Palms & Company Document

"Is it logical to form a Russian Mutual Fund?"

by

Dr. Pyotr Johannevich van de Waal-Palms

-Subject: organization of Russian Mutual Fund -Philosophical Questions Various financial and profit considerations exist. However rationale must go beyond profits. Of course, philanthropic work of donations for social, civic and fraternal betterment of Russia all require that profits be earned by donors to these projects.. For Privately owned Corporations, profits are the life-blood equivalent, or substitute for the "tax revenues" of governments. Without profits private donors cannot make "donations" to worthy causes.

It is important for to recognize that the ultimate purpose of many private Western capitalists is to make money in Russia so it can be used for the constructive achievement of social justice in Russia and not for private power.

Dostoevsky said: "Feed men, then ask of them virtue."

In this sense Western Capitalists have evolved more successfully into humanists than Eastern socialists.

It is not necessary for the Founding Council of Russian Mutual Funds to share these goals. They can be achieved by Western co-investors without such collaboration and cooperation. But it is necessary that Russian founders understand such motivations, because ALL of Western investor actions may be directed to serving this larger purpose for their existence. Such motives and beliefs will not reduce the possibilities for profit that collaboration with Western investors offers to the Founding Council of Russian Mutual Funds because those who serves the common good will prosper and benefit personally on a far larger scale than those who would exploit the common good.

It is my experience that as Russian "colleagues" gain in personal fortune, their inclinations for social justice grow more in the same direction as Western co-investors views on this subject.

Permit me to say a few more words about this. In the context of social justice, Corporations function much like governments. Their large numbers permit more diversity than that offered by a more limited number of governments. There are millions of corporations, and only a few hundred governments of nations.

In many ways Corporations are more socially responsible than governments, since their owners already have wealth and sincerely want to share this wealth with the poor by giving it away. Government officials frequently are not wealthy and may desire to become wealthy by misuse of "tax revenues" and by accepting bribes for helping the nomenklatura become rich. This is true to a lesser degree in the United States than in Russia, but nevertheless true all over the world. So the personal motives of government officials may contain some conflict of interest with the best interests of the population, while the motives of corporations are more sincere because the personal positions of the leaders of corporations, who share are more secure than those of political leaders and because corporation leaders have more clearly defined intentions. It is also true that corporation leaders recognize, more truly than politicians, their dependency upon an enlightened and prosperous work-force for the long term production of an expanded GDP. Corporation executives remain in office much longer and have more assurance of re-election by their shareholders, particularly if they control the majority of their shares. Political leaders can sometimes control their countries for only a short time, and by democratic means only if they bring well being to their populations. Otherwise they must function as dictators. It is difficult for business managers to function as dictators unless they own control of their companies and are not trustees of the shareholders as politicians ought to be trustees of their constituents.

Constructive mobilization of Russian intelligent men of good will, must of necessity produce some constructive progress for the Russian economy, whether evolutionary or dynamic (with reform). Profits can be made from economic miscalculations of others and conserved for future use for the. common good. Is it useful when private businessmen perform this function for society. Another way of saying this is that money must be kept out of the hands of people who do not have the intention to help the Russian population. The possibility that Russian Mutual Funds might become an instrument of true economic reconstruction, and enjoy the full support and collaboration of those who currently hold power in Russia, is an exciting possibility that Palms & Company cannot resist pursuing, in spite of the current climate of nihilism that appears to prevail in Russia.

But such an alliance should not be entered into lightly without full recognition on the part of the Founding Council as to the type of motives Palms & Company stands for and represents. Russian founder are entitled to know these intentions and I have therefore taken the time to set forth my manifesto in some detail so that Russian founders are not mislead.

It will be for the Russian Founding Council's to decide if they consider this philosophy compatible with their intentions.

S uvajheniem

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