INTERNATIONAL BANK FOR Public Disclosure Authorized RECONSTRUCTION AND DEVELOPMENT

SEVENTH ANNUAL MEETING OF THE BOARD OF GOVERNORS

Public Disclosure Authorized MEXICO CITY, D. F.

SEPTEMBER 3-12, 1952

SUMMARY PROCEEDINGS Public Disclosure Authorized

DECEMBER 15, 1952 Public Disclosure Authorized

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INTRODUCTORY NOTE

These Summary Proceedings cover the Seventh Annual Meeting of the International Bank for Reconstruction and Development, held in Mexico City, Mexico, from September 3 to September 12, 1952, under the chairmanship of the Honorable Horacio Lafer, Minister of Finance of Brazil. Resolutions of the Board, adopted between the Sixth and Seventh Annual Meetings, have been included.

In committee meetings and in seven plenary sessions, two of which were joint sessions with the Board of Governors of the Inter­ national Monetary Fund, the Board considered and took action on reports submitted by the Executive Directors, and on matters raised during the Meeting. The final schedule of the meeting is attached to this Introductory Note.

In addition, economic development in the principal areas of the world was informally discussed.

M. M. MENDELS Secretary INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Washington, D.C. December 15, 1952

i SEVENTH ANNUAL MEETING

FINAL SCHEDULE

TUESDAY -September 2- 4 :00 p.m.-Joint Procedures Committee WEDNESDAY -September 3-11 :00 a.m.-Opening Ceremonies - 4 :00 p.m.-Opening Session (Joint) Report of Procedures Committee THURSDAY -September 4-10 :00 a.m. -Presentation of Fund Annual Report -11 :00 a.m. -Fund Discussion-Business of the Fund - 5 :00 p.m.-Fund Annual Report Discussion FRIDAY -September 5-10 :00 a.m. -Presentation of Bank Annual Report -11 :00 a.m. -Bank Annual Report Discussion MONDAY -September 8-10 :00 a.m. -Bank Committee on Finance and Organization -11 :30 a.m. -Fund Committee on Finance and Organization - 4 :00 p.m.-Fund Informal Discussion-World Payments Situation and Outlook TUESDAY -September 9-10 :00 a.m. -Fund Annual Report Discussion (resumed) WEDNESDAY -September 10-10 :00 a.m. -Bank Informal Discussion -12 :00 noon -Bank Annual Report Discussion (resumed) - 4 :00 p.m. -Fund Board-Committee Reports and Executive Director Nominations - 4 :30 p.m.-Bank Board-Committee Reports and Executive Director Nominations THURSDAY -September 11-10 :00 a.m. -Fund Board-Election of Executive Directors -11 :30 a.m. -Bank Board-Election of Executive Directors FRIDAY -September 12-10 :00 a.m. -Joint Procedures Committee -12 :00 noon -Closing Session (Joint)

ii CONTENTS

PAGE Address by the President of Mexico, Miguel Aleman, September 3, 1952______1 Address by Horacio Lafer, Chairman of the Board of Governors of the Bank, at the Open- ing Session of the Joint Boards of Governors of the Bank and Fund, September 3, 1952__ 2 Address by Eugene R. Black, President of the Bank, in Presenting the Seventh Annual Report of the Bank to the Board of Governors, September 5, 1952______6 Address by Ramon Beteta, Governor for Mexico, at the Closing Session of the Joint Boards of Governors of the Bank and Fund, September 12, 1952______11 Address of the Chairman at the Closing Session--______14

Committee Reports: Joint Procedures Committee Report N o. 1______17 Annex V 1 -Agenda ______19 Annex VI -Committee on Finance and Organization______19 Annex VII -Committee on Finance and Organization-Terms of Reference 20 Annex VIII-Informal Discussion-Subject of Discussion______20 Annex IX -Provisional Sched ule ______21 Annex X -Provisions Relating to the Conduct of the Meeting______22 Report N o. 2______23 Report of Committee on Finance and Organization______25 Report on Marketing Activities of the Bank: Statement by the Director of Mar­ keting of the Bank to the Committee on Finance and Organization, September 9, 195 2 ______27

Resolutions adopted by the Board of Governors between Sixth and Seventh Annual Meetings: No. 68-Terms and Conditions on which Jordan shall be Admitted to Membership in the Bank______29 No. 69-Terms and Conditions on which the Federal Republic of Germany shall be Admitted to Membership in the Bank______30 No. 70-Terms and Conditions on which Japan shall be Admitted to Membership in the Bank______32

Resolutions adopted by the Board of Governors at Seventh Annual Meeting: No. 71-Fourth Regular Election of Executive Directors______34 No. 72-Financial Statements and BudgeL______34 No. 73-Terms and Conditions on which the Republic of Indonesia shall be Admitted to Membership in the Bank______34

1 Annexes I-IV and XI related to business of the Fund. iii

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No. 74-Terms and Conditions on which the Republic of Haiti shall be Admitted to Membership in the Bank______36 No. 75-Place and Date of Eighth Annual Meeting______37 No. 76-0fficers of Board of Governors for 1952-53______37 No. 77-Composition of Procedures Committee for 1952-53______37 No. 78-Appreciation ______38

Draft Resolution Submitted by the Governors for Czechoslovakia to the Boards of Gov- ernors of the Bank and Fund at the Seventh Annual Meeting______38 Rules for the Conduct of the Fourth Regular Election of Executive Directors______39 Executive Directors Elected at Fourth Regular Election, Seventh Annual Meeting______42 Statements of Principal Speakers at Informal Discussion of Seventh Annual Meeting, September 10, 1952______44 Accredited Members of Delegations at Seventh Annual Meeting______62 Observers at Seventh Annual Meeting______67 Executive Directors and Alternate Executive Directors in Attendance.______67 Officers of the Board of Governors and Procedures Committee for 1952·53______68

iv ADDRESS BY THE PRESIDENT OF MEXICO, MIGUEL ALEMAN, SEPTEMBER 3, 1952

In behalf of the Government and people in the form of technical advice that is always of Mexico I give you, Honorable Governors useful in so complicated a matter, has been of the International Bank for Reconstruc­ undoubtedly valuable and we trust that it tion and Development and of the Interna­ will continue to be such in an ever greater tional Monetary Fund, a most cordial wel­ degree. Important as, in many of those coun­ come. For us it is a motive of satisfaction tries, has been their effort to diversify and that your institutions, that are already so strengthen their economies and to win in that important in international life despite their manner a greater resistance capacity and recent creation, should have chosen our cap­ autonomy with which to meet the exterior ital city as the seat of their deliberations this forces and incidences of international trade, year. their situation is still too deeply linked with Mexico participated with full enthusiasm factors that completely escape their control, in the formative process of the Bank and of chiefly with the activity of highly industrial­ the Fund. It attended the Monetary Confer­ ized centers. ence at Bretton Woods and on two occasions The aid that the International Bank for it has had the honor of occupying a seat in Reconstruction and Development has afforded the Board of Executive Directors of the Mone­ to countries having an economy under devel­ tary Fund. The Mexican Congress approved opment, and especially to our country, has at the opportune time and unanimously the been sincerely appreciated by the Govern­ norms that were indispensable in order that ment of Mexico even more than for its our country might have a part in both organi­ amount, important as this has been, for what zations, with which we have maintained cor­ the loans granted to our country signify con­ dial relations from the beginning. sidering their object, inasmuch as they pur­ It is probably premature as yet to pass pose to integrate and complement its industry definite judgment upon the significance which and economic progress in order to give its the Fund as well as the Bank may have in inhabitants a higher living level. attaining the objectives assigned to them The care which the Bank authorities take, respectively in the documents of Bretton in the study of every project that is submit­ Woods. We have been aware of the difficult ted to them, with regard to its social purpose circumstances in which these organizations as well as to its economic productivity and began to operate, not having the aid of ex­ technical convenience, is a guarantee that the periences or precedents that might have loans the Bank allows will never prove to be helped them to obviate so many obstacles as a heavy charge for the peoples that receive have made difficult their initial stage. them as was the case in other epochs when the Mexico is gratified that amidst an interna­ investing countries granted loans, to cover tional panorama so filled with uncertainties budget deficits or for destructive ends, that and vicissitudes as that which the world has carried in themselves the uncertainty of ful­ presented during these last years, it has been fillment on the part of the debtor country. able to conserve its traditional freedom of We know well, and have so stated it again exchange and to regulate its trade without and again, that the welfare of all peoples having to establish, except in a transitory must be rooted primarily in their own work manner, controls over its foreign commerce, and efforts. The data worked out in a recent although, as is logical, seeking protection for survey made by a group of experts appointed its producers. by the International Bank and the Govern­ The assistance given by the Monetary Fund ment of Mexico, reveals, for instance, that to countries under development, particularly the investments for development made by us, [1] in the past ten years, show only a small per­ preparatory or preliminary stage that will centage originating in foreign credits. fructify only provided that, in the wake of To seek adequate formulas for the increase the advice given, come the material elements in the immediate future of the international indispensable that the initiatives made may cooperation that has development aims - take real shape. without this meaning that the countries in­ Honorable Governors: The Government terested should renounce their own responsi­ of Mexico hopes that during your permanence bilities- seems a natural field for the nations in this country, that is gratified in having a grouped in the Fund and the Bank to ponder tradition of some centuries in hospitality open in common. Several of these formulas are to all peoples and all races, you may be able already under study within the organization to appreciate some of the results obtained of the United Nations, and I wish to offer you through the development program put in mo­ my country's collaboration in this new task. tion during the past years, for several proj­ Off hand we consider that there is a scope ects of which we have counted with the col­ which until now has not been touched except laboration of the International Bank for Re­ sporadically: that of international invest­ construction and Development and of the ments through long term credits and at re­ Export and Import Bank of Washington. duced interest for purposes of public health, I wish you a pleasant and profitable so­ education and assistance. The programs of journ among us and may the greatest suc­ technical aid that the generous initiative of cesses crown your deliberations for your own His Excellency the President of the United satisfaction and for the good of all the States started on January of Nineteen hun­ friendly countries so worthily represented dred forty nine, are understood by us as a here.

ADDRESS BY HORACIO LAFER, CHAIRMAN OF THE BOARD OF GOVERNORS OF THE BANK, AT THE OPENING SESSION OF THE JOINT BOARDS OF GOVERNORS OF THE BANK AND FUND, SEPTEMBER 3, 1952

It is for me a high privilege to preside over spect for human ideals that render life worth this Joint Meeting of the Boards of Gov­ living. ernors at the opening ceremonies of the I take pleasure in paying homage and trib­ Seventh Annual Meeting of the International ute, on behalf of all of our Governors, to the Bank for Reconstruction and Development Mexican people and the Mexican Govern­ and the International Monetary Fund, and I ment. wish my initial words to be those of greet­ I wish also, in my own name and on behalf ings to our noble host country, the first among of my colleague, Professor Gudin, to extend the Latin American nations to be selected greetings to my fellow Governors, Alternate as a seat for this important meeting. Mexico Governors and Advisers, and also to the ob­ possesses the glory of an ancient civilization servers and guests whom we have with us which her sons have enriched by continuous here today adding brilliance to this ceremony. economic and cultural progress which we all A special word of welcome should be said to admire. Her culture has preserved untouched the new members that have joined the Bank the artistic vibrations, the sense and the re- and the Fund since our last meeting, Burma, [2]

,~--.. -.. " .... ---~-----.------' Germany, Japan and Jordan. It is significant are diverted into the wrong fields of produc­ to note this increase in membership which tion and the balanced development of the surely is an indication that the principles and country is retarded. purposes set out in Bretton Woods are even The policies of the monetary authorities of now looked upon as a sound basis for increas­ each country should be given primary atten­ ing international cooperation and the attain­ tion and those responsible for them should ment of a better understanding among na­ be encouraged in their efforts to apply sound tions in the important fields of finance and economic principles and to resist the sway of economics. outside pressures; for neglect of the basic Each year that passes brings us additional economic laws which are at times as inex­ evidence of the wisdom of the countries and orable in their working as the laws of nature the men that created the International Bank entails disastrous effects for the community. and the International Monetary Fund. Sound practices of budgetary equilibrium, These institutions play in the field of inter­ control of means of payment, fair enactment national finance and economics, one might of fiscal laws and regulations, maintenance say, a role equivalent to that of the United of a reasonable rate of investment policy and Nations in the political field. sound application of public monies are anti­ inflationary techniques that should be pur­ World peace and peaceful social convivium sued by all countries. One must have in mind are impossible to attain if the juridical prin­ that economic instability resulting from in­ ciple of mutual respect by all countries of each flation always leads to social unrest. other's rights is not firmly established and The second problem is the rapid growth continuously preserved and strengthened in world population. By the end of the cen­ through international cooperation and joint tury the world's population is expected to study and decision. increase from 2.4 to 4 billions. As compared These principles however will not hold if to 1920, the population to date has grown by they do not rest on a solid economic and 76 % in Latin America, 46 % in Africa, 44 % financial order, capable of promoting a in the United States and Canada, 28% in Asia healthy economic intercourse between na­ and 22 % in Europe. The population of this tions, opening to each of them the possibility great country of Mexico is expected to jump of assuring its citizens a decent standard of from a present 27 million to around 57 mil­ living. It is because I deem peace and a sound lion by 1980. And my own country, with now economic order to be indivisible concepts, around 53 million people, should by 1980 that I regard this joint meeting of ours as reach more than 100 million inhabitants. ranking among the most important events in Despite this considerable increase foresee­ the international field on a par with the able in world population, I believe geogra­ meetings of the United Nations Organization. phers and nutritionists to be unduly pessi­ Those who study international problems mistic when they express doubt as to our today cannot fail to be struck by the acute ability to develop the necessary food re­ nature of three problems. The first is the sources. Scientific development and better persistent inflation which is a result partly techniques of utilization of land resources of war, partly of social disorders and often coupled with human ingenuity, will enable us the result of errors and lack of foreSight of to meet this challenge. We ought to have in governments, due to the pressures of neces­ mind that international cooperation is indis­ sity or ignorance. We all know that inflation pensable if we are to raise food productivity means economic instability and social in­ to levels necessary for insuring the means of justice. Under inflationary conditions the subsistence of four billion peoples in the demand for goods and services exceeds avail­ world at large. able real resources and benefits only a small The third serious problem we have to face group by severely penalizing the mass of is the widespread balance of payments dis­ consumers. The resources of the country equilibrium affecting many countries. While [3]

..... there is surplus production in many areas and the Bank; it is also encouraging to note that acute need in others, trade cannot flow be­ 37% of the Bank's resources came from other cause of the lack of needed currencies. In countries that are thereby gradually increas­ many cases some of the disequilibria could ing the number of those wishing to be asso­ have been corrected at the outset had timely ciated in the task of providing resources for international cooperation been forthcoming. the work of the Bank. The principal contri­ While the volume of world trade is steadily bution of the bank so far has been towards growing, it is obviously being restricted by the financing of public utilities thereby help­ the chronic payments difficulties of large ing to furnish the right climate for private trading areas. If we could find a practical investment between nations. The frequent solution to the world's exchange problems, and extensive travelling of Messrs. Black and this would result in a substantial increase in Garner and their associates gives evidence of the exchange of goods which would promote the Bank's interest in getting a direct first­ international solidarity and serve common hand knowledge of the problems of member interest. countries, enabling the Bank to make sound The foregoing considerations bear out and constructive decisions. clearly the complexity and importance of the As for the International Monetary Fund, roles the International Bank and the Inter­ many countries have had occasion to benefit national Monetary Fund are required to from its help and assistance. Its extremely play in the world economy. Having been competent research staff has pursued thor­ created to deal with these temporary or oughgoing analyses of the international finan­ fundamental disequilibria, the two institu­ cial situation and is giving valuable advice tions also have to fulfill functions that tran­ to Member Governments. The past perform­ scend the economic field and thus become ance of the Fund is however but an instance instruments for social stability and world of yet more important work that under the peace. firm and competent direction of Mr. Ivar We cannot but fairly recognize the work Rooth the Fund is called upon to perform. that in this way has already been accom­ As we look back to the days of Bretton plished. The International Bank, under the Woods we realize that our difficulties have able guidance of Mr. Eugene Black and his not abated and new problems have emerged. associates, is continuously expanding its ac­ Whilst the dollar value of world trade is now tivities. The record of the last fiscal year­ four times as great as in 1938, the world's during which 19 loans totalling 298.6 million gold reserves, exclusive of those of the United dollars were made to 16 countries to bring the States and Russia, remain at the same level total operations of the Bank to 1,412 million as in 1938. The disequilibrium of interna­ dollars-represents an impressive achieve­ tional payments, the inadequacy of monetary ment. However it is to be hoped that in the reserves and the restrictions and discrimina­ years ahead the Bank can look back upon tions in international trade are today more this year, not as a year of record lending, but serious than was anticipated in 1944. as one in which the Bank made a start to­ Furthermore, it seems that the world's wards even greater lending activity. payments disequilibrium cannot be solely The wisdom of the investment policy of traced to inadequate internal policies of mem­ the Bank has been demonstrated by improve­ ber countries; there have been great changes ments in productivity already noticeable in in the objectives of national economic policy; many of the countries benefited by its loans. there have been great shifts in international The International Bank has won the confi­ economic forces. The difficulties arising from dence of investors. We should be grateful the deep changes brought about by the events to the American people-whose delegation is of the last 20 years will not be overcome now once more presided over by our good without a comprehensive policy of interna­ friend, Secretary John Snyder-for what tional cooperation. they have done by contributing, as investors, I conclude from this that we need the In­ 63 % of the funds so far made available to ternational Monetary Fund more than ever, [4]

._---_.. _------._. and that the Fund must take a more active the food production and distribution for a role, both in using its resources and in help­ rapidly growing world population. ing its members to find a practical solution While we must accept the sad fact that the to their exchange problems. We must rec­ precariousness of the peace renders heavy ognize that for many countries it is difficult expenditure in armaments necessary, it must and sometimes impossible to cope with occa­ not be forgotten that it is only through the sional sharp declines in exchange receipts by development of industry and agriculture that falling back on reserves. My own country, real peace can be achieved. Armaments can for instance, while holding appreciable gold win wars but they can never eradicate the reserves, would not wish to deplete them in causes of war. order to overcome a temporary exchange crisis which may occur in a certain year. So, The great contribution that the Bank can there would be no alternative but to apply make to all member countries is to combine exchange and import restrictions. sound banking principles with a creative effort to help in the world development of I think that it would be preferable to es­ transportation, electric power and food pro­ tablish a system which would not compel duction. By plowing the savings of the gen­ countries to resort to harmful regimes of erous North American people and of other severe restrictions. Unless we have at our nations into these basic fields, the Bank will disposal an international mechanism capable not only provide a fair return for the capital of supplying credits to an extent correspond­ of its investors but will also help the cause ing to the general creditworthiness of each of world peace and prosperity. We are con­ country, it will be impossible to attain the kind fident that under the guidance of Mr. Black, of multilateral trade we all hope to restore. the Bank will not fail to rise to this challenge. Trade will then be reduced to scattered and isolated units following a pattern of restric­ I would like to end on a note of optimism. tive and defensive policies. I am sure that the collective wisdom of our The world needs the Monetary Fund for member countries which brought both insti­ its competent technicians to clarify the basic tutions-the Bank and the Fund-into fru­ elements in the international payments prob­ ition will also ensure their wise utilization lem. The world needs the Monetary Fund to for the solution of the problems faced by our provide greater facilities for meeting tempo­ generation. rary unbalance in current international pay­ In the name of President Getulio Vargas, ments. Otherwise, the continued payments under whose leadership Brazil is pursuing a crises will result in greater economic isola­ policy of sound and balanced development, tion, with countries barricading themselves having as one of its tenets the firm support behind even higher restrictive walls. We are of, and constant cooperation with, the Bank sure that under the leadership of Mr. Ivar and the Fund, both of which have rendered Rooth, the Monetary Fund will adopt bolder significant services to our country's economy, policies to meet the challenge of monetary I wish to greet all of the Member Nations, disorder. through the Governors here present. As for the International Bank, I do not On behalf of the Governors, I wish to regard its mission as encompassed within renew the tribute we pay to this noble coun­ the narrow definitions of reconstruction and try of Mexico, a staunch bulwark of human development: its mission is ever broadening freedom; a nation whose economic progress in scope. No institution is better placed to is well matched by its natural beauty and by meet the long run challenge of increasing the high sense of dignity of her people.

[5] ADDRESS BY EUGENE R. BLACK, PRESIDENT OF THE BANK, IN PRESENTING THE SEVENTH ANNUAL REPORT OF THE BANK TO THE BOARD OF GOVERNORS, SEPTEMBER 5, 1952

Let me begin by expressing my gratitude lent more than in the year preceding; and in Jor the gracious hospitality being shown to Europe we lent substantially more. us by the Government of Mexico. It was, I Disbursements rose to $185 million, the think, a happy decision of the Governors highest level since fiscal 1948. More than a that we should meet in this capital city. It third of this was used for purchases outside gives us a chance to see with our own eyes the United States. something of a nation in which the process The Bank has continued to adapt its lend­ of economic development is fully under way. ing policies and procedures to the differing Since before the war, the income of the problems presented by its borrowers. Mexican citizen has, on the average, increased We usually lend for specific and individual by more than half. This improvement has projects. In the great majority of cases, this been brought about by the growth of produc­ is the most practical and effective form of tion in almost every part of Mexico's econ­ collaboration between us and the borrower. omy. It was achieved without conspicuously But even when we make loans for single plentiful resources and often under difficult projects, we often are financing some key circumstances. It has been based, to mention component of a larger undertaking. Some only a few of many factors, on the energies of the Governors were glad to observe last of the Mexican people, the adaptability and year that in the case of Australia, we were initiative of the citizenry, on sound invest­ giving support to an entire program of de­ ment of public funds in the expansion of velopment. We have made additional loans basic utilities and social services, and on the of this broader type since we convened in sustained confidence of the country in a suc­ Washington 12 months ago-to the Belgian cession of competent national administra­ Congo, to Italy, to Yugoslavia and, for a tions. second time, to Australia. These cases differ The relations between the Bank and Mexico considerably in detail, but they all reflect have been particularly close and continuous. the principle that the Bank is as much inter­ The fact that we are meeting here is evidence ested in the progress a country can make on not only of Mexican hospitality but also, I a broad front as in the success of a particu­ hope, of mutual satisfaction. Mexico, as a lar project. Program loans may continue to member of our Bank, can welcome us; and be the exception rather than the rule; but we, for our part, feel at home here. they definitely have taken their place among This has been an active 12 months for the the instruments used by the Bank to promote Bank. We slightly exceeded the record vol­ economic development. ume of lending we established last year. We In other ways, the Bank has kept its lend­ provided more technical assistance to our ing techniques flexible. Our loan of last Oc­ members, especially in the planning of de­ tober in support of the 10-year plan for the velopment. We were more active in raising development of southern Italy, for instance, funds in the capital markets of the world. is for us a new kind of transaction. It is not For the second consecutive year, our lend­ intended to finance the equipment needed for ing approached $300 million. That sum is carrying out this program. Rather, it will composed of $30 million of new loans in Asia, cushion the impact of the program on the $68 million in Africa, $79 million in Latin Italian economy, by providing dollars to America, and more than $120 million in meet some of the demand for imported goods Europe. Our second loan to Australia did that the 10-year plan will generate. not come until after the end of the fiscal Our loan to Belgium, likewise, might be year, but in each of these other areas, we called an "impact" loan-designed in this [6] case, to offset the dollar cost that will arise investors outside the United States hold ap­ from Belgian support of a development pro­ proximately one-quarter. The central bank­ gram in the Congo. ing institutions of 12 of our member nations, The Bank is keenly aware of the necessity in particular, have acquired for their re­ for keeping its lending flexible in another serves some of the largest known holdings of important respect. Up to now, the Bank has the Bank's bonds. lent chiefly in dollars. To the extent that we Finally, the Bank's lendable resources, as can lend in other currencies, we can better I have already implied, were increased by the meet the needs of countries more able to release to us of parts of the local currency service debt in those currencies than in dol­ subscriptions of several member countries. lars. During the year, we made one loan to The French Government, for instance, re­ Iceland and another to Yugoslavia which are leased the francs which will be used in the repayable entirely in European currencies. Pakistan loan, and the South African Gov­ Almost half our railway loan to Pakistan ernment has made available to us pounds consists of French francs, and part of our which will be used in the loan for Southern loan to Southern Rhodesia will be disbursed Rhodesia. Of particular note, let me say, in South African pounds. Nearly 15 percent was Canada's release, in the spring of this of the amount we lent this past year is re­ year, of 41 million Canadian dollars on a payable in currencies other than dollars-a fully convertible basis. This constituted the proportion much higher than in any previous balance of her original paid-in subscription year. of 58.5 million Canadian dollars to the Bank's With our lending at the current rate, we capital. have increased our own borrowings. We went If we survey all the funds which the Bank to the capital markets four times, with two has had available for lending since the start bond issues in the United States and our of its operations, the international charac­ first public offerings in Canada and Switzer­ ter of our financial resources emerges with land. The total amount of our issues was particular clarity. Up to the end of the fiscal equivalent to approximately $175 million, a year our lendable resources amounted to the sum greater than in any year since 1947. equivalent of nearly a billion and a half dol­ The Bank has also replenished its lendable lars. Of this $375 million in dollars and other funds by $23 million of sales from its port­ currencies-or about one-quarter in all­ folio; more than $10 million of these sales, was received from, or borrowed in, our mem­ let me point out, were made without our guar­ ber countries outside the United States. I antee. am hopeful, in spite of all the known diffi­ I am glad to say that our bonds enjoy a culties, that the Bank will continue to re­ strong position in Switzerland, the United ceive releases of the currencies of its Euro­ Kingdom and Canada, as well as in the United pean members. The need for non-dollar funds States. As the amount of our dollar obliga­ is as urgent as ever. tions has increased, there has been a satisfac­ One of the main objectives of the Bank, tory broadening of the market for our se­ I hardly need remind you, is to promote the curities in the United States. The Bank has international investment of private capital in been affected, however, by a general trend, economic development. The Bank's bonds all over the world, toward higher interest themselves are one of the principal avenues rates. We have had to pay more on our own by which such investment is made, and most borrowings, and there has had to be a cor­ of our sales from portfolio have been made responding rise of interest rates on our loans. to private investors. In addition, however, I would like to emphasize that the market the Bank has continued to be able to interest for the Bank's own securities and for those the private market in more direct participa­ received from borrowers is becoming more tion in its lending. American banks this year and more international in character. Of the took portions of two of our loans-one to more than $500 million worth of direct and the KLM Royal Dutch Airlines, the other guaranteed obligations we have outstanding, to Pakistan-at the time they were made. [7] I see signs that private participation in our ments of the Netherlands and Surinam. The lending will become an increasingly impor­ report of our mission to Ceylon was published tant feature of our operations. earlier this week in Colombo and Washington. One condition, of course, for the interna­ In a few days, we will be presenting to the tional investment of private capital is that Government of Nicaragua the report of two there be a reasonable prospect of repayment. of our staff members who spent nearly a In some cases, this prospect is clouded by the year in that country, working with the Gov­ existence of obligations already in default; ernment in drafting a development program and in some instances the Bank has been able and starting to put it into effect. The recom­ to encourage its member governments to mendations of our recent mission to Jamaica start negotiating settlements on these obli­ are now being prepared in final form. gations as an essential means of encouraging Economic surveys, I hardly need tell you, the resumption of foreign investment. are nothing new. Many good ones have been We have also, as you will have noticed in done, and some of them lie moldering in the our Annual Report, made an intensive study archives of our member nations. It is still of a proposal to establish an International too early to say what the fate of our own sur­ Finance Corporation as a new instrument for veys may be; but I am glad to say that the investment in private enterprise. This Cor­ results, so far, have been encouraging. I poration would be affiliated with the Bank, believe that the Governor for Colombia would but would have its own capital subscribed by agree with me that the report of our mission member governments. It would be able to do to his country, and the recommendations by two things the Bank does not do: it could a citizens' committee on economic develop­ make loans to private enterprises without ment which followed it, have already had an governmental guarantees, and it could pro­ important influence on the economic life of vide equity capital. We have prepared a re­ Colombia. In the case of other countries port on this proposal, and shall continue to more recently visited by our missions, our explore the idea with private financial and Annual Report gives many instances of ac­ business interests and with our member gov­ tion already under way to carry out funda­ ernments. The proposal needs to be given mental recommendations and provide a basis further consideration, and the Corporation for accelerated economic progress in years to admittedly would be an experiment. But I come. personally think that it might prove to be a The Bank has continued to take a broad useful instrument for stimulating investment view of its responsibilities and opportunities of private capital, both domestic and foreign, in other respects. Indeed, we could hardly do in enterprises significant in economic de­ otherwise and remain faithful to the charac­ velopment. ter of our Bank as a cooperative, interna­ The Bank, of course, does not regard it­ tional institution. self merely as a source of financing. I have Early this year, after expressions of inter­ often said to you in these meetings that in­ est by Iran and the United Kingdom, repre­ ternal factors are more important in a coun­ sentatives of the Bank visited London and try's economic growth than financing from Teheran. The purpose of our mission was to abroad. We have therefore continued, at the see whether the Bank could work out some request of member countries, to send our interim arrangement for restoring oil opera­ general survey missions, composed of im­ tions in Iran and give the parties to the dis­ partial experts, to help those countries assess pute time to reach agreement. Our efforts, their potentialities and to draw up broad pro­ as you know, were not successful, and our grams which will best channel their own negotiations were recessed in Teheran last energies and resources into development. March. The reports of four of these general sur­ The Bank has also offered its services in vey missions were presented during the year, another matter affecting two of its member to the governments of Cuba, Guatemala and countries. When I was in Asia late last Iraq, and, for Surinam, jointly to the govern- winter, I discussed with the Prime Ministers [8] of India and Pakistan an invitation I had own capital more effectively. This is a sub­ already extended for the two Governments to ject which is being actively studied on the examine, together with the Bank, the possi­ continent. The Bank has followed this study bilities of developing the water resources of closely and with sympathetic interest. the Indus River System which are so im­ Some of the proposals which recently have portant to the economic development of both been made envisage the creation of a new these countries. The Governments accepted financing institution. If new arrangements this invitation. Their engineers met with come into existence, the Bank would, of ours in Washington this spring, and suc­ course, cooperate with them. But let me point cessfully completed a series of meetings out that new institutions themselves do not which drew up a program for studies of create savings. Fundamentally we must work possible technical measures to increase the with what we have. I myself believe very supplies of water in the Indus Basin. Their strongly that the Bank itself could operate engineers and ours will convene again next effectively as an instrument for mobilizing November in Karachi for an exchange of European capital, and I doubt that sufficient information as a prelude to further meetings. consideration has yet been given to the role I personally am encouraged. I hope that the we might play in this respect. eventual outcome will be the development of these water resources, with the help of the The Bank already has had some experience Bank, in a way which will bring great bene­ in tapping private resources by the sale of fit to millions of people in both India and its securities in European markets. With the Pakistan. cooperation of its members, it could be more As we review the Bank's performance in active in raising additional private capital. the past year, I think we can take satisfac­ That might well require the working out of tion from the fact that our operations have new types of bonds and of distribution tech­ been disturbed remarkably little by the eco­ niques that have not yet been tried. I think nomic changes which have taken place since this is a field well deserving further study, the outbreak of war in Korea. Looking for­ and I am anxious to explore, with the Gov­ ward, it seems to me that if the Bank and its ernors most closely concerned, any adapta­ members fully grasp the opportunities they tion of our operations that would better fit have, the coming year will see a significant them to the particular investment needs of increase in the Bank's operations. Europe and to the special conditions now pre­ In Europe, there continues to be an urgent vailing in Europe's capital markets. need for greatly expanded production. This The continuing movement toward economic will require heavy investment in new plant integration in Western Europe may raise and equipment, as well as in modernization new opportunities for the Bank. The Schu­ of old. It wiII have to be achieved without man Plan, for instance, which aims at the provoking inflation, and will have to take integration of the continental coal and steel place at the same time as United States aid industries, has now begun to operate. The is being reduced in scope and amount. capital requirements of the Plan certainly The Bank, for its part, can supplement will be large, and the necessary equipment Europe's own capital with dollar loans. I probably can be procured for the most part have already remarked that the scale of the in European currencies. Should the Bank Bank's lending in Europe was substantially be asked to provide some of the funds, ques­ increased during this past year. Our ability tions would arise with which we have not to lend in dollars, however, is limited by the previously been confronted, for example, con­ fact that the capacity of many European cerning the form of guarantee needed for a countries to service additional dollar debt is loan to an international body. In any case, itself limited. the Schuman Plan potentially has great im­ From now on, it is clear, the countries of portance. It is one of the projects that the Europe will have to rely more on their own Bank, should it be called on, would be glad savings, and will have to mobilize their to search for feasible ways to assist. [9] For those of our member countries who taken by an increasing number of govern­ are leading producers of primary commodi­ ments as a first step in gauging more ac­ ties, the swift rise of raw materials prices curately the potentialities of their economies that followed the outbreak of the war in and determining the directions in which de­ Korea, and now the recession of those prices velopment should move. Programs and pro­ to pre-Korean levels, have been outstanding gramming agencies have been established to economic events of the past two years. assure continuity of effort. Finally, the finan­ Not all primary products shared in the cial resources, and the increasing skill of the boom, and not all our less developed members underdeveloped countries in planning the use shared in the higher earnings of foreign ex­ of those resources, have been supplemented change that resulted. Nevertheless, a num­ by a growing volume of financial and tech­ ber of our member countries in Asia and nical assistance from the more advanced Latin America made good use of extra earn­ nations. ings by devoting a sizeable portion of them The problems which face the underdevel­ to financing economic development. To do oped countries are still tremendous and diffi­ so required firm and expert handling of the cult. Often in the past, I have stressed the inflationary pressures exerted by high prices shortcomings of the policies and practices in world markets; among several noteworthy of some of our member nations in dealing performances of this kind, I might specifi­ with these problems. cally mention those of India and Colombia. Nevertheless, the scene presented by the At the other extreme, I regret to say, some underdeveloped countries is one of growing members of the Bank not only failed to take activity, and of a growing amount of soundly ,advantage of the windfall from high raw ma­ planned activity. The implication for the terials prices, but allowed inflation to distort Bank is that we have a broader and better their economies to such an extent that they basis on which to conduct our operations. are not so well off today as they were two Many times, the Bank has warned that years ago. massive injections of foreign capital cannot In any event, the boom is now over and our successfully be absorbed in the first stages of less developed member countries are left a country's development. We have pointed to deal with the same hard problems that con­ out that shortages of skilled manpower and fronted them before. There are, however, the lack of basic facilities are limiting fac­ many factors in the situation which I find tors which will take a long time to overcome. encouraging. In the postwar years, and par­ These statements have sometimes been mis­ ticularly in the last two, I think much prog­ construed as expressing a timidity or a lack ress has been made, both in a growing under­ of real will on our part to promote develop­ standing of economic development and in the ment. adoption of techniques to bring that develop­ The facts show otherwise. To more than ment about. half our borrowers, we have made repeated The governments of underdeveloped coun­ loans-to Mexico, for example, in 1949, 1950 tries are realizing more and more that eco­ and 1952; to Colombia in 1949, 1950 and 1951, nomic progress is the primary responsibility and to Brazil in 1949 and every year since of the countries themselves. Responsible then. In countries of Asia and Africa, as leadership, to an increasing extent, is buck­ well as in the developing countries of Europe ling down to the job, and is attempting to like Turkey and Finland, we are doing the achieve progress through sound planning, same thing. financing and engineering. These continuing relationships are proof Many of the world's less developed coun­ that, far from recoiling from additional com­ tries are attempting to shape their economic mitments, we are on the contrary supporting policies-and especially their investment the development of our member countries policies-to make better use of their own year by year and step by step. We are lend­ physical and financial resources. Intensive ing money in amounts our borrowers can stocktaking of these assets has been under- effectively use and can reasonably be expected [10 ] to repay; we are lending for those purposes unnecessary restrictions on the movement of that will do the most to make the borrowing goods in world trade and of the money needed countries more productive and able in the to pay for them. future to put still more money to work. This But the main effort-and most of the means is the basic principle of investment. Soundly -must come from the less developed coun­ and persistently applied, it can help nations tries themselves. They must want develop­ to move forward. ment, and they must want it badly enough Let us ask ourselves, what do we want, all to make some sacrifices. It is up to them to of us, from this process of development? I free the forces of progress in every way they think we want a "World of freedom, of stable can-by continuity of effort, by fiscal and peace, of expanding production and trade­ economic policies that will encourage eco­ a world of opportunity in which free men can nomic growth, by sound programs of invest­ more and more govern their own careers. ment, by a multitude of actions which will How do we go about achieving what we increase incentives for labor, for manage­ want? Development is most certainly not the ment, and for capital-both domestic and concern of only those countries whose stand­ foreign. ard of living is still woefully low. It vitally These are some of the conditions of prog­ concerns, too, the more industrialized nations, ress. If they are met-substantially-the because their own best hope of progress is an underdeveloped nations can advance, not with expanding world economy. a sensational rush, but with an increasing mo­ Financial and technical assistance will con­ mentum. And as the conditions of life im­ tinue to be needed for many years from those prove, so will the prospects of a stable peace. countries which can afford exports of capital Improvement in the living conditions of men and skill. Granted that the underdeveloped brings a sense of personal fulfillment and self areas do not yet have the capacity to make respect. With respect for themselves as indi­ productive use of any huge inflow of re­ viduals, people are not easily fooled by the sources, we must still admit that the present cynical and disruptive propaganda of dema­ magnitude of international investment for gogues-whatever mantle they may be wear­ development is clearly inadequate to the need. ing. Whatever form it takes, the assistance of In development the Bank, I think, has a the industrialized countries must be steady vital role to play. Not only can we be a and continuous. It must not be warped by source of some of the capital that is needed; politics. And it must be accompanied by in­ but we can serve as a focal point for stimu­ ternational economic and commercial poli­ lating and supporting constructive action on cies consistent with the development objec­ the part of all those who are working toward tive-in particular by the removal of all the common goal.

ADDRESS BY RAMON BETETA, GOVERNOR FOR MEXICO, AT THE CLOSING SESSION OF THE JOINT BOARDS OF GOVERNORS OF THE BANK AND FUND, SEPTEMBER 12, 1952

At the successful closing of this Seventh country, and its Government, which I have Annual Meeting of the International Bank the honor to represent as Governor for both for Reconstruction and Development and the organizations, our appreciation of the ex­ International Monetary Fund, it gives me pressions of friendship we have received. great pleasure to express, on behalf of my I wish especially to mention the words of [11 ] the Minister of Finance of Brazil in the lems, and the methods used to solve them, opening session, and also those of Mr. Rooth and even though the inter-relation of our and Mr. Black. peoples becomes closer each day, it is still of When I spoke the other day in the Meeting vital importance for the full realization of of the Fund I had the opportunity to com­ the ideals of every nation, to maintain a na­ ment on Mr. Rooth's words. I would like tional spirit, which serves as a guarantee of now to refer to those of Mr. Black. Mr. Black national individuality, national pride and the is a long-standing friend of Mexico; he based ambition to excel. his references to my country on an apprecia­ Just as we human beings each have our tion of Mexican hospitality and also on rec­ own personality, which we would not want ognition by the W orId Bank of the way in to lose by changing into mere numbers, one which Mexico has through its own efforts, like the other, in the same way the preserva­ raised its standard of living. To quote his tion of the national personality of each of our very words, "since before the war, the income countries-a spiritual autonomy and political of the Mexican citizen has, on the average, sovereignty-provides the stimulus to im­ increased by more than half" and "this im­ prove our life in all fields, cultural, economic, provement has been brought about by the scientific, political and artistic, within a uni­ growth of production in almost every part versal spirit of harmony. This is not a con­ of Mexico's economy. It was achieved with­ flict involving the subordination of some out conspicuously plentiful resources and countries to others, but rather the normal often under difficult circumstances". development of all, rich or poor, developed or These are heartening words and the recog­ not, industrial or agricultural, cattle produc­ nition we have received here encourages us ing or mining, for all have the same goal: the who, whether in positions of responsibility material and spiritual betterment of their or as simple citizens, feel a sense of duty and people. a fervent desire to work for the continued Our two international organizations are of progress of Mexico. vital importance in the achievement of this This Annual Meeting which ends today has goal, and we should congratulate ourselves on served, perhaps as no other, to make us real­ the fact that the efforts of both the Fund and ize the international character of the prob­ the Bank, each in its own sphere, are produc­ lems with which our countries are faced. It ing practical results, as has been acknowl­ has helped us to realize that every day it is edged by most of the Governors in this con­ more difficult for a nation to find a solution ference. to its problems without the understanding Actually there has been no unanimity of and help of the other nations. It was in order opinions, but differences of opinion and free­ to make this cooperation possible that these dom to express them openly are essential international organizations were established. parts of our way of life. Only in totalitarian It is here, when we study the problems of regimes, where each person does what he is freedom of trade, exchange controls, or the told and thinks what he is permitted, only in financing of countries in a stage of develop­ regimes of this type does one always find ment, that we realize more clearly than ever unanimity of opinion. before, the necessity of approaching on an We have often had differences in this An­ international level the problems which we nual Meeting, but most of the countries here ,once considered as exclusively the responsi­ represented agree that the International bility of each individual nation. We have Monetary Fund, having passed through a finally learned that the errors or misfortunes difficult stage, is beginning to find its way and experienced in every corner of the world are can now proceed with growing efficiency and inevitably shared, to a larger or lesser de­ expediency to give technical advice and eco­ gree, by every other country. nomic cooperation to the members who need This does not mean that we are ready to it. It is also an accepted fact that the Inter­ abandon our concept of nationality. In spite national Bank is each day becoming more of the international character of our prob- useful, as its loans increase and become more [12 ] diversified, complementing national savings ons with which we can defeat certain ideas, of the various countries so they may main­ except with other ideas, are actual accomp­ tain their high standard of living; granting lishments and the hope of accomplishments loans to others so they may recover from the to come. From this fact stems the impor­ devastations of war, and to others, the major­ tance and significance of the work which the ity, so they may rise above the want, ignor­ International Bank has been carrying out. ance and squalor that prevail in so many The attacks to which it has been subject are countries. perhaps testimony of its success. As the Bank achieves success in its vital As far as Mexico is concerned, we believe mission of providing security and at least the that the loan policy followed by the World minimum of health and education to the Bank is far superior to the policy followed in peoples of the world, by the same token the the last century and in the first 30 years of democracies will become stronger, because this century. Now the people can be sure the destitution in which large masses of the that the money which their governments re­ peoples of the world exist today makes them quest for investments will increase their pro­ strive for a change of regime, whatever it duction, and thereby their economic potential might be, as long as it gives them the hope of and will not be used to cover budget deficits, improving their standard of living over and luxury projects, or even war ventures, as in above the opportunities offered by the system the past. under which they exist. Mexico is well aware, as President Aleman It would be of little value for us to point stated, "that the welfare of the people must out, in defense of our social system, the real come out of its own efforts and work" and or supposed errors of other systems. The that neither the Fund nor the Bank can give nations which, for historical, geographic or much aid to countries which do not know how any other reasons, have not been able to pro­ to help themselves by means of a sound eco­ vide their peoples with the minimum of food, nomic policy aimed at channeling their re­ shelter, clothing, security, culture and recre­ sources and savings to achieve a betterment ation, consist of people who are willing to of their life. We know that the abundance of listen to anyone who promises them a better foreign private capital can be of great help life, even though they may realize or suspect in correcting the disequilibria which eco­ that they are trading their freedom and even nomic development often causes in the bal­ their personal dignity. These are precious ance of payments; but we also know, from rights which we would never want to sacri­ our own experience, the dangers which an fice; but their value and significance are not indiscriminate flow of foreign capital may as evident to those who live in ignorance and create for a young country. want. The freedom to die of hunger is a free­ Capital, no matter what its origin, and mo­ dom that no one wants, and the dignity of tivated by purely selfish interests, goes only man loses its significance when seen through where it will obtain the greatest yield, not the eyes of abject poverty. where it will contribute most to the progress This emphasizes the vital importance of of the nation receiving it. For that reason, these specialized agencies, not only in the although my country has not put up barriers field of economics, but also in the field of in­ to foreign capital, but has rather received it ternational politics, for they contribute, with­ without prejudices or antagonism, it requires in the framework of a democratic life, to in­ complete respect for the Mexican laws, which creased production, to greater real income, deny any special privileges. Moreover, as has and more diversified and freer trade, which been acknowledged in this meeting, private in turn contribute to the establishment of risk capital does not always arrive in suffi­ economic peace. cient amount nor in time to be helpful in the As we have already stated, ideas do not die development of economically weak countries. a violent death; they must be combatted in For this reason, the loans which the Inter­ the soul of man, where the fundamental bat­ national Bank makes, on a non-profiteering tles of humanity are fought. The only weap- basis and in complete agreement with the [13 ] government of the receiving nation, contrib­ As our President stated plainly in his last ute more effectively to the balanced growth Congressional Report, whenever Mexico, of of the country. its own free will, has decided to assume inter­ Since the loans are made after a thorough national obligations, it has done so openly, study of the general conditions of the mem­ without concealing anything, informing the ber countries and of the special conditions of people directly and through the appropriate the projects under consideration, there is a agencies. reasonable assurance that they will be self­ The loans which the International Bank liquidating, thereby avoiding the danger of has made to Mexico, with the exception of a mortgaging future generations. And we no small quantity granted to some industries longer have to worry, as we did formerly, through private banks, have been for electri­ that foreign loans will imply a more or less fication, which makes it possible to establish concealed limitation on our sovereignty, or or enlarge industrial plants, to irrigate dry subordination to other powers. regions, or to give electricity to the people For those reasons, I believe it is in order for greater comfort. to state, with regard to an isolated opinion In conclusion, I would like to convey to you, expressed here, that the International Bank has never offered to Mexico, nor would my on behalf of the President of the Republic country ever have accepted, loans which were and for myself, our best wishes for a pleasant not destined for projects freely selected by return to your homes; and we hope that you us, after careful consideration of our require­ will take! with you pleasant memories of your ments and our interests. The Bank has never stay with us, plus the assurance that you attempted, nor would we have allowed it, to will always be welcome in this country which interfere in matters which concern only the takes pride in its friendship with all the free people and the Government of Mexico. nations of the world.

ADDRESS OF THE CHAIRMAN AT THE CLOSING SESSION SEPTEMBER 12, 1952

In bringing to a close this Seventh Annual For this we are indebted, first of all, to Meeting of the World Bank and the Monetary our hosts, the Government of Mexico. No Fund, I should like to take, on your behalf, country, no people, could have been more an inventory of what has been accomplished. gracious and more generous to strangers I intend to say nothing that you do not al­ from all quarters of the earth. ready know. I intend merely to record and With the indulgence of the Board, I shall evaluate it. speak directly to Senor Ramon Beteta, Gov­ This has been, by general agreement, the ernor for Mexico and his alternates. On be­ best, the most fruitful annual meeting that half of myself and all of the Governors, the Bank and the Fund have held. It will be please convey our heartfelt thanks to Presi­ a matter of life-long pride to Professor dent Aleman-a real statesman whose able Gudin and to me that you have given us the government I am sure will be remembered as honor of presiding over your deliberations. a glorious period in the history of Mexican Obviously, the success of this meeting is not progress-for the kindness and hospitality due to mere chance. The Annual Meeting is they have shown to all who have attended the product of the work that has gone into it. this meeting. Our success has been in large [ 14] measure due to the excellent preparations the his associates are eager to explore new ways government made to receive us, and on the to encourage the international flow of capital high degree of cooperation and courtesy of which many countries in all regions of the shown by all of the Mexican officials before world stand in need. The World Bank must and during the meeting. take the leadership in this activity. We Governors are also grateful to the Gov­ The Governors have indicated their satis­ ernment of Mexico for other reasons. You faction that the Monetary Fund has been have given us an opportunity to visit this more active. They recognize that a new spirit land, which, with its soaring mountains and of determination and of achievement has fertile valleys, must surely be one of the love­ come into the Fund. It is not merely that the liest in the world. We have been able to see Fund has engaged in a number of transac­ here what the term development means, as tions. It is rather that an attitude of mutual expressed in the industry and progress vis­ confidence is being established between the ible on every hand throughout this great Fund and its members. And the Governors country. have said very explicitly that they want and expect Mr. Rooth to assume the leadership Weare indebted most of all to the Gover­ in making of the Fund a reserve bank for the nors for the 54 countries that sit on our treasuries and central banks of the free Boards. They have come here to discuss the world. It is precisely now that the Fund has international financial problems with which begun to do its job that we can see more the Bank and the Fund are concerned. They clearly how essential it is to its 54 members. have done so fully and frankly, on an intelli­ gent and constructive level. It is the Gover­ There are two further points I want to nors that have made this annual meeting the emphasize. The achievements of this Annual success that it has proved. Meeting are not seen entirely in the formal sessions of the Boards of Governors. Far Finally, we are indebted to Mr. Black and more numerous were the private and confi­ Mr. Rooth, and to the staffs of the Bank and dential meetings of the Governors with Mr. the Fund whose thorough preparation and Rooth and Mr. Black and their staffs to dis­ every labor have enabled us to do our work cuss their business with the Fund and the so well. So much has been said about the Bank. And so, too, were the numerous meet­ quality of the technical staffs of the Bank ings between Governors of different coun­ and the Fund that I shall limit myself to tries to discuss their common problems. In expressing the gratitude of the Governors to the atmosphere of hope and achievement them, especially to Mr. Mendels and Mr. that has prevailed in Mexico City, many Gov­ Horne. ernors have been able to find a solution to The Annual Reports of the Executive Di­ their problems in a manner advantageous to rectors have given us an excellent founda­ their countries and to the world community. tion on which to base our discussions. I be­ Finally, it would be a mistake to assume lieve that our meeting has taken full ad­ that the achievements of the Annual Meeting vantage of the opportunity for constructive end with the closing session. Measures of debate that the Annual Reports have pro­ great importance to the members of the vided. Fund and the Bank will be undertaken dur­ The Governors have expressed satisfac­ ing succeeding months that had their origin tion that the development loans of the World in the suggestions and the proposals of the Bank are expanding steadily and that these Governors. In the long run, it is what loans are being used effectively to bring is done after we adjourn that is the real test better production methods and better produc­ of our achievement at the Annual Meeting. tion facilities to many countries. The Gover­ And we are confident that much will be done. nors look forward confidently to the steady We have been told that the officials of the expansion of the operations of the World Fund and the Bank have taken careful note Bank. They are satisfied that Mr. Black and of what you have said and that they will work [ 15 ] diligently to carry out your suggestions of the countries of the free world. In this promptly and energetically in the spirit in course, the Bank and the Fund can count on which you have made them. us, just as we count on them. In my name and in that of Professor We worked here together with our minds. Gudin, I wish to thank Mr. Black for the But what was more impressive was that our kind words and precious souvenir we just souls were devoted to our job because we received. knew that we are working for the improve­ As we leave each other, not to meet again ment of world conditions and therefore we as a Board until we are called together by the arrived as colleagues and we leave this won­ Bank and the Fund, I believe we are all derful country as true friends. strengthened in our determination that in­ Governors, I thank you. ternational financial problems must be solved I now declare adj ourned the Seventh Annual by international cooperation embracing all Meeting.

[ 16] COMMITTEE REPORTS

JOINT PROCEDURES COMMITTEE Chairman ______BRAZIL Vice Chairma n ______A USTRALIA Reporting M ember ______LEBANON

Other Members: CHINA, FINLAND, FRANCE, INDIA, LUXEMBOURG, MEXICO, PHILIPPINES, UNITED KINGDOM AND UNITED STATES

R.eport No. 1 September 2, 1952

The Joint Procedures Committee, at its first meeting September 2, 1952, considered the matters of business which had been proposed for the Seventh Annual Meeting of the Boards of Governors of the Fund and the Bank. I have the honor to submit the following recommendations of the Committee:

I. Business of the Board of Governors of the Fund 1

II. Busines8 of the Board of Governors of the Bank A. Agenda The Committee recommends that: 1. The agenda attached as Annex V2 be adopted. 2. After the adoption of the initial agenda, proposed additions to the agenda be sub­ mitted in writing to the Procedures Committee, through the Chairman, for its recommendations. B. Committee The Committee recommends that: 1. A Committee on Finance and Organization be established as shown in Annex VI. 3 2. The items shown in Annex VII 4 be referred to the Committee on Finance and Organ­ ization for report to the Board of Governors. C. Bank Informal Discussion The Committee recommends that: 1. There be an informal discussion on progress in economic development in Europe, Asia, and the Western Hemisphere as described in the attached Annex VIII. I) 2. This presentation be followed by a continuation of the discussion on the Bank's Annual Report.

1 Fund business omitted. 2 Annexes I-IV and XI related to business of the Fund. S See page 19. , See page 20. 5 See page 20.

[17 ] D. Fourth Regular Election of Executive Directors The Committee next considered the Report of the Executive Directors of the Bank, dated July 30, 1952, regarding the Fourth Regular Election of the Executive Directors of the Bank. As in the case of the similar Fund item, the Committee decided to eliminate from the pro­ posed rules for the conduct of the election provisions which have become inapplicable because of the admission of new members. Therefore, the Committee recommends the adoption of the draft resolution relating to the Fourth Regular Election of Executive Directors of the Bank annexed hereto as Annex XIF and the proposed rules for the conduct of that election referred to therein. E. Draft Resolution by Czechoslovakia 2 The Committee makes no recommendation with respect to Item 8 of the Bank agenda since it had not received the Draft Resolution at the time of its meeting.

Ill. Procedural Matters of Joint Concern to the Fund and the Bank A. Order of Business The Committee recommends that: 1. The order of business tentatively scheduled in Annex IX3 be adopted. 2. The Secretaries of the Fund and the Bank, in consultation with the Chairman, be authorized to change the schedule, if necessary, as the work of the Meeting progresses. B. Conduct of Meeting The Committee recommends that the provisions relating to the conduct of the Meeting contained in Annex X4 be approved. C. Procedural Items The following procedural items will be dealt with in a later report of this Committee to the Joint Boards of Governors: 1. Place and date of Eighth Annual Meeting. 2. Election of Officers and Joint Procedures Committee for 1952-1953.

Approved: /s/ HORACIO LAFER /s/ JOSEPH OUGHOURLIAN /s/ EUGENIO GUDIN /s/ ANDRE TUENI Chairman Reporting Member (Brazil) (Lebanon)

This Report was approved and its 1'ecommendations were adopted by the Boards of Governors at the Joint Session on September 3, 1952.

1 See Resolution No. 71 on page 34. 2 See pages 19 & 38. 3 See pages ii & 21. 4 See page 22.

[ 18] ANNEX Y

AGENDA 1. Seventh Annual Report 2. Financial Statements and Annual Audit 3. Administrative Budget for Fiscal Year ending June 30, 1953 4. Allocation of Income to Reserve 5. Regulations Relating to Executive Directors and Alternates 6. Fourth Regular Election of Executive Directors 7. Application of Republic of Indonesia for Membership in the Bank 8. "Draft Resolution to be submitted by the Governor for Czechoslovakia Proposing Exclusion of the Kuomintang Group from All Organs of the Bank" 9. Place and Date of Eighth Annual Meeting 10. Election of Officers and Procedures Committee for 1952-53

ANNEX YI

COMMI'ITEE ON FINANCE AND ORGANIZATION Chairman ______N ORW AY V ice Chairman ______PERU Reporting M ember ______THAILAND

BELGIUM FRANCE PARAGUAY CANADA HONDURAS SYRIA CHINA INDIA TURKEY DENMARK NICARAGUA UNITED KINGDOM ECUADOR PAKISTAN UNITED STATES YUGOSLAVIA

[ 19]

j A.NNEX VII

COMMITTEE ON FINANCE AND ORGANIZATION

Terms of Reference For consideration and report to the Board of Governors: 1. Financial Statements and Annual Audit (Appendices uA" - UG" of Seventh Annual Report) 2. Administrative Budget for Fiscal Year ending June 30, 1953 (Appendix UH" of Seventh Annual Report) 3. Allocation of Income to Reserve (Report of the Executive Directors) 4. Regulations Relating to Executive Directors and Alternates (Report of the Executive Directors) 5. Application of Republic of Indonesia for Membership in the Bank (Report of the Executive Directors)

A.NNEX VIII

INFORMAL DISCUSSION Wednesday, September 10, 1952,10:00 a.m. Subject of Discussion: Economic Development I. Mr. Amjad Ali Asia ,. Mr. Robert Marjolin Europe Mr. Raul Prebisch Western Hemisphere DISCUSSION

[20 ]

~------,-,-~-----,------., ANNEX IX

PROVISIONAL SCHEDULE 1

September 8 through 1~, 195~ [TUESDAY-September 2-4 :00 p.m.-Joint Procedures Committee] WEDNESDA Y-September 3-11 :00 a.m.-Opening Ceremonies - 4:00 p.m.-Opening Session (Joint) Report of Procedures Committee THURSDAY -September 4-10:00 a.m.-Presentation of Fund Annual Report -11 :00 a.m.-Fund Discussion-Business of the Fund FRIDAY -September 5-10 :00 a.m.-Presentation of Bank Annual Report -11 :00 a.m.-Bank Annual Report Discussion MONDAY -September 8-10 :00 a.m.-Bank Committee on Finance and Organization -11 :30 a.m.-Fund Committee on Finance and Organization TUESDAY -September 9-10 :00 a.m.-Fund Informal Discussion-World Payments Situ­ ation and Outlook WEDNESDAy-September 10-10 :00 a.m.-Bank Informal Discussion -12 :00 noon-Bank Annual Report Discussion (resumed) - 4 :00 p.m.-Fund Board-Committee Reports and Executive Director Nominations - 4 :30 p.m.-Bank Board-Committee Reports and Executive Director Nominations THURSDAY -September 11-10 :00 a.m.-Fund Board-Election of Executive Directors -11 :30 a.m.-Bank Board-Election of Executive Directors FRIDAY -September 12-10 :00 a.m.-Joint Procedures Committee -12 :00 noon-Closing Session (Joint)

1 The provisional schedule was subsequently amended by adding the following sessions: THURSDAy-September 4- 5:00 p.m.-Fund Annual Report Discussion MONDAY -September 8- 4:00 p.m.-Fund Informal Discussion-World Payments Situation and Outlook TUESDAY -September 9-10:00 a.m.-Fund Annual Report Discussion (resumed) and by deleting the Session shown in the Provisional Schedule for Tuesday, September 9 at 10:00 a.m.

[21 ]

_., _. -,------ANNEX X

PROVISIONS RELATING TO TH~ CONDUCT OF THE MEETING

Attendance (a) Joint sessions of the Boards of Governors of the Fund and Bank, the sessions at which the Annual Reports are presented and the informal discussions shall be open to the press and public; other sessions of the Boards of Governors1 and committee meetings shall be closed to the press and public. (b) Meetings of the Joint Procedures Committee shall be open only to Governors and Alternate Governors and one advisor for each member country represented on the committee. (c) Committee meetings, with the exception of the Joint Procedures Committee, shall be open to Governors and Alternate Governors who are not members of the committee, and their advisors. (d) Accredited observers may attend all sessions of the Boards of Governors and their committees, other than the Joint Procedures Committee, unless a committee decides otherwise. (e) Sessions of the Boards of Governors and committee meetings shall be open to such members of the joint secretariat and the technical staffs as may be necessary to the orderly conduct of business. (f) Accredited observers wishing to speak at a meeting shall consult the Chairman in advance of the meeting.

Public Information The Chairmen of the Boards of Governors, the Managing Director of the Fund and the President of the Bank are authorized to communicate to the press such information con­ cerning the proceedings of the Seventh Annual Meeting as they deem suitable. Copies of such communications shall be available to any Governor on his request.

Records (a) The Secretaries of the Fund and Bank are authorized to prepare verbatim transcripts of the proceedings of the sessions of the Boards of Governors, committees and in­ formal discussions. The transcripts of committees will be kept confidential and made available only to the Chairmen, the Managing Director of the Fund and the President of the Bank. (b) The Secretaries are authorized to prepare summary records of all proceedings of the committees. (c) Reports of committees shall be signed by the Committee Chairman and the Reporting Member.

1 On Sept. 6, 1962 the Board of Governors decided that the Bank Annual Report Discussion should be open to the press and public.

[22 ]

------_.. __ .- . JOINT PROCEDURES COMMITTEE

Report No.2

September 12, 1952

I have the honor to submit the Report of the Joint Procedures Committee on its second meeting which was held at 10 :00 this morning.

I. Admission of the Republic of Haiti to Membership in the Fund and the Bank

The Committee considered the letter dated September 5, 1952 from the Chairman of the Executive Board of the Fund recommending, on behalf of the Executive Board of the Fund, that the Board of Governors of the Fund adopt a proposed resolution concerning the admis­ sion of the Republic of Haiti to membership in the Fund. The Committee also considered a Report, dated September 8, 1952, from the Executive Directors of the Bank recommending the adoption by the Board of Governors of the Bank of a similar resolution 1 concerning the admission of the Republic of Haiti to membership in the Bank. I have the honor in the name of the Committee to recommend the adoption by the Boards of Governors of the proposed resolutions attached to said letter and said Report.

II. Place and Date of Eighth Annual Meeting

The Committee considered the question of the place and date of the Eighth Annual Meet­ ing and decided to recommend that it be held in Washington in September, 1953. An invitation was received to hold the 1954 Annual Meeting in Ceylon. This invitation, together with any others that may be received during the coming year, will be considered at the next Annual Meeting. I have the honor, in the name of the Committee, to recommend the adoption of the draft resolutions attached hereto as Annex 1. 1

Ill. Officers for Ensuing Year

The Committee next considered the question of officers of the Boards of Governors for the ensuing year, and recommends that the Governor for Pakistan be elected Chairman for the ensuing year and the Governors for China, France, India, the United Kingdom and the United States be elected Vice-Chairmen. In the name of the Committee, I have the honor to recommend to the Boards of Governors the adoption of the draft resolutions attached hereto as Annex II. 1

IV. Composition of Procedures Committees for Ensuing Year The Committee then considered the composition of the Procedures Committees of the Fund and the Bank for the ensuing year. I have the honor, in the name of the Committee, to recommend to the Boards of Governors the adoption of the draft resolutions attached hereto as Annex III,l which propose that the Procedures Committees consist of the Governors for Pakistan, Chairman; Guatemala, Vice-Chairman; Sweden, Reporting Member; China; France; India; Peru; South Africa; Thailand; Turkey; the United Kingdom and the United States.

1 See Resolutions Nos. 74 to 77 on pages 36 & 37. [23 ] v. Resolution of Appreciation The Committee heartily recommends to the Boards of Governors the adoption of the draft resolution of appreciation to the Republic of Mexico and the Bank of Mexico, which is attached hereto as Annex IV.1

Approved: /s/ HORACIO LAFER /s/ JOSEPH OUGHOURLIAN /s/ EUGENIO GUDIN /s/ ANDRE TUENI Chairman Reporting Member (Brazil) (Lebanon)

This Report was approved and its recommendations were adopted by the Boards of Governor8 at the final Joint Se8sion, September 12, 1952.

1 See Resolution No. 78 on page 88.

[24 ] REPORT OF COMMITrEE ON FINANCE AND ORGANIZATION September 9, 1952

Chairman ______N ORW AY Vic e Chairman ______PERU Reporting M ember ______THAILAND

Other Members: BELGIUM, CANADA, CHINA, DENMARK, ECUADOR, FRANCE, HONDURAS, INDIA, NICARAGUA, PAKISTAN, PARAGUAY, SYRIA, TURKEY, UNITED KINGDOM, UNITED STATES AND YUGOSLAVIA

I have the honor to report that the Committee on Finance and Organization met at 10 :00 a.m. on Monday, September 8, 1952, and considered the following Agenda items: (1) Financial Statements and Annual Audit. (2) Administrative Budget for Fiscal Year ending June 30, 1953. (3) Allocation of Income to Reserve. (4) Regulations Relating to Executive Directors and Alternates. (5) Application of Republic of Indonesia for Membership in the Bank. The President commented briefly on several of the matters before the Committee.

Financial Statements, Annual Audit and Administrative Budget. The following documents, attached as Appendices "A" to "G" inclusive, to the Seventh Annual Report, were then considered: A. Balance Sheet-June 30,1952. B. Comparative Statement of Income and Expenses for the Fiscal Years ended June 30, 1951 and June 30, 1952. C. Statement of Currencies held by the Bank-June 30, 1952. D. Statement of Loans-June 30, 1952. E. Statement of Subscriptions to Capital Stock and Voting Power-June 30, 1952. F. Notes to Financial Statements-June 30,1952. G. Opinion of Independent Auditor. The Committee also considered the Administrative Budget for the fiscal year ending June 30, 1953, attached as Appendix "H" to the Annual Report, and a supplemental Report giving additional information concerning the Budget. The Budget was prepared in accordance with Section 19 of the By-Laws and approved by the Executive Directors. The Governor for the United Kingdom suggested that an attempt should be made to go forward actively with the extension of joint Bank-Fund services, including joint missions to member countries. In connection with joint missions, he pointed out the possibility not only of resulting economy but also of positive advantages to the Bank and to member countries. The President told the Committee that a joint Bank-Fund committee is to be set up to examine this question and that a report on its findings will be made in due course to the Board of Governors. The Governor for the United Kingdom also suggested the possibility of securing economy by the extension of the practice of having Executive Directors serve in both the Bank and the Fund. [25 ] The Governor for Pakistan noted with approval the intention of the Bank to assist in the organization of Technical Research Institutes and the continued emphasis by the Bank on the selection for the staff of the best qualified individuals available from the broadest possible group of nationalities. In the name of the Committee, I have the honor to recommend to the Board of Governors the adoption of the draft resolution on the Financial Statements and Budget attached hereto as Annex 1.1

Allocation of Income to Reserve. The Committee considered the Report dated July 30, 1952, of the Executive Directors on the Allocation of Income to Reserve and concurs in the recommendations of the Executive Directors. In the name of the Committee, I have the honor to recommend that the Board of Governors note with approval the allocation, in accordance with resolutions previously adopted by the Board of Governors and by the Executive Directors, of the net income of the Bank for the fiscal year ended June 30, 1952, to the General Reserve.

Regulations Relating to Executive Directors and Alternates. The Committee considered the Report, dated July 30, 1952, of the Executive Directors on Regulations Relating to Executive Directors and Alternates. In the name of the Committee, I have the honor to recommend that the record of the pro­ ceedings of the Seventh Annual Meeting of the Board of Governors state that these Regula­ tions have been reviewed and noted by the Board of Governors.

Application of Republic of Indonesia for Membership in the Bank The Committee then considered the Report, dated August 26, 1952, of the Executive Directors concerning the application of the Republic of Indonesia for membership in the Bank. I have the honor, in the name of the Committee, to recommend the adoption by the Board of Governors of the draft resolution 1 attached to that Report.

Marketing Activities of the Bank A statement was made to the Committee by the Director of Marketing, on the marketing activities of the Bank. 2 The Governor for the United Kingdom indicated that the Governors might like to compli­ ment the management on its efforts to extend the range of investors in the Bank's securities.

/s/ GUNNAR JAHN /s/ SERM VINICCHAYAKUL Chairman Reporting Member (Norway) (Thailand)

This Report was approved by the Board of Governors on September 10, 195!.

1 See Resolutions Nos. 72 and 73 on page 34. 2 See page 27.

[26 ] REPORT ON MARKETING ACTIVITIES OF THE BANK

Statement by the Director of Marketing of the Bank to the Committee on Finance and Organization, September 9,1952

On 30th June 1952, the end of the fiscal year, outstanding Bank obligations, both direct and guaranteed, amounted to the equivalent of approximately $535 million. Of this amount, direct obligations amounted to just under $500 million and the balance represents obligations of the Bank's borrowers sold with the Bank's guarantee. The marketing activities of the Bank during the last fiscal year are described in detail in the Annual Report. During the year, the Bank sold new issues amounting in the aggregate to the equivalent of $176,600,000. This was the largest volume of new issues in any fiscal year since the Bank carried out its initial borrowing operations in the United States market in 1947. Four issues were sold during the last year, namely: (a) On July 3, 1951-50,000,000 Sw. fro ($11,634,671) 3%: 12-year Bonds of 1951, due 1963; (b) On September 12, 1951-$100,000,000 314/~ 30-year Bonds of 1951, due 1981; (c) On February 4, 1952-Can. $15,000,000 ($13,636,364) 4% 10-year Bonds of 1952, due 1962; (d) On May 14, 1952-$50,000,000 3%% 23-year Bonds of 1952, due 1975. The 50 million Swiss franc loan was the first public issue to be made by the Bank in the Swiss market, although in 1948 and again in 1950 the Bank had made private placements of two small loans with a group of Swiss bankers. The public issue of July 1951 was very suc­ cessful and well received by Swiss investors. The $15 million Canadian issue was the first to be made by the Bank in the Canadian market. This issue too was very successful. The bonds were well distributed throughout Canada and there was substantial participation by investors in other countries having Canadian interests. The $100 million United States issue of September 1951 was initially a success, as the Governors were informed at the Sixth Annual Meeting in Washington last year. As matters developed, however, it became apparent that many banks and dealers in the large sponsor and selling group who had handled this issue were interested more in subscribing for the bonds with hopes of an immediate rise in their market price, rather than in stimulating interest in the bonds among the investing community. This was a cause of concern to the Bank and it was decided that, for any future issues which the Bank might make in the United States market, a marketing technique should be devised that would, as far as possible, insure against a repetition of this situation. The Bank accordingly entered into consultation with prominent bankers and issuing houses in the United States to accomplish this. As a result, it was decided to adopt a different system of marketing for the Bank's $50 million issue in May 1952. The bonds were sold to Morgan Stanley & Company and The First Boston Corporation as Joint Managers for an underwriting group of one hundred and nine­ teen dealers and banks. In addition, a selling group was formed consisting of one hundred and sixty-four members to ensure a distribution for a substantial proportion of the bonds on a basis as widespread as possible. The members of the underwriting group and of the selling group were selected from every important financial center in the United States. The results [27 ] of this procedure have been most satisfactory. The market for the bonds improved substan­ tially over the issue price and a very wide distribution was obtained. It has been the constant aim of the Bank to secure the broadest possible distribution of the Bank's securities, not only geographically but also institutionally. Over the past fiscal year there has been a considerable increase in the number of investors holding substantial blocks of the Bank's securities and, in the Bank's view, this is due to a considerable extent to the method of handling the last United States issue. Orders have been received from many investing institutions, including some of the largest insurance companies, as well as savings banks and pension and retirement funds which had never before purchased the Bank's bonds. In addi­ tion, many investors added to their already substantial holdings and others re-established positions previously held. However, too many of the Bank's bonds are still held in the hands of too few investors. The Bank is concentrating especially on enlisting the support of the retirement and pension funds in various states, cities and counties in the United States. The volume of these funds is substantial and is growing rapidly. The Bank is particularly gratified by the support which its securities are receiving from investors outside the United States. According to the best estimates that can be made, more than $125 million out of the Bank's total outstanding obligations of $535 million is now held by investors outside the United States, including central banks of member states. There is a growing realization of the advantages of holding the Bank's obligations: the gross income is attractive; in most cases there is a degree of tax exemption and the investment offers a gilt­ edged security. The Bank hopes for a continued and increasing degree of cooperation on the part of official and unofficial investment institutions outside the United States which have funds available for short, medium or long-term investment.

[28 ] RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS BETWEEN SIXTH AND SEVENTH ANNUAL MEETINGS Resolution No. 68 TERMS AND CONDITIONS ON WHICH JORDAN SHALL BE ADMITTED TO MEMBERSHIP IN THE BANK WHEREAS, the Government of the Hashemite Kingdom of the Jordan has applied for admission to membership in the International Bank for Reconstruction and Development in accordance with Section 1 (b) of Article II of the Articles of Agreement of the Bank; and WHEREAS, pursuant to Section 20 of the By-Laws of the Bank, the Executive Directors, after consultation with representatives of the Government of Jordan have made recommenda­ tions to the Board of Governors with regard to the application of that country for admission to membership in the Bank; Now, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors, hereby RESOLVES: THAT the terms and conditions upon which the Hashemite Kingdom of the Jordan shall be admitted to membership in the Bank shall be as follows: 1. Definitions: As used in this resolution: (a) The term "Jordan" means the Hashemite Kingdom of the Jordan. (b) The term "Bank" means International Bank for Reconstruction and Develop­ ment. (c) The term "Articles" means the Articles of Agreement of the Bank. (d) The term "dollars" or "$" means United States dollars of the weight and fineness in effect on July 1, 1944. (e) The term "subscription" means the capital stock of the Bank subscribed to by a member. (f) The term "member" means member of the Bank. 2. Subscription: By accepting membership in the Bank, Jordan shall subscribe to 30 shares of the capital stock of the Bank at the par value of $100,000 per share. 3. Membership in the Fund: Before accepting membership in the Bank, Jordan shall accept membership in and become a member of the International Monetary Fund. 4. Payments on Subscription: (a) Before accepting membership in the Bank, Jordan shall pay to the Bank: (i) Gold or United States dollars equal to 2 % of its subscription; and (ii) An amount in the currency of Jordan which, at the appropriate prevail­ ing exchange rate, shall be equal in value to 18 % of its subscription. (b) Jordan shall agree that, if it tenders any part of the payment called for in paragraph (a) (i) above in gold, the Bank shall have the right to reject any such gold which, in its opinion, may not be sold freely and unconditionally by the Bank to members requiring certification or other evidence as to the origin of gold purchased by them. 5. Representation and Information: Before accepting membership in the Bank, Jordan shall represent to the Bank that it has taken all action necessary to sign and deposit the instrument of acceptance and sign the Articles as contemplated by paragraph 6 (a) and (b) of this resolution and Jordan shall furnish to the Bank such information in respect of such action as the Bank may request. [29 ] 6. Acceptance of Membership: After the Bank shall have informed the Government of the United States of America that Jordan (i) has made the payments called for by paragraph 4 of this resolution; (ii) has made the representation called for by paragraph 5 of this resolution; and (iii) has furnished the information re­ quested by the Bank pursuant to said paragraph 5, and after Jordan shall have become a member of the International Monetary Fund, Jordan shall become a member of the Bank, with a subscription as set forth in paragraph 2 of this resolu­ tion, as of the date when Jordan shall have complied with the following require­ ments: (a) Jordan shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; (b) Jordan shall sign the original copy of the Articles held in the Archives of the Government of the United States of America. 7. Limitation on Period for Acceptance of Member8hip: Jordan may accept member­ ship in the Bank pursuant to this resolution until September 30, 1952; provided, however, that, if extraordinary circumstances are deemed by the Executive Direc­ tors to warrant an extension of the period during which Jordan may accept mem­ bership pursuant to this resolution, the Executive Directors may extend such period until such later date as they may determine, but in no event beyond March 31, 1953.

(Adopted April 21, 1952)

Resolution No. 69

TERMS AND CONDITIONS ON WHICH THE FEDERAL REPUBLIC OF GERMANY SHALL BE ADMITTED TO MEMBERSHIP IN THE BANK WHEREAS, the Government of the Federal Republic of Germany has applied for admission to membership in the International Bank for Reconstruction and Development in accordance with Section 1 (b) of Article II of the Articles of Agreement of the Bank; and WHEREAS, pursuant to Section 20 of the By-Laws of the Bank, the Executive Directors, after conSUltation with representatives of the Government of the Federal Republic of Germany have made recommendations to the Board of Governors with regard to the application of that country for admission to membership in the Bank; Now, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors, hereby RESOLVES: THAT the terms and conditions upon which the Federal Republic of Germany shall be admitted to membership in the Bank shall be as follows: 1. Definitions: As used in this resolution: (a) The term "Bank" means International Bank for Reconstruction and Develop­ ment. (b) The term "Articles" means the Articles of Agreement of the Bank. (c) The term "dollars" or "$" means United States dollars of the weight and fineness in effect on July 1, 1944. (d) The term "subscription" means the capital stock of the Bank subscribed to by a member. (e) The term "member" means member of the Bank. [30 ] 2. Subscription: By accepting membership in the Bank; the Federal Republic of Germany shall subscribe to 3,300 shares of the capital stock of the Bank at the par value of $100,000 per share. 3. Membership in the Fund: Before accepting membership in the Bank, the Federal Republic of Germany shall accept membership in and become a member of the International Monetary Fund. 4. Payments on Subscription: (a) Before accepting membership in the Bank, the Federal Republic of Germany shall pay to the Bank: (i) Gold or United States dollars equal to 2 % of its subscription; and (ii) An amount in the currency of the Federal Republic of Germany which, at the appropriate prevailing exchange rate, shall be equal in value to 18% of its sUbscription. (b) The Federal Republic of Germany shall agree that, if it tenders any part of the payment called for in paragraph (a) (i) above in gold, the Bank shall have the right to reject any such gold which, in its opinion, may not be sold freely and unconditionally by the Bank to members requiring certification or other evidence as to the origin of gold purchased by them. 5. Representation and Information: Before accepting membership in the Bank, the Federal Republic of Germany shall represent to the Bank that it has taken all action necessary to sign and deposit the instrument of acceptance and sign the Articles as contemplated by paragraph 6 (a) and (b) of this resolution and the Federal Republic of Germany shall furnish to the Bank such information in re­ spect of such action as the Bank may request. 6. Acceptance of Membership: After the Bank shall have informed the Government of the United States of America that the Federal Republic of Germany (i) has made the payments called for by paragraph 4 of this resolution; (ii) has made the representation called for by paragraph 5 of this resolution; and (iii) has furnished the information requested by the Bank pursuant to said paragraph 5, and after the Federal Republic of Germany shall have become a member of the International Monetary Fund, the Federal Republic of Germany shall become a member of the Bank, with a sUbscription as set forth in paragraph 2 of this resolution, as of the date when the Federal Republic of Germany shall have complied with the follow­ ing requirements: (a) The Federal Republic of Germany shall deposit with the Government of the United States of America an instrument stating that it has accepted in ac­ cordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; (b) The Federal Republic of Germany shall sign the original copy of the Articles held in the Archives of the Government of the United States of America. 7. Limitation on Period for Acceptance of Membership: The Federal Republic of Germany may accept membership in the Bank pursuant to this resolution until August 15, 1952; provided, however, that, if extraordinary circumstances are deemed by the Executive Directors to warrant an extension of the period during which the Federal Republic of Germany may accept membership pursuant to this resolution, the Executive Directors may extend such period until such later date as they may determine, but in no event beyond February 16, 1953. (Adopted May 28, 1952) [31 ] Resolution No. 70

TERMS AND CONDITIONS ON WHICH JAPAN SHALL BE ADMITTED TO MEMBERSHIP IN THE BANK WHEREAS, the Government of Japan has applied for admission to membership in the International Bank for Reconstruction and Development in accordance with Section 1 (b) of Article II of the Articles of Agreement of the Bank; and WHEREAS, pursuant to Section 20 of the By-Laws of the Bank, the Executive Directors, after consultation with representatives of the Government of Japan have made recommenda­ tions to the Board of Governors with regard to the application of that country for admission to membership in the Bank; Now, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors, hereby RESOLVES: THAT the terms and conditions upon which Japan shall be admitted to membership in the Bank shall be as follows: 1. Definitions: As used in this resolution: (a) The term "Bank" means International Bank for Reconstruction and Develop­ ment. (b) The term "Articles" means the Articles of Agreement of the Bank. (c) The term "dollars" or "$" means United States dollars of the weight and fineness in effect on July 1, 1944. (d) The term "subscription" means the capital stock of the Bank subscribed to by a member. (e) The term "member" means member of the Bank. 2. Subscription: By accepting membership in the Bank, Japan shall subscribe to 2,500 shares of the capital stock of the Bank at the par value of $100,000 per share. 3. Membership in the Fund: Before accepting membership in the Bank, Japan shall accept membership in and become a member of the International Monetary Fund. 4. Payments on Subscription: (a) Before accepting membership in the Bank, Japan shall pay to the Bank: (i) Gold or United States dollars equal to 2% of its subscription; and (ii) An amount in the currency of Japan which, at the appropriate prevail­ ing exchange rate, shall be equal in value to 18 % of its subscription. (b) Japan shall agree that, if it tenders any part of the payment called for in paragraph (a) (i) above in gold, the Bank shall have the right to reject any such gold which, in its opinion, may not be sold freely and unconditionally by the Bank to members requiring certification or other evidence as to the origin of gold purchased by them. 5. Representation and Information: Before accepting membership in the Bank, Japan shall represent to the Bank that it has taken all action necessary to sign and deposit the instrument of acceptance and sign the Articles as contemplated by paragraph 6 (a) and (b) of this resolution and Japan shall furnish to the Bank such information in respect of such action as the Bank may request. 6. Acceptance of Membership: After the Bank shall have informed the Government of the United States of America that Japan (i) has made the payments called for by paragraph 4 of this resolution; (if) has made the representation called for by paragraph 5 of this resolution; and (iii) has furnished the information requested [82 ] by the Bank pursuant to said paragraph 5, and after Japan shall have become a member of the International Monetary Fund, Japan shall become a member of the Bank, with a subscription as set forth in paragraph 2 of this resolution, as of the date when Japan shall have complied with the following requirements: (a) Japan shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; (b) Japan shall sign the original copy of the Articles held in the Archives of the Government of the United States of America. 7. Limitation on Period for Acceptance of Membership: Japan may accept member­ ship in the Bank pursuant to this resolution until August 15, 1952; provided, how­ ever, that, if extraordinary circumstances are deemed by the Executive Directors to warrant an extension of the period during which Japan may accept member­ ship pursuant to this resolution, the Executive Directors may extend such period until such later date as they may determine, but in no event beyond February 16, 1953. (Adopted May 28, 1952)

[ 33]

-""-,,.------RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS AT SEVENTH ANNUAL MEETING

Resolution No. 71

FOURTH REGULAR ELECTION OF EXECUTIVE DIRECTORS RESOLVED: (a) That the proposed Rules for the Conduct of the Fourth Regular Election of Executive Directors, attached hereto as Appendix 11, are hereby adopted as the rules for the conduct of said election; and (b) That the Fifth Regular Election of the Executive Directors shall take place at the annual meeting of the Board of Governors in 1954. Resolution No. 71 was adopted by the Board of Governors on Septem­ ber 3,1952.

Resolution No. 72

FINANCIAL STATEMENTS AND BUDGET RESOLVED: That the Board of Governors consider the Financial Statements, Auditors' Report and Administrative Budget, included as exhibits "A" to "H" inclusive, of the Seventh Annual Re­ port, as fulfilling the requirements of Article V, Section 13, of the Articles of Agreement and of Section 19 of the By-Laws.

Resolution No. 73

TERMS AND CONDITIONS ON WHICH THE REPUBLIC OF INDONESIA SHALL BE ADMITTED TO MEMBERSHIP IN THE BANK WHEREAS, the Government of the Republic of Indonesia has applied for admission to membership in the International Bank for Reconstruction and Development in accordance with Section 1 (b) of Article II of the Articles of Agreement of the Bank; and WHEREAS, pursuant to Section 20 of the By-Laws of the Bank, the Executive Directors, after consultation with representatives of the Government of the Republic of Indonesia, have made recommendations to the Board of Governors with regard to the application of that country for admission to membership in the Bank; Now, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors, hereby RESOLVES: THAT the terms and conditions upon which the Republic of Indonesia shall be admitted to membership in theBank shall be as follows: 1. Definitions: As used in this resolution: (a) The term "Bank" means International Bank for Reconstruction and Develop­ ment. (b) The term "Articles" means the Articles of Agreement of the Bank. (c) The term "dollars" or "$" means United States dollars of the weight and fineness in effect on July 1, 1944.

1 See page 39 for the Rules for the Conduct of the Fourth Regular Election of Executive Directors. [34 ]

...... _----_.. _._------_._-- (d) The term "subscription" means the capital stock of the Bank subscribed to by a member. (e) The term "member" means member of the Bank. 2. Subscription: By accepting membership in the Bank, the Republic of Indonesia shall subscribe to 1,100 shares of the capital stock of the Bank at the par value of $100,000 per share. 3. Membership in the Fund: Before accepting membership in the Bank, the Republic of Indonesia shall accept membership in and become a member of the International Monetary Fund. 4. Payments on Subscription: (a) Before accepting membership in the Bank, the Republic of Indonesia shall pay to the Bank: (i) Gold or United States dollars equal to 2 % of its subscription; and (ii) An amount in the currency of the Republic of Indonesia, which, at the appropriate prevailing exchange rate, shall be equal in value to 18 rr of its subscription. (b) The Republic of Indonesia shall agree that, if it tenders any part of the pay­ ment called for in paragraph (a) (i) above in gold, the Bank shall have the right to reject any such gold which, in its opinion, may not be sold freely and unconditionally by the Bank to members requiring certification or other evidence as to the origin of gold purchased by them. 5. Representation and Information: Before accepting membership in the Bank, the Republic of Indonesia shall represent to the Bank that it has taken all action necessary to sign and deposit the instrument of acceptance and sign the Articles as contemplated by paragraph 6 (a) and (b) of this resolution and the Republic of Indonesia shall furnish to the Bank such information in respect of such action as the Bank may request. 6. Acceptance of Membership: After the Bank shall have informed the Government of the United States of America that the Republic of Indonesia (i) has made the payments called for by paragraph 4 of this resolution; (ii) has made the repre­ sentation called for by paragraph 5 of this resolution; and (iii) has furnished the information requested by the Bank pursuant to said paragraph 5, and after the Republic of Indonesia shall have become a member of the International Monetary Fund, the Republic of Indonesia shall become a member of the Bank, with a sub­ scription as set forth in paragraph 2 of this resolution, as of the date when the Republic of Indonesia shall have complied with the following requirements: (a) The Republic of Indonesia shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; (b) The RepUblic of Indonesia shall sign the original copy of the Articles held in the Archives of the Government of the United States of America. 7. Limitation on Period for Acceptance of Membership: The RepUblic of Indonesia may accept membership in the Bank pursuant to this resolution until March 16, 1953; provided, however, that, if extraordinary circumstances are deemed by the Executive Directors to warrant an extension of the period during which the Republic of Indonesia may accept membership pursuant to this resolution, the Executive Directors may extend such period until such later date as they may determine, but in no event beyond September 16, 1953.

Resolutions Nos. 72 and 73 were adopted by the Board of Governors on September 10, 1952. [ 35 ] Resolution No. 74 TERMS AND CONDITIONS ON WHICH THE REPUBLIC OF HAITI SHALL BE ADMITTED TO MEMBERSHIP IN THE BANK WHEREAS, the Government of the Republic of Haiti has applied for admission to mem­ bership in the International Bank for Reconstruction and Development in accordance with Section 1 (b) of Article II of the Articles of Agreement of the Bank; and WHEREAS, pursuant to Section 20 of the By-Laws of the Bank, the Executive Directors, after consultation with representatives of the Government of the Republic of Haiti, have made recommendations to the Board of Governors with regard to the application of that eountry for admission to membership in the Bank; NoW, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors, hereby RESOLVES: THAT the terms and conditions upon which the Republic of Haiti shall be admitted to membership in the Bank shall be as follows: 1. Definitions: As used in this resolution: (a) The term "Bank" means International Bank for Reconstruction and Develop­ ment. (b) The term "Articles" means the Articles of Agreement of the Bank. (c) The term "dollars" or "$" means United States dollars of the weight and fineness in effect on July 1, 1944. (d) The term "subscription" means the capital stock of the Bank subscribed to by a member. (e) The term "member" means member of the Bank. 2. Subscription: By accepting membership in the Bank, the Republic of Haiti shall subscribe to 20 shares of the capital stock of the Bank at the par value of $100,000 per share. 3. Membership in the Fund: Before accepting membership in the Bank, the Republic of Haiti shall accept membership in and become a member of the International Monetary Fund. 4. Payments on Subscription: (a) Before accepting membership in the Bank, the Republic of Haiti shall pay to the Bank: (i) Gold or United States dollars equal to 2% of its subscription; and (ii) An amount in the currency of the Republic of Haiti, which, at the appro­ priate prevailing exchange rate, shall be equal in value to 1870 of its subscription. (b) The Republic of Haiti shall agree that, if it tenders any part of the payment called for in paragraph (a) (i) above in gold, the Bank shall have the right to reject any such gold which, in its opinion, may not be sold freely and un­ conditionally by the Bank to members requiring certification or other evidence as to the origin of gold purchased by them. 5. Representation and Information: Before accepting membership in the Bank, the Republic of Haiti shall represent to the Bank that it has taken all action necessary to sign and deposit the instrument of acceptance and sign the Articles as con­ templated by paragraph 6 (a) and (b) of this resolution and the Republic of Haiti shall furnish to the Bank such information in respect of such action as the Bank may request. [36 ]

----_._------_.. _------6. Acceptance of Membership: After the Bank shall have informed the Government of the United States of America that the Republic of Haiti (i) has made the pay­ ments called for by paragraph 4 of this resolution; (ii) has made the representa­ tion called for by paragraph 5 of this resolution; and (iii) has furnished the in­ formation requested by the Bank pursuant to said paragraph 5, and after the Republic of Haiti shall have become a member of the International Monetary Fund, the Republic of Haiti shall become a member of the Bank, with a subscription as set forth in paragraph 2 of this resolution, as of the date when the Republic of Haiti shall have complied with the following requirements: (a) The Republic of Haiti shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; (b) The Republic of Haiti shall sign the original copy of the Articles held in the Archives of the Government of the United States of America. 7. Limitation on Period for Acceptance of Membership: The RepUblic of Haiti may accept membership in the Bank pursuant to this resolution until March 16, 1953, provided, however, that, if extraordinary circumstances are deemed by the Executive Directors to warrant an extension of the period during which the Republic of Haiti may accept membership pursuant to this resolution, the Execu­ tive Directors may extend such period until such later date as they may determine, but in no event beyond September 16, 1953.

Resolution No. 75 PLACE AND DATE OF EIGHTH ANNUAL MEETING RESOLVED: That the Chairman shall convene the Eighth Annual Meeting of the Board of Governors of the International Bank for Reconstruction and Development in Washington in the first half of the month of September, 1953.

Resolution No. 76 OFFICERS OF BOARD OF GOVERNORS FOR 1952-53 RESOLVED: That the Governor for Pakistan is hereby elected Chairman, and the Governors for China, France, India, the United Kingdom, and the United States, are hereby elected Vice-Chairmen of the Board of Governors of the International Bank for Reconstruction and Development, to hold their respective offices until the election of officers of the International Bank for Recon­ struction and Development takes place at the close of the next annual meeting.

Resolution No. 77 COMPOSITION OF PROCEDURES COMMITTEE FOR 1952-53 RESOLVED: That a Procedures Committee be hereby established, to be available after the termination of this meeting, and until the election of officers of the International Bank for Reconstruction and Development takes place at the next annual meeting, for consultation at the discretion of the Chairman, normally by correspondence, and also if occasion requires by convening immediately before the annual meeting of the Board. The Procedures Committee shall consist of the Governors for the following members: China, France, Guatemala, India, Pakistan, Peru, South Africa, Sweden, Thailand, Turkey, the United Kingdom and the United States. The Chairman, Vice-Chairman and Reporting Member shall be the Governors for Pak­ istan, Guatemala, and Sweden, respectively. [37 ] Resolution No. 78 APPRECIATION RESOLVED: That the Governors of the International Monetary Fund and the International Bank for Reconstruction and Development thank their hosts, the people of Mexico, for the warm and gracious hospitality they have enjoyed in this beautiful land; and That they express particular appreciation to the President and Government of Mexico, the Governor and Alternate Governors of the Bank and Fund for Mexico, and the Bank of Mexico for their outstanding contributions to the success of the Seventh Annual Meeting.

Resolutions Nos. 74- to 78 were adopted by the Board of Governors on September 12, 1952.

DRAFf RESOLUTION SUBMITTED BY THE GOVERNORS FOR CZECHOSLOVAKIA TO THE BOARDS OF GOVERNORS OF THE BANK AND FUND AT THE SEVENTH ANNUAL MEETING

WHEREAS the Central People's Government of the Chinese People's Republic established in October 1949 is the only lawful representative of the Country, the Seventh Annual Meeting of the Boards of Governors of the International Monetary Fund and of the International Bank for Reconstruction and Development decides that the representatives of the Kuomintang Group which has no right to speak on behalf of the people of China, shall be immediately excluded from all organs of the International Monetary Fund and of the International Bank for Re­ construction and Development.

The Governor for the United States moved, and the Governor for the United Kingdom seconded, that no action be taken on the draft resolution submitted by the Governors for Czechoslovakia. On vote by a show of hands, the motion of the Governor for the United States was adopted, September 5,1952.

[38 ] RULES FOR THE CONDUCT OF THE FOURTH REGULAR ELECTION OF EXECUTIVE DIRECTORS

1. Definitions: Whenever used in these rules, unless the context shall otherwise require, the following terms shall have the respective meanings hereinafter set forth: (a) The term "Articles" means the Articles of Agreement of the Bank. (b) The term "Schedule B" means Schedule B of the Articles with the adjustments speci­ fied in these Rules. (c) The term "Board" means the Board of Governors of the Bank. (d) The term "Chairman" means the Chairman of the Board of Governors or a Vice Chairman who may at the time in question be presiding as Chairman of the Board. (e) The term "Governor" includes the Alternate Governor or any temporary Alternate Governor, designated in accordance with Section 12 of the By-Laws, when acting for the Governor. (f) The term "Secretary" means the Secretary of the Bank. (g) The term "election" means the fourth regular election of Executive Directors. (h) The term "meeting" means the meeting of the Board at which the election is held. 2. Date of Election: The election shall be held during the Seventh Annual Meeting of the Board at a time to be set forth in the schedule of the meeting as approved by the Board. 3. Schedule B: Subject to the adjustments hereinafter set forth the provisions of Schedule B shall apply to the conduct of the election. 4. Number of Executive Directors to be Elected under Article V, Section 4(b): At such elec­ tion eleven Executive Directors shall be elected under Article V, Section 4 (b) . 5. In view of the number of Executive Directors to be elected under Article V, Section 4 (b) . (a) The percentage of the eligible votes required for election as specified in paragraphs 2 and 5 of Schedule B shall be nine percent. (b) The maximum percentage of eligible votes for anyone nominee as specified in para­ graphs 3, 4 and 5 of Schedule B shall be twelve percent. 6. Nominations: (a) A person shall be eligible for election as Executive Director when nominated by one or more Governors. (b) Each nomination shall be made on a Nomination Form to be obtained from the Secretary and signed by the Governor or Governors making the nominations. (c) A Governor shall nominate only one person. (d) On the day preceding the session at which the election is to take place, the Chairman shall, preferably at a session of the Board, announce the nominations received, ask for any further nominations, and close the nominations. The Secretary shall post a list of the persons nominated. 7. Tally Sheets: The Secretary shall post at the meeting and distribute to each Governor and Alternate Governor prior to the election a Tally Sheet substantially in the form of Annex A 1 attached hereto and a list of the persons nominated. 8. Form of Ballot: The Secretary shall have available a sufficient number of ballot forms substantially in the form of Annex B 1 attached hereto.

1 Not included herein. [39 ]

_.", _._------....,...... ------9. Supervision of the Election: The Chairman shall Bupervise the election and shall appoint such tellers and other assistants as he deems necessary. 10. Distribution of Ballots: One ballot form shall be furnished to each Governor eligible to vote immediately before a ballot is taken. On any particular ballot only ballot forms distributed for that ballot shall be counted. 11. Balloting-General: Each ballot shall be taken as follows: (a) The roll of members whose Governors are eligible to vote shall be called in alpha­ betical order. (b) Immediately after a member's name is called, the Governor for such member shall deposit his signed ballot in the ballot box. (c) When the roll call shall have been completed and the ballots cast, the Chairman shall cause the ballots to be counted and shall cause to be announced (i) the names of the members whose Governors voted for each nominee and the total number of votes received by such nominee, (ii) the name of each person elected, and in case the votes of any members counted toward, but were not cast for, his election, the names of such members, and (iii) the names of the members whose Governors are eligible to vote on the next ballot, if any. (d) In the event that the tellers shall be of the opinion that any particular ballot is not properly executed, they shall, if possible, afford the Governor casting such ballot an opportunity to correct it before tallying the results; and such ballot, if so corrected, shall be deemed to be a valid ballot. 12. Recess: After any ballot, the Chairman may recess the meeting for such period as he may deem necessary, if in his opinion such action will facilitate the election. 13. Balloting-Second and Following Ballots: (a) If as a result of any ballot and the preceding ballots (if any) the number of Executive Directors to be elected in accordance with paragraph 4 above shall not have been elected, a succeeding ballot shall be taken. The Governors eligible to vote on such succeeding ballot shall be only (i) those Governors who voted on the preceding ballot for any nominee not elected, and (ii) those Governors whose votes for a nominee elected on the preceding ballot are deemed under paragraph 4 of Schedule B to have raised the votes cast for such nominee above the maximum percentage of the eligible votes as specified in paragraph 5 (b) above. (b) The votes of a Governor shall not be deemed under paragraph 4 of Schedule B to have raised the total votes for a nominee over the maximum percentage of the eligible votes as specified in paragraph 5 (b) above if without the votes of such Governor such total would be more than the minimum percentage of the eligible votes but not more than the maximum percentage of the eligible votes. (c) If on any ballot two or more Governors having an equal number of votes shall have voted for the same "nominee and the votes of one or more, but not all, of such Gov­ ernors could be deemed under paragraph 4 of Schedule B to have raised the total votes received by such nominee above the maximum percentage of the eligible votes, as specified in paragraph 5 (b) above, the Chairman shall determine by lot the Governor or Governors, as the case may be, who shall be eligible to vote on the next ballot. 14. Elimination of Nominees: (a) If two or more nominees shall receive the lowest number of votes within the meaning of paragraph 3 of Schedule B, no nominee shall be dropped from the next succeeding ballot, but if the same situation shall continue on such succeeding ballot, the Chair­ man shall eliminate by lot one of such nominees from the next succeeding ballot. [40 ] (b) When on any ballot the number of nominees shall not exceed the number of Executive Directors remaining to be elected, each nominee shall be deemed to be elected by the number of votes received by him on such ballot; provided, however, that if on such ballot the votes of any Governor shall be deemed under paragraph 4 of Schedule B to have raised the votes cast for any nominee above the maximum percentage of the eligible votes, as specified in paragraph 5 (b) above, no nominee shall be deemed to have been elected who shall not have received on such ballot the required percentage of votes under these rules and a succeeding ballot shall be held on which all nominees not elected on the preceding ballot shall be eligible. 15. Abstention from Voting: If a Governor shall abstain from voting on any ballot, he shall be ineligible to vote on any subsequent ballot; and his votes shall not be counted, within the meaning of Section 4 (g) of Article V, as counting toward the election of any Executive Director; provided, however, that if such abstention shall have first occurred on the last of several ballots the votes of such Governor shall be deemed to have been cast for the election of the Executive Director elected on such ballot by the least number of votes. If at the time any ballot is taken a member shall not be represented by a Governor at the meeting or session at which the ballot is taken, the member, and its Governor, if any, shall be deemed for the purpose of this paragraph to have abstained from voting on that ballot. 16. Announcement of Results of Election: After the last ballot of the election, the Chairman shall cause to be distributed to each Governor a statement setting forth the results of the election. 17. Effective Date of Election of Executive Directors: The effective date of the election shall be November 1, 1952. Incumbent elected Executive Directors shall serve through the day preceding such date. 18. General: Any question arising in connection with the conduct of the election shall be re­ solved by the tellers, subject to appeal, at the request of any Governor, to the Chairman and from him to the Board. Whenever possible any such question shall be put in general terms without identifying the members or Governors concerned.

The Rules for the Conduct of the Fourth Regular Election were approved by Resolution No. 71 page 34.

[41 ] EXECUTIVE DIRECTORS ELECTED AT FOURTH REGULAR ELECTION, SEVENTH ANNUAL MEETING

1. LUIS MACHADO (Cuba), elected by votes of: Mexico ______900 Cuba ______600 Peru ______425 Uruguay ______355 Venezuela ______355 Costa Rica ______270 Dominican Republic ______270 Guatemala ______270 El Salvador ______260 Honduras ______260 Nicaragua ______258 Panama ______252 4,475 2. JOHANNES ZAHN (Germany), elected by votes of: Germany, Federal Republic of ______3,550 Yugoslavia ______650 4,200 3. MOHAMMAD SHOAIB (Pakistan), elected by votes of: Pakistan ______1,250 Egypt ______783 Iran ______586 S yria ______315 Iraq ______310 Lebanon ______295 J ordan ______280 Ethiopia ______280 4,099 4. CABIR SELEK (Turkey), elected by votes of: Italy ______2,050 Austria ______750 Turkey ______680 Greece ______500 3,980 5. TAKEO YUMOTO (Japan), elected by votes of: Japan ______2,750 Burma ______400 Ceylon ______400 Thailand______375 3,925 6. ERLING SVEINBJORNSSON (Denmark), elected by votes of: Sweden ______1,250 Denmark ______930 Norway ______750 Finland ______630 Iceland ______260 3,820 [42 ]

------_._--_.------7. ALFONSO FERNANDEZ (Chile), elected by votes of: Brazil ______1,300 Chile ______600 Colombia ______600 Philippines ______400 Bolivia ______320 Ecuad or ______282 Paraguay ______264 3,766 8. LESLIE G. MELVILLE (Australia), elected by votes of: Australia ______2,250 Union of South Africa ______1,250 3,500 9. LOUIS RASMINSKY (Canada), elected by votes of: C an ada ______3,500 10. A. M. DE JONG (Netherlands), elected by votes of: Netherlands ______3,000 11. THOMAS BASYN (Belgium), elected by votes of: Belgi urn ______2,500 Luxembourg ______350 2,850

Total Votes Cast ______41,115

Czechoslovakia abstained from voting in the Fourth Regular Election of Executive Directors. Its 1,500 votes are not included in the above total and may not be cast by any Executive Director since they did not count towards the election of any Executive Director.

[43 ] STATEMENTS OF PRINCIPAL SPEAKERS AT INFORMAL DISCUSSION OF SEVENTH ANNUAL MEETING SEPTEMBER 10, 1952

ECONOMIC DEVELOPMENT IN ASIA

AMJAD ALI, Governor of the Bank for Pakistan; Chairman, Economic and 80cml Council of United Nations.

It was with some reluctance and hesitation vironments. One hesitates to speak of Asia that I surrendered to the approach of the with any implication of similarity among the Management of the Bank when they turned economies and the economic problems of the on their blandishments and asked me to be continent. one of the three speakers at this informal Yet there are common elements in the eco­ meeting today. nomic patterns from one edge of the con­ There were three reasons for my coyness: tinent to the other. Asia is predominantly First, the area with which I am asked to agricultural with very few centers of sub­ deal contains half of the world's population; stantial industrial development. The density that canvas is vast enough to deter the most of the population is high except in the far rash interpreter-and I am, by temperament, interior, in the Middle East, and in the rice the least rash of individuals. surplus areas of Southeast Asia. The prin­ Secondly, I had to mobilize all my reserves cipal role in the world economy of nearly all of courage before allowing myself to be pre­ Asian countries is the supply of foodstuffs sented to this august assembly, the Governors and primary raw materials. Perhaps the of the International Bank, a constellation, most striking common characteristic through­ nay, a galaxy, of financial and economic tal­ out the entire continent is the extreme pov­ ent from 54 member nations. erty of the great mass of the population. Be­ Finally, I have been very conscious that cause of this ubiquitous poverty and its social in my audience there would be distinguished and political, as well as economic, conse­ citizens of several of the countries about quences, an acceleration of economic develop­ whose affairs I would propose to speak. They, ment is an urgent need which is shared by I hope, will forgive me if, with less intimate every country in the continent. knowledge than they, I do less than full jus­ Of all the countries in Asia, only two­ tice to the needs of their several situations Israel and Malaya-had a per capita income and to the efforts they themselves are mak­ of more than $150 in 1949 and only five­ ing to meet them. Israel, Malaya, Lebanon, Syria, and Japan­ But in spite of all these three deterring had a per capita income above $100. Half circumstances I reached the conclusion that the world's population in Asia shares only any attempt to highlight the miserable living about 15 percent of the world's income. If conditions, and the needs, of the millions of numbers of economically distressed persons Asia would be worthwhile, especially to an be the criteria of urgency of development assembly competent to appreciate the em­ needs, then the problems and needs of Asia phasis, and some of whom were in the place, must command one of the highest priorities and had the power, to take action-and even in the attentions of the world. if the picture were drawn by someone who The extremely low incomes of Asia are a professes to have little more qualification reflection of the heavy concentration of the than a halting ability to express the thinking population in Asia's depressed and congested of an average educated Asian. agriculture. Income from agriculture pro­ Asia, taken as a whole, is a large and di­ vides only the barest minimum of consump­ verse continent. Its population lives in the tion with little or no margin for savings. widest variety of natural and cultural en- Consequently, the capacity of the great mass [44 ]

------_._------of the population to save and thereby to pro­ foreign political rule. There have been, ad­ vide funds for investment is extremely mittedly, important exceptions, notably limited. among the peoples of China, India and Japan, The size of Asia's population in re­ and entrepeneurs from these countries have lation to cultivable land and other natural also been active in the economic life of many resources is far in excess of that in Asian countries outside their own. any other part of the world. It is this But where local popUlations have continued lop-sided relationship, already reached, to tread the traditional economic path, the between population and resources, which importance of outside enterprise and its es­ is one of the most difficult aspects of sentially external orientation have led to a the development problem. Actually, in terms one-sided concentration on trade, and on the of rates of population growth, the figure for development of raw materials for export. So Asia is not excessive by world standards. It long as indigenous agriculture was for purely may be argued, in view of the potentialities domestic consumption or provided a satis­ of Asia's large resources, that with a reason­ factory supply of export materials it con­ able acceleration of economic development tinued to languish in its traditional ineffici­ along traditional lines, production could be encies. There was little incentive to develop kept abreast of, and perhaps surpass, the manufactures for domestic markets or to present rates of population growth. But build up any considerable nucleus of social Asia has a very high birth rate and the pace capital in the form of power, transport, com­ of population growth is held in check only by munications, housing, hospitals and similar a correspondingly high death rate. Measures installations of which the absence or inade­ which reduce the death rate may be quickly quacy constitute such a barrier to self-sus­ reflected in an accelerated pace of popula­ taining development processes in the econo­ tion growth. The present size and the char­ mies of Asia. acteristics of Asia's population suggests that The framework of financial institutions the development of Asia's resources largely has been largely organized around, and to along lines of economic activity traditional serve, trade and especially the export-import in the region, cannot continue to be a real sectors of the economies. In most countries answer to the needs of the population. Even­ the financial facilities to serve the require­ tually, and in the not too distant future, the ments of the local populations and to stimu­ development of less specialized and more di­ late, mobilize and channel such indigenous versified and balanced economies will be savings as might be available are primitive, necessary. compared with those of the highly developed The present cultural patterns over much countries. of Asia are the product of centuries of evolu­ Finally, with their limited and subordinate tion. By and large they are highly conserva­ participation in the more active currents of tive, in some places to the point of consider­ economic life, the local populations of many able social rigidity. Yet these cultures repre­ Asian countries have had little opportunity sent important and venerated values. Within to acquire advanced commercial and techni­ these cultural patterns economic considera­ cal experience and skill. Business enterprise tions are certainly important, but their ex­ and initiative are therefore inadequately de­ pression has tended in many of the Asian veloped and there is an acute shortage of the countries to adhere to traditional lines of eco­ technical and administrative experience and nomic activity. This may be because few competence necessary to organize and direct countries in the East have had an industrial a more effective utilization of available re­ revolution as have had most countries of Europe. sources. Much of the development of production These are some of the chronic economic and commerce that has taken place outside and institutional handicaps to economic de­ of traditional lines has been at the direction velopment in Asia. Added to them are the of outsiders, buttressed in many countries by circumstances which have been partly an out- [45 ] growth of the war and postwar develop­ 1951 there has been a sharply adverse move­ ments. ment in the terms of trade of raw material Much of the Far East was badly damaged exporters, and recent trade figures for many by the war, the postwar revival has been de­ of the Far Eastern countries suggest that the layed by unsettled political conditions in area as a whole is again in a deficit trade several countries arising from enemy occu­ position. The postwar deficits have been pation, and by basic dislocations of long­ largely financed by foreign aid to certain established commercial and economic rela­ countries, especially to Japan, Taiwan, Korea, tionships. and the Philippines; and, in the cases of Cey­ For example, Japan's prewar trade pat­ lon, India, and Pakistan, from their sterling terns have been distorted by the war and balances accumulated during the war. postwar developments. Internal revolt and These postwar deficits may be attributed disorder have disrupted or disturbed the to a number of factors. To some extent they economies of many of the countries of the reflect war and postwar damage which cur­ Far East. War, refugee problems, and poli­ tailed export capacity and increased import tical instability have had unsettling conse­ requirements. They are also attributable in quences for the economies of many parts of part in certain countries to the requirements the continent. of accelerated development programs. In so It is difficult to measure the effects in far as these deficits were incurred to recon­ quantitative terms. Such statistics as are struct and develop the economies of Asia available suggest that in much of Asia cur­ they ought not to be considered as a perman­ rent levels of production are probably just ent or serious symptom. But there have been returning to, and are certainly not much in other factors of a structural nature which excess of, prewar levels. F AO stUdies indi­ have contributed to the deficits. Population cate that in 1950-51 foodgrain production in growth has itself restricted export capacities the Far East was still slightly less than be­ and increased import requirements. Some fore the war. countries have been faced with the necessity Meanwhile Asia's population has grown by for a major reorientation in the direction and upwards of 100 million persons, leaving little composition of their trade. doubt that the material standards of the aver­ Basic changes in the situation of particular age Asian have deteriorated rather than im­ commodities have also created long-term proved. The per capita availability of food­ problems. The competitive position of some grains in 1950-51 in the Far East was almost of Asia's principal exports has been adverse­ 10 percent less than before the war. And ly affected by substitutes. Perhaps the most this, after allowance for over 6 million tons striking case of this has been the virtual col­ of grain imports in a region which in the lapse of the American market for Japanese thirties was a net exporter of grain. Per silk. But other important export commodi­ capita availability of clothing shows a similar ties have also been affected in varying de­ decline. grees; for example, natural rubber and jute. Trade figures for the Far East also reflect The postwar rice situation has also had the changed economic pattern. In prewar widespread repercussions for the economies years the area as a whole maintained a trade of Asia. While world rice production has re­ surplus, including a surplus with the present covered to around prewar levels, the volume dollar area. In the postwar period up until of rice entering into world trade is less than the last half of 1950, the trade balance for half that before the war. Increased domestic the Far East as a whole showed heavy deficits consumption, and reduced output in tradi­ equivalent to around $1 billion in 1947, 1948, tionally important surplus areas, like Burma and 1949. There were also large deficits with and Indo-China, have been responsible. The the dollar area. It was not until after Korea result has been a serious aggravation of rice that the Far East once more earned a sur­ shortages in most of the deficit areas of Asia plus in its trade and this situation has proved and an increase in world rice prices by from quite temporary. Since around the middle of five to seven times the prewar level. This has [46 ] been an important adverse influence on the reflect the particular problems of individual terms of trade of rice importing countries. It countries and they vary in scope, definiteness, has made Asia as a whole dependent on sup­ choice of priorities, and practicability. Over plies of non-Asian grains including imports the past few years they have been through a from the dollar area. And because of the im­ process of major revision and modification, portance of rice in the typical Far Eastern and it seems fair to say that for most coun­ consumption pattern, the high price of export tries this process reflects an evolution in the rice can be expected to exert a steady upward outlook of their leaders away from excessive pressure on the cost of living in urban areas optimism and wishful thinking and toward and, therefore, on wage rates. The implica­ more realistic and practicable possibilities. tions of this for industrial development are In the execution of these programs the obvious, when Asian labor is already losing countries of Asia have received some assist­ its character of cheapness in terms of labor ance from abroad, not only in the form of productivity. financial grants and loans but also in the Briefly, then, the postwar economic picture form of valuable technical aid and guidance. in Asia has been, by and large, one of further United States grants and loans (exclusive of deterioration in the already low average liv­ military aid) utilized in Asia in 1951 amount­ ing standards, and the emergence of a num­ ed to over $650 million, most of which was to ber of new economic problems, partly attrib­ Japan, Korea, India, and Taiwan. United utable to the war and its aftermath and part­ States Mutual Security funds available for ly due to long-run factors, which have added South and Southeast Asia in 1951/52 to the complexities and difficulties of the eco­ amounted to about $225 million. United nomic development problem for the region Kingdom contributions and commitments to as a whole. the United Kingdom territories since the But these complexities and difficulties middle of 1950 have amounted to about 60 should not obscure the accomplishments million pounds. Australia, Canada, and New which most of the countries have achieved in Zealand have also made financial contribu­ recovery from war and postwar damage, nor tions to the programs of development in the progress that certain countries have made South Asia. The International Bank has also and are continuing to make in the develop­ made its contribution in Asia, not only ment of their resources. The point is simply through authorized loans of $128 million to this: As yet, achievements have not meas­ four Asian countries, but also through tech­ ured up to the magnitude of the problem. nical services and general economic survey Perhaps the most encouraging side of the missions to Iraq and Ceylon. For purposes of picture is the efforts which the peoples of comparison, I would like to mention that the Asia are themselves now making to raise aid from the United States (exclusive of mili­ their material levels. Over wide areas of the tary aid) received by ERP for the same per­ Far East--in Burma, China, India, Japan, iod of July 1945 to December 1950 amounts Pakistan, the Philippines and Taiwan-and to 23.8 billion dollars in loans and grants, in the Middle East, too-the social and insti­ while Asia during the same 61;2 years re­ tutional barriers to agricultural improve­ ceived from the same source 6.1 billion ment are already being recognized. Meas­ dollars. ures of agrarian reform have been or are ex­ It is, of course, impossible here to discuss pected to be taken to give the peasants more all of the development plans of the Asian economic security and greater incentive and countries and the actual progress which each opportunity to improve the productivity of country has made. their land. But, as an illustration, I will speak about In addition, with few exceptions, the coun­ the so-called Colombo Plan, as it is one of the tries of Asia are planning and, in many cases, most complete expressions of the objectives, are carrying out, programs of economic de­ the means, and the costs of an accelerated velopment on an extensive scale, mostly from economic development program for a group their own resources. These plans naturally of Asian countries. It also embodies an ap- [47 ]

_ .. _,------_...... proach to the development problem which longer run may create greater economic di­ has relevance for much of the rest of Asia. versity and bring larger improvements in the The participating countries of Asia in the material standards to the people of Asia. For Colombo Plan now include Burma, Ceylon, the present it is recognized that the most Cambodia, India, Pakistan, Nepal, Vietnam urgent tasks lie in food and agriculture. High and the United Kingdom territories of Ma­ priority is therefore given to an increased laya, Singapore, Sarawak and British Borneo. and more efficient utilization of agricultural Non-Asian participants are Australia, Can­ resources through improved farming tech­ ada, New Zealand, the United Kingdom and niques, extension of cultivated areas, and an the United States. expansion of irrigated lands. The potentiali­ Development programs have been pre­ ties of agricultural resources, while large, pared by Ceylon, India, Pakistan and the are not, however, such that they can be ex­ United Kingdom territories. These countries pected indefinitely to meet the material re­ include about a third of the entire population quirements of the growing popUlation. of Asia and about half the Asian population Recognition of this is apparent in the outside the Chinese mainland. Their pro­ Colombo programs, but the participating grams were submitted in late 1950 and have countries have, for the most part, avoided since been considerably revised or are still the temptation to plunge into heavy indus­ in the process of revision. trial outlays for which their countries are as The original estimates of the total cost of yet unprepared in terms of levels of develop. the development programs in the public sec­ ment or technical and financial capacities. tor for Ceylon, India, Pakistan, and for Ma­ Industrial development is not, of course, laya and British Borneo was $5.2 billion over neglected. In India, for example, a consider­ a six-year period. India, with its large popu­ able private industrial expansion is expected lation, had, of course, the largest program, in view of India's already substantial indus­ representing over 70 per cent of the total cost. trial development. By and large, however, Of the combined total cost, about a third was the emphasis of public investment at this for agriculture (including multi-purpose stage is on the development of the basic projects), another third for transport and foundations upon which a self-sustaining in­ communications, six per cent for fuel and dustrial expansion can be built in the future. power, ten per cent for mining and industry, Essentially, then, the programs of the and 18 per cent for social services. Colombo Plan are not to be judged by the In general, these development programs do modest contributions to living standards not represent a large sudden expansion in de­ which are expected in the present phase of velopment activity nor an abrupt departure the program. The programs represent a on an uncharted course of public investment. thoughtful and practical approach to the To a large extent, the programs are a con­ problem of creating the conditions in which tinuation, with some acceleration, of the the economies of Asia can move off dead kinds of investment activities which have center and build up a greater momentum of been underway for the past few years. development. It is an approach which is By and large, the programs are modest. suitable over much of the continent and of­ They envisage quite conservative rates of fers a hopeful alternative to the forced draft public and private capital formation. With of complete political and economic regimen­ some allowance for foreign technical assist­ tation. ance, the programs do not appear excessive Yet it is frankly recognized in the Colombo in relation to the absorptive capacities of the Plans themselves that, however modest and countries for additional investment. And technically practicable the proposals are, they promise no more than small improve­ they are still beyond the financial capacities ments, at best, in average living standards of the participating countries. In the initial over the next several years. Colombo Plan estimates, it was calculated They do, however, represent an approach that, if the six-year programs were to be to the development problem which in the carried out, balance of payments deficits [48 ] would be incurred which would require for­ of the world civilization. Geographically, its eign financial assistance for Ceylon, India, importance is unique. And it has about half Pakistan and the United Kingdom territories the world's crude oil reserves. amounting to $2.3 billion or almost half the When the economic and social conditions cost of the combined programs. This was in of the Middle East are considered, it is not addition to estimated withdrawals from the surprising that the countries of this region accumulated sterling balances of Ceylon, show so many signs of economic and social India and Pakistan, equivalent to about $700 stress and strain. The region as a whole had million over the six years of the program. a combined national income in 1949 estimat­ So far, the availability of foreign financial ed at about nine billion dollars, drawn largely aid has not been a limitation on the progress from agricultural activities. This represent­ of development under the Colombo program. ed an average per capita income for the popu­ Rates of public investment have been run­ lation of some one hundred million of around ning at an even higher level than the original ninety dollars, compared with the world estimates. This has been possible in the last average of about two hundred and thirty and the current years as a result of the large dollars. financial accumulation earned during and carried over from the post-Korean boom, sup­ The very low standard of living is made plemented by some foreign assistance from evident in many ways-in the high mortality Australia, Canada, New Zealand, and the rate and short life expectancy of the mass of United States; releases by the United King­ population; in the inadequate standards of dom of frozen sterling; and withdrawals food consumption, clothing and housing. Its from IBRD loans. . direct consequences are the small flow of savings and investments, the lack of techni­ This, however, appears to be a temporary cal advance, the low degree of capitalization, situation, and it seems likely that beyond the and the small amount of energy resources current year the rates of investment under available to supplement human labor. the Colombo Plan will have to be reduced from their present levels unless additional An outstanding feature of the recent dec­ foreign financial assistance is forthcoming. ades in the Middle East has been the rapid Some of this may be in the form of loans, but growth of its population which has largely the needs of the participating countries are absorbed the gains of such economic develop­ larger than their borrowing capacities, and ment as has taken place. Until the outbreak additional grant assistance will be necessary of the Second World War, taking the region if the development targets are to be reached. as a whole, production increased faster than The experience of the Colombo Plan ap­ population and investments also were being proach makes it quite clear that adequate made on a sufficient scale to maintain or ac­ development activity in Asia, even when celerate the rate of economic growth. But guided by a considerable degree of realism during the war years this trend was upset and when scaled to the minimum require­ and has been only partly restored during the ments, must still be a cooperative venture post-war period. between the countries of Asia and the more Agriculture has been developing in recent economically advanced countries of the years, but slowly in most parts of the region. world. Continuing technical assistance and On the other hand, industry has progressed financial aid from these latter countries must more rapidly, but still plays only a minor role be an essential element if significant and in the Middle East economy. The realization lasting inroads are to be made on the poverty of this is reflected in the high priorities now of Asia. being given to agricultural schemes in the And now I would like to deal briefly and Middle East. The water control project of separately with one region of this vast area, Iraq, for example, would eliminate the devas­ namely, the Middle East. tation which is caused by floods and also The Middle East is one of the most im­ would irrigate large tracts of land which are portant areas of the world. It is the cradle now uncultivable. [49 ] In the Middle East, as in other under-de­ A problem which vitally interests Asia and veloped areas, there is a direct relationship the Middle East is the fluctuation in prices of and interaction between the lack of invest­ commodities. A great deal of emphasis has ment which results in low output on the one been laid on this by the group of experts hand, and on the other, the low output which headed by Professor Angell in the report fails to provide the necessary surplus for new "Measures for International Economic Sta­ investment. The deficiency of domestic sav­ bility." The report suggests international ac­ ings is made good only to a limited extent by tion in two directions to stabilize commodity foreign capital. The availability of foreign prices, by international commodity agree­ capital for investment has, moreover, varied ments and by the creation of buffer stocks. widely among the countries of the region. As regards commodity agreements, the un­ Israel and Turkey have benefitted from sub­ derdeveloped countries fear that prices would stantial capital imports, mainly through Ex­ be fixed at low levels and that unless there port-Import Bank loans and private capital was some sort of relationship established be­ loans issued in foreign markets and under tween prices of raw materials and of manu­ the European Recovery Program. factured goods, such agreements would be to Iran and Israel have been receiving finan­ their disadvantage. The prices of some man­ cial aid under the Point Four Program. ufactured goods have been increasing due to the increase in costs of labor. Therefore, the In the special field of oil production in the underdeveloped countries, with standards region, the gross investment of foreign petro­ already miserably low, are made to sub­ leum companies has been estimated at nearly scribe to the maintenance of the higher two billion dollars, about half of which has standards of living of the peoples of the been invested in the post-war period. This highly developed countries. industry, which provides employment for nearly 130,000 workers, paid royalty and With regard to the establishment of buffer taxes to the governments concerned, exclud­ stocks, there is also hesitation on the part of ing Iran, amounting to about $250 million in the underdeveloped countries, not on the 1951 and, is expected to pay about $430 mil­ principle of the proposal but on the working lion in 1952 because of increased oil produc­ of the price mechanism. The group of ex­ tion and, comparatively, more favorable perts have suggested that the International terms of payment. In spite of the fact that Bank should provide the finance for the pro­ this area exported 18.3 percent of the world's posed buffer stocks. I very respectfully dis­ crude petroleum in 1950, and despite the agree with them as I think that the finances further fact that the area receiving the sums at the disposal of the Bank are vitally needed of money mentioned above contains only for development and there is nothing to about one-tenth of the population of the Mid­ spare for other purposes. I think that the dle East, its people are still living at a very idle resources of the Fund are the appropri­ low standard. ate source for financing such stocks. The One major handicap, the shortage of ad­ purchase of a commodity for the buffer stocks ministrators, technicians and skilled work­ need only happen if there is a slackness of ers, is closely associated with the social struc­ that commodity in world markets. A country ture. But the progress of education in most which has a commodity which it cannot easily Middle East countries is steadily enlarging sell and which is purchased by the agency of the number of trained personnel. The tech­ buffer stocks, would be helped in its balance nical assistance from various international of payments position. It is the prime func­ sources is doing its bit. tion of the Fund to help countries when they Real improvement in the standard of liv­ have adverse balance of trade and run int~ ing of the Middle East will not be obtained payment difficulties. Therefore it would be unless the rate of agriculture and industrial more in consonance with the Fund's func­ production is raised considerably and at a tions to finance a scheme of buffer stocks. speed greater than the rate of growth of I have touched upon international action population. which is being taken for the development of ( 50] underdeveloped countries. In the field of Lastly, there is the proposal of the Inter­ technical assistance, the United Nations and national Fund. This is still viewed with its specialized agencies, the Bank and the some misgivings by the highly developed Fund, the Point Four Program, the Colombo countries. On the other hand, the underde­ Plan, all are making extremely useful con­ veloped countries have given solid support to tributions to provide know-how. The time this idea. Although some of the underde­ may be fast approaching when the techni­ veloped countries perhaps in Latin America cians who are being trained will be like trees may not require assistance from this Fund, in an oasis if development projects do not yet they have lined up in support of this pro­ keep pace with technical training. The tech­ posal. The underdeveloped countries feel that nicians so trained will not be able to utilize development will not only be slow but imbal­ their "know-how" unless projects material­ anced if foreign finance in sizable quantities ize which would lend them the opportunity on grant or long-term, low-interest and easy­ to make use of their knowledge and experi­ payments basis is not made available to them. ence. Otherwise, they will not be able to educate The International Bank has made loans to their people, improve their health, provide the Middle East and Asia to the extent of habitable houses, improve means of commun­ 129 million dollars out of a total of 1,382 ication, and increase irrigation systems to million dollars to the end of June 30, 1952. provide more and better food for their people. The Colombo Plan countries are receiving A group of nine eminent persons is being aid from the developed Commonwealth appointed to translate the proposal for an countries. Some bilateral aid is also moving international fund in a blueprint. Their re­ in from the United States to certain countries port will be examined by the Economic and in the East. I am sure that the recipient Social Council next year. countries are grateful for this help. The The industrial countries of the world today problem of financing is, however, much more are devoting much of their production to re­ gigantic than the total foreign finance which armament. When once the peak of rearma­ is now moving to the countries of the East. ment is reached, how is the released potential Recognizing this fact, the United Nations to be utilized? With their low purchasing have sponsored two other proposals. The first power, the underdeveloped countries could is the International Finance Corporation, not absorb all the released productive capac­ and the second, the International Fund. ity. The consequences seem obvious. Full The Bank has been asked to study the employment in the industrial countries would Finance Corporation proposal and to prepare not be maintained. We have seen within the a blueprint, consult its member governments last ten months something of the kind hap­ and other interests who are concerned with pen in the textile industry. On the one hand, the flow of private capital to underdeveloped hundreds of mills went out of production and, countries, and report to the Economic and on the other, millions of people were still Social Council the progress which it has made without a shirt to their backs. in this direction. This Corporation is de­ In all humility and sincerity, I raise my signed to encourage private capital to move voice with those who advocate the study of to the underdeveloped countries. I hope that this problem. Plans should be formulated member governments will, when the pro­ and machinery created so that the switch­ posals are ready, examine and join the Cor­ over from armament to civilian production poration in a large number so that it can be without a time-lag may be achieved, and a re­ floated at the earliest possible date. I am not cession avoided. I would emphasize that full unduly sanguine about the prospects of a employment in the highly developed coun­ large flow of private capital to the countries tries, and especially those of Europe, can in the East. As, however, the creation of this only be maintained by creating effective and institution may contribute to some flow of lasting demands through raising the stand­ capital, however small, it is worth establish­ ards of living of the hundreds of millions of ing and should be welcomed. Asia. [ 51 ] Lastly, the world economic situation has a Much water has flowed since Bretton direct bearing on economic development. If Woods. Has the time not come when we the former was in a healthier state, the pros­ should take stock and make new efforts to reach goals which were then visualized and pect of economic development would be have not yet been reached? greater. Although there is high economic I shall end by saying that if you turn your activity in two or three countries of the faces to the east, you will see a glorious world, the rest of the world is certainly not dawn, a new morn, a new future and a new in a healthy economic situation. era.

ECONOMIC DEVELOPMENT IN EUROPE

ROBERT MARJOLIN, Secretary-General, Organization for European Economic Cooperation

At the beginning of his speech Mr. Ali such a development. Or, in other words, that listed three reasons for coyness. To those the only possible solution of the European three reasons I should add two more in so problem is a world wide solution involving far as I am concerned. the rapid development of resources. First of all, the great difficulty I have in The problem of economic development in expressing myself in English. Secondly, I am Europe is identical with the problem of the the servant of eighteen different countries expansion of production on the basis of an in­ and eighteen different governments. Conse­ dustry already developed and with the pos­ quently it must be clear that I am speaking sibility for Europe to provide most of the here in a purely personal capacity without capital which is needed for new development committing in any way the organization of and it is to that extent that the problem of which I am Secretary General. Europe is different from the problem of many I have listened with great interest to Mr. other regions of the world. Ali. The problem of economic development in I should add that the European problem is Europe is, of course, very different from the a problem of a continuous and steady expan­ one which Asia and the other underdeveloped sion of production without falling into infla­ regions of the world are facing. Some Euro­ tion and in maintaining or re-establishing pean countries are however in a very similar equilibrium of our balance of payments, or situation, meaning by that that their problem rather a surplus in our balance of payments, of development is of a similar kind. I want because I feel and I think all the European to mention Turkey, Greece, Italy, in so far at countries are in agreement on that point, be­ least as Southern Italy is concerned. In those cause Europe is essential in the development countries we are faced with a problem of de­ of the rest of the World. velopment of a similar character as in the Having stated the European problem in other parts of the world. those few words, and before getting to the But Europe as a whole has a vital interest recent developments, I would like to state in the rapid development of the underdevel­ once more that in the last four or five years oped regions of the world. Europe has made enormous progress towards I am convinced and I shall corne back to the solution of that problem. The difficulties that point later, that there is no satisfactory of the moment, to which I shall corne back solution of the European problem without later, should not obscure the great success of [52 ] the Marshall Plan. By Marshall Plan I mean mean the volume of her exports has increased this combination of European endeavor, in relation to prewar by about 60 percent, European cooperation, made possible and while Europe is importing rather less in sustained by American aid. volume than before the war. I think this fig­ I think this unique combination has proved ure will give you the order of magnitude of extraordinarily successful and without going the problem which Europe had to face and back too much in the past I would like to the effort she made to solve it. quote a few facts which might be considered In addition I would like to say that most as summarizing their progress. European countries acting either individually Industrial production in the last four or or collectively, have undertaken in the last five years has reached in Europe a level 50 two years substantial rearmament programs. percent higher than prewar. Investment pro­ Military expenditures reached in several grams of a large magnitude have been cases 10 percent and more of the national carried out practically in every single coun­ product, of the gross national product. In the try. In many of them the proportion of in­ case of France and the U.K. the proportions vestment to national income has reached and were between 13 and 14.percent of the avail­ exceeded 20 percent. I think the record be­ able resources. longs to Norway which has invested more I have stated those few facts because I than 30 percent of her gross national product. think they are useful as a background to Consumption has regained its prewar level, what I am going to say now. And indeed and while all that was being accomplished, the purpose of this speech is not to pay com­ Europe's balance of payments deficit with pliments but to explain the facts and the the rest of the world was cut from about $8 difficulties. And the facts are that in 1951/52, billion in 1947 to less than $2 billion on an in the last year, Europe has been facing in­ annual basis. At a point, for a brief period in creasing difficulties. Certain problems which the second half of 1950, Europe has even had were regarded as settled or on the way to a surplus, a small surplus, with the rest of the solution have reappeared or become more world. To that I should like to add that serious, possibly because in the face of ad­ Europe has made a great effort trying to de­ verse circumstances the Europeans have velop the territories for which she has a poli­ tried to do too much. But whatever the cause, tical responsibility. the economic development of Western Europe Unfortunately, figures are very difficult to has suffered a setback in the last year. compare, but I would like to quote a few of The main difficulties are well known and I them because I think this is a fact which is shall list them briefly. They have been ex­ not always well known. plained very well in the various documents For instance, last year France contributed which were put before you in the course of in the form of public grants for budgetary this conference. The first of those main diffi­ requirements or in public investments to culties has been the new wave of inflation in overseas territories more than $700 million. Europe. There are large deficits in the bal­ Belgium is spending in the Congo in the form ance of payments of the United Kingdom, of public and private investments more than France and several other countries. There is $100 million a year. I have not a comparable also a large increase in the deficit of the gold figure for the U.K. but it is well known that and dollar balance of payments, not only of since the end of the war the United Kingdom Europe, but of the monetary areas, such as has contributed several billion dollars to the the sterling area, which are linked with economy not only of the Commonwealth but Europe. As a result of those balance of pay­ also of foreign countries. Similar efforts are ments difficulties, new restrictions had to be being made by Portugal and the Netherlands. imposed upon trade with the dollar area and One figure I think will give in a nutshell a also on intra-European trade. At the present measure of the European effort. At the pres­ time trade in Europe is going through a ent time Europe is exporting in volume 60 crisis because the United Kingdom and percent more goods than before the war. I France have been obliged to reimpose quan- [ 53 ] titative restrictions on all or part of their I just want to quote two countries which imports. have made a great effort to cut down their I must say that the picture would be much deficit and were obliged to cut down their worse if in the present difficulties the Euro­ production. They are Netherlands and Den­ pean countries associated in the OEEC were mark. But other countries have been facing not showing a clear demonstration of their similar difficulties. solidarity by helping insofar as they can the Also, there is no possibility of convertibil­ other countries which are in a difficult posi­ ity as long as the dollar deficit has not been tion. cut down substantially, and I would like here Lastly, in the field of production, no new to mention the analogy between the present progress has been made for about a year ex­ situation and the situation four or five years cept in some countries-for instance in Ger­ ago when we wanted to create EPU in Eu­ many, where, if I am not mistaken, produc­ rope. tion has been increasing until the beginning The creation of EPU in Europe-that is, of this year. This may be true also for one a system of convertibility between a limited or two other countries. number of currencies-was impossible until Of course, I don't want to go into details. the deficits and surpluses in Europe between I should make here a distinction between European countries had been considerably light and heavy industries, because the crisis . reduced. It was only then that it was pos­ is largely centered in the textiles and light sible to realize convertibility on that limited industries, while on the contrary the heavy basis. industries are still making progress, but the The reason why the dollar deficit, of which result is a kind of stalemate, a kind of uneasy I analyzed briefly some of the consequences, truce between inflationary and deflationary is not more serious and does not take a tragic forces. toll is the continuation of American aid in I don't want to go into the details of all various forms. But it is clear that this is not those difficulties which are impeding eco­ a normal solution and that it is in the com­ nomic development in Europe. I would like mon interest of both the United States and just to center on one of those difficulties, be­ Europe to put an end to American aid as soon cause it seems to me it is the essential one. as possible, in avoiding at the same time ma­ I mean the dollar gap which still exists in jor dislocations. European accounts-the continuing deficit A further effort is necessary to consolidate with the dollar area. the progress already achieved in bringing the At the present time that deficit, the deficit dollar balance of payments of Europe into of Europe and the monetary zones associated stable equilibrium. This is a condition for with it, and the sterling area especially, the further economic development in Europe. If deficit with the United States is still about this final effort were not made, Europe, and two billion dollars a year. with it the rest of the world, might be faced The most disturbing fact in that deficit is with a very serious crisis. This is the sub­ its persistence, the fact that in spite of all ject of a review of the position of the various the efforts made in the last few years it has European countries and of Europe as a whole not been wiped out completely. This deficit now being made in the OEEC by the OEEC has a great impact on many aspects of the countries, with the close cooperation of the European economic situation and, therefore, United States and Canada. The OEEC hopes on the world economic situation. It leads to that this report will be a real contribution by trade restrictions, as I already said, not only Europe to what must be a common effort. between Europe and North America but also At this stage, I would like to limit myself within the European area. A number of coun­ to a few remarks which once more I am mak­ tries have even been obliged to follow defla­ ing in a personal capacity. First of all, the tionary policies in order to prevent an aggra­ dollar problem is a world problem and not vation of that deficit. exclusively a European problem. I am not [54 ] saying this to belittle in any way the respon­ we must strive for is a world-wide pattern of sibility of the European countries. In the trade and payments which can make it pos­ last analysis, each country, each individual, sible for the European countries to earn their must live within its means. Even if one is living without assistance, contributing at the not responsible himself for a situation, he same time to the prosperity of the rest of the must try and adapt himself to it. world. Perhaps the essential for European But today practically every single region stability in this connection is to produce at of the world has a deficit on current account competitive prices the goods which the rest with the United States. Clearly, the pre­ of the world needs. If I could state in a few sumption to be drawn from this is that this words the European problem, I could put it deficit will require, to be wiped out, a com­ in that way. But, I am also convinced that bined effort on the part of all concerned to there is no lasting world equilibrium, and, bring about the desired equilibrium. consequently, no way for Europe to earn a Secondly, there is no room in Europe for living by exporting without large long-term any further large-scale reduction in dollar capital movements. imports. Since 1947 the dollar deficit of I would just like to quote one fact which Europe has been cut down largely by cutting struck me very much. So far as monetary down imports from the dollar area. There is policies are concerned, all tend to look back­ still room for certain short-term reduction, ward to the pre-1914 situation with certain like, for instance, in the imports of coal. It nostalgia. The gold standard was probably is unnatural for Europe to import coal from the most perfect monetary system which was the United States. And a major effort is ever established, but one must not forget necessary in Europe to cut down those im­ that the working of the gold standard was ports. Some progress has already been made. made possible by very large capital move­ More important long-term savings in dol­ ments. lar expenditures are possible through the For many years before World War I, the development in the non-dollar areas of vari­ United Kingdom was then the center of world ous resources such as grain, for instance. trade and used to export capital to the extent But those savings are limited, and the idea of seven or eight percent of the British na­ that Europe and its overseas territories and tional income. I think that it is an essential the monetary areas of which she is the center condition of the resumption or the re-crea­ would try to become self-sufficient by devel­ tion of a successful pattern of trade and oping their own resources without reference payments that the creditor countries start to production costs must be rejected, once exporting on a large scale. and for all. Assuming that it could be put into prac­ I think the World Bank has already done tice and that the countries concerned could a wonderful job, not only by showing the way accept the discipline necessary to carry out but by accumulating a body of experience such a difficult task, it would inevitably lead and knowledge which I am sure will prove to a contraction of world trade and to a low­ invaluable when the time has come, and I ering of the world's standards of living. hope that time will come soon, for capital The solution of the dollar problem of Eu­ movements on a bigger scale. rope must, therefore, be sought in increasing I just want now to add a consideration, last dollar earnings, and not in a contraction of but not least, as you say. Another problem dollar imports from the dollar area. of extreme importance for Europe, which Thirdly, I am convinced that there is no may not be directly linked to the dollar prob­ bilateralism possible between Europe and the lem but which is linked indirectly to the prob­ United States. However much European ex­ lem of existence in Europe. This is the prob­ ports to the dollar area might be expanded, lem of a surplus of manpower in certain coun­ they could not suffice to finance all essential tries of Europe, and I am thinking especially dollar imports. The desired equilibrium can of Italy. The European Governments are only be achieved on a worldwide basis. What trying to find ways to achieve greater free- [55 ] dom of movement of workers among the mem­ cent has taken place in the volume of trade ber countries of OEEC themselves, but it is within the EPU area. quite clear that no final solution to this prob­ In marking out the path for a further prog­ lem can be found except on a world-wide ress in convertibility, it will be necessary at basis. the same time to strengthen the EPU and I will try to indicate some of the directions the further liberalization of trade which is in which a solution of the European problem associated with it, since these are both essen­ of economic development in Europe might tial stages on the road to general non-dis­ be solved. That end will not be finally achieved crimination and convertibility, I am con­ until we are successful in establishing the vinced that that strengthening will be convertibility in dollars of most European achieved in close cooperation with the Inter­ currencies. Much remains to be done before national Monetary Fund. we get to that point, but we must not forget I must apologize, if in dealing with Euro­ that much has already been done. The Euro­ pean problems and difficulties I have been led pean Payments Union and the removal of to a consideration of world-wide problems, many restrictions on European trade repre­ but I feel that any other course of action sent considerable progress over the position would not have been honest on my part, since in 1948. That progress, like many others, has I am deeply convinced that the essential been made possible by the generous aid of European problems themselves, and the prob­ the United States, not only in contributing to lems of economic development, cannot be the capital of the European Payments Union solved except on a world-wide basis, taking but also in providing constructive thinking into account the essential difficulties which and day by day cooperation. the various countries of the world are meet­ A measure of the importance of EPU, not ing in their effort to improve the fate of their only as a regional institution but also for the people. world as a whole, is the figure of 60 percent, We shall succeed or we shall fail together. which represents the share of world trade My deep conviction is that we are on the right which is now being cleared through the Union. track, and that our goal is in sight. We shall Between the first quarter of 1950 and the reach the goal, provided we make the final first quarter of 1952, an increase of 30 per- effort which is necessary.

ECONOMIC DEVELOPMENT IN THE WESTERN HEMISPHERE

RAUL PREBISCH, Executive Secretary, United Nations Economic Commission for Latin America

I am grateful to the President of the Inter­ ica. This is a most attractive subject for me, national Bank for Reconstruction and De­ and I propose to use the brief time available velopment, Mr. Eugene Black, for his kind to draw attention to certain significant facts invitation to address this meeting. I shall and comments upon the nature and projec­ speak as a Latin American economist, and tions of the process of development. my views are not necessarily those of the If one compares with former periods and organization I represent. not with potential resources, the rate of de­ Mr. Black would wish me to talk about the velopment in Latin America in recent years recent economic development of Latin Amer- has been satisfactory, though not uniform, [56 ]

,------,------in all countries. Gross product per inhabitant there lies an overriding fact-the instability in the five-year period 1946-1950 has in­ of exports in view of the fluctuations and con­ creased at the rate of 3.5 percent annually. tingencies of the international market. There In the five-year period preceding it, growth is no doubt that today industrial output for per capita was only 1.4 percent, per year. domestic consumption offers steadier markets What are the reasons for this striking im­ and holds prospects of growth that are no provement in the rate of growth? Basically, longer present for most export markets. Latin America has found itself in the latter It is therefore not surprising that industry five years in an exceptionally favorable posi­ should especially attract the initiative of busi­ tion for economic development. Not only was ness men. There is, in any case, no real it possible to increase capital formation dilemma between industrialization and ex­ through the use of foreign exchange accumu­ ports. Quite the contrary, all that is needed lated during the last war, but the terms of is an appropriate policy based on both na­ trade with other countries recovered at last tional and international measures to bring from the serious deterioration experienced in both into harmony. the thirties. In 1946-1950, in fact, the terms An example of the recognition of the insta­ of trade improved approximately 66 percent bility referred to is the Paley Report recently over the previous five-year period and were submitted to the Government of the United 62 percent above the average level of the States. The authors of this report are con­ thirties. cerned with the future supply of raw ma­ This is evidenced again by the influence of terials and they recommend, among other foreign trade on the rate of economic devel­ measures, guarantees against abnormal mar­ opment. An increase in exports is of primary ket risks in order to avoid seriously hinder­ importance. Countries like Ecuador, that ing the development of production. This have a very low volume of exports per capita, important report refers to another aspect that will not be able to accelerate their relatively is relevant to our subject. It estimates that slow rate of growth unless they increase their real income in the United States will have exportable output by making better use of increased 100 percent over the next 25 years, their available resources. If exports are low, but that the requirements for imported raw the amount of capital goods imports per materials will have risen less intensively. capita will always be insufficient, however On the basis of the data presented in the re­ large the effort to compress the imports of port, we have calculated that exports of pri­ consumption goods in order to use foreign mary products from Latin America to the exchange to purchase capital goods. The United States are likely to increase during same fact is observed in large countries, such the same period by only 59 percent. This as Brazil, but there the existence of ade­ involves a typical feature of the dynamics of quate raw materials and the extent of do­ economic growth. In industrial countries, mestic markets have permitted an increasing the demand for primary products in general production of capital goods-chiefly iron, tends to grow less rapidly than income, steel, cement and machinery-to compensate whereas in primary producing countries the for the precarious capacity to pay for imports. demand for industrial products tends to in­ It is therefore necessary to encourage ex­ crease at a rate greater than real income. ports from Latin America to the extent that An example of the latter countries is the their increase does not worsen the terms of case of Chile. trade. With certain exceptions, exports are In a study being undertaken by the Eco­ increasing relatively slowly. Among the rea­ nomic Commission for Latin America on the sons for this situation are the illusions of technique of development programming, it self-sufficiency, that do not take long to van­ is estimated that the requirements for pres­ ish, the growth of domestic consumption and ently imported commodities tend to increase the overvaluation of the foreign exchange at a rate twice the rate of growth of real rate in relation to the increase in domestic income, whereas in the United States, as costs. But beyond these particular reasons mentioned above, imports of primary prod- [57 ] ucts from Latin America tend to grow at a rise to the following question-where shall rate only a little more than half the rate of the process of industrialization take place in increase of income. order to withdraw the actual or potential The chronic tendency toward external dis­ excess of manpower from those activities­ equilibrium which is generally observed in in the large industrial centers or in the per­ Latin American economic development is in iphery of the world economy? Whatever large part a consequence of the functional the consequences, it is not conceivable that relationship I have just described, and is the large industrial centers of the world appreciably intensified by inflation. To avoid could absorb enormous amounts of manpower this disequilibrium should be one of the major from the peripheral countries. There thus objectives of an economic development pro­ remains no other solution but to utilize this gram. If the disequilibrium is not prevented manpower in the industrialization of the in time, periodic devaluations will become countries of the periphery to the extent that inevitable, or it will not be possible to get it cannot be employed in increasing exports rid of the orthopedics of exchange control. of primary products without worsening ap­ We shall not be able to eliminate the appa­ preciably the terms of trade. In fact, how­ ratus of control by merely exorcizing it, but ever much these exports may increase they through a policy of foresight to modify the can only employ a relatively small proportion composition of imports and the structure of of the excess manpower made available by production. technical progress in Latin America. In this policy, industrialization should go Large investments are required for the hand in hand with technological progress in application of modern technology to agricul­ agriculture. There are considerable possi­ ture and for the industrialization of our bilities of increasing land yields and produc­ countries. It can be stated in general that tivity per worker through a vigorous appli­ to achieve in Latin America an increase of cation of technology to Latin American agri­ output of one unit, at least two units of new culture. But the more this purpose is capital formation are needed. To be efficient, achieved, the less will be the proportion of capital formation has first to satisfy certain the annual increase of gainfully employed basic economic needs-transportation, energy population that will be absorbed in agricul­ and improvements in productivity-not to tural activities. Industry and related activi­ mention other fields of social overhead. Ap­ ties must fulfill the dynamic role of absorbing parently more urgent immediate needs often active population no longer needed in agri­ lead to postponing the fulfilment of more culture and of relieving in certain character­ basic needs. istic instances the heavy demographic pres­ There is an important country in Latin sure exerted upon the land. America in which the lag in the production Population pressure aggravates the prob­ of energy will seriously slow down the rate lems of land tenure. This is one of the most of development over the next five years. powerful obstacles to economic development Although less evident, the amount of invest­ and to the increase in the levels of real in­ ment for the purpose of increasing produc­ come. Mere redistribution of land to those tivity through technological research and who are on it has unquestionably the virtue practical application of its results is very of breaking up an out of date social order­ slow. It is difficult to emphasize too much but without a simultaneous application of the need for these investments. Their yield technology to raise yields and productivity, is very high, but they cannot attract private and without industrialization to absorb ex­ initiative to a significant degree. If more cess manpower, land reform would only bring resources were invested in technological re­ precarious economic results. search to increase yields and productivity in Industrialization is therefore a necessary agriculture and in industry, a much greater and unavoidable consequence of the propaga­ rate of growth could be achieved. Mexico tion of technical progress to primary activi­ offers a good example of the approach that ties. But this proposition immediately gives can be taken. Through corn genetics, yields [58 ] are being raised, and the application of the mestic capital formation in our countries, results of this research, together with other thus helping to prepare favorable conditions technical improvements will permit an appre­ for both domestic and foreign private invest­ ciable increase in production. The Institute ments. Unfortunately, what has been done of Industrial Research created and supported up to now in the matter of foreign invest­ through the farsightedness of the Bank of ment is rather little. During the period 1946- Mexico and the N acional Financiera is be­ 1950, the net flow of foreign investment ginning to yield results of the first order in through public agencies was only 200 million the utilization of Mexico's raw materials. dollars, allowing for 1,200 million dollars of Fortunately, the conviction in Latin Amer­ extraordinary repatriations of foreign cap­ ica that there is still much to do in this field ital that some countries carried out in the is becoming stronger. Not many days ago, postwar period. In regard to private invest­ at the first meeting of the Committee of Min­ ment, its amount has been quite inconsider­ isters of Economy of Central America, func­ able in Latin America if petroleum invest­ tioning as part of the mechanism of United ments are omitted. Nations, a resolution was adopted recom­ There is another aspect of private invest­ mending the establishment in that region of ments to which I should like to refer. It is a technological research institute to promote well known that in the United States particu­ the best industrial use of the Central Amer­ lar emphasis is placed on the role of private ican natural resources. I have no doubt that foreign investment in our economic develop­ the International Bank, which jointly with ment. I have always believed that such in­ the United Nations is helping to establish vestment could play a very important role. technological institutes of this type in Pakis­ On the other hand, I have many times asked tan and in Ceylon, will receive with interest myself if that insistence on private foreign and sympathy this Central American initia­ investment envisages obtaining an increase tive. of income from abroad or whether it is only It is not only, of course, through research an expression of a deep faith in the construc­ institutes that in Latin America we can tive ability of private enterprise that has con­ assimilate the technology of the great indus­ tributed so much to the extraordinary growth trial centers, adapting it intelligently to our of the American economy. I do not think the particular conditions. Private foreign capital first viewpoint-which is, of course, per­ investment, when properly oriented, carries fectly legitimate-constitutes the basic an­ with it important elements of technical ad­ swer. However much the income from for­ vance. But the amount of these investments eign investments may increase, it will always in activities producing for the domestic mar­ be only an insignificant part of the annual ket in Latin America is rather small. The growth in the national income of the United relatively high returns obtained by private States. I am inclined, therefore, to think capital in the United States do not lead such that the second view reflects more fully the capital to move easily abroad for investment attitude of this country. in other countries, and Europe is not yet in a If such is the aim pursued by the United position to export large amounts of private States, it will have a far-reaching echo in capital. Moreover, Latin America has not Latin America. The scope of private enter­ yet on the whole been able to solve radically prise is here very broad, and this is due the problem of persistent external disequilib­ largely to the previous action of our govern­ rium to which I referred before, and this prob­ ments in creating favorable basic conditions. lem is frequently latent in discussions con­ There has arisen, and is becoming stronger cerning the capacity to absorb foreign invest­ every day, the image of the progressive en­ ments and the ability to transfer abroad the trepreneur, both in industry and in the tech­ service on such investments. nical improvement of agriculture. All these elements justify the need for well­ If we wish to provide solid foundations for conceived development programs in which private enterprise, it is necessary to encour­ international agencies may complement do- age these businessmen and they must be [59 ] given easier access to sources of capital and other aims, the proposal is notable for its technology. To provide this encouragement stress on flexibility with regard to the pres­ to our businessmen is by no means incom­ ent systems of the Bank. The lessons of the patible with the stimulus of foreign private past are evidently being taken account of, investment. Even further, association of since in these matters it is indispensable to Latin American and foreign businessmen has open new approaches that perhaps had not already shown good results, and in those been fully perceived when the Bank was cases in which there is no interest in foreign founded. investment for some reason or other, there During the 19th century, a very efficient is always the possibility of transmitting tech­ system of private investment in the. export nical know-how from the large industrial activities of the peripheral countries was centers to Latin America through royalty evolved, accompanied by the development of arrangements and other forms. In this re­ transportation and other services which per­ spect, it is to be hoped that the United States mitted a more suitable growth of exports. and the leading European countries may in­ But investments directed to satisfy domestic tensify these tasks either directly or through consumption in our countries were not carried active cooperation with international agen­ out on a large scale. This new type of invest­ cies. ment gives rise to problems, both in the I am convinced that easy access by the industrial and in the agricultural sectors, and Latin American entrepreneur-whether he it is natural that a prior period of trial and be a large, a medium or a small entrepreneur error should be necessary before finding more -to the sources of technology and capital definitive mechanisms. will become a powerful means for firmly es­ These forms of satisfying the needs of tablishing and consolidating private enter­ capital could also be an appropriate comple­ prise in order to satisfy with increasing effi­ ment of certain measures to combat infla­ ciency the needs of the Latin American tion. Recourse to inflationary expansion to population. finance investments is partly a consequence We have proof that the International Bank of the lack of savings or of the inadequate is concerned with this problem. In Mexico use of savings possibilities. There is still, it has promoted the formation of a banking in these aspects, a long way to go in our coun­ consortium for the purpose of making loans tries. But this is not enough. Savings from through it to industrial enterprises. If this abroad are required to accelerate the rate of attempt to make international capital avail­ development or to maintain it without greater able to the entrepreneur has not yet fulfilled inflationary disturbances, until the increase expectations, in this case it is undoubtedly in real income permits a gradual reduction of due to special circumstances. It will be nec­ the need for foreign capital. Fortunately, essary to seek the most adequate channels belief in the virtues of inflation is disappear­ for the flow of these funds, and for my part ing. There are countries with chronic infla­ I believe that in general the private and public tion in Latin America in which capital forma­ banks and financial institutes of Latin Amer­ tion is very low and the rate of economic ica could be used, if a selective criterion is growth quite slow. In those countries in followed, as appropriate instruments for our which inflation has had significant effects industrialists to have access to international toward increased capital formation, it has funds. led to serious inequalities in income distribu­ There is also, of course, the possibility of tion. The ultimate objective of the economic facilitating public funds directly to Latin development is to improve persistently the American enterprises. Such is the solution, measurable welfare of the people and dimin­ certainly not incompatible with the one previ­ ish progressively serious social inequalities. ously mentioned, arrived at in the Interna­ This is the only way in which the masses can tional Bank's proposal for an international acquire a clear view of these problems and finance corporation which has been so well become genuinely interested in a develop­ received at this meeting. In addition to its ment policy. Otherwise, social maladjust- [60 ]

_.. ---_._---_._.. _------_.. _...... _--_ ... _------ments might occur that would interrupt or tion. A reasonable and adequate distribution set back the development process, thus de­ of investments will tend to counteract other stroying what might have been achieved serious maladjustments that have arisen in with the aid of inflation. This is one of the the development of the Latin American coun­ problems that requires imagination, boldness, tries and will permit at the same time a bet­ and sensitivity on the part of our statesmen, ter use of scarce capital. Furthermore, a as well as firm support from international sound program, by improving the capacity agencies. to absorb foreign investments, will also be Anti-inflationary measures should be part the best means of obtaining the wholehearted of a broader policy of development, and this cooperation of international financial agen­ policy should be expressed in a program. cies, and it is to be hoped that the Bank, Lack of domestic savings and the need to which has especially stressed the adoption make good use of foreign capital to correct of such programs, may be able to multiply future external disequilibrium instead of ag­ its investments and encourage a greater flow gravating it, are the principal justifications of capital from other sources, thus accelerat­ for a program. That is not the only justifica- ing the rate of development of Latin America.

[61 ] ACCREDITED MEMBERS OF DELEGATIONS AT SEVENTH ANNUAL MEETING

AUSTRALIA BURMA Governor Alternate Governor SIR PERCY SPENDER U SAN LIN Alternate Governor ROLAND WILSON CANADA Advisers Governor L. G. MELVILLE D. C. ABBOTT (Executive Director) Alternate Governor L. H. E. BURY JOHN DEUTSCH (Alternate Executive Director) Advisers T. A. FOWLER LOUIS RASMINSKY (Executive Director) AUSTRIA G. NEIL PERRY Governor (Alternate Executive Director) REINHARD KAMITZ CEYLON BELGIUM Alternate Governor Governor SIR CLAUDE COREA ALBERT-EDOUARD JANSSEN Advisers Alternate Governor D. W. RAJAPATIRANA MAURICE FRERE PONNA WIGNARAJA Temporary Alternate Governor HUBERT ANSIAUX CHILE Advisers Alternate Governor THOMAS BASYN LUIS MACKENNA (Executive Director) Adviser ERNEST DE SELLIERS LUIS AGUIRRE (Alternate Executive Director) JEAN GODEAUX CHINA Alternate Governor BOLIVIA PEH-YUAN Hsu Governor Advisers AUGUSTO CUADROS SANCHEZ Y.L.CHANG Adviser (Executive Director) ALFREDO OPORTO BEUE TANN Kuo-HwA Yu BRAZIL K. F. CHEN Governor KAN LEE HORACIO LAFER Alternate Governor COLOMBIA OCTA VIO PARANAGUA Governor Advisers EMILIO TORO CHARLES P. HARGREAVES Alternate Governor ROBERTO DE OLIVEIRA CA.M:POS JAIME CORDOBA PAULO POOCK CORREA Adviser H. M. BORGES DA FONSECA MARTIN DEL CORRAL [62 ] COSTA RICA ETHIOPIA Governor Governor ANGEL CORONAS JACK BENNETT Temporary Alternate Governor ALVARO VARGAS ECHEVERRIA FINLAND CUBA Governor Governor ARTTURI LEHTINEN LUIS MACHADO Adviser Alternate Governor JOHANN NYKOPP JOAQUIN E. MEYER FRANCE CZECHOSLOVAKIA Governor Governor PIERRE PFLIMLIN RUDOLF HOUDEK Alternate Governor Alternate Governor PIERRE MENDES-FRANCE ANTONIN BRAIDL Advisers ROGER HOPPENOT DENMARK (Executive Director) Governor JEAN DE LARGENTAYE SVEND NIELSEN ALBERT BARRAUD Alternate Gove1"no1' PIERRE BARRE HAKON JESPERSEN FRANCOIS BLOCH-LAINE Temporary Alternate Governor PIERRE CALVET COUNT BENT AHLEFELDT-LAURVIG ERNEST CASTAN JEAN COTTIER DOMINICAN REPUBLIC Governor GUY DE LAVERGNE GUILLAUME GUINDEY WENCESLAO TRONCOSO M. HAAS Temporary Alternate Governor JULIEN PIERRE KOSZUL MILTON MESSINA PIERRE-PAUL SCHWEITZER ECUADOR Governo'i" GERMANY LUIS ERNESTO BORJA Governor Advisers LUDWIG ERHARD OswALDO GARCIA Alternate Governor (Alternate Executive Director) FRITZ SCHAEFFER ANTONIO F. ALOMIA-ARCOS Temporary Alternate Governors ARNOLD KRAMER EGYPT JOACHIM VON SPINDLER Governor Advisers AHMED ZAKI SAAD OTTO DONNER Alternate Governor CARL HEINZ DRECHSLER A. NAZMY ABDEL-HAMID OTMAR EMMINGER Adviser LUTZ GIELHAMMER ALBERT MANSOUR GUENTHER GROSSE WALTER JENTSCH ELSALVADOR ERNST KUTSCHER Alternate Governor HERBERT MEINHOLD LUIS ESCALANTE-ARCE HERBERT MUELLER Adviser KARL HEINRICH PANHORST ARMANDO ALAS FRITZ STEDTFELD [63 ] GREECE ITALY Governor Alternate Governor XENOPHON ZOLOTAS GIORGIO CIGLIANA-PIAZZA Alternate Governor (Temporary Alternate Executive Director) CHARALAMBOS THEODOROPOULOS Advisers GUIDO CARLI GUATEMALA GINO BOLAFFI Governor CARLO CAPOMASI MANUEL NORIEGA MORALES ATTILIO J ASCHI Alternate Governor MASSIMO MAGISTRATI EGIDIO ORTONA CARLOS LEONIDAS ACEVEDO

JAPAN HONDURAS Governor Governor HAYATO IKEDA RAFAEL HELIODORO VALLE Temporary Alternate Governors Alternate GO'l)ernor KOH CHIBA GUILLERMO LOPEZ RODEZNO KICHIO FUTAMI Adviser GENGO SUZUKI RUBEN MONDRAGON TAKESHI WATANABE Advisers ICELAND RYOKO ISHIKAWA SHIGEO MATSUMOTO Governor KIICHI MIYAZAWA JON ARNASON WATARU OWADA

INDIA JORDAN Alternate Governor Governor SIR BENEGAL RAMA RAU YUSUF HAIKAL Temporary Alternate Governor Alternate Govf,rnor G. R. KAMAT OMAR DAJANY Advisers B. K. NEHRU LEBANON (Executive Director) Governor W. R. NATU JOSEPH OUGHOURLIAN B. R. SHENOY Alternate Governor (Alternate Executive Director) RAJA HIMADEH Adviser IRAN CHARLES MARCHAL Temporary Alternate Governor DJALAL ABDOH LUXEMBOURG Governor IRAQ PIERRE DUPONG Temporary Alternate Governor Alternate Governor ABDUL-GHANI AL-DALLI PIERRE WERNER [64 ]

------.--.. ---..... - .. _------_._------MEXICO PANAMA Governor Governor RAMON BETETA ROBERTO M. HEURTEMATTE Alternate Governor Alternate Governor ANTONIO CARRILLO FLORES JULIO E. HEURTEMATTE (Alternate Executive Director) Advisers Adviser RAUL MARTINEZ-OSTOS MANUEL JOSE DIEZ JAVIER MARQUEZ (Executive Director) JOSE ALCAZAR DANIEL J. BELLO ERNESTO FERNANDEZ HURTADO PARAGUAY PLACIDO GARCIA REYNOSO Alternate Governor RODRIGO GOMEZ HERMOGENES GONZALEZ MAYA AGUSTIN LUNA OLMEDO Adviser RAFAEL MANCERA, JR. DARIO VARGAS RAUL ORTIZ MENA FRANCISCO J. PRATT PERU RICARDO TORRES GAITAN Governor FERNANDO BERCKEMEYER NETHERLANDS Temporary Alternate Governor Alternate Governor CARLOS GIBSON A. M. DE JONG Advisers Advisers PEDRO CASO H. M. H. A. VAN DER VALK JOSE HERNANDEZ DE AGUERO MISS G. A. KOEN LIZANDRO MIRO-QUESADA L. R. W. SOUTENDIJK PHILIPPINES NICARAGUA Governor Governor MIGUEL CUADERNO, SR. GUILLERMO SEVILLA-SACASA Temporary Alternate Governor Alternate Governor PLACIDO MAPA RAFAEL A. HUEZO Advisers Adviser JOSE J. ROY NICANOR TOMAS JORGE A. MONTEALEGRE

SWEDEN NORWAY Governor Governor K. E. BOOK GUNNAR JAHN Alternate Governor Alternate Governor S. T. G. AKERMALM OLE COLBJORNSEN Adviser Advisers ERIC O. VIRGIN ALF ERIKSEN HALLVARD HILLESTAD SYRIA Governor PAKISTAN HUSNI A. SAWWAF Alternate Governor Alternate Governor AMJAD ALI NIHAD IBRAHIM PASHA [65 ] THAILAND UNITED STATES Governor Governor JOHN W. SNYDER SERM VINICCHAYAKUL Alternate Governor Advisers DAVID K. E. BRUCE BOONMA WONGSWAN Advisers (Alternate Executive Director) ANDREW N. OVERBY CHALOKE KOMARAKUL (Executive Director) PIPAT KRAIRIKSH FRANK A. SOUTHARD, JR. PRAYOON P AMON MONTRI JOHN S. HOOKER BUA SAJISEVI (Alternate Executive Director) HAWTHORNE AREY ELTING ARNOLD TURKEY HENRY J. BITTERMANN Governor HOMER E. CAPEHART MEHMET IZMEN JACK C. CORBETT Alternate Governor JOHN S. DE BEERS CHARLES L. EGENROAD MUNIR MOSTAR WILLIAM J. HALLAHAN Advisers W. JOHN KENNEY CABIR SELEK MELVILLE E. LOCKER (Executive Director) THOMAS J. LYNCH RESAT AKSAN WM. MCCHESNEY MARTIN, JR. WILLIAM O'DWYER J . HOWARD ROSSBACH UNION OF SOUTH AFRICA ROBERT G. ROUSE Governor JAMES J. SAXON BRENT SPENCE N. C. HAVENGA JEROME J. STENGER Alternate Governor FREDERICK STRAUSS M. H. DE KOCK GEORGE H. WILLIS Adviser JESSE P. WOLCOTT J. J. VAN ROOYEN URUGUAY Governor MARIO LA GAMMA ACEVEDO UNITED KINGDOM Governor VENEZUELA Temporary Alte1'nate Governor SIR ARTHUR SALTER J. J. GONZALEZ GORRONDONA Alternate Governor Advisers SIR LESLIE ROWAN LUIS P ASTORI Advisers ATILIO ROMERO SIR EDMUND HALL-PATCH YUGOSLAVIA (Executive Director) Governor A. M. STAMP VIDO KRUNIC H. L. JENKYNS Alternate Governor F. R. BARRATT J ANVID FLERE LESLIE CRICK Advisers D. H. F. RICKETT NENAD POPOVIC M. STEVENSON D. AVRAMOVIC ST. JOHN TURNER GRGUR CVILICEVIC [66 ] OBSERVERS AT SEVENTH ANNUAL MEETING

BANK FOR INTERNATIONAL INTERNATIONAL LABOR OFFICE SETTLEMENTS ENRIQUE JIMENEZ DOMINGUEZ ROGER AUBOIN ORGANIZATION FOR EUROPEAN ECONOMIC COMMISSION FOR ECONOMIC COOPERATION LA TIN AMERICA ATTILIO CATTANI RAUL PREBISCH FRANCOIS CORBASSON ROBERT MARJOLIN FOOD AND AGRICULTURE ORGANIZATION UNITED NATIONS MORDECAI EZEKIEL MARTINEZ CABANAS RAPHAEL A. FUSONI HAITI M. PEREZ-GUERRERO EDMUND POLl CARD VICTOR URQUIDI

INDONESIA BIAN TIE KHOUW A. F. OMPI SUTIKNO SLAMET

EXECUTIVE DIRECTORS AND ALTERNATE EXECUTIVE DIRECTORS IN ATTENDANCE

EXECUTIVE DIRECTORS ALTERNATE EXECUTIVE DIRECTORS * THOMAS BASYN DJAHANGIR BOUSHEHRI * Y. L. CHANG * L. H. E. BURY * MANUEL JOSE DIEZ * GIORGIO CIGLIANA-PIAZZA * SIR EDMUND HALL-PATCH * ERNEST DE SELLIERS * ROGER HOPPENOT * OSW ALDO GARCIA * L. G. MELVILLE * JULIO E. HEURTEMATTE * B. K. NEHRU * JOHN S. HOOKER * ANDREW OVERBY * G. NEIL PERRY * GUILLERMO PEREZ-CHIRIBOGA * B. R. SHENOY * LOUIS RASMINSKY * BOONMA WONGSWAN * CABIR SELEK

* Appears also as Delegate

[67 ] OFFICERS OF THE BOARD OF GOVERNORS AND PROCEDURES COMMITIEE FOR 1952·53

OFFICERS Chairman ______PAKISTAN Vice Chairmen ______CHINA FRANCE INDIA UNITED KINGDOM UNITED STATES

PROCEDURES COMMITTEE Chairman ______PAKISTAN Vice Chairman ______GUATEMALA Reporting Member ______SWEDEN Members ______CHINA FRANCE INDIA PERU THAILAND TURKEY UNION OF SOUTH AFRICA UNITED KINGDOM UNITED STATES

[68 ]

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