imports to be admitted without quota include:
(a) raw materials for commodity manufacture; (b) sup-
plies and equipment for the armed forces and government
hospitals; (c) articles, goods and commodities bartered
with Philippine products except luxury imports; (d)
goods for religious rites and ceremonies; (e) articles
and goods for personal use, provided no foreign exchange
is used and (f) goods intended solely for rent, lease or
exhibition, provided that at least 25% of the gross rent-
al, royalties and earnings paid therefor shall not be
allowed for remittance abroad.
4) The Import Control Board shall reserve 30% of the total
import quota for any merchandise for the fiscal year
1950-51, 40% for 1951-52 and 50% for 1952-53 in favor of
bona fide new importers who did not import during
1946/48. The new importers must be Filipino or American
citizens or entities of which at least 60% of the stock
is owned by Filipino or American citizens.
5) Quota allocations are based on the average annual CIF
values of importations in the years 1946-48. Non-quota
imports may not exceed 1948 import values except agricul-
tural machinery, materials and equipment for dollar-
producing industries.
6) Quota allocations of any importer for any particular
article are not transferable.
After obtaining the necessary import license from the Import Control Office,
the importer must present it to his bankers who are then authorized to arrange
for the payment abroad of the foreign exchange. Ordinarily this is done by
opening a commercial letter of credit or an authority to purchase. Alterna-
tively, the importer may present his import license to the Central Bank and
apply for a license for his bankers provisionally to remit the foreign exchange
abroad by telegraphic transfer or demand draft on the condition that final pay-
ment will not be made to the exporter until certain documents are presented
evidencing that shipment has been made to the Philippines. These documents may
be presented to his bank in the Philippines or to his bankers' correspondent
abroad. The intention of the Central Bank in issuing licenses to make these
conditional payments is to permit a modified open-account transaction, subject
to certain documentary limitations; hence the documents presented are not
required to conform to usual letter of credit standards.
Acceptance of a provisional deposit (equivalent in local currency) with respect
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to United States dollar documentary collection is not legally mandatory.
Imports from the United States are duty free, but on all imports to the Philip-
pines there are taxes collected from the importer prior to release of the rela-
tive merchandise by the Customs Authorities. Sales tax on luxuries range from
50% to 75%; on semi-luxuries 20% to 30% and on necessities 7%.
All goods, merchandise or commodities shipped out of the Philippines must be
declared for export, and either the approval by the Exchange Control Department
of the Central Bank or the endorsement of an Authorized Agent (bank licensed to
operate in the Philippines) must be secured.
No goods may be sent abroad (1) which are not covered by a draft drawn in
United States dollars representing the fall value of the exports and (2) unless
the collection of the proceeds of the sale of such goods is to be undertaken by
or entrusted to a bank licensed to do business in the Philippines.
The following regulations must be observed:
a) Shipping documents must be coursed through, or entrusted
to, a bank authorized by the Central Bank to deal in for-
eign exchange;
b) Payment for the goods, merchandise and/or commodities
must be received within a period of 90 days from the
date of the shipment, unless the Central Bank grants an
extension of time for such payment, and
c) Payment must be effected by drawing bills in United
States dollars on banks or firms wherever located out-
side the Philippines.
d) Additionally, all exports of copra and coconut oil must
be covered by irrevocable bank letters of credit with
drafts drawn at sight.
The following articles are exempted from export regulations and, therefore, no
application for an export license need be submitted for approval:
1) Personal effects accompanying outgoing passenger.
2) Household effects accompanying a traveler where the
value does not exceed p500.
3) Articles purchased by a tourist and shipped out as part
of the personal baggage and effects of such traveler
upon departure.
4) Household and personal effects belonging to foreign
diplomatic representatives or such other personages who
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travel under diplomatic passports.
An exporter cannot retain the foreign currency proceeds of his exports.
As a matter of policy, the Government does not allow the re-exportation of mer-
chandise.
A traveler entering the Philippines may bring in Philippine currency in an
amount not exceeding P100 and may take with him on leaving the country a like
amount without the prior approval of the Exchange Control Department of the
Central Bank. An excess of P100 is prohibited, unless approved by the Central
Bank.
Visitors are required to declare their foreign exchange holdings upon entering
the country and during their stay must sell such foreign exchange as is required
for current spending to an Authorized Agent. Unexpended Philippine currency not
exceeding 50 pesos (P50.O0) can be exchanged for foreign currency by an Author-
ized Agent without the prior approval of the Central Bank. At the time of his
departure, the traveler must complete his declaration on a form prescribed by
the Central Bank showing the amount of foreign currency, coin or travelers
checks sold to Authorized Agents during his stay and the amount he is taking
with him, and must surrender this declaration to the Customs Authorities at the
port of departure. The declaration form includes a certification by the visitor
that all sales of foreign funds during his stay in the Philippines have been
made to an Authorized Agent.
PORTUGUESE CHINA (Macao)
The unit of currency is the Pataca and while subject to fluctuation has a pres-
ent value of about U.S.0.17 5/16.
The Banco de Portugal in Lisbon exercises control over all exchange matters, but
generally there are no specific restrictions. Current accounts can be opened by
non-residents, and income and the sale proceeds of assets can be remitted.
Macao being a free port, there are no import regulations except for the importa-
tion of ammunition, gold and platinum which are subject to license. There is no
limitation on the amount of foreign currency a visitor may bring with him. Vis-
itors may only remain in the Colony 7 days except with prior approval of the
Authorities.
PORTUGUESE INDIA (Goa)
The unit of currency is the Rupee which has a current value of about U.S.$0.204.
Funds may be remitted freely to India from Portuguese India, but sums of
Rs.50.000 and above must be accompanied by a declaration stating the name of the
remitter and the purpose. All remittances in sterling require approval of the
Reserve Bank of India, Exchange Control Department. Remittances in all other
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currencies require the approval of the Banco de Portugal in Lisbon. Effective
from January 1, 1951, all imports from foreign countries require prior govern-
mental approval.
Accounts may be maintained by non-residents and operated without restriction.
However, in making remittances abroad the regulations mentioned above are effec-
tive.
Travelers are permitted to enter and leave the country with United States dollar
letters of credit or currency with no limitation as to amount. It is not neces-
sary to declare such holdings at any time.
SARAWAK
Straits $ = U.S.$0.332.
Exchange control is based on regulations in force in the United Kingdom.
Most United Kingdom goods are covered by open general license; other imports are
subject to license.
Export licensing regulations to some extent follow the United Kingdom plan.
SINGAPORE - FEDERATION OF MALAYA
The unit of currency is the Straits Dollar. which, is linked to the pound sterling
at approximately two shillings and four pence. The United States dollar equiva-
lent of the Straits dollar is about U.S.0.33.
All imports from countries outside the Scheduled Territories require prior import
license, commonly referred to as an "A.P.". With minor exceptions, transactions
relative to trade within the Scheduled Territories can be conducted without
Exchange Control approval. Licenses for imports from hard currency areas are
normally restricted to articles which are essential to the economy of Malaya and
cannot readily be obtained from the Scheduled Territories. Before undertaking
shipments to Malaya (i.e., Singapore and Federation of Malaya) exporters in hard
currency areas should assure themselves that the importer is in possession of an
import license, as otherwise there is a risk that importation of the merchandise
and/or granting of exchange for remittance may not be allowed. For this reason
it is advisable and recommended that all shipments be made under irrevocable let-
ters of credit.
Exports to hard currency areas, whether consisting of commodities produced in the
Colony or merchandise for re-export, require prior approval of the Authorities,
and the full relative proceeds must be received by means of exchange' negotiated
through a bank.
Residents of the United States and other American Account Countries may maintain
bank accounts in Singapore in Straits dollars with the prior approval of the
Exchange Control. Deposits to such accounts are subject to approval of the
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Authorities and when this approval is obtained, the Authorities agree to permit
the use of the funds in Malaya or for remittance to the account holder without
further formality. Income from investments in Malaya can be remitted abroad in
this manner, while the granting of permission for the remittance of the proceeds
from the sale of securities, real estate or other capital assets would depend on
the circumstances governing each particular case. Remittances from abroad may
be made to Malaya through banks without prior approval. Overdrafts whether
clean or secured, in the accounts of non-resident individuals are normally not
allowed, as is the case with respect to non-resident companies which do not
maintain a branch office with capital or assets in Malaya.
Travelers to Malaya may not take in more than &5 in sterling bank notes or
Malayan $45 in Malayan currency notes, but are not restricted in the amount of
funds they may carry with them in the form of foreign currency travelers checks,
travelers letters of credit or United States currency. Such instruments may be
negotiated by banks at official rates, but the reconversion of any excess draw-
ing to foreign currency (i.e., United States dollars or other hard currency)
requires Exchange Control approval. Unless a traveler has brought the currency
into Malaya and has so declared it, he is not allowed to take out of Malaya any
foreign currency in cash to an aggregate value (at local conversion rate) of
over S$85.
TAIWAN
The unit of currency is the Yuan, officially pegged at Yuan $5 equals U.S.$l.
An open market exists with an exchange rate at present of about Yuan $10.25
equals U.S.$1.
All overseas trade is under close government regulation and supervision, and
effective from January 1, 1951, all self-financed imports, unless approved by
the Production Finance Committee, are prohibited. Exporters may retain 80% of
the proceeds of their exports, which may be disposed of against imports by sell-
ing to importers the exchange certificates covering the exports.
Travelers visiting Taiwan are not restricted in the amount of funds they may
bring with them in the form of travelers checks and letters of credit. However,
when departing, the only foreign currency notes and coin which can be taken out
is the amount which was declared at the time of entry and deposited with the
Bank of Taiwan in safe custody during their stay in Taiwan.
THAILAND
The unit of currency is the Baht which is at times referred to as the "Tical".
The official rate is Baht 12.65 5/8 equals U.S.$l. There also exists an open
market rate which at present fluctuates between Baht 22.to 23 per U.S.$l.
The license system has been abolished in general, but licenses are still
required for the import or export of rice, arms and ammunition, opium, ganja,
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156
live animals, fresh and salted foodstuffs, hard wood, fuel wood, raw cotton,
silk and cotton cloth, gunny bags and gold. Exporters are permitted to retain
the foreign currency proceeds of their exports except those.arising from the
sale of rice, tin, rubber and cement. On these exports 90%, 40%, 20% and 100%
respectively of the foreign currency proceeds must be surrendered to the Bank
of Thailand. The customary and recommended procedure for financing imports is
under bankers commercial letters of credit. Foreign exchange at the official
rate is available from the Exchange Control for merchandise previously approved
by the Bank of Thailand; for other imports there are no restrictions on obtain-
ing foreign exchange from commercial banks at the open market rate.
Accounts of non-residents may be maintained by local banks and no restriction
is placed on the operation of such accounts, while remittances may be made
abroad at the open market rate.
Visitors to Thailand are permitted to carry funds with them in the form of let-
ters of credit, travelers checks or foreign currency without limitation. Such
holdings, however, must be declared when entering the country.
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Next 88 Page(s) In Document Exempt
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25XFUJI BANK BULLETIN
PUBLISHED QUARTERLY
VOL. I. No. 4
CONTENTS
TIME FOR ANOTHER TURN IN JAPANESE ECONOMY
REGARDING BANK LOANS IN JAPAN
COPPER, LEAD AND ZINC IN JAPAN
RECENT TREND IN SUPPLY AND DEMAND OF SUL-
PHITE PULP
STATISTICS
TOKYO JAPAN
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,full ~ituh ~nZZetxn
PUBLISHED QUARTERLY
THE RESEARCH DIVISION
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THE FUJI BANK LIMITED
Established in 1880
HEAD OFFICE
1-chome, Otemachi, Chiyoda-ku, Tokyo
President : - - - - - - - - - Seiji Sako
Vice President : - - - - - - - - - Toshi Kaneko
Managing Directors : - - - - - - - Takehiko Nishino
Yoshizane Iwasa
Mitsuo Koike
Directors : - - - - - - - - - - Takeo Kamio
Toshio Sato
Takao Makimoto
Shozo Ota
Goro Mizobe
Yasuhiko Kuroda
Juichi Mikami
Kazuo Yukawa
Standing Auditors -- - - - - - - - Jiro Shoda
Takeo Ishida
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TIME FOR ANOTHER TURN IN
JAPANESE ECONOMY
1. The New Economic Situation of the
World and Japanese Economy.
The outburst of Korean hostilities and
shifting toward the adoption of the semi-
war economy and rearmament throughout
the world at this juncture have changed the
key-note of Japanese economy which was
about to face poignant depression due to
the continual decrease of effective demands
both at home and abroad, enabling Japan
to mark a new turning point for the re-
habilitation of her economy.
Japanese economy in 1951 is confronted
by the second and perhaps the last turn-
ing period. The new development of the
Korean war situation caused by the inroad
of the Chinese Communist leads up to
the emergency declaration by President
Truman and, taking it as a turning point
the world is now passing into an all-out
war time economy. Would Japan be able
to accomplish her work of economic re-
habilitation, placed as she is to be the
contact-point between the United States and
Soviet Russia or is she destined to follow
the path of collapse? This is a cross road
upon which she now stands.
On December 16, President Truman pub-
lished declaration about the emergency
state of the country, distinctly stating his
intention of adopting economic control
system which is necessary for utilizing
American economic resources to the maxi-
mum degree for the purpose of national
defence. This spells that while he is pursu-
ing his hope for peaceful solution of the
trouble from military point, the state of
war has been entered, economically speak-
ing. The new world-wide situation of
politics and ? economy could not help but
having strong influence upon Japan in all
the phases of politics and economy.
A. The Problem of adopting Control
System again.
With the outbreak of Korean hostilities,
the world economy has entered the period
of "goods" from that of "money". Center-
ing around the purchase and storage of
munitions, the market has turned again to
that of sellers. Particularly, since the
enactment of the National Defence Produc-
tion Act of America in 1950, the importa-
tion of principal goods to our country has
been made rather difficult, and in addition,
the prohibition of export to Communist
China coupled with American declaration
of emergency has made this difficulty
quite decisive. The importation of such
major raw materials as caking coal, iron
ores, soy-beans, salt, cotton, wool and pulp
has run on rock. Certainly, too much
emphasis could not be attached to the im-
portation of raw materials in a country
like ours which depends upon overseas for
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the 70% supply of chief raw materials
indispensable for economic expansion and
re-production.
While we are feeling contentment with
the restoration of international trade
balance brought about by the increase of
exports and special procurement, there
might arise for aught we know a condition
under which smooth working of re-produc-
tion becomes impossible due to the shortage
of materials coming from the fact that the
amount of dollars accumulated with such
a great trouble might loose its value owing
to the restriction on exportation of raw
materials or even through depreciation of
dollar value. The possession on hand at
present of the sum of foreign money
amounting to around $450,000,000 may be
likened to banking deposites held by
beggars. The effective use of surplus
foreign money is of urgent necessity for
the nonce. Acceleration of trade by private
individuals and overseas activities of com-
mercial firms must by all means be en-
couraged, but it must be born in mind that
the Government should carry out importa-
tion under the stress of circumstances so
as not to keep idle such foreign funds in
its command.
The foreign telegram (dispatched on
December 20, Washington A. P.) reports
the statement made by Mr. Takeuchi, the
Superintendent of International Trade, the
Ministry of International Trade and In-
dustry who is visiting America now to the
following effect: "The American authori-
ties promise that America ? will continue
the supply of the materials needed for the
rehabilitation of Japanese economy despite
the fact that demand for strategic materials
is increasing in America.due to the crisis
facing the world all over." Surely this
promise inspires us Japanese, with courage
and hope toward economic rehabilitation
more than anything else, especially when we
consider the fact that Japan is in the state
of unstability due to her dependence upon
imports of industrial raw materials as well
as food-stuffs, and that she feels more
keenly than ever under the present tense
world conditions the fate of Japanese
economy prone to be directly affected by
the unstability of political and economic
conditions overseas.
Even supposing that part of raw ma-
terials such as caking coal is imported from
America, at this very time when America
herself is controlling domestic consumption
she would require our iron and copper
articles in exchange for their exportation
of these raw materials to Japan. Thus 'as
long as we rely on America, if the American
economic control is strengthened, the Japa=
nese economy must naturally follow the
course. That is to say, in order to secure
economic stability by making good the
shortage of supply due to import difficulty,
there is every necessity to introduce regula-
tion in respect of goods. It must be re-
garded that under these circumstances the
revival of economic control is unavoidable.
This control, however, that is to be made
now, unlike the one in the past war time is
to be strongly governed by the shifting of
economic control in America. Hence the
attainment and maintenance of well bal-
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TIME FOR ANOTHER TURN IN JAPANESE ECONOMY
anted economic structure which constitutes
the content of the rehabilitation or re-
construction of Japanese economy would
become very difficult.
B. Financial and Monetary Policy.
After diagnosing Japanese economy three
times and taking well into consideration
the new conditions prevalent subsequent to
the Korean hostilities, Mr.,Dodge has given
us a prescription which is intensively set
forth in the Budget of the year 1951. For
the fiscal years of 1949 and 1950, through
the financial policy of making supra-
balanced budgets as the pivot, economic
stabilization has been attained, but the
question is whether the Budget for 1951
would be- suited to lead our national
economy in the new situation of politics
and economy prevailing in the world.
Now let us proceed to examine the three
chief points of the Budget compilation in
Japanese economy, namely, economic stabi-
lization, economic rehabilitation and social
security.
Economic Stabilization.
The Budget for 1951 goes by the name of
"neutral budget". The budgets in the past
assumed the form of supra-balanced budget
whereby redemption of national debts was
carried out, but the Budget for the coming
year is made in the form of plain balanced
budget, and such surplus expenditures
as debt-redemption are not incorporated
into the budget which accounts for the
name of "neutral budget". In other words,
the funds for special accounts and govern-
mental agencies are met by transferring in
total the sum of Y118,800,000,000 making
balance, namely, Y77,800,000,000 from the
General Account, Y32,000,000,000 from the
Trust Fund Bureau and Y9,000,000,000 from
the Counterpart Fund. The idea seems to
be that financial funds based on. such
calculation could be smoothly and balancedly
utilized so as not to bring undue pressure
upon banking.
Surely, such budget, mathematically con-
sidered, is balanced budget or "neutral
budget", but when going a step further and
analysis is made it will be observed that
it has not quite shaken off the character
of supra-balanced budget, as may be seen
from the plan to practice inventory finance,
i. e. appropriating from the General Ac-
count the total sum of 1`55,100,000,000
namely Y50,000,000,000 to the Foreign
Exchange Fund Special Account, Y3,700,-
000,000 to Noble Metals Account and
Y1,400,000,000 to the Land Development
Fund Accomodation Account. To secure
financial neutrality, it is necessary, as
prefigured, the excess of export should
reach $150,000,000 but even in this case,
if the amount be simply kept as the re-
served foreign fund, it spells the keeping
of idle fund in these days when the need
for long term funds is most keenly felt.
It may possibly imply the sense of reserve
fund, but it should be more actively em-
ployed to forward the policy of strengthen-
ing the national productive capacity, at the
same time rectifying the lame nature of
present prosperity.
Economic Rehabilitation Expenses.
Public Works Expenses as compared with
the year 1950 show an increase of Y740,-
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000,000, but shortage of funds is still felt
for development of natural resources and
for execution of food increase plans, as
will be necessitated by the actual economic
conditions of the future. The serious prob-
lem for the 1951 economy is to finance the
funds needed for these purposes. Judged
from the very nature of supra-balanced
budget it may be a difficult problem to
squeeze out these funds. This certainly
presents an important national problem.
With a view to secure importation of
materials of urgent necessity by the govern-
mental trade and to enable the Government
to discharge the function of stock-piling
materials, the Urgent Goods Importation
Fund Account has been created, but the
fund amounts only to /2,500,000,000, by
which, even if figured on the basis of 4
times rotation in a year, the business
amounting only to Y10,000,000,000could be
carried out. It is reportedly said that the
Western German Government is getting
loans up-to-limit allowed by the European
Payment Alliance after exhausting foreign
money in its possession. In our case, also,
positive measures should be considered to
open the way for getting loans if necessary
in relation to this fund.
With regard to industrial funds which
do not fall under the purview of commercial
basis, we find that there are established
funds for agricultural, forestry and fish-
sheries banking, amounting to X2,000,000,-
000, that for agricultural mutual aid to
/2,500,000,000, and that for.smaller and me-
dium enterprises credit insurance amount-
ing to (1,000,000,000 and investment to
the Export Bank amounting to Y5,000,000,-
000, but it is to be regretted that in con-
sidering the future expansion of our
economic deta these funds would be al-
together too small. To be more specific,
/9,000,000,000 for public enterprise invest-
ment, /35,000,000,000 for private enterprise
investment, out of C. P. A. Fund, and
/40,000,000,000 for accepting banking de-
bentures out of the Trust Fund Bureau
Fund making a total of /84,000,000,000 may
be regarded as long term funds, which is
an increase of only some ten billions yen
compared with the past year. It is, there-
fore, desirable that the reservation from
the Counterpart Fund be released more
elastically.
Social Security.
Under this heading, we find that an
investment of Y5,000,000,000 is made to
the House Loan Corporation, and that com-
pared with the year 1950, the living protec-
tion expense was increased by /4,800,000,-
000, the social insurance expense by /1,600,-
000,000, anti-tubercrosis measure expense
by Y2,600,000,000 and employment measures
expense by /1,800,000,000 besides the
reduction program of income taxes, etc.
However, seeing that stable food stuffs
expenses are to be increased on a large
scale from January coupled with a tendency
for the rise of general commodities priges,
and under the growing strained interna-
tional circumstances, the maintenance of
social order will become more important
than ever. Such passive position as await-
ing a favorable turn of the times for realiz-
ing social stability should be altogether
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TIME FOR ANOTHER TURN IN JAPANESE ECONOMY 5
L
given up.
In these days, when we are moving
toward war-time economy, the policy of
checking inflation from the phase of cur-
rency is insufficient; we should resort our-
selves to that of finding a way for increased
supply of materials by enlargement of
production as well as by active importation
from overseas. In these two points, our
financial policy should be on a large scale
turned to contribute toward economic re-
habilitation and reconstruction, but the
Budget for the year 1951 is compiled on
too conservative a base to meet such im-
portant demands.
As mentioned before, as our economic
activities are constrained according to the
turns taken by the American war-time
economic control, and bur social unrest may
be expected from the aggrandizement of
lame nature of our production, we should
possess more positive measures relative to
social security question.
And again, in our country where capital
accummulation capacity is feeble and poor,
there is but little inside capital reservation
in enterprises. The mass of the people
being with but little capacity for savings,
the security market has rather the charac-
ter of speculation market, and enterprises
are forced to seek their capital in indirect
investment through banking organs. Over-
loans made from banking organs in 1949
and 1950 have after all their origin in this
respect. For the long term funds needed
for the repletion of productive capacity
and for rationalization of industries, the
sum of Y-80,000,000,000 (the amount of
public and private investment made out of
the Counterpart fund for 1951 and the
amount of accommodation loans to be ac-
cepted by the Trust Fund Bureau) is by no
means sufficient so that they will necessarily
have to rely upon commercial banks and
other measures. Furthermore, although
the 1951 Budget is a neutral one as far as
its form goes, the movement of actual
economic condition in the future will give
rise after all to the relative shortage of
the Government funds, so that there is a
strong possibility that this tendency should
.of necessity have a resource to increase in
banking accommodations.
C. Japan Aids and Autonomy of Eco-
nomic Policy.
(a) The Gray Report and Japan Aids.
On November 12 last year "Report on
Foreign Aids Program of the United
States" by Gray Commission was published.
The report recommended with regard to
Western Europe, to the effect that aids
should be continued for 3 or 4 years apart
from aids for military equipment, and with
reference to Japan it stated that the pay-
ment of Japan aids should be decided taking
into full consideration the development of
her present condition and the report is
concluded with the statements which run
somewhat in this wise; "At present, in-
dustrial production index in Japan is only
a little less than that of the' prewar times.
The red in international balance accounts
is steadily decreasing. The indispensable
factor for this recovery is the American
aid which runs up to about $1,800,000,000
from September 1945 to June, 1950."
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"Should this favorable tendency be con-
tinued, Japan would be able to attain com-
plete economic autonomy, and be able to
have a considerable amount of dollars in
hand and have accumulation of reserve
goods to a certain extent, although at the
early part of 1952 fiscal year, the income
per head would be somewhat below the
prewar level." If Japan could secure
markets for her products, Japanese eco-
nomy would not only be able to maintain
by far greater export trade, but to keep up
considerably higher level for domestic con-
sumption and investment."
Director General of the Economic Stabi-
lization Board, Sudo clarified before the
Budget Committee and the Economic Stabi-_
lization Committee in the. House of Re-
presentatives the opinion of the Government
on November 28 with the following words:
"It is difficult to attain economic autono-
my in July, the coming year and unless the
measure of securing the sufficient amount
of equipment funds, it would be very dif-
ficult to become economically self-support-
ing by 1953."
Economic autonomy spells the firm es-
tablishment of international balance in
receipts and expenditures, and this balance
must possess the nature of permanency,
expansion, and it also must have stability
enough to check the influences arising from
changes in international conditions. There-
fore, real substantial economic autonomy
is directly connected with the way to
economic rehabilitation. The question is
how real economic autonomy could be at-
tained in such a miserable condition as with
the living level reaching only 70%, of the
prewar times and with Engel coefficient 60.
The development of the new situation
caused by the inroad of Chinese Com-
munists in the Korean hostilities, President
Truman's declaration of the emergency
state of affairs and the utter suspension of
trade with Chinese Communists appear to
have pushed backward the question of our
economic autonomy. If one reads carefully
the contents of the Gray Report, he will
notice that the new development of the
situation itself compells the continuance of
Japan aids just as Marshal Aids to England
were converted into military aids.
The last paragraph of the Gray Report
contains a statement to the following
effects :
"However, Japan is perhaps placed in
a position for putting greater reliance upon
imports than any other country of the
world. Whatever the reason may be, if
Japan is placed in a situation where she
could not increase her export products,
necessity for aids from foreign countries
would naturally arise." In these very days
when movements toward wartime economy
are already started, the importation of
required raw materials presents the actual
difficult problem. The assumption in the
Gray Report "if Japan could secure suf-
ficient markets for disposal of her products"
would become extremely precarious to hold
when we take into consideration such facts
as the loss of extensive Chinese market,
unstability of political conditions in South-
Eastern Asia and maritime insecurity ac-
companying the development of . warlike
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TIME FOR ANOTHER TURN IN JAPANESE ECONOMY
situation.
Furthermore as ' rightly pointed out in
the Gray Report, Japan is faced with these
serious obstacles :
1. Enfeeblement of competitive ability.
in a certain section of Japanese export
industry. This condition has been brought
about the superannuation of factory facili-
ties, inefficient use of labor and un-neces-
sary reduction of Japan's merchant marines
on a large scale.
2. Various international political objec-
tions relative to the re-admission of Japa-
nese vessels visiting foreign ports and
participation in foreign trade.
3. The rapid increase of Japanese popu-
lation extending over a long period.
These obstacles still continue in Japan
forming a bottle-neck for her economic
rehabilitation.
The Gray Report says that the question
of Japan aids must be carefully taken into
consideration, and recommends the increase
of aids to South Eastern Asia. However,
the new development of international situa-
tion has made it difficult to actively carry
out the Point 4 Program etc. Therefore
we must ask for the continuance of Japan
aids.
(b) Japan Aids and the "War-Termina-
tion-Disposition" Expenses.
Supposing the case of American Aid to
Japan is cut off, there remains a question
of its relation to war-termination-disposi-
tion expenses running up to about X100,-
000,000,000 which takes- up around 15%
of the Budget.
The following table shows a trial com-
parison between the "war termination-
disposition" , expenses and Japan aid.
Speaking in mathematical figures, the
former seems to be somewhat larger than
the latter.
Temporary Comparison between Japan
Aid and the " War-Termination-
Disposition" Expenses.
American Aid
War-Termination-
to Japan
Disposition Expenses
in Million $
in Million $
1945,1946
193
1,283
(9-12)
1947
407
842
1948
464
502
1949
537
355
Total
1,601
2,982
Note : In comparing the two the following
exchange rate has been used.
1946, 1$....Y30
1947, 1$....Y80
1948, 1$....Y220
1949, 1$....Y360
Some argue to the effect that the giving
up of Japan Aid should rather be welcomed
if it means the release from the burden of
the "war-termination-disposition" expenses.
However, the question can not be handled
simply be appealing to mathematical
figures. For. our country suffering from
the poverty of industrial materials especial-
ly at the time when difficulty is felt to
obtain the goods in the world, aids by goods
are most necessary. Whether the aids are
endorsed by goods or not has important
bearings on the future stability of Japanese
economy.
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FUJI BANK BULLETIN
(c) Economic Rehabilitation and Adapt-
ability of Policy.
Japanese economy at present is compared
to a cart drawn by two horses. One of the
horses is controlled by the tight reins of
the Dodge line and the other is dancing to
the changes of international conditions.
The horses can not briskly run as they often
fail to keep their steps in harmony.
Our economy to be rehabilitated hereafter
is that of dual nature drawn by two horses
as it were. One is to keep the positive
stimulus and utilize it toward free capitalis-
tic economy, and the other is to operate
strong economic policy positively to smooth
the disturbance of equity in capitalistic
economy by systematically distributing sav-
ings and investments. Therefore in order
to harmonize the operation of the dual
economy, there is a necessity of carrying
out into effect the comprehensive economic
policy that is responsive to the actual
condition of economy or that is able to give
proper guidance to it. In other words the
proper economic policy adaptable to the real
economic conditions should be adopted.
2. Future of Japanese Economy.
It is desired both at home and abroad
that Japanese economy of 1951 should move
from the stabilization policy in respect of
currency to the comprehensive economic
policy that attaches importance to the re-
habilitation of economy from its substantial
aspect. However, in such a case the re-
habilitation of Japanese economy should be
considered from the concept of new eco-
nomic cycle which is at once responsive to
the conditions of the world.
The following table gives the percentage
of our trade with China (including Man-
churia) before War in respect of our export
and import, and also for the following
chief articles we were dependent upon
China in 1936.
Export 1930 1936 1937
23.6% 24.4% 24.9%
Import 18.3% 14.2% 11.5??
Export Fishery products 53.8?;;
Woolen textiles 35.9io
Steel 46.5%
Paper 73.3%
Steel products 35.7%
Rubber-tyers 41.1%
Machinery 66.4%/-
Lumber 30.5?0
0
Import Soy-beans 94.4?
Coal 76.9%
Pig iron 40.0%o
Bean oil 94.3;',%,
Peanuts 84.4%
Thus it will be seen that China including
Manchuria occupied about 25% of Japap's
total export and we depended upon China
for importing major parts of beans, coal,
iron and steel. From such standpoint our
economic reliance upon the eastern conti-
nent is still strongly advocated. At this
juncture, we must calmly study the question
as to which one of the split-up world eco-
nomy should be sided by Japanese economy
to enhance the public welfare of the people.
It would not be simply desired to return to
our economic flow or cycle of the past.
After the war, in actuality our trade with
China in 1947 totaled to 58% of our export
and 0.9% of our import, in 1948 1.5% of
export and 3.9% of import, and in 1949 it
was estimated as 1.20% of export and 4%
of import.
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TIME FOR ANOTHER TURN IN JAPANESE ECONOMY 9
We Japanese should now make up our
minds to sever political and economic con-
nections with China, and should recognize
the importance of finding contact with
America, Australia and the South Seas to
fill the economic gap. For the picturing of
this new idea it is specially important to
secure oil and cotton from America, wool
from Australia as well as rubber and ores
from the South Seas. We are anxious to
have positive aids from America and other
free countries. At the same time, with a
view to protecting Japan from the threats
of Communism and to safeguard our politi-
cal independence and economic welfare,
there is every necessity for having strong
political power, and determination and
economic ability, and possibly even the
sacrifice of our ownselves.
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REGARDING BANK LOANS IN JAPAN
As regards the particularity in the make-
up of accounts for commercial banks in
Japan and its changing aspects from time
to time, a comprehensive expalanation was
already set forth in an article appearing
in Volume 1, No. 2, of this Bulletin, in
which was also made clear from various
ratios of comparison the fact that the
accounts of various Japanese banks com-
prise such factors, when compared with
banks in America and England, as look
extremely unhealthy due to the special
circumstances of Japan's economy. To ex-
plain the reasons for appearance of such
abnormal situation, it becomes necessary to
analyze minutely not only the special cir-
cumstances existent at the time of emer-
gence of Japanese capitalistic economy, but
the role banks have had to play in the
course of economic growth. However, we
shall not touch here upon all this, for an
explanation thereon was already made in
the article, "Analysis of Over-loans", ap-
pearing in No. 3 of this Bulletin.
It is true that some of such abnormal
characteristics as referred to above in the
make-up of capital for various banks in
Japan that have so markedly developed
during the period of vicious inflation after
the end of World War II are steadily being
pushed back into their pre-war shape after
partial modifications, following the restora-
tion and normalization of general economy
along the so-called Dodge plan ever since
1949. To show an example, the proportion
occupied by what may be called deposits of
a saving character in all the bank deposits`
is steadily, though very slightly, going up;
another instance is the fact that seasonal
changes in the aspects of banking- are
resembling the pre-war shape. On the
other hand, it must also be admitted that
such abnormal character has been rather
intensified in no small measure by vigorous
artificial measures adopted to. check the
inflation. This, it may be said, made its
appearance most distinctly in the shape of
bank loans following the aggravation of
the so-called tight-money in enterprises-
namely, in the course of a rapid change
from inflation to deflation. It appears
many are inclined to place'much emphasis,
in order to get familiar with the banking
situation of Japan, on various ratios of
composite elements appearing in the final
accounts of banks or other companies,
though such is quite a usual method of
analysis, but this alone is hardly sufficient,
it must be said, to fully comprehend con-
crete facts existent behind.
Such being the case, the writer intends
to introduce through this little article
certain concrete aspects of the banking
situation in Japan, focussing his main
weight on various loan accounts of banks.
For this purpose, the writer will hereunder
give an explanation on such matters as the
weight occupied by the bank advance (in-
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cluding discounts) in the operation of fund,
the substance of the object of advances and
their amount, etc., by borrowing some of
the latest bank statistics available in Japan.
The writer regrets to say, however, that
although Japan's pre-war banking statistics
are available in comparatively well-arranged'
book-form, they are of little value to the
purpose to be tackled here, and that the
concrete classified statistics about the bal-
ance of loans exist only during the war-
time when an overall banking control was
being enforced and for the period from
March 1949 when' the compilation of full
data began under G. H. Q. memorandum,
up to the present.
Needless to say, it is, and must always
be, the deposits which become the source
of fund that determines for what concrete
purpose the bank loans should finally be.
given; therefore, analysis of loans alone
may, it is much feared, become an extreme-
ly superficial explanation. Yet, if it be of
service in whatever way for making clear
the current state of loan business handled
by various Japanese banks, the purpose of
this small article is, the writer believes,
amply met.
(1) Proportion of Supply of Loans in
the Operation of Fund.
While the make-up of accounts itself was
already dealt with, as mentioned above, in
No. 2 of this Bulletin, the following shows,
though it is somewhat of the same nature,
how much proportion the loan occupies in
the operation of funds of banks. In the
period immediately preceding the outbreak
of World War II, some 60-70 per cent of
the deposits of the banks were loaned out,
the remainder being invested for securities.
But, this proportion markedly went up, after
the end of the war, the year 1949 showing
a 86 per cent high in the ratio of loan
supply. This change alone may well be re-
garded as significant; but, when compared
with the manner of operation of funds
of bank in America and England, this
adds a further appearance that the funds
of. Japanese banks are decidedly a "risky-
asset". However, such ratio in the opera-
tion of funds is of course to be largely
affected, as it is so with the ratio of de-
posits against loans, by various conditions
of the national economy as well as by the
charactristics of bank deposits which serve
as the source of much funds.
1. Composition of Earning Assets
(Japan)
At the end
of
Year
Loans
&
Discounts
Securities
1916
85?;
15%
17
84
16
19,
83
17
19
85
15
20
85
15
21
81
19
22
82,
18
23
82
18
24
83
17
25
81
13
1930
68
32
31
69
31
32
68
32
33
64
36
34
60
40
44
53
47
45
62
38
46
69
31
47
65
35
48
75
25
49
86
14
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Despite the fact that accumulation of
capital has been meager in Japan, more
loans were supplied than deposits, as
stated in the article "Basic Analysis of the
`Over-loan' Problem" appearing in No. 3 of
this book, from the years of 1900 through
to the thirtieths; at the same time, the
ratio of loans against the holding of securi-
ties during the period of 1916-25 is the
same as at present, as shown in Table I.
This apparent similarity does not of course
show the sameness of basic circumstances,
yet the relations between the loans and
valuable papers in the operation of bank
funds have, at any rate, gone through con-
siderable changes.
The fact that securities hold such a small
ratio as at present should be looked upon
with great concern from the standpoint of
stability and fluidity of assets. This state
of affairs is to be attributable to the scanti-
ness of reliable debentures, as well as of
government bonds, and also to the reality
of the situation in which various enterprise
companies find themselves compelled, be-
cause of extreme narrowness jnd unsta-
bility of stock-markets, to rely upon borrow-
ings from banks, being unable to issue
company stocks. But we shall leave this
point for explanation on a later occasion.
(2) Proportion of Uses' of Loans.
The primary principle of loaning by
commercial banks seems to be that loans
should be diverted, like discounts of com-
mercial bills, toward the so-called opera-
tional funds which are easy to withdraw
within a short period. This is especially
true in view of the fact that the source of
such funds is the deposits which differ from
long-term funds through issuance of de-
bentures and that even those deposits are,
unlike those of savings banks, made up of
primarily "demand deposits" which are
always subject to withdrawal. But this
form of commercial short-term financing
does not always have the same quality
because of changes in the aspects of na-
tional economy and of management of
various enterprises, in particular. For
example, those countries where capitalism
has made.a marked growth like the United
States, the financial power of an enterprise
(capital accummulation) is such that it can
by itself cover needed operational funds of
this sort (at least as in the case of many
large and concentrated enterprises). An-
other factor to be noticed is that a high
degree of development of transport facili-
ties and a change in the practice of holding
inventories have reduced the necessity of
short-term commercial financing to such an
extent that the banks are compelled to
divert their funds to other uses. This is
shown very clearly in attached Table II,
which shows a drop in the amount of the
so-called commercial loans as against the
total loans supplied, from 32% as of the
end of 1938 to 25% as of the end of 1949
in American banking.
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II. Loans & Investment of All Insured Commercial Banks in America
(in Billion Doller)
End of
Year
Total
Loans
&
Investment
Total
Loans
Commercial,
including
open market
paper
Agricultur-
al Loan
Loans for
purchasing,
carrying
securities
Real
estate
Loan
Consumer
Loan
Other
Loan
Total
Invest-
ment
1938
37.4
16.0
5.6
1.0
1.8
3.8
3.4
21.4
39
39.2
16.8
6.3
1.0
1.6
4.1
3.6
22.4
40
42.5.
18.3
7.1
1.2
1.3.
4.4
4.0
24.1
41
39.2
21.2
9.2
1.4
1.2
4.7
4.5
28.0
46
112.1
30.7
14.0
1.3
3.1
7.1
4.0 1.0
81.4
47
114.2
37.5
18.0
1.6
2.0
9.2
5.6 1.0
76.6
48
112.2
41.9
18.7
2.7
2.2
10.6
6.8 1.0
70.3
49
118.2
42.4
16.9
2.9
2.6
11.4
8.0 1.1
75.7
from " Banking & Monetary Statistics
P Federal Reserve Bulletin

< // >
Likewise, in England, in such leading
banks as the Lloyds, the Midland, the
Westminster, etc. the ratio of advances
against assetts dropped from somewhere
about 40% as of the end of 1939 to 20%
or so as of the end of 1948. It needs little
explanation that such drop in the amount
of short-time commercial loans is well set
off by an increase in investments in the
form of securities to say nothing of national
bonds. A striking fact relative to this in
the United States is a phenemonal rise of
real estate loans and consumer loans.
In Japan, however, although it is some-
what difficult to distinguish commercial
loan from other loans due mainly to dif-
ferences in the compilation of over-all data,
we find from the following table a peculiar
tendency of our banking loans in distinc-
tion between short-time loans (operational
funds) and long-term loans (equipment
funds) .
To comprehend Table III, the reader
should note that the figures covering the
the years upto 1945 stand for the war-
time period when financial control was be-
ing enforced and also that the banking
organs listed there include special banks
(the Industrial Bank, the Hypothec Bank,
the Cdlonial Bank of Hokkaido), whose
primary task is to advance long-term loans.
(Also note that these are the only available
figures.) In other words, it will be seen
first of all that because of an expansion of
equipments carried out before the necessity
of rapid expansion in the output of muni-
tions, equipment funds occupy a compara-
tively large share. Secondly, care must be
taken not to judge the character of ad-
vances from ordinary banks directly from
Table III, because the advances from those
special banks then occupied 40-30% of the
total advances from the nation's entire ad-
vances combined. But the post-war figures
show a marked drop in the proportion of
equipment funds. This is due to a con-
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tinual increase of demand for operational
funds from enterprise, following a spiral
aggravation of inflation. These post-war
figures do not include the advances made
by the Reconversion Finance Bank (a
national banking organ which was in charge
of advancing a greater portion of equip-
ment funds that were made outside the
object of loaning from ordinary private
banks, for the purpose of war-damage
restoration; in March 1949, which was the
peak period in loaning, it advanced Y-140
billion or one-third of the total advances
from all banks combined, of which 70%
was diverted toward equipment funds).
Accordingly, if the share done by the
Reconversion Finance Bank is computed,
the post-war proportion would come up to
almost the pre-war level.
III. Loans of All Financial Intitittions
(all Banks) of Japan as Divided by Use
(in billion yen)
Fund for
Operation
Fund for
equipment
0;
0/
1940 Dec.
8.1 (66.5)
3.4 (33.5)
1941
9.1 (66.0)
3.8 (34.0)
42
10.7 (65.5)
4.4 (34.5)
43
14.4 (70.0)
6.3 (30.0)
44
27.9 (74.0)
10.1 (26.0)
45
32.5 (75.0)
11.2 (25.0)
49 March
381.192 (92.9)
28.9 (7.1)
o Dec.
631.762 (92.8)
48.8 (7.2)
50 Sept.
787.696 (90.7)
80.6 (9.3)
Because such division between opera-
tional funds and equipment funds is only
a documentary division through papers filed
before loaning, it is doubtful, of course,
whether those loans, thus advanced, are
being actually used as originally intended.
Be that as it may, if the conclusion were
to be drawn from these statistical facts as
visible in the above-mentioned Tables, we
might say like this: In Japan where ac-
cummulation of own capital of an enterprise
is inadequate, especially since the adoption
of a vigorous deflationary policy designed
for suppression of inflation, the relation-
ship between the entire banking organs
and the industrial circles is so very direct
and close that the banks are advancing
funds to enterprises, not in the indirect
form of company debenture or stock, but
in the form of direct advance. What is
more, almost all such advances are diverted
toward industry, and consumer loans or
real estate loans ' which have come to draw
so much attention in the United States
don't have any significant position sta-
tistically. In fact, individual credits merely
occupy a little over 1% of the total ad-
vances of the nation's all banks combined.
(3) Division of Loans according to
Trade.
Table IV also indicates the results ob-
tained by adding the post-war figures to
the substantial data based on the minute
investigations of advances made from the
nation's entire banking organs, which were
a product of the financial control during
World War II. However, because the post-
war classification according to trade does
not always comprise the same elements as
the pre-war one, and also because the pre-
war data cover the entire banking organs
(including the special banks), while the
post-war data cover ordinary ' banks only
(excluding the above-mentioned Reconver-
sion Finance Bank), there lacks con-
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sistency, in the true sense of the word.
Moreover, with no data available about
loans supplied by. all banks according to
trade for the period preceding the time
covered by this Table, it is impossible to
make a comparison with the pre-war period.
Besides, taking into consideration the fact
that bank advances in post-war Japan have
been regulated, as in the war-time, by the
financial control policy of the Government
under the inflationary circumstances, where-
by advances were made with priority given
to the so-called "designated key industries
and trades", thereby rendering unimportant
and non-urgent enterprises totally inacces-
sable to loans (such control is no long
existent), this Table does not reflect, by
any means, the natural result of own selec-
tion on the part of the banks for free fund
demand in industry or enterprise. As ex-
plained already, the figures in this Table
do not cover the Reconversion Finance Bank
which since 1947 was solely in charge of
furnishing funds toward such basic in-
dustrial fields as coal, steel, chemical in-
dustry, which have been put on a different
track from the general commercial base.
Also, funds were advanced by. the said Bank
toward various public corporations (control
organs of the State), which were establish-
ed following the enforcement of the price
and rationing controls, in the course of
their respective activities, and when occa-
sion necessitated; consequently, commercial
funds which would otherwise of course be
required under laissez-faire economy had
been made outside the financing route of
the banks until the abolition of the corpo-
ration.
Because such scores of factors as stated
above must, be taken into consideration, it
is only natural that we can not vividly
imagine, from Table IV alone, the real
picture whereby Japan's various industrial
branches are tied up with the banks.
Nevertheless, we may safely and explicitly
point, amidst such restrictions, to the
following facts.
IV. Division of Loans According to Trade (/)
1940
1941
1942
1943
1944
1945
1948
1949
1950
Mining
5.9
6.9
6.6
5.5
4.3
4.4
6.1
5.7
4.8
Manufacturing
42.8
43.8
45.7
46.9
47.9
51.4
58.7'
56.0
55.5
textile
8.1
6.4
5.9
6.2
5.3
3.9
15.4
17.0
17.2
metalic
6.8
7.5
6.6
6.6
7.2
7.1
5.8
6.1
5.6
machine, tool
12.6
15.3
8.6
8.9
11.4
12.6
13.9
13.9
2.6
amunition
8.9
11.3
13.7
17.2
ceramics
1.0
1.0
1.1
0:6 '
0.6
1.8
1.9
1.7
chemical
6.6
7.0
7.8
8.3
7.1
6.6
11.4
11.4
6.7
food
1.8
1.6
1.8
1.5
0.9
0.9
5.5
5.3
5.0
elect. gas
4.8
4.1
4.1
2.7
1.4
1.3
1.1
1.4
1.4
others
1.2
1.0
1.1
1.1
0.9
1.2
3.8
1.5
15.3
Agriculture, Forestry
0.7
0.7
0.5
0.5
1.2
0.5
1.7
1.3
0.8
Fishery
1.0
0.8
1.0
0.9
0.6
2.7
2.4
1.6
Transportation
6.7
6.1
6.0
5.5
4.2
4.2
3.5
3.9
4.3
Commerce
19.6
21.1
21.4
17.4
21.6
20.2
16.0
21.7
24.5
Others
23.2
20.5
18.7
23.0
20.5
18.5
11.3
9.0
8.5
Total
100
100
100
100
100
100
100
100
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The first fact is that almost all bank
loans are absorbed into some sorts of in-
dustrial branches, and that, with the excep-
tion of a very few special banking institutes
with a very limited sphere of activity, the
entire banks of Japan are putting, or rather
are compelled to put, entirely outside their
consideration real estate loans for building
houses or individual conscumer loans. The
second is that so little portion, almost
surprisingly small at that, is occupied by
agriculture, forestry or marine industry, of
all the industrial branches as the objects
of loaning. By the way, it is also charac-
teristically true that these three industrial
fields can't keep up pace with growth of
modern capitalism from the standpoint of
management even in advanced foreign
countries. And such tendency is particular-
ly eminent in Japan. Consequently, what
could be the object of loaning from the
banks which are modern banking organs
insofar as ' aggricultural management is
concerned cover lumber sawing, tea manu-
facture, sericulture, and a portion of stock-
raising, besides the farmer cooperatives.
The actual state of loaning towards them
is, as seen from the above, very small in
amount.
When this situation is compared with
that in the United States, it becomes clear
that loans supplied by the Japanese bank-
ing organs are overwhelmingly inclined, so
to say, to industry and commerce. This
also shows that it is difficult to comprehend
the actual banking and financial conditions
of this country merely from the weight
between the items of deposits and advances
appearing in the balance-sheet or from the
ratio of composition of various items of
accounts.
In addition to what has been stated above,
a further explanation on the bank loan itself
is desirable from many other angles such
as actual ratio of withdrawal, state of
spread of loans in scale per case, analysis
of interest, the problem of mortgage to be
put up, etc. But all this has to be left
untouched here because of lack of data.
Table V which shows a tendency of mort-
gage against loans in five clearing houses
may serve as a reference.
V. Composition of Mortgage Against
Loans for Member Banks in Big
5 Cities' Clearing Houses
Year
mortgage
1940
1941
1942
1943
Not-Secured
530;
55%
59,
66
Securities
21.7
18.1
16
13.1
Commodities
2.5
2.8
2.2
0.3
Real Estates
4.4
3.8
3.2
2.6
Syndicate
4.2
4.6
5
4
Bonds &
Deeds
12.8
14.0
12.7
12
Others
1.4
1.6
1.9
2
Total
100
100
100
100
At any rate, an explanation has been
given above, though inadequately, on the
loan accounts of the bank itself. Finally,
we shall touch, before concluding this little
article, briefly upon, apart from the bank,
what position the bank loan occupies today,
viewed from an over-all angle of procure-
ment of industrial fund.
Ordinary banks in Japan have ceased
any longer to be such type of banks as
related to issuance of debentures and stocks
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with a German nature as in the past, in
line with economic democratization follow-
ing her defeat in the war, but have come
to devote themselves solely to banking
business only, separated from floation busi-
ness. That is exactly the course anticipated
to be followed by commercial banks serving
as the supplier of short term industrial
funds,-which reflects an ideal of democra-
tization of banking system in Japan. On
the other hand, however, on the part of
industrial enterprise, a greater part of their
accumulated capitals'have been lost due to
war damage and other factors, and yet,
they desperately needed a. huge amount of
long-term funds for restoration of their
productive capacity, the fact that has
brought, as stated above, the Reconversion
Finance Bank into a most brilliant activity.
Because the supply of those funds from
the said Bank, made available in the form
of the Bank's debenture to be accepted by
the Bank of Japan, brought about an in-
creased issuance of bank notes, and thus
was considered to become a major cause of
inflation, they were finally banned under
the plan laid down by Mr. Dodge. Con-
sequently, the alternative, and at the same
time the desirable picture, would be for
each enterprise to seek its requisite long-
term industrial fund in the form of internal
reserves, increased capital, and company
debenture, etc., namely, as the capital of
its own. But, at the present stage, there
is no prospect that the internal reserves in
enterprise could be rapidly expanded a
great deal, while either an increase of
capital or issuance of company debentures
would be virtually impracticable under the
current dull circumstances of security
market, except a few exceptionally superior
companies. Such being the case, the posi-
tion of an ordinary bank in the field of
supply of industrial fund, could not remain
merely as the supplier of short-term com-
mercial loans, much against the original
task imposed upon it. This is clearly seen
from Table VI, shown hereunder, which
was compiled on the basic of material
supplied from ESB.
VI Results in Supply of Industrial Fund (Showing net increase)
(100 million yen)
Year
1949
1950, 1st Half
det to is
Sources
Equipment
Operation
total
??
Equipment
Operation
total
io
Loans of Banks
313
3,817
4,130
71.7
226
1,346
1,572
71.6
C. P. Fund
246
0
246
4.3
39
0
39
1.8
Debenture
189
77
266
4.6
129
71
200
9.1
Stock
364
371
735
12.8
68
. 78
146
6.6
Internal Reserve
190
190
380
6.6
120
120
240
10.9
Total.
1,302
4,455
5,757
100
582
1,615
2,197
1.00
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lUJI BANk BULLETIN
The activity of this `monster-like' Re-
conversion Finance Bank reduced gradual-
ly, if not altogether, in 1949-50. There-
fore, the banking organs, so called here,
can be regarded primarily as ordinary
banks, whose supply of fund reaches, no
doubt, more than 70 per cent of the total
loans supplied. Besides, procurement of
debentures means after all absorption by
banks owing to dullness in security market,
so that as much as 80-90 per cent of the
total industrial fund had to be relied upon
banks. Also viewed from the angle of uses,
equipment funds which could not be the
object of commercial bank loans, were
actually supplied by banks in a larger
amount than through any other sources,
namely, 24% through direct loans alone,
which, plus indirect investment through
absorption of debentures, comes up to 40%
in total. (It must be noted that of all those
banks, such old special banks as the In-
dustrial Bank, the Hypothec Bank, the
Colonial Bank of Hokkaido, the Central
Bank for Agriculture and Forestry, etc. are
issuing bills anew, by which a greater part
of equipment fund has been covered.)
All this explains, after all, the circum-
stances under which a state of "over-loans"
from banks, as it now appears, is really
unavoidable. It also makes it clear that
banks have had to procure a considerably
large portion of such huge fund by means
of borrowings from the Bank of Japan.
Thus, it will be seen the very difficulty of
accumulating and procuring capital for
enterprise is affecting directly and serious-
ly the form and character of bank loans,
as stated above.
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COPPER, LEAD AND ZINC IN JAPAN
COPPER, LEAD AND ZINC IN JAPAN 19
Introductory remark.
Actual results of production.
Latest condition of demand and supply.
Change in prices.
Conclusion.
The non-ferrous metal industry has only
a short history. It appeared late on the
stage of modern capitalism built up on iron,
steel and coal, yet it is playing an indis-
pensable support's role. Our country is
known for copper mining from ancient
times but the production of the other
minerals under review began later than
Mid-Meiji Era. As the Japanese economic
reestablishment after the war was started
under a snow-man system (priority produc-
tion system) of iron, steel and coal, the
production of non-ferrous metals has been
put in a very disadvantageous condition.
Following the adjustment of gold, tin and
sulpher mines during the war, middle and
small-sized mines, which had escaped down-
fall due to the profuse protection of the
State lost support and their number steadily
decreased. As to the remaining mines,
there were deterioration of working condi-
tion resulting from irrational extraction
during the war, extreme lowering of opera-
tional efficiency and spiral inflation, and
serious restriction in capital, material,
transportation, electric power, etc. In spite
of these causes for high production cost,
controlled economy held down their prices,
and as a result figures in red had been
ever increasing in mining enterprises'
books.
Since 1949, however, non-ferrous metals
except gold and silver have met a boom due
to sudden rise in price. Now the Govern-
ment began to show good-will and concern
to the metal industry which on its part
made good its rationalization of operation.
Especially the critical change in interna-
tional relations has brought about increased
prices of non-ferrous metals and attention
is being attracted to a metal boom develop-
ment.
But when compared with the peak during
the war, there is a remarkable snag of
production.
1949
peak period in
1943
(in one thousand
tons)
(in one thousand
tons)
Electrolytic copper
74,037
123,499
Electrolytic and
distilled zinc
Electrolytic lead
12,599
30,040
The latest monthly production (Aug.
1950) is: Electrolytic copper 7,196 tons,
Electrolytic lead 1,298 tons, Electrolytic
zinc 2,858 tons and Distilled zinc 1,436 tons.
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FUJI BANK BULLETIN
There are some fundamental features in
the Japanese non-ferrous metals mining
which include :
In the first place, it is remarkable that
in Japan big capitals co-exist with small
ones. Small as Japan is in its extent, there
is such a great variety of mines as is rarely
seen in other countries. A large part of
mining enterprises consists of 'small capitals
operating limited mining claims. As they
have no smeltery, they have to sell ores at
low prices to a few big enterprises which
have smelteries.
There are about thirty major mining
companies while others are mostly indi-
vidual mine-owners. Big enterprises with
smelteries (the Nihon Kogyo, the Taihei
Kogyo, the Kamioka Kogyo, the Furukawa
Kogyo, the Besshi Kogyo, the Dowa Kogyo)
monopolize a greater part of the metal
industry in Japan.
Amount of Copper Gold
deposit
Silver l
Sulphide
Zinc
Lead
A thousand
A thousand
tons
A thousand
A thousand
A thousand
A thousand
ton
ton
ton
ton
ton
ton
Taihei Kogyo
21,348
20.6
13.4
0.4
-
308
125
Kamioka Kogyo
38,867
-
15.5
1.2
1,653
150
Besshi Kogyo
22,500
184.1
32.9
0.5
-
20
7.5
Nihon Kogyo
21,657
147.4
12.0
0.1
2,986
-
-
Furukawa Kogyo
9,131
218.8
2.7
7.7
-
18.3
6.7
Dowa Kogyo
41,243
23.4
-
-
11,241
Matsuo Kogyo_
141,679
-
-
-
141,679
Chugai Kogyo
3,200
-
7.5
0.25
-
32
17
Toho Aen
3,400
-
2.8
0.18
210
90
In 1948, the products of the six compa-
nies mentioned are copper 80%, lead 74%,
zinc 77% and sulphide 63%. On the other
hand, there are thousands of small enter-
prisers who continue to sell ores and are
playing an important part in supply of
materials to smelteries. But in order to
enable them to get ores at low prices from
small mines, prices of ores are set at very
low rates, and in cost accounting, it is so
arranged as to set a margin for the
smelters. Thus poor mines are operated
only in a boom season and closed in depres-
sion, playing the part of a "cushion
reserve". Anyway this large number of
small enterprises forms a special feature
of the Japanese metal mining as in the coal
industry, and affords a lot of difficult ques-
tions from the administrative standpoint.
Secondly, our metal mining is favored
with cheap labor and on that account
mechanization is being delayed. In other
words, the goal has been set in increasing
absolute surplus value through constrained
labor and low wages rather than realizing
relative surplus value by improvement 'of
production of labor, and little effort har
been made for improvement of technique
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and efficiency.
Thirdly, the greatest problem is that,
different from other kinds of industry, the
metal industry needs an exceedingly long
years and a large amount of capital for
exploitation, with a long time required for
a turnover of capital. Once closed, a mine
requires more sacrifice in reopening it than
developing a new mine as our gold mine
adjustment in the war-time well testifies.
On account of these special features of
metal mining, big mining companies had
been either affiliated with Zaibatsu or stood
under their protection. (Of the foregoing
six companies, the Kamioka Kogyo, the
Taihei Kogyo, the Besshi Kogyo were under
the direct control of the Mitsui, Mitsubishi
and Sumitomo respectively. The Nihon
Kogyo had belonged to the Nissan Concern
and the Furukawa Kogyo had formed the
nucleus of the Furukawa Concern as is well
known.) Enterprises connected with the
Zaibatsu had been in league with the
Zaibatsu banks while others had had the
Industrial Banks of Japan, the Teikoku
Kohatsu and other special banks to depend
upon. Especially, during the war the
Controlled Distribution Company estab-
lished to meet an enormous metal demand
during the war monopolized all purchases,
and there existed no financial difficulties.
As to equipment capital, there was no
difficulty of obtaining it as the Government
gave mandatory accommodation. After the
war, the Zaibatsu and other privileged
institutions were dissolved and disappeared.
Production consequently decreased in metal
mines. Japanese mining companies with
small capital and assets met with a crisis
through unbalance of incomes and outlays
on account of inflational spiral, and through
financial 'difficulty due to depression of
metal secondary and subsequent processing
businesses. Lately the market is turning
for the better and enterprises are showing
an upward trend. But it is a pity that
banks are still unable to meet demand for
big long-term loans sufficiently.
Since the war's end our metal mining
industry which had been under special
condition mentioned, had passed through
a vacuum period (Aug. 1945-Mar. 1946),
a fuel shortage period (April 1946-Dec.
1946), a red account period (since Jan.
1947), until it entered a self-supporting
period in April 1949, followed by an inter-
national boom since April 1950.
A) Mining production.
Non-ferrous mining industry in Japan
made a remarkable development in the
decade beginning 1935 through the China
Affair and the Pacific War, and reached its
peak around 1943, its scale being expanded
from twice to five times as much as that of
the basic period (1930-1934). Its produc-
tion, however, declined gradually thereafter,
the war rather proving a stumbling-block
to it. It rapidly sank low since the end
of the war, which precipitated the down-
ward movement of industrial production in
general due to the war damage and dis-
appearance of war-time demand.
Recovery of production became gradually
conspicuous in 1948, in spite of accelerated
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adjustment of enterprises, and the produc- silver, copper or tin was much lower than
tion especially of lead, zinc and pyrites the average output of the 1930-34 period.
rose higher than the average level of the It was, however, increasing steadily, as
1930-34 period. compared with that at the end of the war.
On the other side, the production of gold,
Table 2. The Amount of production of principal non-ferrous metal ores.
(In calender years)
Gold
I
Silver
Copper
Lead
Zinc
Tin
L
J
Pyrites
kg
t
t
t
t
- -
t
__
Thousand Tons
1930--34
13,143
181
72,559
5,586
27,985
1,264
768
(100)
(100)
(100)
(100)
(100)
(100)
(100)
37
23,010
314
86,728
10,392
49,233
1,702
1,928
(175.0)
(173.5)
(118.2)
(185.9)
(175.9)
(134.7)
(264.3)
40
26,957
356
99,841
16,808
61,078
1,781
1,859
(505.1)
(196.7)
(137.6)
(300.9)
(218.3)
(140.9)
(242.8)
43
11,465
234
112,776
29,828
61,883
1,815
1,168
(87.2)
(129.3)
(155.4)
(533.9)
(221.1)
(143.6)
(152.1)
45
2,486
63
23,300
9,480
16,606
62
435
(18.9)
(34.8)
(31.1)
(169.7)
(59.3)
(4.9)
(56.6)
46
866
48
23,271
4,965
11,253
162
493
(6.6)
(26.2)
(32.1)
(88.9)
(40.2)
(12.8)
(64.2)
47
1,783
59
21,883
5,929
29,674
111
832
(13.5)
(32.6)
(30.2)
(106.1)
(106.0)
(8.1)
(105.7)
48
2,170
69
25,711
6,676
33,217
120
1,139
(16.5)
(38.1)
(35.5)
(119.5)
(118.7)
(9.5)
(148.4)
49
2,629
85
32,741
9,106
44,314
192
1,535
(20.0)
(47.0)
(45.1)
(163.0)
(158.4)
(1.5)
(199.9)
Table 3. The results of production in crude copper.
Crude copper
1948
1949
Percentage (%)
Kunitomi, Hokkaido
738
1,381
1.8
Ozarusawa, Akita
5,624
7,005
9.1
Kozaka, Akita
3,742
5,811
7.6
Hatsumori, Akita
1,536
1,869
2.4
Nagamatsu, Yamagata ?
178
117
0.2
Hitachi, Ibaraki,
14,621
13,785
18.0
Ashio, Tochigi
4,792
6,103
8.0
Ogoya, Ishikawa
1,854
1,889
2.5
Hibi, Okayama
3,927
Naozima, Kagawa
3,437
10,805
14.1
Shinsakajinra, Ehime
9,573
11,353
14.8
Saganoseki, Oita
11,051
10,688
13.9
Others
10,523
1,889
2.5
Total
65,791
76,622
100
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1948
1949 Percentage 000
Hosokura, Miyagi
3,770
5,160
1 42.1
Aizu, Fukushima
736
487
4.0
Hitachi, Ibaraki
161
444
3.6
Murakami, Niigata
417
417
3.4
Kamioka, Gifu
4,087
4,801
39.1
Saganoseki, Oita
236
954
7.8
Konomai, Hokkaido
10
Total
9,407
12,266
100
Table 5. The amount of production of metals.
(Unit : 1,000 m. ton)
Electrolytic copper
Lead
Zinc
1935-37
78.5
8.9
40.8
1938
95.2
11.1
56.1
1939
93.4
13.7
61.5
1940
94.8
18.0
63.1
1941
81.6
18.1
64.0
1942
91.2
24.8
59.8
1943
112.8
29.8
61.9
1944
90.2
43.1
60.0
1945
25.3
9.3
16.9
1946
23.3
5.0
11.2
1947
36.8
8.4
14.8
1948
54.3
10.3
21.2
1949
74.0
12.7
32.3
d) Metal industry.
Production of metals also declined from
its peak in 1943, the bottom having been
reached in 1946. It could not expand im-
mediately after the end of the war, and the
industry depended mainly on the stock-
piles at the restart. It recovered conspicu-
ously in 1948, but had to tread a thorny
way in 1949, owing to general depression
following the Dodge Line and the abolish-
ment of subsidy.
(The production, however, has been in-
creasing this year under a favorable
condition.)
50% to 60% of the world production of
non-ferrous metals in recent years is
occupied by the United States. Japan, al-
though small in quantity has been included
in the best ten of the principal copper and
zinc producing countries of the world.
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24 . FUJI BANK BULLETIN
Table 6. The results of production of electrolytic copper.
(Unit: ton)
1948
1949
(:'o )
Kosaka, Akita
3,288
5,141
7.0
Nikko Refinery Plant, Tochigi
9,824
14,152
19.1
Hitachi, Ibaraki
13,483
14,608
19.8
Annaka, Gunma
706
1,328
1.8
Mitsubishi Osaka, Osaka
8,867
11,486
15.5
Takehara, Hiroshima
3,075
3964.
5.4
Araihama, Ehime
10,370
12,527
16.9
Saganoseki, Oita
10,456
10,714
14.5
Total
60,073
73,923
100.0
Table 7. The results of production of electrolytic lead.
(Unit: ton)
1948
1949
(90)
Hosokura, Miyagi
3,131
4,462
34.0
Aizu, Fukushima
618
526
4.0
Murakami, Niigata
443
400
3.1
Fukuoka, Gifu
3,432
4,435
33.2
Sahara, Hiroshima
1,576
2,240
17.1
Saganoseki, Oita
1,993
947
7.2
Annaka, Gunma
3
185
1.4
Total
10,399
13,105
100.0
Table 8. (A) The results of production of distilled Zinc.
1948
1949
(9/0)
Hikoshima, Yamaguchi
2,902
4,412
35.7
Miike, Fukuoka
5,887
7,943
64.3
Total
8,789
12,355
100.0
Table 9. (B) The results of production of electrolytic Zinc.
(Unit : ton)
1948
1949
(00)
Hosokura, Miyagi
3,029
5,406
22.2
Aizu, Fukushima
2,131
3,936
16.2
Annaka, Gunma
681
2,699
11.1
Fukuoka, Gifu
4,883
7,607
31.3
Miike, Fukuoka
2,806
4,681
19.2
Total
13,533
24,329
100.0
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Table 10. Demand and Supply of non-ferrous metals in the fiscal year of 1949.
(Compiled by the Mining Division in the Natural Resources Section)
Classification
Copper
Old copper
New lead
Reprodu-
ed leadc
Scrap lead
Zinc
(Metric ton)
( v )
( n )
( n )
( n )
( // )
Approxi-
(Repro-
mately
ducers)
Refinery Plants
6,000
0
1,933
862
0
2,696
Industry Rehabilitation
Public Corporation
4,823
18,952
914
8,044
7,323
1,410
Mineral and Industrial Pro-
ducts Trade Public Corporation
Dealers (Wholesale)
274
3,484
139
322
302
308
Others
13
796
104
133
212
756
Approxi-
mately
Consumers (running stock)
6,000
34,752
4,136
4,893
8,630
4,976
Total (Instock)
17,110
57,984
13,105
14,254
16,895
10,146
(Accumu-
(Electroly-
lators)
tic zinc)
The results of production in
13,105
20,037
24,330
1949
73,923
-
1,989
6,689
(distilled)
12
355
(Accumu-
,
lators)
The amount of import in 1949
0
0
9,426
0
257
0
Total
91,033
57,984
37,870
40,980
17,152
46,831
Electric
Electric
Electric
Electric wires 3,538
Steel
wires
33,098
wires
1,485
wires
2,640
Accumulators 9,292
23,479
Sheet
Sheet
Accumu-
J2,603
Sheet
copper
4
599
copper
21,176
lato3313
Item 6,689
copper
Delivery for home
,
Cast
Cast
1,244
Item
1
non-organic 596
Zinc plate
consumption
copper
144
copper
9
239
1,989
non-
i
tube and plate 8,150
3,246
Zinc Sower
ty
o
Others
,
for refinery
organ
c
281
Fusible alloy 1,759
4,477
1,651
23,144
tube and
for refinery 5,346
powZinc
der
0
Others
plate
527
for re-production
725
2,316
heavy pin
14,388
Others
ti
2,579
2,500
H
F
Total
39,492
57,360
9,340
8,719
38,854
Metal
Delivery for export
30,032
0
0
0
0
Grand Total
74,372
95,092
11,806
48,719
38,854
(Electroly-
In stock as of the end of
March, 1950
25,896
42,253
27,649
6,614 11,873
j tic 3,471
Distilled
2,354
Electroly-
In hand of supplyers
21,248
4,521
25,183
2,642 9,404
tic 897
Distilled
274
Items
Electroly-
In running stock of
4,648
37,732
2,466
3,972 3,489
tic 2,574
Distilled
consumers
2,080
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4. The condition of supply and demand
in recent years.
(1) Copper
It is estimated roughly that the amount
of average consumption of copper in Japan
during the period of 1925-32 was 6,000 to
7,000 tons a year, and that in the period
of 1933-44 was, according to incomplete
statistics, 135,000 tons, inclusive of the
war-time stockpiles.
Although the consumption increased to
72,319 tons in (fiscal) 1948 and 91,033 tons
in 1949, it was much lower than the pre-
war level. Its supply and demand for 1950
was originally estimated by the Economic
Stabilization Board as following table indi-
cates. According to it, production amounts
to 80,000 tons which is somewhat higher
than about 74,000 tons in 1949 while
demand is 43,000 tons, or 4,000 tons more
than 39.000 tons of the previous year.
Table 11. The plan for demand and supply of electrolytic
copper during fiscal 1950..
(Compiled by the E. S. B.)
Supply (A)
Demand (B)
Stockpiles as of the end of fiscal 1949
9,600(tons)
Electric wires
38,500
Items :
Sheet copper
3,200
In the Public corporation.
4,000
On the market
3,000
Castings
1,300
In refinery plants
9,600
The estimated amount of production
Total
43,000
in 1950
80,000
Items:
Miscellaneous materials for export
40,000
Produced from ores.
37,000
Reproduction of old copper
43,000
A-B-
(to be carried over)
6,600
Total
89,000
Table 12. Demand and Supply of electrolytic copper.
(Investigations by Japan Mining Industry Association)
April
Mar.
June
July
August
Total from
Apr. to Aug.
(tons)
Total Production
6,454
6,751
6,912
7,057
7,186
34,360
Total sales
12,199
11,725
7,600
8,091
11,071
51,494
Stock-piles
6,375
1,399
703
7,402
3,524
3,524
Remark : Sales since July indicate the amount of delivery, so the figures showing the amounts of
stock-piles from June to July do not tally with them.
The actual condition of supply and
demand in 1950 is roughly as follows.
While the amount of production was only
a little above the estimated one, the amount
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COPPER, LEAD AND ZINC IN JAPAN 27
of demand was increasing every month, and
all the stock-piles on the market have been
exhausted since July, bringing buyers of
copper to a state where it is impossible for
them even to make a contract for "futures".
It is due to the fact that, from the be-
ginning of the year 1950, economic depres-
sion in Japan was not so bad as expected
and the export trade enjoyed a boost (6,345
tons In April, 5,560 in May 4,500 in June,
3,600 in July and 2,400 in August totaling
22,405 tons, which were chiefly shipped to
the United States, and the E. C. A. countries
in South America). Generally speaking, it
reflects an intense demand on the world
markets, owing to deficiency in the absolute
amount of copper and an increased demand
by war industries.
Although it may be considered that it
has been affected both internationally and
internally by speculative purchases as a
result of rapid rise in prices, (to be dealt
with later on) the fact that there is an
absolute shortage due to a remarkable
decline in post-war world production of
copper and that there is an expansion of
armament going on in the United States
which is consuming a greater part of the
supply, will have a domiiiant influence on
the international markets, as well as the
copper market of Japan. Both may thus
continue, for the time being, to be "sellers"
markets.
(2) Lead
The presumed amount of yearly con-
sumption of zinc during the period of
1925-33 is 61,000 tons on an average, while
that in.the period of 1934-44 is 85,0,00 tons.
The demand increased conspicuously around
1934-5, being directly stimulated by the
war.
The results of production of lead in 1949
totaled 85,000 tons, but delivery of new
lead amounted only to 11,806 tons. There-
fore, the stock-piles at the beginning of
1950 amounted to an enormous figure of
25,825 tons, including 15,550 tons on hand
by the Public Corporation, which was
brought by the existence of reproduced
lead and scrap lead on the market.
However, international demand increased
suddenly from the beginning of the year
1950, and the delivery has been made twice
of lead on hand by the Public Corporation
recently, totaling 4,000 tons (which had
been imported up to March, 1949, at the
price of about y140,000 corresponding to
18 cents, c. i. f. in Japan, and was exported
at the price of Y39,000, last time), reducing
the remaining stock to 11,000 tons.
On the other side, domestic demand also
increased rapidly, amounting, it is esti-
mated, to about 5,000 tons a month. The
amount of monthly production, under the
present circumstances of productivity in
Japan, is estimated at 1,500 tons in re-
production and 1,300 tons in manufacture
from ores, in consequence of which about
2,200 tons stored by the Public Corporation
have to be released. Consequently, their
stock-piles will be consumed completely by
the end of 1950, marking a turning point
in the condition of demand and supply.
While there has constantly been pressure
on the market brought by an enormous
quantity of old lead and scrap lead, they
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have been exported to the extent of 4,500
in May, 1,890 in June and 50 in July (due
to special procurement demand), and 670
in August, totaling 7,110 tons, about
Y80,000 in value at the price of 11 cents,
f. o. b. (Their export, however, has been
bauned since July)
Accordingly, it is quite gratifying to the
business concerned that the demand and
supply plan of 1950 (see Table 13) which
was so pessimistic has been overstepped.
Table 13. The Plan for Demand and Supply of Lead in 1950.
(Compiled by the E. S. B.)
Supply (A)
Demand (B)
The amount carries over from the
Electric wires
5,000
previous year
Accumulators
4,480
in stock at refinery plants
8,300
"by the Industry Rehabilitation
Non-organic Chemicals
200
Public Corporation
897
Total
9,680
" by the Mineral and Industrial
Others
1
000
Products Trade Public Corporation
15,550
,
Others
75
Grand Total
10,680
On the market
1,000
A-B=
34,642
Total
25,825
(excess in supply)
The amount of production under
plan for 1950
in refinery plants
17,500
Reproduction
2,000
Total
19,500
Grand total
45,322
Table 14. Demand and supply of electrolytic lead in 1950.
(April-August)
April
May
June
July
Aug.
April-Aug.
Production
1,250
1,269
1,298
1,397
1,298
6,520
Sales
104
5,677
3,277
2,546
1,906
13,510
Stock
each les at month end
of each
9,540
5,042
3,063
2,389
3,695
3,695
(3) Zinc
On zinc the report of the Office of Natural
Resources says that the average estimated
volume of consumption was figured at 5,400
tons between 1925 and 1933 while it was
figured at 82,000 tons between 1934 and
1944.
After the war, the output for 1948 was
45,933 tons which was decreased to 38,854
tons in 1949. However, according to the
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program for 1950, it was figured at 57,218
tons, somewhat larger than the actual
output for the previous year. These figures
prospectively include 300 thousand tons of
galvanized sheet of which 200 thousand
tons are for export. The output of galva-
nized sheet covers more than 70% of the
total supply and demand; thus the business
condition of galvanized sheet finally decides
the fate of zinc industry. It will be seen
that the output of galvanized sheet for the
year 1950 is larger than what was original-
ly planned which had been regarded as
vastly over-estimating, the amount being
21,847 tons in April, 21,947 tons in May,
25,361 tons in June, and 29,751 tons in
July making a total of 98,907 tons for the
1st quarter of the year of which 45,657
was for export. Accordingly, as shown in
the attached table, the shortage of zinc on
stock is apprehended. The estimate for
the 3rd quarter of the year is 12,900 tons
of zinc for refinery and 500 tons for re-
production, the supply of which reveals
considerable shortage, and it is desired to
have 2,000 tons of zinc ores imported.
Since the import price of zinc is 33 cents
c.i.f. Japan, there prevails strongest market
for it at present.
Table 15. Plans for Demand and Supply of Zinc for 1950.
(E. S. B.)
? Supply (A)
Demand (B)
Carried from the previous year
Secondary Iron and Steel products.
31,818
Import
1,080
Electro-plated
1,500
Stocks on hand
500
Copper articles
1,200
Total
1,580
Zinc plates
4,000
Zinc powder
6,060
Production plan for the present y
ear
Zinc dust
1,200
Refinery (electrolytic zinc)
35,500 (Ton)
Diecast
200
n (Distillation)
14,500
Machinery
400
Re-production Distilled zinc
2,000
Shipping
300
Total
52,000
Communication
100
Amount supplied
53,500
Total
57,218
Others
782
Volume of demands
53,560
Table 16. Demand and Supply of Electrolytic Zinc for 1950.
(April to August) Demand and Supply of Electrolytic Zinc
I April May
June
July
August
Total
Production
2,446 2,835
2,737
2,847
2,858
13,724
Sales
2,592 2859
2,415
3,173
2,787
13,820
Stocks on hand
at month end.
245 221
543
784
855
855
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Table for Demand and Supply of Distillated Zinc
(April-August)
Kamioka Mine
1,376
1,420
1,429
1,429
,436
1
'1,090
Sales
1,088
1,115
1,703
1,470
1,544
6,920
Stocks on hand
at month end.
139
446
172
131
167
167
5. Shifting of Prices.
Of the prices of various non-ferrous
metals, those of electrolytic copper, lead
and zinc form the center of movements.
These products being regarded as chief
materials for industrial products, the con-
sumption prices up to the year 1949 were
officially fixed at low rate while producers
were given subsides to cover price dif-
ferentials. Due to such stilted doublefold
economy, the law for price was interrupted
by the power of the State.
However, since the last year, the Dodge
classic measure for stabilization has been
adopted. with a view to place economy on
free commercial base, which has brought
about the abolishment of subsidies for non-
ferrous metals as well as their control.
Note: The producers' price of electrolytic
copper was 1?181,060 and that of consumers
Y102,014, that of electrolytic lead Y80,810 and
that of consumers 1E59,103, that of electrolytic
producers was y58,030 and that of consumers
x`42,284 and that of steam zinc producers was
Y55,030 and that of consumers 142,284. On
April 1, subsidies for electrolytic lead and zinc
were given up, followed by the lifting of
control on September 2 while subsidies for
electrolytic copper were done away with on
Oct. 1 the same being placed in the . free
market.
Naturally, prices of these non-ferrous
metals will be eventually decided in the long
run in free market by cost expenses, but
in general prices being swayed by specific
economic circumstances such as war etc.
will be determined by the influence of
demands rather than of supplies. Further-
more, these political and economic condi-
tions give rise to active movements in
international market. In the non-ferrous
metals which, are international articles of
commerce, there is every tendency that the
Japanese market with a limited supply
capacity in international markets has to
follow the New York city market in U. S. A.
which is the largest producer and consumer
in the world.
With reference to pace of price move-
ments since 1926 for electrolytic copper,
lead and zinc both in America and Japan,
we find the following to say; (all these
prices are after spot quotation in mines.)
There is a tendency that prices of copper,
lead and zinc in America preceed in rise
and fall the prices of general goods. In
this sense, it may be said that the recent
sudden rebound of prices spells the boom
of the stock. market and prosperity of
America in general.
The attached table gives prices move-
ments subsequent to April the year 1950.
Entering the year 1950, prices of goods
in America have made striking advance
and there is every, tendency for the increase
of demand for non-ferrous metals which are
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needed as strategic goods with the intensifi-
cation of cold war. Besides the securing
of domestic resources, America is concen-
trating her efforts to secure metal re-
sources' overseas, by passing Strategic
Goods Storage Law, including copper, lead,
zinc, and tins. It is said that the question
of customs duties resumption has been put
off, but prices will remain strong under the
pressure of international conditions.
The market price of electrolytic copper
which was quoted at !131,000 in 1949 year
has shown ascending graph on the right
due to the decrease of old copper and to
that of copper scraps used as the materials
for electrolytic copper. The prevailing
makers' quotation was !158,000 in June,
but due to international market activity
subsequent to the Korean hostilities, it
jumped up to !165,000 as soon as we entered
into July, and to !170,000 in the course of
the same month. The recent export negoti-
ation reached 28.5 cents, and the market
price underwent a great change, the same
being quoted at Y200,000 (!195,000 in
Osaka). On September 14, the Japan
Mining Industry Co. set up a price of
Y210,000 in cathode while negotiations were
made on the 18th along this line. This
price may be regarded as approaching
26.50 cents (!209,000 per ton) at the
present New York quotation which is 24.50
cents plus 2 cents customs duties (Oct.
1950). In response to this tendency, the
Besshi and other mines set-up prices quot-
ing !22,500 (In many mines set-up prices
have not been published), and the city
quotation actually reached !230,000, and in
some cases, export negotiation was made
even at '35 cents f. o.b. (the same being
30-31 cents for export to America). How-
ever, generally speaking, at present the
price has reached its peak. It is expected
that price will not possibly go up any
higher.
B) Lead and Zinc.
International prices for these metals were
high, and our cost prices were higher than
controlled prices, which created strong
desire to raise controlled prices, and in
April, last year, with the abolishment of
subsidies, consumption prices were raised,
so that. both producers and consumers prices
were raised !80,800 for lead and Y58,000
for zinc respectively. On September 2, the
price control was given up. The price for
zinc after the abolition of its control which
was 1`73,000 rose to !76,000 at the end of
the year which again at the end of the
present year suddenly rose from !88,500
in Feburary to !100,000 in June, in fact,
in the middle of May, a high quotation
such as !120,000 was made at a time. The
market remained somewhat quiet later, but
in July it showed a. sharp rising curve, and
in August, it went up close to !158,000 or
!160,000 as in response to the American
set-up price of 15 cents. At present, ruling
prices in Japanese markets, are !180,000
and 1137,000 at the mines.
The price of lead in America showed
firm tendency rising from 11.17 cents in
the past to 12 cents in May while in the
middle of August, the set-up price of lead
went up as, high as 14 cents. However,
the price of lead in Japan evidently due to
stocks on hand of old lead has not shown
such a high rise as that of copper and zinc.
The March quotation at !70,000 or below
gradually went to !85,000 in August. Its
high price came much after that of copper
and lead. At present, its set-up price in
mines is !120,000 and market price went
up in its heels gaining the same-quotation.
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32
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