INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized

FIRST ANNUAL MEETING of the BOARD OF GOVERNORS Washington, D. C. Septem1er 27 - Octoher 3, 1946 Public Disclosure Authorized

PROCEEDINGS ana RELATED DOCUMENTS Public Disclosure Authorized

Washinllton, D. C. Octoher 29, 1946 Public Disclosure Authorized

Contents

Page Introductory Note 1 Message from the President of the United States of America 3 at the Opening Session Opening Address by the Honorable John W. Snyder, Secretary 5 of the Treasury of the United States, and Chairman of the Boards of Governors of the International Bank for Recon­ struction and Development and the International Monetary Fund. Address of Mr. Eugene Meyer, President of the International 9 Bank for Reconstruction and Development, in Presenting the First Annual Report by the Executive Directors. Address of Mr. Hugh Dalton, Governor for the United King- 14 dom, on Acceptance of Chairmanship of Board of Governors for Ensuing Year. Closing Address of Mr. Eugene Meyer, President of the Inter- 15 national Bank for Reconstruction and Development, at Dinner in Honor of the Boards of Governors of the Bank and the International Monetary Fund. I'lrst Annual Report by the Executive Directors 17 Letter of Transmittal ______18 Establishment of the Bank ______19 Election of the President ______20 Formal Commencement of Operations and Calls of Capital ______20 Investment of Funds Received by the Bank in Payment of the First 2 % of the Subscriptions ______21 The Scope of the Bank's Lending Operations ______22 Organization of the Executive Directors ______23 Proposed Amendments to the By-Laws of the Bank ______24 Organization of Bank's Staff ______25 Recruitmen t Policies ______26 Procedure on Loan Applications ______27 Marketing Policies ______28 Cooperation with Other International Organizations ______28 Membership ______30 Interpreta tions ______30 Advisory Council ______31 Financial Statement ______31 Statement on Administrative Budget ______32 Conclusion ______34 Appendix A-Governors and Alternates of the Inter­ national Bank for Reconstruction and Development__ 35 Appendix B-Executive Directors and Alternates of the International Bank for Reconstruction and Develop- ment ______37

III Page Appendix C-List of Depositories ______38 Appendix D-Membership of Standing Committees ______39 Appendix E-Report of the Executive Directors to the Board of Governors on Interpretation of the Ar- ticles of Agreement ______40 Appendix F -Auditors' Report ______46 Appendix G-Financial Statements as of August 31, 1946 51 Committee Reports Adopted by the Board of Governors 56 First Report of the Procedures Committee (Joint) ______56 Committee on Rules and Regulations ______61 Committee on Membership ______64 Financial Committee ______67 Committee on Subscription Revisions ______68 Committee on Advisory Council ______70 Resolutions Adopted by the Board of Governors at the First 74 Annual Meeting I. Resolution on Attendance at Meetings ______74 II. Resolution on Information Concerning Meetings ______74 III. Resolution on Additions to Agenda ______74 IV. Resolution on Inv~tations to Schedule A Countries 74 V. Resolution on Invitations to International Organiza- tions ______75 VI. Resolution on Voting by Denmark ______75 VII. Resolution Relating to the Terms and Conditions on Which Syria Shall be Admitted to Member- ship in the Bank ______75 VIII. Resolution Relating to the Terms and Conditions on Which Lebanon Shall be Admitted to Member- ship in the Bank ______78 IX. Resolution Relating to the Terms and Conditions on Which Italy Shall be Admitted to Membership in the Bank ______80 X. Resolution Relating to the Terms and Conditions on Which Turkey Shall be Admitted to Member- ship in the Bank ______83 XI. Resolution on Financial Statements ______85 XII. Resolution on Increase in Capital Subscription of France ______85 XIII. Resolution on Increase in Capital Subscription of Paraguay ______86 XIV. Resolution on Site of Second Annual Meeting ______87 XV. Resolution on Election of Officers of Board of Gov- ernors ______87 XVI. Resolution on Establishment of Procedures Com- mittee ______87

IV Page Reference by Board of Governors to Executive Directors Re­ 88 garding Selection of Advisory Council Resolutions of Inaugural Meeting of Board of Governors at 89 Savannah, Ga., March 8-18, 1946 No. I-Appointment of a Temporary Secretary ______89 No.2-Relating to Interim Administrative Arrange- ments ______89 No.3-Fiscal Year and Annual Meeting of the Gov- ernors ______90 NO.4-First Meeting of the Executive Directors ______90 No.5-Selection of the Advisory Council ______90 No.6-Interpretation of the Articles of Agreement ______90 No.7-Requesting Interpretation of Articles of Agree- ment as to Appointment of Executive Directors 91 No.8-Establishing a Procedures Committee ______91 No.9-Acceptance of Membership by Schedule A Countries ______91 No.10-Election of an Additional Executive Director ______92 No.11-Concerning National Taxes on Salaries and Allowances ______92 Observers at First Annual Meeting of Board of Governors 94 Statements by Observers at the First Annual Meeting of the 95 Board of Governors. By-Laws of the International Bank for Reconstruction and 101 Development (as approved by the Board of Governors at the First Annual Meeting) Rules of Procedure for Meetings of the Executive Directors 109 Officers of the Board of Governors Elected at the First Annual 113 Meeting Committee on Procedures for Second Annual Meeting 113 Articles of Agreement 114 List of Articles and Sections ______114 Text of Articles of Agreement ______116 Signatories to the Articles of Agreement ______146 Voting Power and Subscriptions of Member Countries (as of 147 September 27, 1946) Voting Power of Executive Directors (as of September 27, 148 1946) Officers of the Bank 14g

v INTRODUCTORY NOTE

Pursuant to Resolution No.3 adopted March 16, 1946 at the .ixth session of the Inaugural Meeting of the Board of Governors of the International Bank for Reconstruction and Development held at Savannah, Georgia, the First Annual Meeting of the Board of Governors was convened at Washington, D. c., from September 27 to October 3, 1946 by the Honorable John W. Snyder, Secretary of the Treasury of the United States and Chair­ man of the Board of Governors. Thirty-eight member Govern­ ments, comprising the entire membership roster of the Bank, were represented by their designated Governors or Alternate Governors of the Bank. The Board of Governors considered and took action on the reports and recommendations prepared and submitted by the Executive Directors. In addition to various Committee meetings, the Board of Governors completed the business of the First An­ nual Meeting in five plenary sessions, three of which were joint sessions with the Board of Governors of the International Mone­ tary Fund. These proceedings outline the work of the First Annual Meet­ ing and the final decisions taken by the Board of Governors. Other relevant documentary data relating thereto are also in­ cluded for purposes of reference.

M. M. Mendels Secretary International Bank for Reconstruction and Development Washington, D. C. October 19, 1946

1

MESSAGE FROM THE PRESIDENT OF THE UNITED STATES OF AMERICA AT THE OPENING SESSION

September 23, 1946 THE WHITE HOUSE Washington

Dear Mr. Snyder: It is my great pleasure, on behalf of the people of the United States, to welcome to Washington the Boards of Governors of the World Bank and Fund. The World Bank and the World Fund were conceived in the midst of a great war to help meet the difficult problems of the postwar period and to become a permanent part of the structure of international cooperation visualized by the United Nations. At this first annual meeting of these two organizations. it is impossible to look about the world and fail to see the great responsibility that confronts you. The world looks to you to provide leadership in helping to build a stable economic world in which nations can trade and prosper in peace. Your governments have accepted the Bretton Woods plans and have placed substantial funds at your disposal to carry them out. Let us put both the plans and the funds to work. It is with the deepest personal concern that I wish you com­ plete success in your important work.

Very sincerely yours, (Signed) Harry S. Truman

Honorable John W. Snyder Chairman Boards of Governors of the International Bank for Reconstruction and Development and the International Monetary Fund Washington, D. C.

3

OPENING ADDRESS BY THE HONORABLE JOHN W. SNYDER, SECRETARY OF THE TREASURY OF THE UNITED STATES, AND CHAIRMAN OF THE BOARDS OF GOVERNORS OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND THE INTERNATIONAL MONETARY FUND, AT THE FIRST SESSION, SEPTEMBER 27, 1946

I welcome you to Washington. And I take this opportunity of expressing my deep appreciation of the honor of serving as your Chairman. I am conscious of the great responsibility which we share as Governors of the Boards of the World Fund and World Bank during this critical period. The agreement reached at Bretton Woods two years ago was possible only because of the convictions we shared that postwar problems would be ~omplex, and would require unprecedented international cooperation. These expecta-' tions have been realized; the magnitude of our postwar iHterna­ tional economic and financial problems has more that; taAed our individual abilities. We must now actively assume uur share in the task of building a permanent peace and providing a pros­ perous life for the peoples of the world. We must not fail to meet this challenge. We are now beyond the blueprint stage of Bretton Woods. Last March at the Savannah Confert:!nce we established the basic operating structure under which these institutions of international cooperation would function. The period since the Savannah Conference has been one of building the organizations. Basic procedures and policy have been explored by the Executive Di­ rectors of the Fund and Bank and the important task of choosing key personnel has been practically completed. The election of Mr. Camille Gutt as Managing Director of .the Fund and Mr. Eugene Meyer as President of the Bank has inspired confidence in the institutions whose operations they have been chosen to guide. I wish to commend the Executive Directors for their ex­ cellent work during this organizational period. The initial period of building the structures of the Fund and Bank is at an end. From now on they will be ollerating agencies in their appointed fields. If I may be permitted to ex­ press the keynote of this second meeting of the Boards of Gov­ ernors, it is this: let us lose no time in speedily activating the Fund and Bank as effective instruments in a world sorely in need of their services. The Fund and Bank were designed to meet both the im­ mediate postwar and the longer tenn monetary and financial needs of the world.

5 OPENING ADDRESS BY THE HONORABLE JOHN W. SNYDER

I think we may take pride in saying that since the end of hostilities, no nation-despite its many other woes and troubles­ has been denied the financial means of obtaining temporary relief and assistance. As the world shortages of goods are over­ come, however, financial needs will become even more apparent than they now are. The war-devastated countries must now be put in a position to restore production as rapidly as possible on a scale adequate for home use and for export. It has been the privilege of the United States to offer leader­ ship in positive action toward international peace and economic stability, through encouraging the formation of the United Na­ tions organization, Bretton Woods and other international groups. And in furtherance of the ideals and objectives of these endeavors, the United States has been privileged to offer considerable finan­ cial aid in an earnest effort to re-establish economic equilibrium in the war-devastated countries, as well as in those countries materially affected by the effects of the war. In making this contri­ bution, the United States has been prompted not only by its recog­ nition of the great needs of other nations, but also because, as a member of the world family, the intelligent self-interest of the United States ,recognizes that all of us must move forward to­ gether. As a part of this broad program, since V-E Day, our Export­ Import Bank has made loan commitments of over $2,000,000,000, the bulk of which has been for reconstruction purposes. When the United States Congress increased the lending power of the Export-Import Bank in 1945 from $700,000,000 to $3,500,000,000, it did so not only in recognition of the world's urgent recon­ struction requirements but in the expectation that the Interna­ tional Bank would soon become the principal international lending institution. Despite the very large loan commitments already made by the Export-Import Bank and by the United States and other governments, there remain large credit needs which should be met if we are to have a stable and prosperous world. As we all know, the International Bank must now assume the primary responsibility for underwriting reconstruction loans to countries otherwise unable to borrow on reasonable terms. I am sure that all of us in the Bank are conscious of how far­ reaching our operations will be, even though necessarily tempered by the distinctions between prudent lending and improvident borrowing. In addition to assisting in the restoration of war-devastated areas, the Bank will have an enduring function in stimulating the How of international capital for development purposes. Many parts of the world are in need of funds in order to develop their productive resources or to improve existing facilities. The eco­ nomic goal of the United Nations is productive employment for all who are able and willing to work, and better living standards for everyone.

6 OPENING ADDRESS BY THE HONORABLE JOHN W. SNYDER

It is equally urgent that the International Monetary Fund begin full operations at an early date. During this critical period, when nations are endeavoring to restore their currencies, they need the help that the Fund is designed to provide. We all know that no government can function internally or externally without a sound currency system. Every encouragement should be given to countries to get rid of currency restrictions, wartime or other­ wise, which are designed to cover up fundamental weaknesses. We must not allow the restrictive and discriminatory trade and currency practices which were forced upon many countries prior to and during the war to become permanent fixtures of inter­ national commerce. The Fund can provide timely assistance to countries in maintaining imports while their export industries and foreign markets are being restored. There are many obstructions in world trade, closely related to monetary and financial arrangements, but the existence of the Fund and Bank as operating institutions will greatly facilitate their removal. We should expect no over-night solutions of these problems, since some members of the Fund will necessarily retain certain controls during the transition period. However, a most immediate task of the Fund should be to encourage and assist all of its members in removing these restrictions as rapidly as pos­ sible. We have long since agreed that we must attack these problems together. Active leadership on the part of the Fund in this regard is essential if world trade is to be restored to a high level and if economic warfare among nations is to be avoided. One of the most important jobs on which the Fund is now engaged is to determine by agreement with each member country the par value of its currency. If we are to avoid the unecnr..ornic consequences of improper exchange rates, and avoid the com­ petitive undermining of the exchange rates structure, we must determine by cooperative action a pattern of rr.tes which will be consistent with the maintenance of international equilibrium and stability of international currency values. An early stabiliza­ tion of exchange rates at their proper levels will give encourage­ ment to the flow of international commerce and investment, and give confidence to people everywhere in their own currencies. Everyone must realize that this is a most c'lmplicated and difficult task. The mere attempt to do this is a great pioneering step, and although we shall undoubtedly find obstacles and resistances, I . am sure we shall be successful if we have the full cooperation and the confidence of the member nations. A function of the Fund which I want to emphasize is that of promoting common standards of fair practice in monetary and financial relations among nations. In discharging this function the Fund must be a flexible instrument capable of adjusting to changing international economic conditions. At this time I believe that our success can be measured by our development of accept­ ab!e standards to which all countries are willing to adhere.

7 OPENING ADDRESS BY THE HONORABLE JOHN W. SNYDER

Healthy economic competition undertaken in an atmosphere of international good will is wholesome and will contribute to the expansion of international trade. Economic warfare reduces trade and creates suspicion among nations. We cannot afford to permit economic warfare to weaken the bonds which hold the United Nations together. Among the problems with which the Boards of Governors will want to deal at this meeting is that of considering the appli­ cations for membership which have been made since the Fund and Bank came into existence. It has always been contemplated that eventually other nations would want to join. Obviously, the Fund and Bank will gain strength if the largest possible number of ptace-Ioving nations join with us. All but six of the forty-four nations represented at the Bretton Woods Conference have joined the Fund and all but seven are members of the Bank. I sincerely hop~ that all. peace-loving countries will see their advantage in becoming members of both institutions in the very near future. Cooperation in the economic world is no less important than cooperation in the political world. It is essential to the peace and prosperity of all nations that they operate under the same funda­ mental rules in their business dealings with one another. The charters of the Fund and Bank are drawn broadly enough to encompass various types of economic and trading systems. In this world of rapid change and widely differing systems of eco­ nomic and political organization, it is essential that we reach an agreement on common standards of fair practice in inter­ national dealings. The world is looking to us as we begin our task of putting the Fund and Bank in full operation. At Bretton Woods we gave a war-weary world the promise of peaceful trade and economic prosperity. In joining the Fund and Bank, our respective govern­ ments have not only invested large sums of money, but they have in a considerable measure staked their economic destinies on the success of these institutions. We must not fail our govern­ ments and, above all, the hopeful people they represent. The spirit of cooperation and enthusiasm which we show here, will carryover into the day-to-day operations of the Fund and Bank. I can ask no more than that the members of the Boards of Governors gathered together at this meeting will have the same spirit of cooQeration, and the same faith and will to succeed, as was manifested two years ago at Bretton Woods, and again at the Savannah Conference last March. We have the machinery-let us put it to work.

8 ADDRESS OF MR. EUGENE MEYER, PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, IN PRESENTING THE FIRST ANNUAL REPORT BY THE EXECUTIVE DIRECTORS, AT THE THIRD SESSION, SEPTEMBER 30, 1946

I appreciate the kind words of the Chairman and hope that a year from now they will prove to have been merited. The report by the Executive Directors, submitted to the Board of Governors today, had its genesis over three years ago during a war in which nearly all mankind was engaged. At that time members of the United Nations were by no means sure when or how the war would end. But they were vividly aware of the vast destruction that was taking place over the world and of the need for common action after the war if currencies were to be stabilized and if international investment was to approach in volume the needs that would exist for the reconstrnction of the world economy. By the summer of 1944, when the Bretton Woods Conference was convened, UNRRA had been established and there was reasonable assurance that the immediate relief and rehabilitation requirements would be met following the liberation of areas then occupied by the enemy. It was frankly recognized that relief was not the appropriate object of international investment. The International Bank was created to assist in the recon­ struction and development of the territory of its members by facilitating the investment of capital for productive purposes. This is the only sound basis on which any international lending institution can be conducted. You have in your hands now the first annual report by the Executive Directors which reflects the progress made by the Bank in readying itself for business. The strncture of the Bank has been established, most of the key personnel has been appointed, and working procedures and relationships have been successfully developed. At the same time the Executive Directors have exam­ ined, together with the staff, the policy and operational questions which lie ahead and they have made preparations to meet them as and when they arise. I am happy to say that on every matte>: which has come before the Executive Directors it has been possible to resolve all dif­ ferences of opinion. Action has been unanimous on each item of business. The Executive Directors have impressed me as a group of unusually able men who are guided by the high purposes expressed in the Articles of Agreement of the Bank and who are working together in a spirit of harmony with good-will toward each other and toward the staff.

9 ADDRESS OF MR. EUGENE MEYER

The Bank fixed June 25 as the date for the formal commence­ ment of its operations. By this action the first two percent of the subscriptions of each of the members, payable in gold or United States dollars, became due within sixty days-by August 24. An additional three and five percent of the capital subscriptions have been called, payable in local currencies of the members on or before November 25. The members also have been notified that the Bank intends to make two further calls of five percent each, payable in their local currencies on or before February 25 and May 26, 1947, respectively. Of the first two percent of the members' subscriptions, the Bank has received in gold and United States dollars nearly $144,000,000, and under the Articles of Agreement partial post­ ponements have been authorized for seven countries which were occupied by the enemy during the war. Also, pursuant to the Articles of Agreement, requests for postponement of the balance of the first two percent of subscriptions are under consideration in the case of two countries. The United States has paid in full the three percent call and Chile and Costa Rica have paid in full the three percent and five percent calls. As a result of the various payments the Bank had at the time of the report capital resources of about $242,000,000. Except for approximately $3,000,000 represented by local currencies, this amount was composed entirely of gold or United States dollars. The Executive Directors have authorized the investment of the United States dollars received by the Bank in payment of the first two percent of the subscriptions of the members, in bills, notes and certificates of the United States Treasury having a ma­ turity when purchased of not more than twelve months. Under this authorization, we have now completed the investment of $125,000,000 in such securities. Funds received in payment of the further calls will be represented by currencies of the members, who are entitled to substitute non-interest bearing notes, payable on demand, for such funds to the extent that they are not needed by the Bank in its operations. I have been somewhat surprised in recent weeks to find that there are those who think it curious that the Bank has not already negotiated a number of loans. The fact is, that at the date of the annual report, letters requesting loans had been received from only two countries, and in neither case has the Bank yet received such properly documented applications as would make it possible for us to act. Since then, a letter has been received from a third country which indicates that its representatives are prepared to begin discussions, and informal advices indicate that the same may be true of several other countries. It is impossible to know at the moment how rapidly the necessary information in these cases will be developed and how speedily the negotiations can

10 ADDRESS OF MR. EUGENE MEYER be conducted. In the first instance, promptness depends upon the borrower rather than upon the lender. .The Bank can, of course, supplement its capital by borrow­ ing the additional funds necessary for its lending operations. I have spent a good deal of time in discussions of the problem of marketing the Bank's securities. Commercial bankers, investment bankers, representatives of insurance companies and savings banks, dealers in securities and officers of the Federal Reserve banking system have been consulted. I have also requested the Executive Director of the Bank representing Canada to take up with his Government the possibilities of marketing the Bank s securities in Canada. As circumstances justify, we will study the marketing possibilities in other countries. In the United States, the laws of some of the states will have to be revised before insurance companies and savings banks can invest their funds in the Bank's securities, and steps must be taken by the United States authorities and others to secure the necessary changes. These changes will, of course, take some time. Naturally, every effort will be made to coordinate our borrowing with our program as to loans, and I am confident that any reasonable amount that may be required immediately can be promptly obtained. I have been asked what the form of the Bank's securities will be and what interest we shall pavon them. It would be futile and misleading if I were to pretend that I knew the exact answers to these questions. But I am convinced that, if the Bank acts prudently in its lending operations and the general economic conditions of the world continue to develop along the lines en­ visaged in the Bretton Woods Agreements, the Bank's securities will be attractive enough to command a reasonable rate of interest. We have moved carefully in the recruitment of the Bank's staff because it is essential that the officers and employees of the Bank have a high order of ability. If we should fail to select people who meet the highest standard of character and competence, we would most certainly find the Bank's operations seriously hampered in the future. It has been our desire to recruit personnel as rapidly as was necessary for the proper functioning of the Bank, but not to build up a large staff before it was clear precisely what would be needed. We have, however, made arrangements which will permit us to call upon engineers and other technically qualified personnel on a consulting basis should this prove necessary. This procedure also will be useful in the period before the permanent staff is fully completed. I feel that we are in a position to handle properly any formal loan applications which we will receive, and we will proceed with the permanent staffing of the Bank as circumstances require.

11 ADDRESS OF MR. EUGENE MEYER

Our desire to build soundly has led us to the conclusion that we should let our experience in operations determine the form and nature of our cooperation with other international organizations whose activities complement or affect those of the Bank. We have had representatives in attendance at meetings of the Food and Agriculture Organization and the Economic and Social Council and its subcommissions. We have been especially anxious to coordinate our activities with those of the Fund, and we are now establishing a joint standing committee of the Execu­ tive Directors of the two institutions to assure the maintenance of continuous contact. It is not possible yet to establish formal arrangements for cooperation with the Economic and Social Council. But we have every desire to give and receive cooperation and will develop practical working relationships, without delay, wherever these prove advantageous either to the Bank or to the United Nations. We have included in the annual report financial statements based on an audit as of June 30 and additional financial state­ ments as of August 31. Naturally, these cover little more than the first payments of subscriptions to the capital of the Bank and the operating expenses already incurred. We have, however, estab­ lished an accounting procedure within the Bank and we engaged an outside auditing firm to make an audit of the Bank's financial position as of June 30, the end of our fiscal year. We expect to be lending large sums of money. This will entail the borrowing of large amounts from private investors. The accuracy of the Bank's accounts therefore must be beyond question and there must be confidence in our auditing procedures. We have set up a chart of the Bank's accounts which we believe will be adequate to reflect fully the operations in which we will engage, and periodic outside audits of our accounts will assure the closest scrutiny of our accounting procedures. I shall not review in any further detail the material included in the report submitted to you today. It is a report of the early stages in the life of an institution to which the people of the world look for help in reconstructing their devastated lands and in assisting all member nations to increase productive activities which will improve their standards of living. We in the Bank and in the Fund are working in organizations whose purposes are to promote peace and prosperity through the machinery of monetary, stabilization and through restoration of international credit on a large scale by the member nations. It is unnecessary to tell you that these institutions do not operate in a vacuum. They are part of a plan for general international or­ ganization to improve the lot of humanity. Their activities are rooted in the fundamental relations between the nations of the world, great and small. Stability, to be achieved, must be desired and struggled for. We must realize that after the great storm

12 ADDRESS OF MR. EUGENE MEYER of war, a calm cannot be expected immediately. Still, if the fun­ damental desire of the nations is for peace and understanding, there is hope that the stability we desire may be attained. The Executive Directors of the BalIk and I welcome this opportunity to meet with the Board of Governors and discuss the proper service which the Bank can render. I believe in its ability to serve the world, and I am sure that the Executive Directors and the staff have only one objective-to carry out the purposes which the founding nations had in mind when they created this International Bank for Reconstruction and Development. I think the Bank is well begun and that the year ahead will be one of progress in the ful£llment of its mission. I cannot close without paying tribute to the men of ·the various nations who first conceived the idea of creating these two great world organiza­ tions-the Bank and the Fund-and proceeded to make their dream come true. Whether or not these institutions will fully attain the objectives of all their hopes and expectations, the world certainly will be vastly better for the fact that such high ideals were crystallized into united action by the great group of nations which conceived them. The First Annual Report by the Executive Directors was approved by the Board of Governors, First Annual Meeting, Third Selsion, September 30, 1946, and appears on pages 17-55.

13 ADDRESS OF MR. HUGH DALTON, GOVERNOR FOR THE UNITED KINGDOM, ON ACCEPTANCE OF THE CHAIR· MANSHIP OF THE BOARD OF GOVERNORS FOR THE ENSUING YEAR

Mr. Chainnan, and Governors of the Fund and of the Bank: I am much honored, personally, and my Government is honored, and the United Kingdom is honored, by the decision you have made to hold the next annual meeting in London and also that the representative of the United Kingdom, the Governor for the United Kingdom, should, from the conclusion of this meeting, be the Chainnan. I feel that we have done good work here, and we can go forward with great confidence through the next stage of our work. There will be difficulties, but we shall, I believe, overcome them. I will not say more than that next year, when we meet again, I am confident that good progress will be reported by both these two still new international institutions. We have confidence, in particular, in those who are charged with their conduct, Mr. Camille Gutt and Mr. Eugene Meyer. Sir, I would like, while I am now speaking, to say how successfully this year's meeting has been conducted, very largely due to the qualities which you, sir, have displayed in the Chair, and to the assistance which has been rendered to you by others, including the very able Secretariat, who have waited upon us and who have prepared the documentation, and who have done much valuable work behind the scenes and between the sessions. I would like, if it be in order, to propose a resolution of thanks and appreciation, in the first place, sir, to you, yourself, and in the second place to all those who have cooperated with you, includ· ing, in particular, the Secretariat for the services they have rendered and the contribution they have made to the success of our meeting. I would like, sir, to move that resolution, if it is in order.

The motion of Mr. Hugh Dalton was seconded by the Gov­ ernor for Ecuador, Mr. Esteban F. Carbo, and adopted by the Board of Governors, First Annual Meeting, Fifth Session (Joint), October 8, 1946.

14 CLOSING ADDRESS OF MR. EUGENE MEYER. PRESI. DENT OF THE INTERNATIONAL BANK FOR RECON· STRUCTION AND DEVELOPMENT AT DINNER IN HONOR OF THE BOARDS OF GOVERNOR" OF THE INTER· NATIONAL BANK FOR RECONSTRUCTION AND DEVEL­ OPMENT AND THE INTERNATIONAL MONETARY FUND AT THE STATLER HOTEL ON OCTOBER 3, 1946

Ladies and Gentlemen: This is a purely social gathering tonight, the last of many that have taken place this week. I hope that I am speaking for all of you when I say that the atmosphere in which we have met, sober as it may have been, nevertheless marks a step forward in international amity, confidence and cooperation. Perhaps the in· tensely practical nature of our common problems makes for greater unity. Indeed, this first annual meeting of the Boards of Governors of the International Monetary Fund and the Interna­ tional Bank for Reconstruction and Development tempts me to assert that a keen sense of reality seems to be the soundest basis for idealism, tolerance and mutual sympathy. It is no derogation of the human spirit to say that we have progressed toward good working relations because we know by experience that inter­ national credit and finance simply cannot function without them. We have the right to relax this evening and to look back upon the week with satisfaction. The great undertaking in which we are mutually engaged affords one of the vital keys to the future of mankind. Wisely employed, it is capable of opening doors to avenues of immense hope and promise. In a solemn sense, then, we are the trustees of an opportunity-the kind of opportunity that comes to men only once in a generation. For, rightly understood and fulfilled, it may mark the turning point of history. There is, I think, a significant lesson to be learned from the turbulent experiences of our times-a les:>on as great and mean­ ingful as it is plain and simple. It is that we live upon a planet which is inescapably integrated. The whole world is one com­ munity. All parts affect the common destiny of the whole. The well-being of men anywhere is dependent upon the well-being of men everywhere. Prosperity, like peace, must therefore be viewed as indivis­ ible. And even from the narrowest considerations of self-interest,

15 CLOSING ADDRESS OF MR. EUGENE MEYER

each of us must be concerned with the economic development of the world as a whole. For we shall prosper individually only as we prosper collectively. But there are even larger considerations than material wel­ fare which dictate our recognition of the world's essential unity. Economic distress is a prime breeder of war; it makes for a desperation from which aggression seems the only avenue of escape. A better standard of living, therefore, is an indispensable condition of peace. So, in the large sense, our task is nothing less than to play a part in the creation of conditions upon which enduring peace may rest. I mean no disparagement of the great discussions now taking place in the conference at Paris and in the United Nations. But I have the conviction that their success is closely associated with the foundations we lay. We are engaged in the first large­ scale, practical implementation of the United Nations' spirit, in an area which cannot fail to shape decisively the whole pattern of international relations. Our endeavor is a concrete test of the capacity of nations to work cooperatively toward the solution of a specific common problem. The Bank is capable of providing capital funds for constructive undertakings which will serve to repair the ravages of war and to raise standards of living everywhere. This is a prerequisite to an expanding world economy. For only as men are enabled to produce and to contribute to the world's wealth can they purchase the goods produced by their neighbors. Thus the function of the International Bank, to state it in elementary terms, is to make available to all men the means to improve their conditions of life through peaceful industry and other productive pursuits. In proportion as we fulfill this function with vision, with wisdom and with a sense of high responsibility, we shall help to lay the basis of a world at once peaceful, prosperous and free. The manner in which we meet our task will aid in deciding, as Lincoln phrased it, whether we shall noLly save or meanly lose the last best hope of earth.

16 FIRST ANNUAL REPORT BY THE EXECUTIVE DIRECTORS TO THE BOARD OF GOVERNORS OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (A. of September 20, 1946)

17 INTERNATIONAL BANK FOB REcONSTRUcnON AND DEVELOPMENT

September 27, 1946

My dear Mr. Chairman: In accordance with Section 10 of the By-Laws of the International Bank for Reconstruction and Devel­ opment, I have the honor to submit to the Board of Governors the Annual Report of the Executive Direc­ tors, and, in accordance with Section 19 of the By-Laws, a financial statement, based on an audit of the ac­ counts of the Bank, together with a statement on the annual administrative budget.

Sincerely yours,

Eugene Meyer, President.

Honorable John W. Snyder, Chairman, Board of Governors, International Bank for Reconstruction and Development, Washington, D. C.

18 FIRST ANNUAL REPORT

This first annual report of the Executive Directors comes at the threshold of the Bank's operations. During the few months which have passed since the Executive Directors held their first meeting in May, substantial progress has been made in establishing the Bank's structure, securing staff personnel, and developing working procedures and relationships. The policy and operational questions which lie ahead have been examined and preparations have been made to meet them when they arise. As the Board of Governors' meeting convenes, the Bank stands ready to play the important role in reconstruction and develop­ ment which has been assigned to it by its 38 member govern­ ments.

Eatabliahment of the Bank

Under the By-Laws adopted at Savannah by the Board of Gov­ ernors, the principal office of the Bank has been established in Washington. In accordance with a resolution adopted by the Board of Governors, the first meeting of the Executive Direc­ tors was held on May 7. The Executive Director representing the United States acted as Temporary Chairman and continued so to act until the election of the President. The seven Executive Directors elected by the Board of Gov­ ernors at the Savannah meeting took office on May 7, as did four of the appointed Executive Directors. The fifth appointed Executive Director, representing the United Kingdom, served in a temporary capacity until the arrival of the permanent Exec­ utive Director for the United Kingdom on May 29. The only subsequent change in the membership of the Executive Direc­ tors was caused by the resignation of Mr. Camille Gutt, of Bel­ gium, to become Managing Director of the International Mone­ tary Fund. Mr. Gutt was succeeded as Executive Director by Mr. Hubert Ansiaux, who was elected on June 14 by votes of the Governors representing Belgium, Iceland, Luxembourg and No~-way. Eleven permanent Alternate Directors have been ap­ poiIlted and one vacancy exists. A list of the Governors and their Alternates appears as Ap­ pendix "A", and a list of the Executive Directors and their Alter­ nates appears as Appendix "B".

19 FmST ANNUAL REPORT

Election 0/ the PreaidenJ On the agenda of the first meeting of the Executive Direl:­ tors was the election of a President of the Bank, but considera­ tion of this item was postponed until June 4, when Mr. Eugene Meyer was nominated and unanim~usly ,elected. Mr. Meyer took office on June 18.

Formal Commencement 0/ Operatiom and Call. 0/ Capital The Executive Directors fixed June 25, 1946 as the date upon which the Bank would formally begin operations. The member governments were advised that such date had been fixed and that, under the Articles of Agreement, the balance of the first 2% of their capital subscriptions, payable in gold or United States dollars, would be due within sixty days. The members also were advised of an additional call of 3% of their capital subscriptions, payable on or before November 25, 1946, in their local currencies. They were notified at the same time that the Bank would make another call, as of September 25, for a further 5% of their subscriptions, payable in their respective currencies, by November 25. This further call has now been authorized. At the time this September 25 call is made, notice will be given of the Bank's intention to make two more calls, each for an additional 5% of the subscriptions payable in the local currencies of the members by February 25, 1947, and May 26, 1947, respectively. In response to the call for the balance of the first 2 % of the capital subscriptions of members, the Bank received $143,- . 786,883.70" of a total of $153,400,000. The unpaid amount is accounted for as follows: ( 1) Payment of Y2 % of the subscriptions of China, Czecho­ slovakia, Denmark, Greece, Norway, Poland and Yugoslavia was postponed for a period of five years under Article II, Section 8 ( a ) (i) of the Articles of Agreement, which provides for

-This figure includes the payment of the 11100 of 1 % of the sub­ scription of each member made at the time of its acceptance of the Articles of Agreement, but it does not include that portion ($1,989,616.30) of the payment of $1,990,000 due from the Union of South Africa, represented by gold which was reported to have been shipped on August 24, 1946 and to be in transit to the Federal Reserve Bank of New York at the time of the preparation of this report.

20 FIRST ANNUAL REPORT

such postponement in the case of a member whose metropolitan territory suffered from enemy occupation or hostilities during the . war. These postponements amount to $5,165,000. (2) Czechoslovakia and Yugoslovia have requested a post­ ponement with respect to the remaining llh% of their subscrip­ tions, amounting to $1,862,500 and $596,000 respectively, under Article II, Section 8 (a) (ii) of the Articles of Agreement, which provides that an original member which cannot make payment of the 2% of its subscription, payable in gold or United States dollars, because it has not recovered possession of its gold re­ serves which are still seized or immobilized as a result of the war, may postpone all payment of such 2% until such date as the Bank may decide. These two requests are under consideration by the Executive Directors. In addition to the amount received by the Bank from pay­ ments of 2% of the members' subscriptions, the United States has paid the call for 3% of its subscription, amounting to $95,- 250,000, and payments have been made by Chile and Costa Rica of the calls for 3% and 5% of their subscriptions, amounting to $2,800,000 and $160,000, respectively. These payments, made in the local currencies of the members, aggregate $98,210,000 in value, making the total amount received by the Bank to date equivalent to $241,996,883.70 at the time of payment. Of the total, $14,072,258.62 was received in gold, of which $9,395,758.64 is held by the Federal Reserve Bank of New York and $4,676,499.98 is held by the Bank of England, A list of the depositOries of the Bank, designated by the members, appears in n Appendix "C ,

In",e.tment 0/ Fund. Recei",ed by the Bank in Payment 0/ the Fir.t 2% 0/ the Sub.criptiom The question of the investment of the Bank's funds has been under consideration by the Executive Directors for some time, They have recently authorized the President or the Vice Presi­ dent to invest, at current market prices, in bills, notes and certifi­ cates of the United States Treasury, maturing not more than twelve months after the date of purchase, the United States dollars received by the Bank in payment of the first 2% of the Bank's subscribed capital.

21 FIRST ANNUAL REPORT

The Scope 0/ the Bank'. Lending Operation. The purposes of the Bank are clearly set out in Article 1 of the Articles of Agreement as follows: "(i) To assist in the reconstruction and development of territories of members by facilitating the investment of capi­ tal for productive purposes, including the restoration of econ­ omies destroyed or disrupted by war, the reconversion of productive facilities to peacetime needs and the encourage­ ment of the development of productive facilities and re­ sources in less developed countries. "(ii) To promote private foreign investment by means of guarantees or participations in loans and other investments made by private investors; and when private capital is not available on reasonable terms, to supplement private invest­ ment by providing, on suitable conditions, finance for pro­ ductive purposes out of its own capital, funds raised by it and its other resources. "(iii) To promote the long-range balanced growth of international trade and the maintenance of equilibrium in bal­ ances of payments by encouraging international investment for the development of the productive resources of members, thereby aSSisting in raising productivity, the standard of liv­ ing and conditions of labor in their territories. "(iv) To arrange the loans made or guaranteed by it in relation to international loans through other channels so that the more useful and urgent projects, large and small alike, will be dealt with first. "( v) To conduct its operations with due regard to the effect of international investment on business conditions in the territories of members and, in the immediate post-Wat years, to assist in bringing about a smooth transition from a wartime to a peacetime economy." It might have been expected that with the formal com­ mencement of operations on the 25th of June, applications for loans would have been presented to the Bank in large numbers. Nevertheless, the Bank has so far received only two letters from its members requesting loans. It is expected that these letters will soon be followed by properly documented loan applica­ tions, and in the meantime preliminary discussions are taking place. The absence of loan applications may be surprising at first Sight. But a little reHection will indicate some of the reasons why applications have not been received in larger numbers.

22 FmST ANNUAL REPORT

When the tide of war ebbs, the physical devastation and other physical changes caused by the war are there for all to see. What is not so obvious are changes in economic and social stru~ture as well as the destruction of administrative systems and of the nec­ essary mechanisms of commerce and industry. On the one hand, this makes it more difficult to devise plans for a long-run recon­ struction of the countries concerned; on the other hand, it leads inevitably to whole peoples having to preoccupy themselves with the mechanics of avoiding starvation. It is not surprising, then, that there has been in so many countries a period during which relief on a large scale has been necessary before there could be any thought of preparing major programs of reconstruction. In this sphere UNRRA provided magnificent assistance and pre­ vented serious disasters. But the period of relief must come to an end, and it is vital that well articulated and productive programs of reconstruction and development should be ready against that time. Such programs are the raw material of the Bank's business. The Bank is equipped now to consider appli­ cations for loans to cover such programs and to investigate them with reasonable dispatch. Indeed, the Bank is prepared to con­ sider furnishing technical assistance in the preparation of loan applications. The Articles of Agreement of the Bank prescribe the standards which it must apply in the consideration of such applications. It is obvious, therefore, that in order to avoid unnecessary delay in the consideration of applications for loans, they must be supported by adequate data which will enable the Bank to determine whether or not they conform to the pre­ scribed standards.

Organization oj the Executive Directors By action of the Executive Directors, the respective fun\!­ tions and duties of the Executive Directors and the officers of the Bank have been determined and the pattern of the Bank's oper­ ations has been outlined. Matters of policy determination are the responsibility of the Executive Directors, while operational, administrative, and or­ ganizational questions are·the responsibility of the President, sub­ ject to the general direction and control of the Executive Di­ rectors. The President is the presiding officer of the Executive Directors and is entitled to a: deciding vote in the case of an equal division.

23 FIRST ANNUAL REPORT

The Executive Directors are constantly available for con­ sultation with the administration of the Bank. Formal meetings of the Executive Directors are held frequently, and they also meet with the senior members of the staff for informal discus­ sions concerning the Bank's operations. The Executive Directors established a number of commit­ tees even before the selection of the President, and valuable discussions on various aspects of the Bank's structure and work took place in the early months of the Bank's existence. In the sphere of policy the deliberations of the Executive Directors have been carried to the point where provisional conclusions now need to be checked and developed by reference to specific and de­ tailed loan applications. The committees of the Bank have been consolidated into standing committees on membership, financial policy, interpre­ tation, information and liaison. These committees are composed solely of Executive Directors, but the President has designated members of the staff to meet with each of them. The member­ ship of the existing standing committees appears in Appen­ dix "D". The Bank and the Fund have also agreed that there shall be a joint standing committee to consider matters of com­ mon concern to the two institutions. Ad hoc committees have been and will be established from time to time to consider and make recommendations to the Executive Directors on specific matters referred to them. Rules of procedure defining and regulating meetings of the Executive Directors, the agenda for meetings, voting, commit­ tees, minutes, notices, publicity and amendments, have been adopted by the Executive Directors. The text of these rules of procedure is being submitted separately to the Board of Gov­ ernors for review pursuant to Section 16 of the By-Laws of the Bank.

Proposed Amendments to the By-Laws of the Bank Certain amendments to the By-Laws of the Bank will be proposed to the Board of Governors for their approval. These are being submitted separately for consideration.

24 FIRST ANNUAL REPORT

Organization 01 Bank's Staff Although the organizational pattern of the staff must neces­ sarily remain to a large extent flexible in the present formative stage of the Bank's development, the following offices and de­ partments have been established on a tentative basis to carry on the work of the Bank: Office of the President Office of the Secretary Office of the Treasurer Legal Department Loan Department Research Department Personnel Office Office Services (1) Office of the President.-In addition to the President, this Office consists of the Vice President and two Assistants to the President. The Vice President is Mr. Harold D. Smith, formerly Director of the Bureau of the Budget of the United States Gov­ ernment (2) Office of the Secretary.-Mr. Morton M. Mendels, of Canada, has been appointed Secretary of the Bank. In addi­ tion to his duties as such staff member, he acts as Secretary of the Executive Directors and of the Board of Governors. He is also responsible for providing secretariat service for the committees of the Executive Directors. Prior to the appointment of Mr. Mendels, Mr. John S. Hooker, of Chevy Chase, Maryland, acted for several months as Tem­ porary Secretary. (3) Office of the Treasurer.-Mr. D. Crena de longh, of the Netherlands, now an Alternate Executive Director, has been appointed Treasurer. The Bank was fortunate in receiving the temporary assist­ ance during July and August of representatives of the Board of Governors of the Federal Reserve System of the United States, who developed, in conjunction with members of the Bank's staff, a chart of accounts for the Bank. ( 4) Legal Department.--This Department is headed by the General Counsel, Mr. Chester A. McLain, of New York, who is responsible for the legal staff of the Bank.

25 FIRST ANNUAL REPORT

(5) Loan Department.-Pending the appoinbnent of a per­ manent Loan Director, Mr. J. W. Beyen, of the Netherlands, has been acting as Temporary Loan Director in addition to his duties as Executive Director. For the time being, it is contemplated that the engineering and technical staff of the Loan Department will be kept to a minimum and that, to the maximum extent practicable, the tech­ nical services required by the Bank will be secured on a con­ sulting basis. To this end, discussions have been held with various technical groups for the purpose of enabling the Bank to be in a position to call upon technical experts in the United States and elsewhere to advise on loan applications which may be presented. . ( 6) Research Department.-The Research Deparbnent is responsible for economic, statistical and other research required in connection with the operations of the Bank. Mr. Leonard B. Rist, of France, formerly an Alternate Executive Director, has been appointed Research Director. Discussions have been conducted with the research depart­ ments of the International Monetary Fund and of the United Nations with the view of arranging for cooperation in the ex­ change of statistical and other information and research serv­ ices. As a result it is hoped to keep the research staff of the Bank confined to a small group of highly qualified economists and statisticians. (7) Personnel Office.-The Personnel Office is responsible for personnel matters in connection with the Bank's staff. Mr. William Howell, of Washington, D. C., formerly Personnel Direc­ tor of UNRRA, is serving as Acting Director of Personnel. ( 8) Office Services.-Office Services is ;responsible for all supply, space, housekeeping; transportation and similar admin­ istrative services. The Bank has been fortunate in receiving, during the past few months, the assistance of representatives of the Bureau of the Budget of the United States Government in connection with the development of its administrative procedures ..

Recruitment Policies Pending the receipt of loan applications, the Bank has not attempted to build up its organization beyond its needs, but the

26 FIRST ANNUAL REPORT

Bank is in a position to assemble additional personnel as soon as it is required. In recruiting the Bank's staff, two principles have been con­ sistently followed: first, that appointees shall have a high order of competence; and second, that the staff be recruited with due regard to geographical representation. The success of the Bank's operations depends to a large ex­ tent on the character of its personnel, and it is believed that the policy of careful selection will, in the long run, pay large divi­ dends in the form of efficient and sound operation. Where neces­ sary, positions have been filled on a temporary basis pending per­ manent appointments. By care in the selection of competent personnel and by the use of expert consultants in connection with special problems as they arise, the regular staff will be smaller than otherwise would be necessary, with resulting benefits in both efficiency and economy.

Procedure on Loan Applications The Executive Directors and the staff have been engaged in continuous study of the loan policies to be pursued by the Bank. These studies have necessarily been preliminary in nature, since development of definitive policies in substantial detail can only be intelligently undertaken in the light of loan applications which shall be received. The Executive Directors have agreed as to the method of handling loan applications. The procedure will consist of three stages. Mter preliminary conversations with the applicant, the Presi­ dent will bring the application before the Executive Directors, so that they may decide whether the Bank should proceed with the negotiations. If the Executive Directors determine that the Bank should continue the negotiations, they will authorize the President so to proceed and a Loan Committee will be appointed ad hoc for the study of the particular application in accordance with the Articles of Agreement. Each Loan Committee will include an expert selected by the member in whose territory the project to be financed is located and one or more members of the technical staff of the Bank. The Loan Committee will study the proposal and submit a written report to the President with its recommendations con-

27 FIRST ANNUAL REPORT cerning the merits of the proposal. The Loan Committee will not participate in the actual negotiations, but it will maintain close touch with the negotiators in order that they may coor­ dinate the negotiations with the findings of the Loan Committee. Throughout the procedure the Executive Directors will be kept continuously informed about the progress of the negotia­ tions. The ultimate proposal of the President, together with the accompanying report of the Loan Committee, will be brought before the Executive Directors for their final decision.

Marketing Policies Preliminary investigation has indicated that most of the funds required by the Bank in addition to its capital must, for the pres­ ent, be obtained in the United States. Informal discussions have accordingly been held with representatives of leading invest­ ment bankers, commercial banks, savings banks and insur­ ance companies in order to familiarize them with the nature of the Bank's operations and to obtain their views. In most important states, legislative action will be required before the Bank's securities can legally be purchased by insur­ ance companies or savings banks, or by trustees who are limited to investments which are legal for savings banks. Measures have been taken by the United States authorities and by representa­ tives of institutional investors looking toward the introduction of the requisite legislation to permit such purchases, but most of the State legislatures are now in recess and will not meet again until after January 1, 1947. An encouraging first step was taken by the New York State Legislature at its last session, when it authorized savings banks in the State of New York to pur­ chase securities issued or guaranteed by the Bank. Preliminary study of the marketing possibilities in Canada has also been undertaken, and studies will be made, as cir­ cumstances develop, of the possibilities of selling in markets, other than the United States and Canada, securities issued or guaranteed by the Bank.

Cooperation with other International Organizations The Executive Directors recognize that the Bank must maintain close relations with the International Monetary Fund,

28 FIRST ANNUAL REPORT and that cooperation with the Economic and Social Council of the United Nations, as well as with other specialized agencies of the United Nations, is necessary in the light of the problems of mutual concern which arise. \ A joint standing committee of the Executive Directors of the Bank with the Executive Directors of the International Monetary Fund is being created to consider matters of common interest. This will serve as a bridge between the two institutions in those re­ spects in which they should complement each other. The Secre­ taries of the Bank and the Fund have also been charged with the responsibility of infonning each other of new subjects of mutual interest to be considered by the Executive Directors of each in­ stitution, and they have been authorized to exchange documents pertinent to matters of joint concern. The Chainnan of the Ex­ ecutive Directors of each of the two institutions will invite a representative of the other to attend meetings at which matters of common interest are to be discussed, and the two Chainnen will maintain close touch with each other and will propose to the respective Executive Directors additional measures necessary to insure close cooperation. The Bank has had representatives in attendance at meetings of the Food and Agriculture Organization in Washington dur­ ing the spring and in Copenhagen during the summer, and a rep­ resentative from the Bank attended meetings in London of the Sub-Commission of the Economic and Social Council on Eco­ nomic Reconstruction of Devastated Areas. Observers from the Bank were also in attendance at meetings of the Economic and Social Council during June and September. Pursuant to the instructions of the Board of Governors at their Savannah meeting, a number of discussions have been heM with representatives of the United Nations concerning arraugo­ ments for cooperation, particularly with the Economic and So­ cial Council. The Executive Directors have felt that, pending further development of the Bank's activities, it would be prema­ ture to attempt to define the exact scope and nature of such co­ operation in a written agreement. They believe that the devel­ opment of practical working relationships will be facilitated rather than delayed by the absence of a fonnal agreement.

29 FIRST ANNUAL REPORT

Membership Recommendations with respect to the admission of coun­ tries which have applied for membership in the Bank are being submitted separately to the Board of Governors in accordance with Section 20 of the By-Laws of the Bank. '

Interpretations By Resolution No.6, adopted on March 18, 1946, the Board of Governors referred to the Executive Directors the request of the Governor for the United States, pursuant to Section 12 of the Bretton Woods Agreement Act, for an interpretation of the Articles of Agreement with regard to the authority of the Bank to make or guarantee loans for programs of economic reconstruc­ tion and the reconstruction of monetary systems, including long­ term stabilization loans. As has been set out in a separate report to the Board of Governors, to which reference -should be made, the Executive Directors have agreed that such loans are within the authority of the Bank. This separate report appears as Appendix "E". The Executive Directors have also rendered two other de­ cisiuns with regard to the interpretation of the Articles of Agree­ ment of the Bank, as follows: (1) In accordance with Resolution No.7, adopted by the Board of Governors on March 18, 1946, the Executive Directors, at their meeting on May 9, 1946, decided that, under Article V, Sections 4 (b) (i) and 4 (d) of the Articles of Agreement of the Bank, any member of the Bank, having one of the five largest subscriptions to the capital of the Bank at the date of a regular election of Executive Directors or at any date between regular elections of Executive Directors, shall be entitled to appoint an Executive Director who shall hold office until the next regular election of Executive Directors, without prejudice to the right of a subsequently admitted member of the Bank to appoint an Ex­ ecutive Director if it has one of the five largest subscriptions to the capital of the Bank. (2) At their meeting on June 20,1946, the Executive Direc­ tors decided that, under Article IV, Section 2 (a) of the Articles of Agreement, the United States does not have power to control the use of United States dollars paid to the Bank in lieu of gold pursuant to Article II, Section 7 (i) of the Articles of Agreement.

30 FIRST ANNUAL REPORT

Advi.ory Council

Recommendations in respect of the Advisory Council are being submitted separately to the Board of Governors in accord­ ance with Resolution No.5 of the Board of Governors.

Financial Statement The accounts of the Bank have been audited as of June 30, 1946, by Price, Waterhouse & Co. in accordance with Resolu· tion No. 19 adopted by the Board of Directors on September 10, 1946. The Auditors' Report appears as Appendix "F". Finan­ cial statements, as of August 31, 1946, prepared by Office of the Treasurer of the Bank, appear as Appendix "G". Summary information relating to the Bank's financial con­ dition as of August 31, 1946, is given below. Total assets were $385,157,513.64. Gold amounted to $14,- 072,258.62, of which $9,395,758.64 was held by the Federal Re­ serve Bank of New York and $4,676,499.98 by the Bank of Eng­ land. Deposits' with· banks totalled $227,729,955.32, of which $224,730,887.11 was on deposit with the Federal Reserve Bank of New York and $39,068.21 with the American Security and Trust Co., Washington, D. C. The account at the American Se­ curity and Trust Company is used for the payment of the Bank's operating expenses. $2,960,000, the U. S. dollar equivalent at exchange rates in effect at the date of deposit, was in the Cen­ tral Banks of Chile and Costa Rica. These deposits in Chile and Costa Rica represent payments of the 3% stock subscrip­ tion call made as of June 25, 1946 and due on or before No­ vember 25,1946, and the 5% call made as of September 25,1946, also due on or before November 25, 1946. Calls on subscriptions to capital stock outstanding as of August 31, 1946 amounted to $143,353,116.30, including outstand­ ing balances of $9,613,116.30 on the 2% call payable on or before August 24, 1946, and of $133,740,000 on the 3% call payable on or before November 25, 1946. The subscription calls and payments thereon are discussed in detail in the section of this Report entitled "Formal Commencement of Operations and Calls of Capital". Miscellaneous assets of $2,183.40 include travel and other ad­ vances and service deposits.

31 FIRST ANNUAL REPORT

Total liabilities of $1,939,676.77 include accounts payable of $73,948.35, a reserve of $15,728.42 for estimated liability for income taxes on salaries paid through August 31, 1946, and de­ ferred credits of $1,850,000, the last item representing the ad­ vance payments by Chile and Costa Rica of the 5% stock sub­ scription call which was not actually made until after August 31, 1946. Capital stock of $383,500,000 represents the 2% call of $153,- 400.000 and the 3% call of $230,100,000. The deficit of $282,163.13 is the total of the operating ex­ penses of the Bank to August 31, 1946. The accounting system that has been established will reflect at all times the various member currencies held by the Bank, as well as the sources of the funds.

Statement on A.dministrative Budget Paragraph 4 of Resolution No.2, adopted by the Board of Governors on March 16, 1946, authorized the Temporary Secre­ tary of the Bank, until permanent procedures should be estab­ lished, to expend up to $200,000 to meet salaries and other admin­ istrative expenses of the Bank, including transportation expenses of Governors and their Alternates. The Temporary Secretary made disbursements under such authority until July 15, 1946. Thereafter, disbursements were made by the President or Vice President of the Bank. Total disbursements through July 15, 1946 amounted to $75,703.40. The expenses of the Bank to August 31, 1946 totaled $282,- 163.13, including accrued expenses and provision for estimated liability for income taxes on salaries and expenses of Execu­ tive Directors, their Alternates and the staff. Of the total, $33,- 086.50 represented expenses of the Governors and their Alter­ nates in attending the meeting at Savannah, Georgia, and $8,- 407.73 r~presented expenses of the Executive Directors and their Alternates in moving to Washington. At the date of this Report, in addition to the Executive Di­ rectors and Alternates, the staff and secretarial force of the Bank totaled 72. Operating expenses, on the basis of the present staff and office space, are accruing at a rate of approximately $100,000 a month, or at an annual rate of $1,200,000. However, the Bank

32 FIRST ANNUAL REPORT is still in the process of developing its organization and this rate of expenditure will necessarily increase. Small staffs have been recruited for the offices of the Exec­ utive Directors and their Alternates, the offices of the Presi­ dent, the Secretary, the Treasurer, the General Counsel, the Personnel Office and Office Services. The Director of the Loan Department is serving in that capacity on a temporary basis, and the Director of the Research Department only recently assumed the duties of his office. The staffs for these departments will be de­ veloped in the light of their requirements. All the operational units will have to be expanded substantially when the Bank be­ gins to make loans and undertake financing. Consideration is being given to the development of a re­ tirement system and the provision of various provident funds for employees, consistent with actions being taken by other inter­ national organizations. These, if adopted and put into effeCt, will add a further undetermined amount to the cost of operations. It would not be difficult to develop an administrative bud­ get, based on numerous arbitrary assumptions, which would present a forecast purporting to reflect the anticipated ex­ pense of operations of the Bank for a given period. However, the many assumptions which would have to be made would re­ sult in figures that could not be accepted as having any founda­ tion in fact. There is no indication as to the number or com­ plexity of the loan applications which will have to be considered, or as to the rapidity with which they will develop. There is no experience on which to estimate the extent of the staff work which will be required, either in Washington or in the field, before loans can be approved. Work-load information is com­ pletely lacking, both as to lending and financing activities, and there is no similar public or private financing institution with which comparison can be made. Any assumptions which might be made, at this stage, therefore, would be extremely speculative. The minimum function of budgetary planning should be to furnish to management an intelligent control over operations. To be useful a budget must be based on anticipations that can be reasonably justified. A budget prepared on any other basis would be useless. Under existiNg circumstances, it would not be possible to prepare an estimate of operating costs that would be useful.

33 FIRST ANNUAL REPORT However, within a few months sufficient operating experience will have accumulated to justify the development of an ade­ quate budgetary control well in advance of the next fiscal year.

Conclusion During the three months since its formal commencement of operation, the Bank has attempted to prepare the ground for those tasks of reconstruction and development which will be its responsibility in the years ahead. If we build skillfully and well an international organization to perform those tasks, the Bank will be able to contribute, as the member governments of the Bank intended it should, to the structure of a secure peace.

34 FIRST ANNUAL REPORT

APPENDIX "A" Governor. and A.lternates 01 the International Bank lor Reconstruction and Development

Member Government Governor Alternate

Belgium rean Vauthier Maurice Frere Bolivia Rene Ballivian Cald- Jaime Gutierrez eron Guerra

Brazil Francisco Alves dos Edgard de Mello Santos-FilllO Canada James L. IIsley Graham F. Towers Chile Arturo Maschke Luis Davila China O. K. Yui T. L. Soong Costa Rica Julio Pena Moroa Angel Coronas Guar- dia Cuba Joaquin E. Meyer

Czechoslovakia Alois Kral _ Joseph Hanc Denmark Carl Valdemar Erling Sveinbjoem­ Bramsnaes sson Dominican Republic Jesus Maria Troncoso Jose Ramon Rodri­ guez Ecuador Esteban F. Carbo Sixto E. Duran- Ballen Egypt Ahmed Zaki Bey Ahmed Selim Saad El Salvador Federico Vides S. Manuel Melendez V. Ethiopia George A. Blowers France Robert Schuman Pierre Mendes-France Greece Athanase Sbarounis Nicholas B. Kaskarelis Guatemala Manuel Noriega Mo- Leonidas Acevedo rales

35 FmST ANNUAL REPORT

Honduras Julian R. Caceres Jorge Fidel Duron Iceland Magnus Sigurdsson Thor Thors India Sir Chintaman Desh- N. Sundaresan mukh Iran A. H. Ebtehaj Mocharraf NaScy Iraq Ali Jawdat A. M. Gailani Luxembourg Pierre Dupong Hugues Le Gallais Mexico Antonio Espinosa de Luciano Wiechers los Monteros Netherlands P. Lieftinck A. M. de Jong Nicaragua Guillermo Sevilla Sa- Rafael A. Huezo casa Norway Gunnar Jahn Ole Colbjoemson Panama Joaquin Jose Valla­ rino Paraguay Harmodio Gonzales Ruben Benitez Peru Carlos Montero Ber- Jose Barreda Moller nales Philippine Republic Joaquin M. Elizalde Poland Konstanty Dabrowski Janusz Zoltowsld Union of South Mrica Tan Hendrik Hof­ M. H. de Kock meyr (J. H. Holloway, act­ ing)

United Kingdom Hugh Dalton Sir James Grigg United States John W. Snyder William L. Clayton Uruguay Hugo Garcia Yugoslavia Lavoslav Dolinsek Ivan Randic

Note: Since publication of the First Annual Report, the following appointments have been made' Philippine Republic: Alternate Governor-Joseph Foley. Yugoslavia: Governor-Stane Krasovec; Alternate Governor -Vaso Srzentic. Greece: Alternate Governor-Grigorios Zarifopoulos. 36 FmST ANNUAL REPORT APPENDIX "B" Executive Directors and Alternat•• 01 the International Bank lor Reconstruction and Development Member Government Executive Director Alternate United States Emilio G. Collado John S. Hooker United Kingdom Sir James Grigg Maurice I. Hutton China Yuen-Ting Shen France Pierre Mendes-France Guy de Carmoy India N. Sundaresan Jaganadh Vishwanath Joshi Netherlands J. W. Beyen D. Crena de Iongh Union of South Africa ( Netherlands) ( Netherlands)

Belgium Norway Hubert Ansiaux Thomas Basyn Luxembourg (Belgium) (Belgium) Iceland Brazil Chile Philippine Republic Bolivia Victor Moller Fernando Illanes Costa Rica (Chile) (Chile) Guatemala Paraguay Panama Czechoslovakia Poland Leon Baranski Alois Kral Yugoslavia (Poland) ( Czechoslovakia) Mexico Cuba Peru Uruguay Ecuador Dominican Republic Luis Machado Aramis Alvarez EI Salvador (Cuba) (Cuba) Honduras Nicaragua Canada R. B. Bryce J. F. Parkinson Egypt Greece Iran Kyriakos Varval'essos Mocharraf Nancy Iraq (Greece) (Iran) Ethiopia

Note: D. Crena de Iongh (Netherlands) will assume his duties as Treasurer of the Bank on December 1, 1946. Hubert Ansiaux (Belgium) has resi{!ned, effective N ovem­ ber 1, 1946. His post will be filled by Franz de Voghel (Belgium). 37 FmST ANNUAL REPORT APPENDIX "C" List oj Depositories Member Government Depository Designated

Canada Bank of Canada Chile Banco Central de Chile China Central Bank of China in Shanghai Costa Rica Banco N adonal de Costa Rica EI Salvador Central Reserve Bank of EI Sal- vador France Banque de France Greece Bank of Greece India The Reserve Bank of India Iran Bank Melli Iran Iraq Rafidain Bank Mexico Bank of Mexico Netherlands De Nederlandsche Bank, N. V. Nicaragua The Emission Deparbnent of the National Bank of Nicaragua Philippine Republic Bureau of the Treasury Poland N arodowy Bank Polski United Kingdom Bank of England United States Federal Reserve Bank of New York Note: Since publication of the First Annual Report, the Bank has been notified of the following Depositories: Czechoslovakia: National Bank of Czechoslovakia Dominican Republic: The Reserve Bank of the Dominican Republic Luxembourg: Caisse ilEpargne de iEtat (National Savings Bank) Nicaragua: The Department of Issue of the National Bank of Nicaragua. 38 FIRST ANNUAL REPORT APPENDIX "D" Membership oj Standing Committea

Committee on Financial Policy Leon Baranski J. W. Beyen, Chairman R. B. Bryce Emilio G. Collado Sir James Grigg Luis Machado

Committee on Interpretation Hubert Ansiaux Victor Moller Yueri-Ting Shen N. Sundaresan Kyriakos Varvaressos, Chairman

Committee on Membership Hubert Ansiaux Leon Baranski R. B. Bryce Victor Moller Yuen-Ting Shen, Chairman

Committee on Liaison Sir James Grigg, Chairman Pierre Mendes-France Victor Moller N. Sundaresan Kyriakos Varvaressos

Committee on Information J. W. Beyen Emilio G. Collado Sir James Grigg Luis Machado Pierre Mendes-France, ChainJlan Note: Since publication of the First Annual Report, the following Joint Standing Committee with the International Monetary Fund has been established: for the Bank, Emilio G. Collado, Sir James Grigg, Pierre Mendes-France, N. Sundaresan; for the Fund, Rodrigo Gomez, l' ee··Chun Koo, Louis Ras­ minsky, Harry D. White. 39 FmST ANNUAL REPORT

APPENDIX "E"

Report 0/ the Executive Directors to the Board 0/ Governors on Interpretation 0/ the A.rticles 0/ A.greement

Pursuant to Resolution No.6 of the Board of Governors, the Executive Directors have interpreted the Articles of Agreement with respect to the authority of the Bank to make or guarantee loans for programs of economic reconstruction and the recon­ struction of monetary systems, including long-term stabilization loans, by approving the following report of their Committee on Interpretation. REPORT OF THE COMMITTEE ON INTERPRETATION Section 12 of The Bretton Woods Agreements Act of the United States of America provides as follows: The Governor and Executive Director of the Bank ap­ pointed by the United States are hereby directed to obtain promptly an official interpretation by the Bank as to its au­ thority to make or guarantee loans for programs of economic reconstruction and the reconstruction of monetary systems, including long-term stabilization loans. If the Bank does not interpret its powers to include the making or guaran­ teeing of such loans, the Governor of the Bank representing the United States is hereby directed to propose promptly and support an amendment to the Articles of Agreement for the purpose of explicitly authorizing the Bank, after consultation with the Fund, to make or guarantee such loans. The President is hereby authorized and directed to accept an amendment to that effect on behalf of the United States. Resolution 6, adopted by the Board of Governors of the Bank on March 18, 1946, provides as follows: That the Executive Directors of the International Bank for Reconstruction and Development are invited, at the request of the Governor for the United States of America, to interpret the Articles of Agreement, pursuant to Article IX ( a), as to the authority of the Bank to make or guarantee loans for programs of economic reconstruction and the reconstruction of monetary systems, including long-term sta­ bilization loans. The Executive Directors of the Bank have referred the matter to this Committee.

40 FmST ANNUAL REPORT

The Committee, having carefully examined the question in the light of the provisions Of the Articles of Agreement of the Bank and of statements and memoranda which have been sub­ mitted to the Committee with regard thereto, presents the follow­ ing report and recommendations to the Executive Directors: 1. The question presented by Section 12 of the Bretton Woods Agreements Act relates to the general purposes for which the Bank is authorized to make or guarantee loans and the scope of the authority of the Bank to make or guarantee loans. 2. Article I of the Articles of Agreement of the Bank lets forth the purposes of the Bank as follows: (i) To assist in the reconstruction and development of ter­ ritories of members by facilitating the investment of capital for productive purposes, including the restoration of economies de­ stroyed or disrupted by war, the reconversion of productive facilities to peacetime needs and the encouragement of the de­ velopment of productive facilities and resources in less devel­ oped countries. (ii) To promote private foreign investment by mearu of guarantees or participations in loans and other investments made by private investors; and when private capital is not available on reasonable terms, to supplement private investment by pro­ viding, on suitable conditions, finance for productive purposes out of its own capital, funds raised by it and its other resources. (iii) To promote the long-range balanced growth of inter­ national trade and the maintenance of equilibrium in balances of payments by encouraging international investment for the de­ velopment of the productive resources of members, thereby as­ sisting in raising productivity, the standard of living and condi­ tions of labor in their territories. ( iv) To arrange the loans made or guaranteed by it in rela­ tion to international loans through other channels so that the more useful and urgent projects, large and small alike, will be dealt with first. (v) To conduct its operations with due regard to the ef­ fect of international investment on business conditions in the territories of members and, in the immediate postwar years, to assist in bringing about a smooth transition from a wartime to a peacetime economy. The Bank shall be guided in all its decisions by the purposes set forth above.

41 FIRST ANNUAL REPORT

3. The relevant provisions of Article III of the Articles of Agreement of the Bank with regard to the making or guarantee­ ing of loans by the Bank are as follows: Section 1. Use pf Resources ( a) The resources and the facilities of the Bank shall be used exclusively for the benefit of members with equitable con­ sideration to projects for development and projects for recon­ struction alike. (b) For the purpose of facilitating the restoration and recon­ struction of the economy of members whose metropolitan terri­ tories have suffered great devastation from enemy occupation or hostilities, the Bank, in determining the conditions and terms of loans made to such members, shall pay special regard to light­ ening the financial burden and expediting the completion of such restoration and reconstruction. Section 3. Limitations on guarantees and borrowings of the Bank The total amount outstanding of guarantees, participations in loans and direct loans made by the Bank shall not be increased at any time, if by such increase the total would exceed one hundred percent of the unimpaired subscribed capital, reserves and surplus of the Bank. Section 4. Conditions on which the Bank may guarantee or make loans The Bank may guarantee, participate in, or make loans to any member or any political sub-division thereof and any busi­ ness, industrial, and agricultural enterprise in the territories of a member, subject to the following conditions: (i) When the member in whose territories the project is lo­ cated is not itself the borrower, the member or the central bank or some comparable agency of the member which is acceptable to the Bank, fully guarantees the repayment of the principal and the payment of interest and other charges on the loan. (ii) The Bank is satisfied that in the prevailing market con­ ditions the borrower would be unable otherwise to obtain the loan under conditions which in the opinion of the Bank are rea­ sonable for the borrower. (iii) A competent committee, as provided for in Article V, Section 7, has submitted a written report recommending the project after a careful study of the merits of the proposal. (iv) In the opinion of the Bank the rate of interest and other charges are reasonable and such rate, charges and the

42 FIRST ANNUAL REPORT

schedule for repayment of principal are appropriate to the proJect. ( v) In making or guaranteeing a loan, the Bank shall pay due regard to the prospects that the borrower, and, if the bor­ rower is not a member, that the guarantor, will be in position to meet its obligations under the loan; and the Bank shall act prudently in the interests both of the particular member in whose territories the project is located and of the members as a whole. ( vi) In guaranteeing a loan made by other investors, the Bank receives suitable compensation for its risk. ( vii) Loans made or guaranteed by the Bank shall, .except in special circumstances, be for the purpose of specific projects of reconstruction or development.

Section 5. Use of loans guaranteed, participated in or made by the Bank. ( a) The Bank shall impose no conditions that the proceeds of a loan shall be spent in the territories of any particular member or members. (b) The Bank shall make arrangements to ensure that the proceeds of any loan are used only for the purposes for which the loan was granted, with due attention to considerations of economy and efficiency and without regard to political or other non-economic influences or considerations. ( c) In the case of loans made by the Bank, it shall open an account in the name of the borrower and the amount of the loan shall be credited to this account in the currency or currencies in which the loan is made. The borrower shall be permitted by the Bank to draw on this account only to meet expenses in con­ nection with the project as they are actually incurred. 4. The expression '1oans for programs of economic recon­ struction and the reconstruction of monetary systems, including long-term stabilization loans," is not defined either in the Bretton Woods Agreements Act or in the above-quoted Resolution No.6. There is no reason to doubt, however, that loans of the kinds in­ tended to be included in such expression fall within the general purposes for which the Bank is authorized to make or guarantee loans. With regard to any particular loan the only question would be whether or not it complied with the conditions speci­ fied in the above-quoted provisions of Article III of the Articles of Agreement of the Bank. Such conditions apply generally to all loans made or guaranteed by the Bank.

43 FIRST ANNUAL REPORT

Among those conditions is the condition set forth in para­ graph (vii) of Section 4 of Article III that "Loans made or guar­ anteed by the Bank shall, except in special circumstances, be for the purpose of specific projects of reconstruction or develop­ ment." It is obvious that many of the loans referred to in Sec­ tion 12 of the Bretton Woods Agreements Act would be "for the purpose of specific projects of reconstruction or development," within the meaning of the above-quoted provision of Section 4 (vii) of Article III of the Articles of Agreement of the Bank. But without at this time attempting to determine what would con­ stitute a specific project of reconstruction or development within the meaning of that Section, it is sufficient to point out that under such Section the Bank is authorized "in special circumstances" to make or guarantee loans other than for purposes of specific projects of reconstruction or development, provided, of course, that such loans come within the general purposes of the Bank as set forth above. It follows, therefore, that, under Article III, Section 4 (vii) of the Articles of Agreement, the Bank, while primarily expected to make or guarantee loans for specific proj­ ects of reconstruction and development, does have authority to make or guarantee loans for programs of economic reconstruc­ tion and the reconstruction of monetary systems, including long­ term stabilization loans, even if such loans are not for specific projects of reconstruction or development within the meaning of such Section. 5. In determining whether or not to make or guarantee any such loan, it is, of course, for the Bank to decide whether or not such loan conforms to the conditions specified in the above-quoted provisions of Article III of the Articles of Agreement of the Bank, and, in the case of a loan which is not for the purpose of a specific project of reconstruction or development, it is for the Bank to decide whether special circumstances exist which jus­ tify it in making or guaranteeing such loan. 6. The Committee is, therefore, of opinion that, under the Articles of Agreement, the Bank has authority to make or guar­ antee loans for programs of economic reconstruction and the reconstruction of monetary systems, including long-term stabili­ zation loans, and the Committee recommends that the Executive Directors so decide. 7. H this report shall be approved by the Executive Direc- 44 FIRST ANNUAL REPORT tors, the Committee recommends that this report be transmitted to the Board of Governors as the decision of the Executive Direc­ tors in accordance with the above-quoted Resolution No.6 9f the Board of Governors. Committee on Interpretation [Signed] Kyriakos Varvaressos (Chairman) Hubert Ansiaux Victor Moller Yuen-Ting Shen N. Sundaresan

45 FIRST ANNUAL REPORT

APPENDIX "F" Auditors' Report

PRICE, WATERHOUSE & Co. AMERICAN SECURITY BUILDING Washington 5, D. C., September 19, 1946

To The Executive Directors, International Bank for Reconstruction and Development, Washington, D. C.

We have examined the accompanying financial statements of the International Bank for Reconstruction and Development as of June 30, 1946. Our examination was made in accordance with generally accepted auditing standards applicable in the cir­ cumstances, and included such tests of the accounting records and other supporting evidence and such other procedures as we con­ sidered necessary. In our opinion, the accompanying financial statements pre­ sent fairly the pOSition of the Bank at June 30, 1946, and the re­ sults of its transactions from December 27, 1945 (the date when the Articles of Agreement establishing the Bank entered into force), to June 30, 1946, in conformity with generally accepted accounting principles.

PRICE, WATERHOUSE & Co.

46 :rmST ANNUAL REPORT

Appendix "1"', (Cont.) INTERNATIONAL BANK. FOR RECONSTRUCTION AND DEVELOPMENT

BA.LA.NCE SHEET-JUNE 30, 1946

Expressed in U. S. dollars ASSETS Due from banks (United States currency) ______$159,136,919 Receivable from members for calIs on subscriptions to capital stock: Due August 24, 1946 ______$89,450, 500 Due November 25, 1946______134, 850, 000 224,300,500 Other assets ______.__ 483 $383,437,902

LIABILITIES AND CAPITAL Accounts payable and accrued expenses______$ 63,061

Capital stock: Authorized-lOO,OOO shares of $100,000 par value eaclL______$10,OOO,OOO,OOO

Subscribed but not issued-76,700 shares ______$7,670,000,000

Less-:--U:ncalled portion of sub- sCriptions ______7,286,500,000 383,500,000 Deduct: Organization and other initial expenses from December 27, 1945 to June 30, 1946 ______125,159 383,374,841 $ 383,437,902

47 FmST ANNUAL REPORT

Appendix "F', (Cont.)

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Statement 01 Members' Subscriptions to Capital Stock and Balances due on Calls June 30, 1946 (Expressed in U. S. Dollars)

Amounts Amounts Balances receivable called received at June 30. 1946 Subscription to to Due Due June 30, June 30, Total Aug. 24 Nov. 25 Member Country Shares Amount 1946 1946 1946 1946

Belgium______2,250 $225,000,000 $11,250,000 $22,500 $11,227,500 $4,477,500 $6,750,000 Bolivia______70 7,000,000 350,000 700 349,300 139,300 210,000 BraziL ______1,050 105,000,000 5,250,000 10,500 5,239,500 2,089,500 3,150,000 Canada ______3,250 325,000,000 16,250,000 32,500 16,217,500 6,467,500 9,750,000 Chile______350 35,000,000 1,750,000 3,500 1,746,500 696,500 1,050,000 China______6,000 600,000,000 30,000,000 60,000 29,940,000 11,940,000 18,000,000 Costa Rica ______20 2,000,000 100,000 200 99,800 39,800 60,000 Cuba ______350 35,000,000 1,750,000 3,500 1,746,500 696,500 1,050,000 Czechoslovakia______1,250 125,000,000 6,250,000 12,500 6,237,500 2,487,500 3,750,000 Denmark______680 68,000,000 3,400,000 6,800 3,393,200 1,353,200 2,040,000

Dominican Republic ___ 20 2,000,000 100,000 200 99,800 39,800 60,000 Ecuador ______32 3,200,000 160,000 320 159,680 63,680 96,000 Egypt ______400 40,000,000 2,000,000 4,000 1,996,000 7915,000 1,200,000 El Salvador______10 1,000,000 50,000 100 49,900 19,900 30,000 Ethiopia ______30 3,000,000 150,000 300 149,700 59,700 90,000

France ______4,500 450,000,000 22,500,000 45,000 22,455,000 8,955,000 13,500,000 Greece ______250 25,000,000 1,250,000 2,500 1,247,500 497,500 750,000 Guatemala______20 2,000,000 100,000 200 99;800 39,800 60,000 Honduras ______10 1,000,000 50,000 100 49,900 19,900 30,000 Iceland ______10 1,000,000 50,000 100 49,900 19,900 30,000

India ______4,000 400,000,000 20,000,000 40,000 19,960,000 7,960,000 12,000,000 Iran ______240 24,000,000 1,200,000 2,400 1,197,600 477,600 720,000 Iraq ______60 6,000,000 300,000 600 299,400 119,400 180,000 Luxembourg ______100 10,000,000 500,000 1,000 499,000 199,000 300,000 Mexico ______650 65,000,000 3,250,000 6,500 3,243,500 1,293,500 1,950,000

Netherlands ______2,750 275,000,000 13,750,000 27,500 13,722,500 5,472,500 8,250,000 Nicaragua ______8 800,000 40,000 80 39,920 15,920 24,000 Norway ______500 50,000,000 2,500,000 5,000 2,495,000 995,000 1,500,000 48 FIRST ANNUAL REPORT

Appendix "F", (Cont.)

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Statement 01 Member.' Subscriptions to Capital Stock and Balances Due on Call.-June 30, 1946 (Expressed in U, S. Dollars)

Amounts Amounts Balances Receivable called received at June 30, 1946 Subscription to to Due Due June 30, June 30, Total Aug. 24 Nov. 25 Member Country Shares Amount 1946 1946 1946 1946 Panama ______2 , 200,000 , 10,000 , 20 $ 9,980 , 3,980 , 6,000 Paraguay______8 800,000 40,000 80 39,920 15,920 24,000 Peru ______. 175 17,500,000 875,000 1,750 873,250 348,250 525,000 Phlllpplnes ______150 15,000,000 750,000 1,500 748,500 298,500 450,000 Poland ______1,250 125,000,000 6,250,000 12,500 6,237,500 2,487,500 3,750,000

Union of South Afrlca ______1,000 100,000,000 5,000,000 10,000 4,990,000 1,990,000 3,000,000 United Klngdom __ 13,000 1,300,000,000 65,000,000 130,000 64,870,000 25,870,000 39,000,000 United States of America ______31,750 3,175,000,000 158,750,000 158,750,000 Uruguay ______105 10,500,000 525,000 1,050 523,950 208,950 315,000 yugoslavia ______400 40,000,000 2,000,000 4,000 1,996,000 796,000 1,200.000 Totals______76,700 $7,670,000,000 $383,500,000 $159,199,500 $224,300,500 ,89,450,500 ,134,850,000

Notes: (A) The amounts of subscriptions called to June 30, 1946 comprised­ One one-hundredth of one percent, payable by members at the time of signing the Articles of AgreemenL______$ 767,000 Balance of the first two percent, payable on or before August 24, 1946 ______152,633,000 Three percent, payable on or before November 25, 1946 ______230,100,000 Total, as above ______$383,500,000

(B) In August 1946, the Executive Directors authorized deferment until June 25, 1951 of amounts equal to one-half of one percent of subscriptions with respect to calls payable by certain members, as follows: China $3,000,000; Czechoslovakia $625,000; Denmark $340,000; Greece $125,000; Norway $250,000; Poland $625,000; Yugoslavia $200,000; (total $5,165,000), Additional deferments have been requested by Czechoslovakia and Yugo­ slavia with respect to the remainder of the balances due August 24, 1946 from those members, $1,862,500 and $596,000, respectively. Action on these two requests was still pending at the date of this report. 49 FIRST ANNUAL REPORT

Appendix "F", (Cont.)

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Statement of Organization and Other Initial Expenses From December 27, 1945, to June 30, 1946

Expressed in U. S. dollars

Salaries and expense allowances of Executive Directors and Alternates ----______.______$28,372 Other salaries- Officers ______821

Staff ______7,478

Provision for reimbursement of income taxes on salaries and expense allowances (estimated}______3,308

Travel- Governors and Alternates______33,086

Other ______7,364

Rental of office quarters______4,772

Stationery and supplies --_. ---'------5,262 Postage, telephone, telegraph and cable______2,209 Miscellaneous expense ______2,410

Office furniture and equipment______30,077

$125.159

50 FIRST ANNUAL REPORT

APPENDIX "G" Exhibit A Financial Statements as of August 31,1946 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Balance Sheet-August 31, 1946 ASSETS GOLD (Valued at $35 per fine troy ounce) Federal Reserve Bank of New York __ _ $9,395,758.64 Bank of England ______4,676,499.98 $14,072,258.62 DUE FROM BANKS Member Currency­ United States: Federal Reserve Bank of New YorL______$224,730,887.11 American Security and Trust Co., Washington, D. C.__ 39,068.21 $224,769,955.32 Member Currency- Other than United States-Note A 2,960,000.00 227,729,955.32 CALLS ON SUBSCRIPTIONS TO CAPI­ TAL STOCK-Note B 2% Call: Payment in process ______$ 1,989,616.30 Pending requests for deferment ______2,458,500.00 Payments Deferred until June 25, 195L______5,165,000.00 $9,613,116.30 3% Call: 133,740,000.00 143,353,116.30 MISCELLANEOUS ASSETS 2,183.40 TOTAL ASSETS $385,157,513.64 LIABILITIES AND CAPITAL LIABILITIES Accounts payable and accrued expenses $73,948.35 Reserve for estimated liability for income tax on salaries 15,728.42 DE'ferred credits-advance payments on stock subscrip­ tion 1,850,000.00 -.ll,939~ TOTAL LIABILITIES CAPITAL Capital Stock $100,000 par value Authorized 100,000 shares Unsubscribed 23,300 shares Subscribed _ _ $7,670,000,000.00 Less: Subscriptions not Called ______~------7,286,500,000.00 $383,500,000.00 Deduct: Deficit (Exhibit B) __2~_2,163-.:!~ $383,217,836.87 TOTAL LIABILITIES AND CAPITAL $385,157,513.64

Note A-Converted to U. S. dollars at rates of exchange in effect » at date of deposit. Note B-As of June 25, 1946, 2% and 3% capital stock subscrip­ tion calls were made, payable on or befor~ August 24, 1946 and November 25, 1946, respecti:vely. 51 FmST ANNUAL REPORT

Appendix "G", (Cont.) Exhibit B

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

Deficit-August 31, 1946

DEFICIT JUNE 30, 1946 Operating Expenses from the beginning of operations of the Bank (including expenses of the inaugural meeting of the Board of Governors in Savannah, Ga.) $125,158.36 Add: OPERATING EXPENSES FOR THE PERIOD FROM JULY 1 TO AUGUST 31, 1946 Salaries: Executive Directors and Alternates ______$ 42,447.72 Officers ______15,647.99 Others ______25,229.97 $83,325.68 Expense Allowance- Executive Directors and Alternates 2,006.46 Provision for Income Taxes on Salaries 12,420.36 Transportation and Moving to Seat of Bank 1,388.52 Travel: Executive Directors and Alternates ______$ 70.23 Others ______1,103.29 1,173.52 Rental of Office Quarters 7,546.11 Furniture and Equipment 37,175.61 Stationery, Printing and Supplies 4,577.05 Telephone and Telegraph 285.38 Cable Charges 3,412.89 Handling, Shipping and Storage of Gold 52.10 Books and Periodicals 241.11 Rental of Equipment 36.50 Repairs, Maintenance and Alterations: Rented Quarters ______$ 3,257.36 Furniture and Equipment___ _ 45.50 3,302.86 Miscellaneous 60.62 157,004.77 DEFICIT, AUGUST 31, 1946 $282,163.13

52 I'IRST ANNUAL REPORT Appendix "G", (Cont.) Exhibit C INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Statement of Receipts and Disbursements From July 1,1946 to August 31, 1946

I F{TNDS DERIVED FROM 2% CALL ON STOCK SUBSCRIPTIONS BALANCE JULY 1, 1946 $63,886,919.33 RECEIPTS Payments on call $79,837,383.70 Deduct: DISBURSEMENTS Operating Expenses: (Exhibit B) ______$ 157,004.77 Deduct: Expenses Unpaid as of Aug. 31, 1946 ______--,7=-05--,-",,043.44 $ 81,961.33 Payment of Expenses Unpaid at June 30, 1946 48,427.76 Miscellaneous Advances 1,700.00 132,089.09 79,705,294.61 BALANCE AUGUST 31, 1946 $I43)92,213.94 REPRESENTED BY: GOLD: Federal Reserve Bank of New York ______$ 9,395,758.64 Bank of England______4,676,499.98 $14,072,258.62 MEMBER CURRENCY­ UNITED STATES Federal Reserve Bank of New York Account B ______$129,480,887.11 American Security and Trust Co., Wash., D. C.___ 39,068.21 129,519,955.32 Total $143,592,213.94 II FUNDS DERIVED FROM 3% CALL AND ADVANCE PAYMENT ON 5% CALL ON STOCK SUBSCRIPTIONS BALANCE JULY 1, 1946 $95,250,000.00 RECEIPTS Payments on 3% call $1,110,000.00 Advance payment on 5% call 1,850,000.00 2,960,000.00 BALANCE AUGUST 31, 1946 $98,210,000.00 REPRESENTED BY: Federal Reserve Bank of New York Account A $ 95,250.000.00 Currency Depositories of Members other than United States 2.960,000.00 $ 98,210,000.00 III COMBINED FUNDS BALANCE JULY 1, 1946 $159,136,919.33 RECEIPTS Payments on 2% call on Stock SUbscriptions $79,837,383.70 Payments on 3% call on Stock Subscriptions 1,110,000.00 Advance payments on 5% call on Stock Subscriptions 1,850,000.00 82,797,383.70 $241,934.303.03 DISBURSEMENTS (From Item I above) 132.089.09 BALANCE AUGUST 31, 1946 $241,802,213.94 53 FIRST ANNUAL REPORT

INTERNATIONAL BANK FOR REI STATEMENT OF CAPlTA CALLS ON SUBSCRIPTIONS 1/ SUBSCRIBED------­ AMOUNT • 1/100 of 1% Balance of 2% 3% Tot: Belgium ------______$225,000.000. $ 22,500. $ 4,477.500. $ 9,750,000. $ 1l,250,0( Bolivia ------______7,000,000. 700. 139,300. 210,000. 350,0! Brazil ------______105,000,000. 10,500. 2,089,500. 3,150,000. 5,250,0! Canada ------______325,000,000. 32,500. 6,467,500. 9,750,000. 16,250,0( Chile ------______35,000,000. 3,500. 696,500. 1.050,000. 1,750,0( China ______600,000,000. 60,000. 11,940,000. 18,000,000. 30,000,0( Costa Rica --______2,000,000. 200. 39,800. 60,000. 100,0( Cuba ------______35,000,000. 3,500. 696,500. 1.050,000. 1,750,0( Czechoslovakia ______125,000,000. 12,500. 2,487,500. 3,750,000. 6,250,0( Denmark ______68,000,000. 6,800. 1,353,200. 2,040,000. 3,400,0( Dominican Republic ______2,000,000. 200. 39,800. 60,000. 100,0( Ecuador ______3,200,000. 320. 63,680. 96,000. 160,0( F~ypt ------______-40,000,000. 4,000. 796,000. 1,200,000. 2,000,01 El Salvador ______1,000,000. 100. 19,900. 30,000. 50,0( Ethiopia ______3,000,000. 300. 59,700. 90,000. 150,01 France ------______450,000,000. 45,000. 8,955,000. 13,500,000. 22,500,01 Greece ------______25,000,000. 2,500. 497,500. 750,000. 1,250,01 Gua temala ______2,000,000. 200. 39,800. 60,000. 100,01 Honduras ______1,000,000. 100. 19,900. 30,000. 50,01 Iceland ------______1,000,000. 100. 19,900. 30,000. 50,01 India ______400,000,000. 40,000. 7,960,000. 12,000,000. 20,000,01 Iran ______24,000,000. 2,400. 477,600. 720,000. 1,200,01 Iraq ______6,000,000. 600. 119,400. 180,000. 300,01 Luxembourg ______10,000,000. 1,000. 199,000. 300,000. 500,01 Mexico ------______65,000,000. 6,500. 1,293,500. 1,950,000. 3,250,0 Nether lands ______275,000,000. 27,500. 5,472,500. 8,250,000. 13,750,01 Nicaragua -______800,000. 80. 15,920. 24,000. 40,01 Norway ------______50,000,000. 5,000. 995,000. 1,500,000. 2,500,01 Panama ______200,000. 20. 3,980. 6,000. 10,01 Paraguay ______800,000. 80. 15,920. 24,000. ,(0,01 Peru ______17,500,000. 1,750. 348,250. 525,000. 875,01 Philippine Republic __ 15,000,000. 1,500. 298,500. 450,000. 750,01 Poland ______125,000,000. 12,500. 2,487,500. 3,750,000. 6,250,01 Union of S. Africa___lOO,OOO,OOO. 10,000. 1,990,000. 3,000,000. 5,000,01 United Kingdom ____ 1,300,000,000. 130,000. 25,870,000. 39,000,000. 65,000,01 United States ______3,175,000,000. 317,500. 63,182,500. 95,250,000. 158,750,01 Uruguay ______10,500,000. 1,050. 208,950. 315,000. 525,01 Yugoslavia ______40,000,000. 4,000. 796,000. 1.200,000. 2,000,01 $7,670,000,000. $767,000. $152,633,000. $230,100,000. $383,500,01 1/ 2% of the subscriptions to the capital stock of the Bank was payable in gold or United States dollars, 1/100 of 1 % of the subscription being payable at the time the Agreement was signed and the balance being payable on or before August 24, 1946. 3% of such subscriptions payable in the currencies of the respective members of the Bank was called, as of June 25, 1946, for payment on or before November 25, 1946. 2/ Balances of the 2% on subscriptions were paid in gold by Belgium. Chile, Ethiopia, Luxembourg, Mexico, Netherlands, Nicaragua and Poland. 54 Appendix "G", (Cont.) Exhihit D

UNPAID BALANCES ON CALLS ~ 2% Call Deferments 3/ Other 4/ 3% Call 11 TOTAL W~j;jl. $ ______$ ______$ 6,750,000. $ 6,750,000. 40,000. ______210,000. 210,000. ______3,150,000. 3,150,000. ______9,750,000. 9,750,000. ------. ------.-- 3,000,000. ------18,POO,000. 21,000,000. 00,000. ------00,000. ------1,050,000. 1,050,000. 12,500. 625,000. 1,862,500. 3,750,000. 6,237,500. WIIIII. 340,000. ---_.------2,040,000. 2,380,000. 40,000. ------.--._------60,000. 60,000. 54,000. ------96,000. 96,000. 00,000. ------.------1,200,000. 1,200,000. 20,000. ------30,000. 30,000. 60,000. ------90,000. 90,000. WIIIII. ------13,500,000. 13,500,000. 75,000. 125,000. ----.------750,000. 875,000. 40,000. ------60,000. 60,000. 20,000. ------30,000. 30,000. 20,000. ------30,000. 30,000. l!l!JIIIII. ------.------12,000,000. 12,000,000. 80,000. ------_. __ . __ ._--- 720,000. 720,000. 20,000. ------. ------180,000. 180,000. 00,000. ------300,000. 300,000. " " I. ------.----- 1,950,000. 1,950,000. " I. ---.------8,250,000. 8,250,000. 16,000." ------24,000. 24,000. 50,000. 250,000. ------1,500,000. 1,750,000. 4,000. ------6,000. 6,000. 16,000. ------24,000. 24,000. 50,000. ------525,000. 525,000. 00,000. --_._------450,000. 450,000. l1d(IItlI. 625,000. ------3,750,000. 4,375,000. 10,383.70 ------1,989,616.30 3,000,000. 4,989,616.30 ------39,000,000. 39,000,000. ------10,000. ------315,000. 315,000. 4,000. 200,000. 596,000. 1,200,000. 1,996,000. 1 $5,165,000. $4,448,116.30 $133,740,000. $143,353,116.30 11:1:111 1 leferments of % of 1 % of sUbscriptions granted pursuant to Art. II, Sec. :a)(i). zechoslovakia and Yugoslavia have requested deferment of the balance of ~% of their subscriptions pursuant to Art. II, Sec. 8(a)(ii). These requests :e still under consideration. The Union of South Africa is reported to have lipped gold on August 24, 1946, in payment of balance.

55 COMMITTEE REPORTS ADOPTED BY THE BOARD OF GO~ ERNORS FIRST REPORT OF THE PROCEDURES COMMITTEE (JOINT) Chairman: United States Vice Chairman: United Kingdom Reporting Member: Egypt-Ahmed Zaki Bey Saad Members: Belgium, Brazil, Canada, China, France, India, Mexico, Netherlands, and Poland. The Procedures Committee had its first meeting at 10:00 a.m., September 28, with Mr. John W. Snyder as Chairman. 1. Agenda The Procedures Committee had before it a letter from the President of the Bank proposing a revised agenda, and a request from Denmark which was to be placed on the agenda. Mter consideration, the Procedures Committee recommends the fol­ lowing agenda for the First Annual Meeting of the Board of Governors: 1. Organization of Meeting 2. First Annual Report of the Executive Directors (including the fi~ancial statements) 3. Rules of Procedure of the Executive Directors 4. Proposed amendments to the By-Laws 5. Selection of Advisory Council 6. Voting by Denmark 7. Applications for membership-Syria, Lebanon, Italy and Turkey 8. Increases in capital subscriptions 9. Election of Officers and place of next Annual Meeting. 2. Number and Terms of Reference of Committees 'To consider the items on the agenda and to make reports to the Board of Governors, the Procedures Committee recommends that the Board of Governors establish the following committees: A. Rules and Regulations Committee To consider and report on the: (i) Report of the Executive Directors recommending certain amendments to the By-Laws of the Bank, which is a matter for action by the Board of Governors. (ii) Rules of Procedure for Meetings of the Executive Di-

56 FIRST REPORT OF THE PROCEDURES COMMITTEE

rectors, which are subject to review by the Boaru of Governors. (ill) The request of Denmark to be allowed to cast its votes for one of the present Executive Directors of the Bank. B. Committee on Subscription Revisions To consider and report on the Report of the Executive Di­ rectors with regard to increases in subscriptions to the capital of the Bank, if such are made. C. Committee on Membership To consider the report of the Executive Directors with regard to the applications of Syria, Lebanon, Italy and Turkey for membership in the Bank and to make recommendations to the Board of Governors for action concerning thel!e applications. D. Financial Committee To consider and report on the Financial Statements which are annexed as Appendices "F" and "G" to the First Annual Report of the Executive Directors. E. Advisory Council Committee To consider and report on the Report of the Executive Di· rectors with regard to the selection of the Advisory Council.

3. Composition 01 Committees The Procedures Committee recommends that the composition of these Committees should be as follows: (a) Committee on Rules and Regulations

Chairman Canada Vice Chairman Ethiopia Reporting Member Luxembourg Members Belgium Chile China Czechoslovakia Denmark France India Panama Philippine Republic Union of South Africa United Kingdom United States

57 FIRST REPORT OF THE PROCEDURES COMMITTEE

The composition of the Committee on Rules and Regulations for the Bank differs from that for the Fund in that Colombia, which is on the Fund Committee, is not a member of the Bank; and Mexico appears in the Fund COITlmittee for discussion of its resolution on silver. (b) Committee on Subscription Revisions Chairman Cuba Vice Chairman Poland Reporting Member Canada Members Brazil China Ecuador France Iceland India Mexico Norway Paraguay Union of South Africa United Kingdom United States Uruguay (c) Committee on Membership Chairman Bolivia Vice Chairman Iran Reporting Member Guatemala Members China Costa Rica Dominican Republic Egypt El Salvador France Greece Honduras India Iraq Netherlands Peru United Kingdom United States Yugoslavia

58 FIRST REPORT OF THE PROCEDURES CO~rrTEE

(d) Financial Committee Chairman Czechoslovakia Vice Chairman Iraq Reporting Member Chile Members Brazil China Cuba France India Nicaragua Norway Philippine Republic Poland United Kingdom United States Yugoslavia (e) Committee on Advisory Council Chairman Denmark Vice Chairman Peru Reporting Member Netherlands Members Belgium China Dominican Republic France Greece Guatemala Iceland India Iran Nicaragua United Kingdom United States 4. Resolutions Concerning First Annual Meeting The Resolutions recommended by the Procedures Committee appear on pages 74-75 and are numbered I to V. The Procedures Committee considered that the observers should be allowed to sit at all meetings of the Board of Govern­ ors, except Committee Meetings. In accordance with previous practice, the Procedures Com­ mittee recommends that Governors, Alternates and Advisers may

59 FIRST REPORT OF THE PROCEDURES COMMITTEE attend any Committee whose proceedings they wish to observe, with the exception of the Procedures Committee. The Report was adopted by the Board of Governors, First Annual Meeting, Second Session (Joint), September 28, 1946. The Committee on Procedures submitted its Second Report to the Board of Governors, First Annual Meeting, Fifth Session (Joint), October 3, 1946, comprising recommendation of Resolu­ tions Nos. XN, XV and XVI (which appear on pages 87-88) and the invitation to Liberia (included in Resolution No. N).

60 REPORT OF THE RULES AND REGULATIONS COMMITTEE Chairman: Canada Vic,3 Chairman: Ethiopia Reporting Member: Luxembourg-Pierre Dupong Members: Belgium, Chile. China, Czechoslovakia, Denmark, France, India, Panama, Philippine Republic, Union of South Africa, United Kingdom and United States. The Rules and Regulations Committee met at 3:00 p.m. on Wednesday, October 2, 1946, with Mr. Graham F. Towers as Chairman. I. Amendments to the By-Laws The Committee on Rules and Regulations recommends to the Board of Governors that it amend the By-Laws of the Bank as follows: A. That Sections 3, 4, 5 and 6 of the By-Laws of the Bank be amended to read as follows: Section 3. Meetings of the Board of Covemors ( a) The annual meeting of the Board of Governors shall be held at such time and place as the Board of Governors shall de­ termine; provided, however, that, if the Executive Directors shall, because of special circumstances, deem it necessary to do so, the Executive Directors may change the time and place of such annual meeting. (b) Special meetings of the Board of Governors may be called at any time by the Board of Governors or the Executive Directors and shall be called upon the request of five members of the Bank or of members of the Bank having in the aggregate one-fourth of the total voting power. Whenever any member of the Bank shall request the Executive Directors to call a special meeting of the Board of Governors, the President shall notify all members of the Bank of such request and of the reasons which shall have been given therefor. ( c) A quorum for any meeting of the Board of Governors shall be a majority of the Governors. exercising not less than two­ thirds of the total voting power. Any meeting of the Board of G.:-vernors at which a quorum shall not be present may be ad-

61 REPORT OF THE RULES AND REGULATIONS COMMITTEE journed from time to time by a majority of the Governors present and notice of the adjourned meeting need not be given.

Section 4. Notice of Meetings of the Board of Governors. The President shall cause notice of the time and place of each meeting of the Board of Governors to be given to each member of the BapJr by telegram or cable which shall be dispatched not less than 42 days prior to the date set for such meeting, except that in urgent cases such notice shall be sufficient if dispatched by telegram or cable not less than 10 days prior to the date set for such meeting.

Sect'ion 5. Attendance of Executive Directors and Observers at Meetings of the Board of Governors. ( a) The Executive Directors and their Alternates may attend all meetings of the Board of Governors and may participate in such meetings, but an Executive Director or his Alternate shall not be entitled to vote at any such meeting unless he shall be entitled to vote as a Governor or an Alternate or a Temporary Alternate of a Governor. (b) The Chairman of the Board of Governors, in consulta­ tion with the Executive Directors, may invite observers to attend any meeting of the Board of Governors.

Section 6. Agenda of Meetings of the Board of Governors. ( a) Under the direction of the Executive Directors, the President shall prepare a brief agenda for each meeting of the Board of Governors and shall cause such agenda to be transmitted to each member of the Bank with the notice of such meeting. (b) Additional subjects may b0 placed on the agenda for any meeting of the Board of Governors by any Governor provided that he shall give notice thereof to the President not less than seven days prior to the date set for such meeting. In special circumstances the President by direction of the Executive Dir­ ectors may at any time place additional subjects on the agenda for any meeting of the Board of Governors. The President shall cause notice of the addition of any subjects to the agenda for any meeting of the Board of Governors to be given as promptly as possible to each member of the Bank. ( c) The Board of Governors may at any time authorize any subject to be placed on the agenda for any meeting of such Board

62 REPORT OF THE RULES AND REGULATIONS COMMITTD ev~n though the notice required by this Section shall not have been given. ( d) Except as otherwise specifically directed by the Board of Governors, the Chairman of the Board of Governors jointly with the President shall have charge of all arrangements for the holding of meetings of the Board of Governors. B. That there be added to the By-Laws of the Bank a new Sec­ tion 23 to read as follows: Section 23. Amendment to By-Laws These By-Laws may be amended by the Board of Governors at any meeting thereof or by vote without a meeting as provided in Section 13.

The By-Laws of the Bank, (1$ amended, appear on page. 101-108. n. Rule. 01 Procedure For Meetin!. 01 the E:cecutive Director. The Committee reviewed the Rules of Procedure for Meetings of the Executive Directors as submitted by the Executive Dir­ ~tors to the Board of Governors. The Committee recommends to the Board of Governors that it notify the Lxecutive Directors that it has reviewed the Rules of Procedure for Meetings of the Executive Directors and has no changes to suggest. The Rules of Procedure for Meetings of the Executive DI­ rectors appear on pages 109-112. III. The Request 01 Denmark to Ca.t the Vote. of the Danish Governor in Favor 01 One 01 the E:cecutive Directors Elected at the Inaugural Meeting The Committee recommends to the Board of Governors that it adopt the following resolution: The Board of Governors hereby resolves that, as the request of Denmark that arrangements be made by which the Danish Governor may cas! the Danish votes in favor of one of the Directors elected at the Inaugural Meeting raises questions of interpretation of the Articles of Agreement and of Resolution 10 of the Board of Gov­ ernors as adopted at the Inaugural Meeting, the request be referred to the Executive Board of the Bank. The Report was adopted by the Board of Governors, First Annual Meeting, Fourth Session, October 3, 1946. 63 REPORT OF THE COMMITTEE ON MEMBERSHIP Chairman: Bolivia Vice Chairman: Iran Reporting Member: Guatemala-Manuel Noreiga Morales Members: China, Costa Rica, Dominican Repub­ lic, Egypt, El Salvador, France, Greece, Honduras, India, I r a q, Netherlands, Peru, United Kingdom, United States and Yugoslavia. I have the honor of reporting to the Board of Governors on the work and conclusions of the Committee on Membership set up by the Board of Governors at their plenary session of Septem­ ber 28, 1946. The Committee, under the chairmanship of the Honorable Rene Ballivian Calderon, Governor for Bolivia, con­ cluded its deliberations in one meeting held at 10:00 a.m. on October 3, 1946. The Committee considered the applications for admission to membership in the Bank received from the Governments of Syria, Lebanon, Italy and Turkey, together with the Report of the Executive Directors containing their recommendations and the draft resolutions attached thereto, submitted by the President to the Board of Governors. The draft resolutions relating to the terms and condition!! on which Syria, Lebanon and Turkey shall be admitted to mem­ bership in the Bank were approved unanimously by the Com­ mittee, with the minor change, at the suggestion of the Chairman, of substituting the words "as of the date ... shall have complied with" for the original words "upon compliance with" in paragraph 5, :md the insertion of the date "April 15" in paragraph 6 as the limit of the period in which the applicant countries may accept membership. As to the draft resolution relating to the terms and conditions on which Italy shall be admitted to membership, the Governor for Yugoslavia expressed his opposition to Italy's admission at the present time on the same grounds as were stated by him at the Membership Committee meeting of the Fund. The Governors for the United Kingdom and the United States requested that the statements made by them at the Fund Membership Committee meeting be held to apply also to the ad­ mission of Italy to the Bank.

64 REPORT OF THE COMMITTEE ON MEMBERSHIP

These statements, made applicable to the Bank, are as follow8: Statement by the Representative of Yugoslavia: My action and vote as against the actual aeceptane« of Italy in the Bank is not directed against the Italian people with whom we are trying to establish, and are succeeding in establishing, relations of friendship and brotherhood. My stand is the consequence of a point of principle, that is, a decision was Hot made that a former enemy country can be accepted in the Bank before she has signed a peace treaty. By the acceptance of such a country, an abnormal situation is created whereby that country, with equal right as any other member, is en­ titled to make decisions in the Bank regarding former victims of her aggression to whlCh she has not yet re­ turned the requisitioned monetary gold and with which she has not settled the question of reparations for the damage done by her. I reserve my right to express my position on the decision at a later time. Statement by the Representative of the United States: Mr. Chairman, there is certainly something to be said in support of the general principles that an ex-enemy country, not yet having signed a peace treaty, is thereby ineligible for admittance to the Bretton Woods institu­ tions. My Government would certainly not wish any action that may be taken with respect to Italy to be used as an automatic precedent in actien regarding the appli­ cations of other ex-enemy countries. I think, Mr. Chairman, that a careful examination of . the particular circumstances with respect to Italy would convince us all that the technical objection which has . been made to the admittance of Italy should be waived in favor of the practical advantages and benefits which, I think, would be derived by all of us in the admittance of Italy to the International Bank for Reconstruction and Development. I will not attempt, Mr. Chairman, to repeat the argu­ ments in favor of Italian admitt:mce to the Bank which I made at the meeting of the Membership Committee, and which arguments are given in the Report of the

85 REPORT OF THE COMMITTEE ON MEMBERSHIP

Committee which has been read to the Board of Gov­ ernors. I would like to point out, however, Mr. Chairman, that I have been advised on competent authority that there is nothing in international law which would pre­ vent the admittance of Italy to the Bank. In view of the fact that Italy was, in October, 1943, given the status of a co-belligerent in the war against Germany and the Axis, and in view of the very valuable contributions which Italy has made in the war against the Axis, and the further fact that she has been recog­ nized diplomatically by all but two of the Allied Govern­ ments, my Government hopes very much that the appli­ cation by Italy will be acted upon favorably at this meet­ ing. Statement by the Representative of the United Kingdom: Mr. Chairman, I would like to state just a few word5 supporting the action taken by the representative of the United States. I think in this matter we here should be guided b) our considerations of the objectives and interests of the Bank itself. I think Mr. Clayton, while making clear that there was no objection in international law, opened the way for us to take the interests of the Bank into consider­ ation, and I support the conclusions at which he arrived The Committee decided to recommend to the Board of Gov ernors to adopt the draft resolution on the acceptance of Italy tc membership in the International Bank for Reconstruction and Development, with the same minor change in paragraph 5 and the insertion of the date in paragraph 6 as were made in the draft resolutions for Syria, Lebanon, and Turkey. I have the honor in the name at the Committee on Member­ ship to recommend to the Board ~f~'Covernors the adoption of the appended draft resolutions relating to the terms and conditions on which Syria, Lebanon, Italy and Turkey shall be admitted to membership in the Bank. Resolutions VII to X, as adopted, appear on pages 75-85. The Report was adopted by the Board of Governors, Fir8f Annual Meeting, Fourth Session, October 3, 1946.

66 REPORT OF THE FINANCIAL COMMITTEE Chairman: Czechoslovakia Vice Chairman: Iraq Reporting Member: Chile-Luis Davila Members: Brazil, China, Cuba, France, India, Nicaragua, Norway, Philippine Re- public, Poland, United Kingdom, United States and Yugoslavia. The Financial Committee met at 12:00 noon on Tuesday, October 1, 1946, with Dr. Alois Kral as Chairman. Financial Statement The Committee had before it, and gave consideration to, an Audit Report prepared by Price, Waterhouse and Company as of June 30, 1946, together with Financial Statements prepared by the Bank as of August 31, 1946. The Financial Committee recommends that the Board of Governors adopt the following resolution: RESOLVED: THAT the Board of Governors consider the Financial Statements included as Appendix "F" of the Annual Report of the Executive Directors as fulfilling the requirements of Article V, Section 13 of the Articles of Agreement and of Section 19 of the By-Laws relating to annual audit and the submission of financial statements based thereon. In submitting the foregoing resolution, the Financial Com­ mittee wishes to record its approbation of the economical and efficient use of the Bank's resources as evidenced in the Financial Statements. The Report was adopted by the Board of Governors, Firrl Annual Meeting, Fourth Session, October 8, 1946.

87 REPORT OF THE SUBSCRIPTION REVISIONS COMMITTEE Chairman: Cuba Vice Chairman: Poland Reporting Member: Canada-Graham F. Towers Members: Brazil, China, Ecuador, France, Ice­ land, India, ~fexico, Norway, Para- guay, Union of South Africa, United Kingdom, United States and Uruguay. The Subscription Revisions Committee met at 4:30 p.m. on Tuesday, October 1, 1946, with Dr. Joaquin Meyer as Chairman. I have the honor of reporting to the Board of Governors of the Bank on the work and conclusions of the Committee on Su bscrip­ tion Revisions which met under the chairmanship of Dr. Joaquin Meyer, to consider proposed increaSC1> in the respective subscrip­ tions of France and Paraguay to the capital of the Bank. The Chairman called attention of the Committee to the re­ commendations of the Executive Dir~ctors of the Bank submitted by the President of the Bank to the Board of Governors on Sep­ tember 27,1946 concerning the proposed increases in the respec­ tive subscriptions of the above-mentioned countries to the capital of the Bank. The Chairman announced that the Quota Revisions Com­ mittee of the Fund had recommended an increase in France's quota in the Fund from $450,000,000 to $525,000,000 and an in­ crease in the quota of Paraguay from $2,000,000 to $3,500,000. That Committee noted that France had applied for a proportion­ ate increase in its subscription to the capital of the Bank and recommended that the increase in the quota of Paraguay become effective upon application by Paraguay for an additional sub­ scription to the capital of the Bank proportionate to its proposed increase in the quota ~f the Fund. It was also pointed out by the Chairman that no request for an increase in the subscription of Paraguay to the capital of the Bank had been received from that country, although it is expected that such a request will be received in the near future. After discussion, it was unanimously agreed that the report of the Executive Directors be approved. Accordingly, the Committee recommends to the Board of Governors the adoption of the .following resolution with respect to the proposed increase in the subscription of France to the capi­ tal of the Bank:

68 REPORT OF THE SUBSCRIPTION REVISIONS COMMITTEE

The Resolution on the subscription increase of France appears on pages 85-86.

The Committee also recommends to the Board the adoption of the following resolution with rpspect to the proposed increase in the subscription of Paraguay to the capital of the Bank: The Resolution on the subscription increase of Paraguay appears on pages 86-87. The Report was adopted by the Board of Governors, First Annual Meeting, Fourth Session, October 3, 1946. REPORT OF THE COMMITTEE ON ADVISORY COUNCIL Chairman: Denmark Vice Chairman: Peru Reporting Member: Netherlands-A. M. de Jong Members: Belgium, China, Dominican Republic, France, Greece, Guatemala, Iceland, India, Iran, Nicaragua, United King­ dom and United States. I have the honor of reporting.to the Board of Governors on the work and conclusions of the Committee on Advisory Council. The Committee, under the chairmanship of Mr. Carl Valdemar Bramsnaes representing Denmark, has concluded its deliberations in a meeting held the afternoon of October 2, 1946. The Committee considered the problems and procedures incident to the establishment of the Advisory Council provided for in Section 6 of Article V of the Articles of Agreement. That Section provides as follows: (a) There shall be an Advisory Council of not less than seven persons selected by the Board of Governors in­ cluding representatives of banking, commercial, indus­ trial, labor, and agricultural interests, and with as wide a national representation as possible In those fields where specialized international organizations exist, the mem­ bers of the Council representative of those fields shall be selected in agreement with such organizations. The Council shall advise the Bank on matters of general policy. The Council shall meet annually and on such other occasions as the Bank may request. (b) Councillors shall serve for two years and may be reappointed. They shall be paid their reasonable ex­ penses incurred on behalf of the Bank. At the Inaugural Meeting of ~he Board of Governors at Savannah, the Board by Resolution No.5 requested the Executive Directors to examine the problems relating to the selection of the Advisory Council and to make recommendations to the Board for its consideration at this meeting. TIle Committee had the benefit of the Report of the Execu­ tive Directors on this subject. This report contains the following recommendations: 1. That the total number of members be nine, of whom five

70 REPORT OF THE COMMITTEE ON ADVISORY COUNCIL

"i10uld be representatives of each of the following interests: banking, commercial, industrial, labor and agricultural. The other four members should be ( a) The Chairman who should be a personality of general eminence; (b) a scientist with specialized knowledge in the field of engineering; and ( c) two members not representing any particular field of interest, one of whom may~be an economist. Such a composition would give the Council a proper balance enabling it to advise the Bank on matters of general policy. 2. That the Board of Governors should select the members 1.n the following way: ( a ) One member to represent banking interests, from a panel of names compiled by the Executive Directors in consultation with the International Monetary Fund. (b) One member to represent commercial interests, from a panel of names obtained f:om the International Trade Organization (if the I.T.O should not yet be consti­ tuted, from a panel compiled by the Executive Directors after consultation with the International Chamber of Commerce). (c) One member to represent industrial interests, from a panel of names compiled by the Executive Directors. ( d) One member to represent labor interests, from a panel of names obtained from the International Labor Organ· ization and the World Federation of Trade Unions. e) One member to represent agricultural interests, from a panel of names obtained from the Food and Agriculture Organization. The Articles prescribe that in those fields where specialized international organizations exist, th~ mem­ bers of the Council representative of those fields shall be selected in agreement with such organizations. It is therefore recommended that if none of the names initially obtained from any such international organi­ zation commends itself to the Executive Directors, the latter shall ask such organization to submit further names.

°Or: the recommendation of the Committee, the word "may" was changeC! to "shall".

71 REPORT OF THE COMMITTEE ON ADVISORY COUNCIL

(f) The chairman, the representative of scientific interests, and the two general members to be selected on the basis of recommendations submitted by the Executive Directors. 3. In order to satisfy the requirement of Article V, Section 6 (a) of the Articles of Agreement, that the Council have "as wide a national representation as possible", that the inter­ national organizations be asked to submit panels of names of persons from different countries. The same should apply to any panels of names submitted by the Executive Directors to the Board of Governors. 4. That the rules and regulations of the Advisory Council prescribe that all meetings of the Council be attended by the President of the Bank or his designee. 5. That the assistance of the President, the Vice-President and technical staff· of the International Bank for Reconstruction and Development be made available to the Advisory Council when required. 6. In order to establish a working liaison between the Council and the Bank, that the Secretary of the Bank provide the secretariat for the Council. 7. That the Council hold its annual meeting at least three months before the annual meeting of the Board of Governors, in order to enable the Bank to incorporate in its annual report to the Board of Governors the advice tendered by the Council together with a report of such action as has been taken thereon by the Executive Directors. The Committee recommends to the Board of Governors the adoption of the above recommendations with only this modifica­ tion, that the word may in recommendation number 1 (c) be changed to shall, thus making it mandatory that one member of the Council be an economist. The Committee further recommends that the Executive Directors be requested to take the necessary steps for compiling. obtaining, and preparing the panels of names and recommenda­ tions as provided in their report, and to submit them to the Board of Governors in time for the next annual meeting of th~ Board.

72 REPORT OF THE COMMITTEE ON ADVISORY COUNCIL

It was the view of the Committee that the Executive Directors have performed a valuable service for the Board of Governors in preparing this excellent report. This concludes the report on the work of the Committee on Advisory Council. The Report was adopted by the Board of Governors, First Annual Meeting, Fourth Session, October 8, 1946.

73 RESOLUTIONS ADOPTED BY THE BOARD OF GOVERNORS AT THE FIRST A.~UAL MEETING I Resolution on Attendance at Meetings. RESOLVED: THAT the opening and closing meetings of the Board of Governors and the meeting at which the Annual Report of the Executive Directors of the Bank is presented shall be open to the Press and Public. Other meetings of the Board of Governors and its committees shall be closed. II Resolution on Information Concerning Meetings. RESOLVED: THAT the Chairman of the Board of Governors is authorized to communicate to the Press such information concerning the proceedings of the First Annual Meeting of the Board of Governors as the Chairman deems suitable.

III Resolution on Additions to Agenda. RESOLVED: THAT after the initial agenda for the First Annual Meeting of the Board of Governors has been adopted, addi­ tions to the agenda shall be submitted in writing to the Pro' cedures Committee at least 24 hours before the time of consideration by the Board of Governors.

IV Resolution on Invitations to Schedule A Countries. <) RESOLVED: THAT the Chairman is authorized to extend formal invitations to send observers to the First Annual Meeting of the Board of Governors of the International Bank for Recon­ struction and Development to the Governments of Australia, Colombia, Haiti, Liberia and Venezw'lla, who are signatories of the Bretton Woods Agreements and who have indicated that they are prepared to send ohservers.

"On August 27, 1946, the Chairman of the Board of Governors commun­ icated with the following Schedule A countries: Australia, Colombia, Haiti, Liberia, New Zealand, Union of Soviet Socialist Republics, and Vene­ zuela, suggesting that if the Governments of these countries wished to have observers in attendance at the First Annual Meeting of the Board of Gover­ nors, the Chairman would propose to the Board of Governors at its initial organizational session that invitations be extended. The wish to have observers in attendance was indicated by Australia, Colombia, Haiti, Liberia, and Venezuela. 74 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

V Resolution on Invitations to International Organization.. RESOLVED: THAT the Chairman is authorized to extend fonnal invitations to the Economic and Social Council of the United Nations, the Food and Agriculture Organization, the Pro­ visional International Civil Aviation Organization, the Inter­ national Labor Office, and the United Nations Relief and Rehabilitation Administration to have representatives present as observers at the First Annual Meeting of thE. Board of Governors of the International Bank for Reconstruction and Development. Resolutions I-V were adopted by the Board of Governors, First Annual Meeting, Second Sessio1l (Joint), September 28, 1946, with the exception of the Resolution on the invitation to Liberia which was adopted at the Fifth Session (Joint), October 3, 1946.

VI Resolution on Voting by Denmark RESOLVED: THAT as the request of Denmark that arrangements be made by which the Danish Governor may cast the Danish vote in favor of one of the Directors elected at the Inaugural Meeting raises questions of interpretation of the Articles of Agreement and of Resolution 10 of the Board of Governors as adopted at the Inaugural Meeting, the request be referred to the Executive Board of the Bank.

VII Resolution Relating to the Terms and Conditions on which Syria Shall Be Admittpd to Membership in the Bank WHEREAS, the Government of the Republic of Syria has applied for admission to membership in the Inter­ national Bank for Reconstruction and Development in accord­ ance with Section 1 (b) of Article II of the Articles of Agree­ ment 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 Syria, have made recommendations to the Board of Governors with regard to the number of shares of capital stock of the Bank to be subscribed by Syria and other conditions which,

75 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING in the opinion of the Executive Directors, the Board of Gov­ ernors may wish to prescribe; NOW, THEREFORE, the Board of Governors having considered the recommendations of the Executive Directors, hereby • RESOLVES: THAT the terms and conditions upon which the Gov­ ernment of the Republic of Syria shall be admitted to mem­ bership in the Bank shall be as follow~: 1. Definitions: As used in this resolution: ( a) The term "Syria" means the Government of of the Republic of Syria. (b) The term "Bank" means International Bank for Reconstruction and Development. ( 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 mem­ ber. (f) The term "member" means member of the Bank. 2. Membership in the Fund: Before accepting mem­ bership in the Bank, Syria shall accept member­ ship in and become a member of the International Monetary Fund. S. Subscription: By accepting membership in the Bank, Syria shall subscribe to 65 shares of the capital stock of the Bank at the par value of $100,000 per share. 4. Payments on Subscription: ( a) On the date on which Syria becomes a member, Syria shall pay to the Bank: ( i ) Gold or dollars equal to 2% of its sub­ scription, without any right to post­ pone payment of any part thereof un­ der Section 8 ( a) of Article II of the Articles; and

76 RESOLUTIONS ADOPTED AT THE FmST ANNUAL MEETING

(ii) An amount in the currency of Syria which, at the appropriate prevailing exchange rate, shall be the same per­ centage of its subscription as the per­ centage of the subscriptions of original members which has been called and which, pursuant to call, is required to be paid on or before the date on which . Syria becomes q member. (b) Syria shall agree al.m to comply fully with all other calls for payments on subscriptions which shall have been made or announced by the Bank as of the date it becomes a member of the Hank and which are payable after that date ( c) Syria shall further agree that if it tenders any part of the payment called for in (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 certifica­ tion or other evidence as to the origin of gold purchased by them.

5. Effective Date of Membership: Syria shall be­ come a member of the Bank, subject to the terms and conditions set fOt th In this resolution as of the date when Syria shall have complied with both of the following requirements: ( a) Syria shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Anicles 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 un· der the Articles and this resolution; and (b) Syria shall sign the original copy of the Articles held in the Archives of the Govern­ ment of the United States of America.

77 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

6. Limitation on Period for Acceptance of Member­ ship: Syria may accept membership in the Bank pur­ suant to this resolution. until April 15, 1947. VITI Resolution Relating to the Terms and ConditionlJ on which Lebanon Shall be A.dmitted to Membership in the B~nk WHEREAS, the Government of the Republic of Lebanon has applied for admission to membership in the International Bank for ReconstmctiOl1 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 Le­ banon, have made recommendations to the Board of Gov­ ernors with regard to the numbE:r of shares of capital stock of the Bank to be subscribed by Lebanon and other conditions which, in the opinion of the Executive Directors, the Board of Governors may wish to prescribe; NOW, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors, hereby RESOLVES: THAT the terms and conditions upon which the Gov­ ernment of the Republic of Lebanon shall be admitted to membership in the Bank shall be as follows: 1. Definitions: As used in this resolution: ( a) The term "Lebanon" means the Government of the Republic of Lebanon. (b) The term "Bank" means International Bank for Reconstruction :md Development. ( c) The tenn "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 mem­ ber.

78 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

(f) The term "member" means member of the Bank. 2. Membership in the Fund: Before accepting mem­ bership in the Bank, Lebanon shall accept mem­ bership in and become a member of the Inter­ national Monetary Fund. S. Subscription: By accepting membership in the Bank, Lebanon shall subscribe to 45 shares of the capital stock of the Bank at the par value of. $100,000 per share. 4. Payments on Subscription: (a) On the date on which Lebanon becomes a member, Lebanon shall pay to the Bank: (i) Gold or dollars equal to 2% of its sub­ scription, without any right to post­ pone payment of any part thereof un­ der Section 8 ( a) of Article II of the Articles; and (ii) An amouut in the currency of Lebanon which, at the appropriate prevailing . exchange rate, shall be the same per­ centage of its subscription as the per­ centage of the subscriptions of original members which has been called and which, pursuant to call, is required to be paid on or before the date on which Lebanon becomes a member. (b) Lebanon shall agree also to comply fully with all other calls for payments on sub­ scriptions which shall have been made or announced by the Bank as of the date it becomes a member of the Bank and which are payable after that date. ( c ) Lebanon shall further agree that if it tenders any part of the payment called for in (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 certifica­ tion or other evidence as to the origin of gold purchased by them.

79 USOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

5. Effective Date of Membership: Lebanon shall be­ come a member of the Bank, subject to the terms and conditions set f.:)rth in this resolution, as of the date when Lebanon shall have complied with both of the following requirements: (a) Lebanon shall deposit with the Govern­ ment 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 re­ solution; and (b) Lebanon shall sign the original copy of the Articles held in the Archives of the Govern­ ment of the United States of America. 6. Limitation on Period for Acceptance of Member­ ship: Lebanon may accept membership in the Bank pursuant to this resolution until April 15, 1947. IX Resolution Relating to the Terms and Conditions on which Italy Shall be Admitted to Membership in the Bank WHEREAS, the Government of the Republic of Italy has applied for admission tc mf'mbership in the Inter­ national Bank for Reconstruction and Development in accord­ ance with Section 1 (b) of Article II of the Articles of Agree­ ment 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 Italy. have made recommendations to the Board of Governors with regard to the number of shares of capital stock of the Bank to be subscribed by Italy and other conditions which, in the opinion of the Executive Directors, the Board of Governors may wish to prescribe; NOW, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors. hereby

80 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

RESOLVES: THAT the terms and conditions upon which the Gov­ ernment of the Republic of Italy shall be admitted to mem­ bership in the Bank shall be as follows: 1. Definitions: As used in this resolution: ( a) The term "Italy" means .the Government of the Republic of ltaly. (b) The term "Bank" means International Bank for ReconstrucUon and Development. ( 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 mem­ ber. (f) The term "member" means member of the Bank. 2. Membership in the Fund: Before accepting mem­ bership in the Bank, Italy shall accept mem­ bership in and become a member of the Inter­ national Monetary Fund. 3. Subscription: By accepting membership in the Bank, Italy shall subscribe to 1800 shares of the capital stock of the Bank at the par value of $100,000 per share. 4. Payments on Subscription: ( a) On the date on which Italy becomes a member, Italy shall pay f;p the Bank: (i) Gold or dollars equal to 2% of its sub­ scription, without any right to post­ pone payment of any part thereof un­ der Section 8 ( a) of Article II of the Articles; and (ii) An amount in the currency of Italy which, at the appropriate prevailing exchange rate, shall be the same per­ centage of its subscription as the per-

81 RESOLUTIONS ADOPTED AT THE FmST ANNUAL MEETING centage of the subscriptions of original members which has been called and which, pursuant to call, is required to be paid on or before the date on which Italy becomes a member. (b) Italy shall agree also to comply fully with all other calls for payments en sub­ scriptions which sh:111 have been made or announced by the Bank as of the date it becomes a member of the Bank and which are payable after that dab::. ( c) Italy shall further agree that if it tenders any part of the payment called for in (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 certifica­ tion or other evidence as to the origin of gold purchased by them. 5. Effective Date of Membership: Italy shall be­ come a member of the Bank, 'Subject to the terms and conditions set forth in this resolution, as of the date when Italy shall have complied with both of the following requirements: (a) Italy shall deposit with the Govern­ ment 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 re­ solution; and (b) Italy shall sign the original copy of the Articles held in the Archives of the Govern­ ment of the United States of America. 6. Limitation on Period for Acceptance of Member­ ship: Italy may accept membership in the Bank pursuant to this resolution until April 15, 1947.

82 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING Adopted by the Board of Governors, First Annual Meeting, Fourth Session (Joint), October 3, 1946, after the Represen­ tatives of Yugoslavia, the United States and the United Kingdom repeated the statements shown on pages 65-66. X Resolution Relating to the Terrm and Conditions on which Turkey Shall be A.dmitted to Membership in the Bank WHEREAS, the Government of the Republic of Turkey has applied for admission to membership in the Inter­ national Bank for Reconstruction and Development in accord­ ance with Section 1 (b) of Article II of the Articles of Agree­ ment 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 Turkey, have made recommendations to the Board of Governors with regard to the number of shares of capital stock of the Bank to be subscribed by Turkey and other conditions which, in the opinion of the Executive Directors, the Board of Governors may wish to prescribe; NOW, THEREFORE, the Board of Governors, having considered the recommendations of the Executive Directors, hereby RESOLVES: THAT the terms and conditions upon whieh the Government of the Republic of Turkey shall be admitted to membership in the Bank shall be as follows: 1. Definitions: As used in this resolution: ( a) The term "Turkey" means the Government of the Republic of Turkey. (b) The term "Bank" means International Bank for Reconstruction and Development. ( 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 BaTik subscribed to by a mem­ ber.

83 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING (f) The term "member" means member of the Banle 2. Membership in the Fund: Before accepting mem­ bership in the Bank, Turkey shall accept mem­ bership in and become ::t member of the Inter­ national Monetary Fund 3. Subscription: By accepting membership in the Bank, Turkey shall subsclJbe to 430 shares of the capital stock of the Bank at the par value of $100,000 per share. 4. Payments on Subscription: (a) On the date on which Turkey becomes a member, Turkey shall pay to the Bank: (i) Gold or dollars equal to 2% of its sub­ scription, without any right to post­ pone payment of any part thereof un der Section 8( a) of Article II of the Articles; and (ii) An amount in the currency of Turkey which, at the appropriate prevailing exchange rate, shall be the same per­ centage of its subscription as the per­ centage of the subscriptions of original members which has been called and which, pursuant t~ call, is required to be paid 011 or before the date on which Turkey becomes a member. (b) Turkey shall agree also to comply fully with all other calls for payments on sub­ scriptions which shall have been made or announced by the Bank as of the date it becomes a member of the Bank and which are payable after that date. ( c) Turkey shall further agree that if it tenders any part of the payment called for in (a) ( i) above in gold, the Bank shall have the right to reject any such geld which, in its opinion, may not be sold freely and unconditionally by the Bank to members requiring certifica·

84 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING tion or other evidence as to the origin of gold purchased by them. 5. Effective Date of Membership: Turkey shall be­ come a member of the Bank, subject to the terms and conditions set forth in this resolution, as of the date when Turkey shall have complied with both of the following requirements: ( a) Turkey shall deposit with the Govern­ ment 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 re­ solution; and (b) Turkey shall sign the original copy of the Articles held in the Archives of the Govern­ ment of the United States of America. 6. Limitation on Period for Acceptance of Member­ ship: Turkey may accept membership in the Bank pursuant to this resolution until April 15, 1947. XI Resolution on Financial Statements RESOLVED: THAT the Board of Governors consider the Financial Statements included as Appendix an application of the French Government for the revision of the subscription of France in the capital stock of the International Bank for Reconstruction and Development.

85 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

"This application is in connection with the one forwarded on September 6, 1946, by the French Government for the increase of the quota of France in the International Mon­ etary Fund, copy of which is attached hereto." "It is the intention of the French Government to share the entire responsibility it is faced wi!:..h as a member of the International Bank for Reconstruction and Development. "Consequently, the French Government agrees in ad­ vance to increase its subscription in the Bank to the same amount as will be retained foi.' the quota in the Fund. "Moreover, I am ready to furnish the Board of Governors of the International Bank with all data necessary to justify both requests of my Government. as mentioned above." WHEREAS, the Board of Governors is informed that the quota of France in the Intenlational Monetary Fund has been increased from $450,000,000 to $525,000,000, RESOLVED: THAT, pursuant to Article II, Section 3 (b) of the Articles of Agreement of the Bank, the Board of Governors hereby authorizes the acceptance by the Bank of the sub­ scription of France to 750 shares of the capital stock of the Bank at the subscription price of $100,000 per share, in addition to the 4,500 shares of said ,:;apital stock heretofore subscribed by France, upon the condition that, within 30 days after the date of the adoption of this resolution, France shall pay to the Bank, on account of !-he subscription price of each such additional share, two percent in gold or United States dollars, and that on or before November 25, 1946, France shall pay to the Bank in currency of France, as pro­ vided in Article II, Section 8 (b) of said Articles of Agree­ ment an additional eight perceut of the subscription price of such additional shares.

IDI Resolution on Increase in Capital Subscription of Paraguay RESOLVED: THAT, pursuant to Artic1e II, Section 3 (b) of the Articles of Agreement of the Bank, the Board of Governors hereby authorizes the acceptance bv the Bank of the sub-

"Not included.

86 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

scription of Paraguay to six shares of the capital stock of the Bank at the subscription price of $100,000 per share, in addi­ tion to the eight shares of said capital stock heretofore sub­ scribed by Paraguay, upon the condition that, within 30 days after the date on which such subscription shall be received by the Bank, Paraguay shall pay to the Bank, on account of the subscription price of each such additional share, two per­ cent in gold or United States dollars, and that Paraguay shall within such 30-day period pay to the· Bank in currency of Paraguay, as provided in Article II, Section 8 (b) of said Articles of Agreement, such additional amounts on account of such subscription price as shall have heen called for payment on the shares of the capital stock of the Bank heretofore sub­ scribed by Paraguay. Resolutions VI-XIII were adopted by the Board of Governors, First Annual Meeting, Fourth Session, October 3, 1946. XIV Resolution on Site of Second Annual Meeting RESOLVED: THAT, the Chairman shall convene the Second Annual Meeting of the Board of Governors of the International Bank for Reconstruction and Development in London, England, in the month of September, 1947. XV Resolution on Election of Officers af Board of Governor. RESOLVED: THAT, the Governor of the United Kingdom is hereby elected Chairman, and the Governors of China, France, India, and the United States are hereby elected Vice-Chair­ men 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 Reconstruction and Development takes place at the close of the next annual meeting. XVI Resolution on Establishment of Procedures Committee 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

87 RESOLUTIONS ADOPTED AT THE FIRST ANNUAL MEETING

Chairman, normally by correspondence, and also if occasion requires by convening immediately b9fore the annual meet­ ing of the Board. The Procedures Committee shall consist of the Governors of the following members: Belgium, Canada, Chile, China, Cuba, Czechoslovakia, France, India, Iran, Norway, United Kingdom and United States. The Chairman, Vice-Chairman and Reporting Member shall be the Governors of the United Kingdom, China, and Czechoslovakia, respectively. Resolutions XIV-XVI were adopted by the Board of Gov­ ernors, First Annual Meeting, Fifth Session (Joint), October 3,1946.

Reference hy Board of Governors to Executive Directors Regarding Selection of Advisory Council The Executive Directors are requested to take the necessary steps for compiling, obtaining, and pn:paring the panels of names and recommendations as provided in their report on the Selection of the Advisory Council, and to submit them to the Board of Governors in time for the next Annual Meeting of the Board. Approved by the Board of Governors, First Annual Meeting, Fifth Session (Joint), October 3, 1946.

88 RESOLUTIONS OF INAUGURAL MEETING OF BOARD OF GOVERNORS AT SAVANNAH, GA., MARCH 8·18,1946

Resolution No.1 ,ApPOINTMENT OF A TEMPORARY SECRETARyl Resolved: That, until a Secretary is appointed, Mr. John S. Hooker shall be Temporary Secretary of the International Bank for Re­ construction and Development. Resolution No.2 RELATING TO INTERIM ADMINISTRATIVE AmlANGEMENTSl Resolved: 1. The Temporary Secretary after consultation with the Executive Directors shall make all arrangements necessary for the first meeting of the Executive Directors. 2. The Temporary Secretary is authorized and directed to establish an account in the name of the International Bank for Reconstruction and Development in the Federal Reserve Bank of New York. 3. The Government of the United States of America is authorized and requested to transfer to the account to be estab­ lished in the Federal Reserve Bank of New York all funds now held or hereafter received under Article XI, Sc. 2 (d) of the Articles of Agreement. • 4. Until permanent procedures have been established by the Executive Directors, the Temporary Secretary is authorized to expend up to $200,000.00 to meet salaries and other adminis­ trative expenses of the Bank including transportation and other expenses of Governors and their alternates, Executive Directors and their alternates, and temporary employees of the Bank; expenditures for supplies, equipment and office space; reim­ bursement for salaries and necessary expenses of employees of member Governments loaned for work on behalf of the Bank; salaries of temporary employees of the Bank; and other necessary administrative expenditures. 5. The Temporary Secretary shall maintain a detailed account of all expenditures and shall present a full accounting to the Executive Directors for all funds which he has expended. lAdopted at the sixth session, March 16, 1946. 89 RESOLUTIONS OF INAUGURAL MEETING

Resolution No. 8 FISCAL YEAR AND ANNUAL MEETING OF THE GOVERNORS1 Resolved: 1. That the fiscal year of the International Bank for Re­ conshuction and Development shall begin on July 1. 2. That the Chairman shall call the first annual meeting of the Board of Governors during the month of September 1946. Resolution No.4 FmsT MEETING OF THE EXECUTIVE DIRECTORS! Resolved: 1. That the first meeting of the Executive Directors shall be convened about May 1, 1946. The Executive Director of the member having the largest quota shall act as temporary chair­ man of the Executive Directors until a President takes office. 2. That Executive Directors and their alternates shall take office on the date of the first meeting unless they have not been appointed by that date, in which case they shall take office upon the effective date of their appoinhnent. 3. That the next regular election of the Executive Directors shall take place at the annual meeting of the Board of Governors in September 1948. Resolution No.5 A RESOLUTION ON THE SELECTION OF THE ADVISORY COUNCILl Resolved: That the Executive Directors are requested to examine the problems relating to the selection of the Advisory Council by the Board of Governors, and to make recommendations to the Board for its consideration at its annual meeting to be held in September 1946. Resolution No. 6 A RESOLUTION ON INTERPRETATION OF THE ARTICLES OF AGREEMENT2 Resolved: That the Executive Directors of the International Bank for Reconshuction and Development are invited, at the request of the Governor for the United States of America, to interpret the Articles of Agreement, pursuant to Article IX( a), as to the lAdopted at the sixth session, March 16, 1946. 2Adopted at the seventh session March 18, 1946. 90 RESOLUTIONS OF INAUGURAL MEETING authority of the Bank to make or guarantee loans for programs of economic reconstruction and the reconstruction of monetary systems, including long-term stabilization loans. Resolution No.7 REQUESTING INTERPRETATION OF ARTICLES OF AGREEMENT AS TO ApPOINTMENT OF EXECUTIVE DIRECTORl Resolved: That the following point of interpretation raised by the Governor for India in regard to Article V, Section 4 (b) 1 and Section 4 (d) be referred to the Executive Directors for their decision in pursuance of Article IX of the Articles of the Inter­ national Bank for Reconstruction and Development namely: That with reference to the Ad Hoc Committee's report on the position of the Executive Director for India adopted by your Governors at their meeting on the 15th of March and in view of the inconsistency between Section 4 (b) 1 and Section 4 (d) of Article V that these sections be inter­ preted to mean that any member having one of the five largest quotas at the date of a regular election or at any date between regular elections shall be entitled to appoint an Executive Director who shall hold office until the next regular election without prejudice to the right of a subse­ quently admitted member to appoint a Director if it has one of the five largest quotas. Resolution No.8 ESTABLISHING A PROCEDURES COMMITTEE2 Resolved: That a Procedures Committee of twelve Governors be con­ stituted, consisting of those Governors who were appointed members of the Executive Committee of the Board at this meet­ ing of the Board to be available after the termination of this meeting and until the next annual meeting of the Board for con­ sultation at the discretion of the Chairman, normally by corres­ pondence and also, if occasion required, by convening immed­ iately before the annual meeting of the Board.

Resolution No.9 ACCEPTANCE OF MEMBERSHIP BY SCHEDULE A COUNTRIESl Resolved: That membership in the International Bank for Reconstruc­ lAdopted at the seventh session, March 18. 1946. 2Adopted at the third session. March IS, 1946.

91 RESOLUTIONS 01" INAUGURAL MEETING tion and Development is approved under Article II, Section 1 (b) of the Articles of Agreement for all countries listed in Schedule A which are members of the International Monetary Fund and whose governments accept membership in accordance with. the provisions of Article XI until December 31, 1946.

Resolution No. 10 ELECTION OF AN ADDITIONAL EXECUTIVE DIRECI'OR1 Resolved: There shall be one additional Executive Director who shall hold office until the second election of Executive Directors if, at any time before the second election, both of the following conditions exist: 1. There have been admitted to membership the Govern­ ments of one or more countries not listed on Schedule A; and 2. The members not entitled to appoint Executive Direc­ tors, whose votes are not included in those entitled to be cast by Executive Directors holding office at the time the additional Director is elected, have votes totalling 4,000. Those members not entitled to appoint Directors, whose votes are not included in those entitled to be cast by Directors holding office at the time the additional Director is to be elected, shall participate in the election. Each Governor participating shall cast for one person all of the votes to which he is entitled, and a simple majority of the votes cast shall constitute election, but the Director elected shall be deemed to be elected by all of the members eligible to participate. If no one receives a majority of the votes cast on the first ballot, additional ballots shall be held, and the candidate who received the lowest number of votes on the preceding ballot shall be ineligible for election.

Resolution No. 11 CONCERNING NATIONAL TAXES ON SALARIES AND ALLOWANCES2 Whereas: Appropriate measures for the elimination or equalization of the burden of national taxes upon salaries and allowances

lAdopted by the Board of Governors at the fifth session, March 15, 1946, as part of the Report of the Ad Hoc Committee on Appointment of an Executive Director by India. 2Adopted by the Board of Governors at the sixth session, March 16, 1946, as part of the Report of the Committee on Functions and Remuneration.

92 RESOLUTIONS OF INAUGURAL MEETING paid by the International Bank for Reconstruction and Develop­ ment are indispensable to the achievement of equity among its members and equality among its personnel, Therefore: The Board of Governors of the International Bank for Re­ construction and Development recommends to the members of the Bank that necessary action be taken by them to exempt from national taxation salaries and allowances paid out of the budget of the Bank to the President, the Executive Directors and their Alternates, and to the staff of the Bank.

93 OBSERVERS AT FIRST ANNUAL MEETING OF THE BOARD OF GOVERNORS

Countries Australia J. B Brigden A. Tange D.Munro Colombia Emilio Toro Haiti Joseph D. Charles Daniel Theard Liberia James F. Cooper Frederick A. Price Venezuela Pedro I. Aguerrevere Jose A. Mayobre

Organizations Economic and Social Council of the United Nations David Owen Walter Chudson Bruce Turner David Weintraub

United Nations Relief and Rehabilitation Administration- Fiorello H. La Guardia P. W. Kuo International Labor Organization E. J. Riches Provisionnl International Civil Aviation Organization F. H. Copes Van Hasselt E. R. Marlin Food and Agriculture Organization V. A. Deillet-Lavalle J. Hubbard Karl Olson

94 STATEMENTS BY OBSERVERS AT THE FIRST ANNUAL MEETING OF THE BOARD OF GOVERNORS, FIFTH SESSION (Joint), October 3, 1946. Statement by the Honorable Fiorello H. LaGuardia, the Director General oj United Nations Reliej and Rehabilitation Administration "1 am happy to be able to express the views of the United Nations Relief and Rehabilitation Ariministration on the signifi­ cant work of the World Bank and the International Fund as it affects the tasks so far performed by UNRRA. Before I do so, I want to express appreciation for the praising remarks on the work of UNRRA contained in the Reports by the Executive Directors of the Bank and the Executive Directors of the Fund. "The United Nations have set up different agencies for the different functions which they have to perform. The functions of UNRRA are quite different from those of the Bank and the Fund. As the Fund's report clearly states 'The Fund will not serve as a relief agency like UNRRA; it cannot give foreign exchange away.' "The Fund, I understand, can only meet temporary deficits in the balance of payments position of its member countries. The Bank too is not set up to lend for relief purposes or for imports in general; its function is to make loans for reconstruction or development problems. "But if our respective functions are separate, they are also intimately connected. By doing its work of relief and rehabilita­ tion UNRRA has gone a long way in preparing the way for the operations of the Fund and Bank. Without the magnanimous efforts of the United Nations in providing large scale relief the economies of the countries which received this relief would not be safe borrowing risks. But UNRRA.. could not, with its limited terms of reference and its limited funds, actually restore to any large extent the unparalleled destruction of capital brought about by the war. To restore this capital, reconstruction loans will be necessary. Without such loans the level of production in these countries will remain desperately low and the need for relief may be protracted for years. It is a matter of the gravest concern to UNRRA that at this time when it is nearing the end of its activ­ ities, the United Nations agency designed to give. reconstruction loans still has to start its active operations. 1 appeal to the Bank

95 STATEMENTS BY OBSERVERS to make its reconstruction loans as expeditiously as is humanly possible. If any assistance in the consideration of loans is required from UNRRA while its Missions are still in the field, I shall be 1.appy to direct these Missions to put all their services, their personnel and their files at the disposal of the Bank. "At its fifth session in Geneva, the Council of UNRRA dis­ cussed the need for further relief assistance required after the termination of UNRRA operations by the end of this year and it recommended that the United Nations analyze the size of existing needs and the ability of countries to nnance such needs and make recommendations regarding the financial assistance that might be required and that cannot be met by existing agencies. "I do not have to stress the fact that the adequate provision of relief where relief is still required is of paramount importance not only to the countries in need, but also to the world economic and political stability and to the very operations of the Fund and the Bank. The Social and Economic Council has been discussing this question this very week and studies as to the magnitudes involved are underway. The entire question of relief needs in 1947 will be a major item on the agenda of the General Assembly of the United Nations which convenes on the 23rd of October. "In order to enable us to foresee what needs cannot be met be existing agencies, it wUI be necessary in the very near future to know what the Fund and the Bank can do in their respective spheres. I would hope that the Fund and the Bank will be able to devote immediate attention to this question in close cooperation with the appropriate agency of the Unitcd Nations. "If the facilities which the Fund will put at the disposal ot the countries now receiving relief from UNRRA are substantial and if the amounts the Bank can lend to these countries for re­ construction in 1946 and 1947 are large, that may greatly reduce the need for further relief. "If, on the other hand, in the light of the Constitution and the resources of both agencies, the assistance they can render to these particular countries in the near future is relatively small that fact should be known. "With their large resources obtained from the United Nations the Fund and the Bank have a great opportunity and a great responsibility before them. Wise planning of the total activities of all United Nations agencies which in one way or another are authorized to render assistance to the countries devastated by

96 STATEMENTS BY OBSEJWERS war, requires knowledge well in the advance of what each of these agencies can do in its respective field of operations."

Statement by Mr. Trygve Lie, Secretary General of the United Nations "I was very much appreciative of your conveying to the Governors of the International Monetary Fund and the Inter­ national Bank for Reconstruction and Development my personal good wishes and earnest hope that their deliberations during the past week had sucessfully paved the way for both institutions to deal with the problems so urgently confronting them. "I am honored to be associated in this message with the President of the Economic and Social Council, whose members have naturally watched with great interec;t the progress of your organizations in view of their central importance as an instrument of postwar economic policy. "As the organ of the United Nations ~pecifically charged with the authority of the General Assembly, and with the responsibility of promoting conditions of stability and peaceful and neighborly relations between nations, the Economic and Social Council is fully conscious of the fact that it must rely upon the active co­ operation of the other United Nations organizations having spe­ cialized functions in the economic and sodal fields. "To this end, agreements have already been negotiated be­ tween the United Nations and such organizations. "I hope that it may be possible to conclude appropriate agree­ ments with the International Monetary Fund and the Interna­ tional Bank in the near future. "The current session of the Economic and Social Council has had before it a number of problems which have served to highlight the needs for the fullest possible working relationship between the Fund and the Bank on the one hand, and the United Nations on the other. "In particular, the attention of the Council has been directed to the serious economic problems still confronting the war devas­ tated areas of the world, despite the considerable economic progress which the war devastated areas have made since the end of hostilities. The early availability of foreign exchange resources to meet urgent reconstruction requirements has become a question of great importance, particularly in the cases of countries which have been in need of assistance from UNRRA.

97 STATEMENTS BY OBSERVERS

"In any concerted effort that might be made to deal with this question, the financial institutions created at Bretton Woods hav~ obviously a major role to play. "It is the confident hope and expectation of all who believe sincerely in the purposes for which the United Nations came into being that your future operations will continue in large measure to the development of expanding economies under which the living standards of nations and individuals are lifted to progress­ ively higher levels. "I am sure that if we can work closely together in our task with patience and determination, this expectation will not be disappointed."

Statement by Mr. Edward J. Phelan, Director of the International Labor Office ''The International Labor Organization has had great pleasure in accepting your invitation to be represented at the First Annual Meeting of the Boards of Governors of the International Monetary Fund and the International Bank for Reconstruction and Develop­ ment. The International Labor Organization has followed the establishment of the Fund and Bank with a keen appreciation of their potential importance to industry and labor. ~t values the privilege of being represented at these meebngs and trusts that this representation will be the begir.ning of a continuing and fruitful association between the Fund, the Bank, and the Inter­ national Labor Organization. "If industry is to reach the highest productivity and labor the highest living standards that existing resources and techniques will permit, there must be a great expansion of international trade. The International Labor Conference has frequently indi­ cated its awareness of the extent to which international trade and full employment are dependent on a \vell adjusted and stable structure of exchange rates and its deep concern with the need for speedy reconstruction of areas impoverished by the war and with the special problems of the underdeveloped regions of the world. "If working conditions and living standards are to be raised with reasonable speed the capital equipment of these regions must be improved and developed a gyeat deal more rapidly than even the most strenuous efforts of the countries· concerned can achieve unaided.

98 STATEMENTS BY OBSERVERS

"The Declaration of Philadelphia has pledged the full co­ operation of the International Labor Organization in this great task entrusted to the Fund and the Bank. Through the represen­ tative membership of the International Labor conference and the governing body, the In'ternational Labor Organization can help to focus the attention of industrial and labor organizations throughout the world on the purposes and work of the Fund and the Bank, and. you may be sure that the International Labor Office will at all times be glad to render any technical assistance in its power, particularly in supplying information' on labor and social questions and in the consideration of any problem of labor and social policy which may arise in th~ course of the work of the Fund and the Bank."

Statement by Dr. F. H. Copes Van Hasselt, Representative oj the Provisional International Civil 4.viation Organization "I have first to thank you and the Boards of Governors of the International Monetary Fund and the International Bank for Reconstruction and Development for your kind invitation to the Provisional International Civil Aviation O'-ganization to be repre­ sented at the First Annual Meeting of the two Boards_ "Our organization is appreciative of this honor and regards this as the beginning of a fruitful relationship in practical co­ operation between our respective agencies. "Both the Fund and the Bank nre "till in the organization stage, and some time may elapse before they commence actual operations. Nevertheless, it may not be premature to refer in general terms to the line of cooperation which might usefully be opened to the Provisional International Civil Aviation Organ­ ization on the one hand and to the International Bank on the other. "It seems to us in Provisional International Civil Aviation Organization that the development of an economically sound and well ordered program of international civil air transport offers one of the keys to a new era of beneficial intercourse among the nations. But a great deal of construction must be undertaken to realize this program. Many of the airports and air navigation facilities that once served civil aviation were destroyed during the war, others in operation must be improved to keep pace with the advances in aeronautical science and the increase in air traffic, and still others remain to be built.

99 STATEMENTS BY OBSERVERS

"While the Interim Agreement and the Convention on Inter­ national Civil Aviation contains provisions whereby our organiza­ tion may assist states in constructing avhtion facilities, there is considerable doubt regarding the wisdom of an organization such as ours assuming the role of banker in addition to its other mani­ fold and heavy tasks. "To the extent that loans to states for the provision of airports and air navigation facilities required by International Civil Avia­ tion can be considered productive investments, they would in our judgment be more suitably financed by an institution such as the International Bank. "In such cases the Provisional International Civil Aviation Organization would be prepared to assist the Bank by placing at its disposal aviation technicians, economists, and other experts capable of making objective evaluations of any requests for loans of this type in terms of the needs of international air transport. "I take this opportunity to extend to the Governors of the Bank and the Fund the best wishes of the Interim Council of the Provisional International Civil Aviation Organization for the suc­ cessful achievement of the far-reaching aims that have been set before your organizations."

100 BY-LAWS OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT .4. Approved by the Board 0/ Governors at the First Annual Meeting

These By-Laws are adopted under the authority of, and are intended to be complementary to, the Articles of Agreement of the International Bank for Reconstruction and Development; and they shall be construed accordingly. In the event of a con­ flict between anything in these By-Laws and any provision or requirement of the Articles of Agreement, the Articles of Agree­ ment shall prevail. Section 1. Places of Business The principal office of the Bank shall be located within the metropolitan area of Washington, D. c., United States of America. The Executive Directors may establish and maintain agencies or branch offices and regional offices at any place in the territories of any member, whenever it is necessary to do so in order to facilitate the efficient conduct of the business of the Bank. Section 2. Fund Represented The Executive Directors are authorized to invite the Inter­ national Monetary Fund to send a representative of the Fund to meetings of the Board of Governors and Executive Directors who may participate in such meetings, but shall have no vote. The Executive Directors are authorized to accept invitations from the Fund to send a representative of the Bank to participate in meetings of the Board of Governors or Executive Directors of the Fund. Section 3. Meeting of the Board of Governors (a) The Annual Meeting of the Board of Governors shall be held at such time and place as the Board of Governors shan determine; prOvided, however, that, if the Executive Directors shall, because of special circumstances, deem it necessary to do SO, the Executive Directors may change the time and place of such Annual Meeting. (b) Special meetings of the Board of Governors may be

101 BY-LAWS called at any time by the Board of Governors or the Executive Directors and shall be called upon the request of five members of the Bank or of members of the Bank h:1ving in the aggregate one-fourth of the total voting power. Whenever any member of the Bank shall request the Executive Directors to call a special meeting of the Board of Governors, the President shall notify all members of the Bank of such request and of the reasons which shall have been given therefor. ( c) A quorum for any meeting of the Board of Governors shall be a majority of the Governors, exercising not less than two-thirds of the total voting power. Any meeting of the Board of Governors at which a quorum shall not be present may be adjourned from time to time by a majority of the Governors present and notice of the adjourned meeting need not be given. Section 4. Notice of meetings of the Board of Governors The President shall cause notice of the time and place of each meeting of the Board of Governors to be given to each member of the Bank by telegram or cable which shall be dispatched not less than 42 days prior to the date Set for such meeting, except that in urgent cases such notice shall be sufficient if dispatched by telegram or cable not less than 10 days prior to the date set for such meeting. Section 5. Attendance of Executive Directors and observers at meetings of the Board of Governors (a) The Executive Directors and their Alternates may attend all meetings of the Board of Governors and may participate in such meetings, but an Executive Director or his Alternate shall not be entitled to vote at any such meeting unless he shall be entitled to vote as a Governor or an Alternate or a temporary Alternate of a Governor. (b) The Chairman of the Board of Governors, in consulta­ tion with the Executive Directors, may invite observers to attend any meeting of the Board of Governors. Section 6. Agenda of Meetings of the Board of Governors ( a) Under the direction of the Executive Directors, the President shall prepare a brief agenda for each meeting of the Board of Governors and shall cause st!ch agenda to be transmitted to each member of the Bank with the notice of such meeting. (b) Additional subjects may be placed on the agenda for any meeting of Governors by any Governor provided that he shall

102 BY-LAWS

give notice thereof to the President not less than seven days prior to the date set for such meeting. In special circumstances the President by direction of the Executive Directors may at any time place additional subjects on the agenda for any meeting of the Board of Governors. The President shall cause notice of the addi­ tion of any subjects to the agenda for any meeting of the Board of Governors to be given as promply as possible to each member of the Bank. ( c) The Board of Governors may at any time authorize any subject to be placed on the agenda for any meeting of such Board even though the notice required by this section shall not have been given. ( d) Except as otherwise specifically directed by the Board of Governors, the Chairman of the Boald of Governors jointly with the President shall have charge of all arrangements for the holding of meetings of the Board of Governors. Section 7. Election of Chairman and Vice Chairmen At each ·annual meeting the Board of Governors shall select a Governor to act as Chairman and at least two other Governors to act as Vice Chairmen until the next annual meeting. In the absence of the Chairman the Vice Chairman desig­ nated by the Chairman shall act in his place. Section 8. Secretary The Secretary of the Bank shall serve as Secretary of the Board of Governors. Section 9. Minutes The Board shall keep a summary record of its proceedings which shall be available to all members and which shall be filed with the Executive Directors for their guidance. Section 10. Report of Executive Directors The Executive Directors shall have prepared for presenta­ tion at the annual meeting of the Board of Governors an annual report in which shall be discussed the operations and poliCies of the Bank and which shall make recommendations to the Board of Governors on the problems confronting the Bank. Section 11. Voting Except as otherwise specifically provided in the Articles of

103 BY-LAWS

Agreement, all decisions of the Board shall be made by 11 majority of the votes cast. At any meeting the Chairman may ascertain the sense of the meeting in lieu of a formal vote but he shall require a formal vote upon the request of any Governor. Whenever a formal vote is required the written text of the motion shall be distributed to the voting members.

Section 12. Proxies No Governor or Alternate may vote at any meeting by proxy or by any other method than in person, but a member may make provision for the designation of a temporary Alternate to vote for the Governor at any Board Session at which the regularly designated Alternate is unable to be present.

Section 13. Voting Without Meeting Whenever, in the judgment of the Executive Directors, any action by the Bank must be taken by the Board of Governors which should not be postponed until the next regular meeting of the Board and does not warrant the calling of a special meet­ ing of the Board, the Executive Directors shall present to each member by any rapid means of communication a motion embody­ ing the proposed action with a request for a vote by its Governor. Votes shall be cast during such period as the Executive Directors may prescribe, provided that no Governor shall vote on any such motion until 7 days after despatch of the motion unless he is notified that the Executive Directors have waived this require­ ment. At the expiration of the period prescribed for voting, the Executive Directors shall record the results and the President shall notify all members. If the replies received do not include a majority of the Governors exercising two-thirds of the total voting power which are usually required for a quorum of the Board of Governors, the motion shall be considered lost.

Section 14. Terms of Service ( a) Governors and Alternates shall receive their actual transport expenses to and from the place of meeting in attending meetings including the inaugural meeting and $50 for each night which attendance at such meeting requires them to spend away from their normal place of residence, this amount being redcced to $10 for each night when accommodation is included in the price of transportation.

104 BY-LAWS

(b) Pending the necessary action being taken by members to exempt from national taxation salaries and allowances paid out of the budget of the Bank, the Governors and the Executive Directors, and their Alternates, the President, and the staff mem­ bers shall be reimbursed by the Bank for the taxes which they are required to pay on such salaries and allowances. In computing the amount of tax adjustment to be made with respect to any individual, it shall be presumed for the purposes of the computation that the income received from the Bank is his total income. All salary scales and expense allowances pre­ scribed by this Section are stated as net on the above basis. ( c) The salary of the President shall be $30,000 per annum. The Bank shall also pay any reasonable expenses incurred by the President in the interest of the Bank (including travel and trans­ portation expenses for himself, and expenses for his' family, and his personal effects in moving once to the seat of the Bank during or immediately before his term of office and in moving once from the seat during or immediately after his term of office). The terms of contract of the President shall be five years. ( d) It shall be the duty of an Executive Director and his Alternate to devote all the time and attention to the business of the Bank that its interests require, and, between them, to be cont­ inuously available at the principal office of the Bank. ( e ) The maximum salary and expense allowance, includ­ ing housing, entertainment and all other expenses except those specified in subsection (f) shall be $17,000 for Executive Direct­ ors and $11,500 for Alternates. It will be the duty of each Executive Director and each Alternate to state how much of these amounts he intends to draw whether as salary or as expense allowance. (f) The Executive Directors and their Alternates are to be reimbursed, in addition, for all reasonable expenses incurred during absence from the seat of the Bank while on the designated service of the Bank. They shall also be reimbursed for travel and transportation expenses for themselves, their families, and their personal effects in moving once to the seat of the Bank during or immediately before their terms of office and in moving once from the seat during or immediately after their terms of office. ( g) Where not specified, it is assumed that the Director and Alternate will be a full time Director and Alternate. Where

105 BY-LAWS it is intended that he shall not devote his full time, it shall be so indicated. Where an Executive Director or Alternate indicates that he intends to devote only part of his time to the Bank, his remuneration shall be pro-rated on the basis of a representation by him of the proportion of his time he has devoted to the interests of the Bank. He may make such representation each month. (h) Where an individual is serving both Fund and Bank, the aggregate of salary received from both shall not exceed the full annual single salary indicated above. In all cases of salaries or expenses involving dual offices in the Fund or Bank, or both, the individual affected is entitled to take his choice as to which salary or expense he elects, but he shall not be entitled to both. (i) An individual putting forward a claim for reimburse­ ment for any expenses incurred by him shall include therewith a representation that he has not received and will not claim re­ imbursement in respect to those expenses from any other source. (j) Secretarial, staff services, office space, and other services incidental to the performance of the duties of the Executive Directors and Alternates shall be provided by the Bank. Section 15. Delegation of Authority The Executive Directors are authorized by the Board of Governors to exercise all the powers of the Bank except those reserved to the Board by Article V, Section 2 (b) and other pro­ visions of the Articles of Agreement. The Executive Directors shall not take any action pursuant to powers delegated by the Board of Governors which is inconsistent with any action taken by the Board. Section 16. Rules and Regulations The Executive Directors are authorized by the Board of Governors to adopt such rules and regulations, including financial regulations, as may be necessary or appropriate to conduct the business of the Bank. Any rules and regulations so adopted, and any amendments thereof, shall be subject to review by the Board of Governors at their next annual meeting. Section 17. Vacant Directorships Whenever a new Director must be elected because of a vacancy requiring an election, the President shall notify the

106 BY-LAWS members who elected the former Director of the existence of the vacancy. He may convene a meeting of the Governors of such countries exclusively for the purpose of electing a new Director; or he may request nominations by mail or telegraph and conduct ballots by mail or telegraph. Successive ballots shall be cast unb1 one candidate has a majority; and after each ballot, the candidate with the smallest number of votes shall be dropped from the next ballot. When a new elective Director is named, the office of Alter­ nate shall be deemed to be vacant and an Alternate shall be named by the newly-elected Director. Section 18. Representation of Members Not Entitled to Appoint a Director Whenever the Executive Directors are to consider a request made by, or a matter particularly affecting a member not entitled to appoint a Director, the member shall be promptly informed in writing of the date set for its consideration. No final action shall be taken by the Executive Directors, nor any question affect­ ing the member submitted to the Board of Governors, until the member has been offered a reasonable opportunity to present its views and to be heard at a meeting of the Executive Directors of which the member has had reasonable notice. Any member, so electing, may waive this provision. Section 19. Budget and Audits The Executive Directors shall have an audit of the accounts of the Bank made at least once each year and on the basis of this audit shall submit a statement of its accounts, including a balance sheet and a statement of profit and loss, to the Board of Governors to be considered by them at their annual meeting. The Executive Directors shall instruct the President to prepare an annual administrative budget to be presented to them for approval. The budget as approved shall be incorporated in the annual report to be presented to the Board of Governors at their annual meeting. Section 20. Application for Membership Subject to any special provisions that may be made for coun­ tries listed in Schedule A of the Articles of Agreement, any mem­ ber of the International Monetary Fund may apply for member­ ship in the Bank by filing with the Bank an application setting

107 BY-LAWS forth all relevant facts. When submitting an application to the Board of Governors, the Executive Directors after consultation with the applicant country, shall recommend to the Board the number of shares of capital stock to be subscribed and such other connitions as, in the opiilion of the Executive Directors, the Board of Governors may wIsh to prescribe. Section 21. Suspension of Membership Before any member is suspended from membership in the Bank, the matter shall be considered by the Executive Directors who shall inform the member in reasonable time of the com­ plaint against it and allow the member an adequate opportunity for stating its case both orally and in writing. The Executive Directors shall recommend to the Board of Governors the action they deem appropriate. The member shall be informed of the recommendation and the date on which its case will be con­ sidered by the Board and shall be given a reasonable time within which to present its case to the Board both orally and in writing. Any member so electing may waive this provision. Section 22. Settlement of Disagreements The President of the International Court of Justice is pre~ scribed as the authority to appoint an umpire whenever there arises a disagreement of the type referred to in Article IX (c) of the Articles of Agreement. Section 23. Amendment to By-Laws These By-Laws may be amended by the Board of Governors at any meeting thereof or by vote without a meeting as provid~d in Section 13.

lOS RULES OF PROCEDURE FOR MEETINGS OF THE EXECUTIVE DIRECTORS Pursuant to Section 16 of the By-Laws of the Bank, the Execu­ tive Directors hereby adopt the following rules of procedure for meetings of the Executive Directors; Section 1. Definitions For convenience of reference, the term "Board" is used in these rules to mean the Executive Directors of the Bank acting as a body with the President of the Bank as Chairman, in accord­ ance with the provisions of the Articles of Agreement. Section 2. Meetings (a) Regular meetings of the Board shall be held at such times as the Board shall from time to time determine. Notice of a regular meeting of the Board need not be given. (b) A special meeting of the Beard may be called at any time by the President of the Bank. The President shall call a special meeting of the Board at any time at the request of any Executive Director. Notice of each special meeting of the Board shall be given to each Executive Director not less than one day prior to the date fixed for such meeting. ( c) A quorum for any meeting of the Board shall be a ma­ jority of the Executive Directors, exercising not less than one-half the total voting power of the Board. Any meeting of the Board at which a quorum shall not be present may be adjourned from time to time by a majority in voting power of the Executive Directors present at such meeting and notice of any such ad­ journed meeting need not be given. ( d) Meetings shall be open to attendance only by Executive Directors and their Alternates, the President and such members of the staff as he may designate, representatives of members ap­ pointed under Article V, Section 4 (h) of the Articles of Agree­ ment and such other persons as the Board may invite. ( e) The Board shall meet at the principal office of the Bank unless it decides that a particular meetmg shall be held elsewhere. (f) The President of the Bank, or in his absence the Vice­ President of the Bank, shall act as Chainnan of, and preside at, all meetings of the Board. (g) Except as otherwise in these rules expressly provided,

109 RULES OF PROCEDURE any reference in these rules to an Executive Director shall be deemed to include his Alternate when such Alternate acts for such Executive Director. Section 3. Agenda for Meetings ( a) An agenda for each meeting of the Board shall be pre­ pared by the President, or on his instructions, and a copy of such agenda shall be given to each Executive Director at least 24 hours before such meeting. Any matter upon which the Board h:ls power to act shall be included on the agenda for any meeting of the Board, if any Executive Director shall so request. (b) Any matter not included on the agenda for a meeting of the Board may be presented to the Board by the Chairman or any Executive Director and may be acted upon by the Board at such meeting unless the Chairman or an Executive Director ob­ jects thereto. ( c) If any Executive Director shall so request, action by the Board on any matter, whether or not included on the agenda for the particular meeting, shall be postponed not more than once for not less than two days. ( d) Any item included on the agenda for a meeting of the Board, consideration of which has not been completed at that meeting, shall, unless the Executive Directors decide other­ wise, be automatically included on the agenda for the next meeting. Section 4. Voting If any Executive Director shall request a formal vote on any matter before the Board, such vote ... hall be taken in accordance with the provisions of Article V, Section 4 (g) of the Articles of Agreement. In the absence of any such request, the Chairman may ascertain and announce to the meeting the sense of the Board with regard to such matter and the Board shall be deemed to have acted in accordance with the announcement by the Chairman without the taking of a formal vote. Any Executive Director dis­ senting from the decision of the Board may require that his views be recorded in the minutes of the meeting. Section 5. Committees ( a) The Board may from time to time establish such com­ mittees as it shall deem advisable. Membership of such com

110 RULES OF PROCEDURE mittees need not be limited to Executive Directors or their Al­ ternates. The Chairman shall appoint the members of such committees and shall designate one of such members to act as chairman of the particular committee. In the absence of the chairman so designated, the members of any committee may designate one of their number to :let as chairman of the com­ mittee. (b) Unless otherwise expressly provided by the Board. there shall be no formal voting in committees and sub-committees of the Board. The chairman of the committee or sub-committee shall determine the sense of the meeting (including alternative points of view) which shall be reported. Section 6. Minutes (a) The Secretary of the Bank !'hall act as Secretary of the Board and, under the direction of the President, the Secretary shall be responsible for the preparation of a summary record of proceedings of the Board. (b) Verbatim records will be taken only if an Executive Director requests that his remarks be taken down. ( c) Draft minutes will be circulated to all Executive Direct­ ors as quickly as possible after meetings. Such minutes shall be presented to the Board for approval. Section 7. Notices to Executive Directors and Alternates ( a) Any notice required by these rules to be given to any Executive Director shall be deemed to have been sufficiently given when it shall have been delivered in writing or in person or by telephone at the office of such Executive Director in the principal office of the Bank in Washington, D. C. (b) Any notice which is required by these rules to bf' given to any Executive Director (including notices with regard to meetings and the agenda for meetings) may be waived by such Executive Director or his Alternate by writing or telegram at any time, whether before or after the meeting to which such notice relates. Section 8. Publicity The proceedings of the Board are con£dential and should not be published except where the Boald decides to authorize the Chairman to arrange for suitable publicity in respect of particular decisions.

111 RULES OF PROCEDURE

Section 9. Amendments These rules may be amended by the Board at any meeting provided at least five days' notice of the proposed amendment has been given to the Executive Directors. Accepted by the Board of Governors, First Annual Meeting, Fourth Session, October 3, 1946.

112 OFFICERS OF THE BOARD OF GOVERNORS ELECTED AT THE FIRST ~'UAL MEETING. FIFTH SESSION, OCTOBER 3. 1946

Chairman United Kil.gdom Vice Chairmen China France India United States

COMMI'ITEE ON PROCEDt1RES FOR SECOND ANNUAL MEETING

Chairman United Ki.ngdom Vice Chairman China Reporting Member Czechoslovakia Members Belgium, Canada, Chile, Cuba, France, India, Iran, Norway, and United States.

113 ARTICLES OF AGREEMENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

LIST OF ARTICLES AND SECTIONS Introductory Article I. Purposes II. Membership in and Capital of the Bank 1. Membership 2. Authorized capital 3. Subscription of shares 4. Issue price of shares 5. Division and calls of subscribed capital 6. Limitation on liability 7. Method of payment of subscriptions for shares 8. Time of payment of subscriptions 9. Maintenance of value of certain currency holdings of the Bank 10. Restriction on disposal of shares III. General Provisions Relating to Loans and Guarantees 1. Use of resources 2. Dealings between members and the Bank 3. Limitations on guarantees and borrowings of the Bank 4. Conditions on which the Bank may guarantee or make loans 5. Use of loans guaranteed, participated in or made by the Bank N. Operations 1. Methods of making or facilitating loans 2. Availability and transferability of currencies 3. Provision of currencies for direct loans 4. Payment provisions for direct loans 5. Guarantees 6. Special reserve 7. Methods of meeting liabilities of the Bank in case of defaults 8. Miscellaneous operations 9. Warning to be placed on securities 10. Political activity prohibited V. Organization and Management 1. Structure of the Bank 2. Board of Governors 3. Voting 4. Executive Directors 5. President and staff 6. Advisory Council 114 7. Loan Committees 8. Relationship to other international organizations 9. Location of offices 10. Regional offices and councils 11. Depositories 12. Form of holdings of currency 13. Publication of reports and provision of information 14. Allocation of net income VI. Withdrawal and suspension of membership: Suspension of Operations 1. Right of members to withdraw 2. Suspension of membership 3. Cessation of membership in International Monetary Fund 4. Settlement of accounts with governments ceasing to be members 5. Suspension of operations and settlement of obligations VII. Status, Immunities and Privileges 1. Purposes of Article 2. Status of the Bank 3. Position of the Bank with regard to judicial process 4. Immunity of assets from seizure 5. Immunity of archives 6. Freedom of assets from restrictions 7. Privilege for communication 8. Immunities and privileges of officers and employees 9. Immunities from taxation 10. Application of Article VIII. Amendments IX. Interpretation X. Approval deemed given XI. Final Provisions 1. Entry into force 2. Signature 3. Inauguration of the Bank SCHEDULE A. Subscriptions SCHEDULE B. Election of Executive Directors

115 TEXT OF ARTICLES OF AGREEMENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT The Governments on whose behalf the present Agreement is signed agree as follows: INTRoDucroRY ARTICLE The International Bank for Reconstruction and Develop­ ment is established and shall operate in accordance with the following provisions:

ARTICLE I PURPOSES The purposes of the Bank are: (i) To assist in the reconstruction and development of terri­ tories of members by facilitating the investment of capital for productive purposes, including the restora­ tion of economies destroyed or disrupted by war, the reconversion of productive facilities to peacetime needs and the encouragement of the development of produc­ tive facilities and resources in less developed countries. (ii) To promote private foreign investment by means of guarantees or participations in loans and other invest­ ments made by private investors; and when private capital is not available on reasonable terms, to supple­ ment private investment by providing, on suitable con­ ditions, finance for productive purposes out of its own capital, funds raised by it and its other resources. (iii) To promote the long-range balanced growth of inter­ national trade and the maintenance of equilibrium in balances of payments by encouraging international in­ vestment for the development of the productive re­ sources of members, thereby assisting in raising produc­ tivity, the standard of living and conditions of labor in their territories. (iv) To arrange the loans made or guaranteed by it in rela­ tion to international loans through other channels so that the more useful and urgent projects, large and small alike, will be dealt with first. (v) To conduct its operations with due regard to the eHect of international investment on business conditions in the territories of members and, in the inimediate post­ war years, to assist in bringing about a smooth transi­ tion from a wartime to a peacetime economy. The Bank shall be guided in all its decisions by the purposes set forth above.

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ARTICLE II MEMBERSHIP IN AND CAPITAL OF THE BANK Section 1. Membership (a) The original members of the Bank shall be those mem­ bers of the International Monetary Fund which accept member­ ship in the Bank before the date specified in Article XI, Section 2 (e). (b) Membership shall be open to other members of the Fund, at such times and in accordance with such terms as may be prescribed by the Bank. Section 2. Authorized capital ( a) The authorized capital stock of the Bank shall be $10,000,000,000, in terms of United States dollars of the weight and fineness in effect on July 1, 1944. The capital stock shall be divided into 100,000 shares having a par value of $100,000 each, which shall be available for subscription only by members. (b) The capital stock may be increased when the Bank deems it advisable by a three-fourths majority of the total voting power. Section 3. Subscription of shares ( a ) Each member shall subscribe shares of the capital stock of the Bank. The minimum number of shares to be sub­ scribed by the original members shall be those set forth in Schedule A. The minimum number of shares to be subscribed by other members shall be determined by the Bank, which shall reserve a sufficient portion of its capital stock for subscription by such members. (b) The Bank shall prescribe rules laying down the con­ ditions under which members may subscribe shares of the authorized capital stock of the Bank in addition to their minimum subscriptions. ( c) If the authorized capital stock of the Bank is increased, each member shall have a reasonable opportunity to subscribe, under such conditions as the Bank shall decide, a proportion of the increase of stock equivalent to the proportion which its stock theretofore subscribed bears to the total capital stock of the Bank, but no member shall be obligated to subscribe any part of the increased capital.

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Section 4. Issue price of shares Shares included in the minimum subscriptions of original members shall be issued at par. Other shares shall be issued at par unless the Bank by a majority of the total voting power decides in special circumstances to issue them on other terms. Section 5. Division and calls of subscribed capital The subscription of each member shall be divided into two parts as follows: (i) twenty percent shall be paid or subject to call under Section 7 (i) of this Article as needed by the Bank for its operations; . (ii) the remaining eighty percent shall be subject to call by the Bank only when required to meet obligations of the Bank created under Article IV, Sections 1 (a) (ii) and (iii). Calls on unpaid subscriptions shall be uniform on all shares. Section 6. Limitation on liability Liability on shares shall be limited to the unpaid portion of the issue price of the shares. Section 7. Method of payment of subscriptions for shares Payment of subscriptions for shares shall be made in gold or United States dollars and in the currencies of the members as follows: (i) under Section 5 (i) of this Article, two percent of the price of each share shall be payable in gold or United States dollars, and, when calls are made, the remaining eighteen percent shall be paid in the currency of the member; (ii) when a call is made under Section 5 (ii) of this Article, payment may be made at the option of the member either in gold, in United States dollars or in the currency required to discharge the obligations of the Bank for the purpose for which the call is made; (iii ) when a member makes payments in any currency under ( i) and (ii) above, such payments shall be made in amounts equal in value to the member's liability under the call. This liability shall be a proportionate part of the subscribed capital stock of the Bank as authorized and defined in Section 2 of this Article. Section 8. Time of payment of subscriptions ( a ) The two percent payable on each share in gold or United States dollars under Section 7 (i) of this Article, shall be

118 ARTICLES OF AGREEMENT paid within sixty days of the date on which the Bank begins operations, provided that (i) any original member of the Bank whose metropolitan territory has suffered from enemy occupation or hos­ tilities during the present war shall be granted the· right to postpone payment of one-half percent until five years after that date; (ii) an original member who cannot make such a payment because it has not recovered possession of its gold re­ serves which are still seized or immobilized as a result of the war may postpone all payment until such date as the Bank shall decide. (b) The remainder of the price of each share payable under Section 7 (i) of this Article shall be paid as and when called by the Bank, provided that (i) the Bank shall, within one year of its beginning opera­ tions, call not less than eight percent of the price of the share in addition to the payment of two percent re­ ferred to in (a) above; (ii) not more than five percent of the price of the share shall be called in any period of three months. Section 9. Maintenance of value of certain currency holdings of the Bank (a) Whenever (i) the par value of a member's currency is reduced, or (ii) the foreign exchange value of a member's currency has, in the opinion of the Bank, depreciated to a signifi­ cant extent within that member's territories, the member shall pay to the Bank within a reasonable time an additional amount of its own currency sufficient to maintain the value, as of the time of initial subscription, of the amount of the currency of such mem­ ber which is held by the Bank and derived from currency orig­ inally paid in to the Bank by the member under Article II, Section 7 (i), from currency referred to in Article IV, Section 2 (b), or from any additional currency furnished under the provisions of the present paragraph, and which has not been repurchased by the member for gold or for the currency of any member which is acceptable to the Bank. (b) Whenever the par value of a member's currency is increased, the Bank shall return to such member within a reasonable time an amount of that member's currency equal to the increase in the value of the amount of such currency described in (a) above. ( c ) The provisions of the preceding paragraphs may be

119 ARTICLES OF AGREEMENT waived by the Bank when a unifonn proportionate change in the par values of the currencies of all its members is made by the International Monetary Fund. Section 10. Restriction on disposal of shares Shares shall not be pledged or encumbered in any manner whatever and they shall be transferable only to the Bank. ARTICLE III GENERAL PROVISIONS RELATING TO LOANS AND GUARANTEES Section 1. Use of resources ( a ) The resources and the facilities of the Bank shall be used exclusively for the benefit of members with equitable con­ sideration to projects for development and projects for recon­ struction alike. (b) For the purpose of facilitating the restoration and re­ construction of the economy of members whose metropolitan territories have suffered great devastation from enemy occupa­ tion or hostilities, the Bank, in detennining the conditions and tenns of loans made to such members, shall pay special regard to lightening the financial burden and expediting the comple­ tion of such restoration and reconstruction. Section 2. Dealings between members and the Bank Each member shall deal with the Bank only through its Treasury, central bank, stabilization fund or other similar fiscal agency, and the Bank shall deal with members only by or through the same agencies. Section 3. Limitations on guarantees and borrowings of the Bank The total amount outstanding of guarantees, participations in loans and direct loans made by the Bank shall not be increased at any time, if by such increase the total would exceed one hun­ dred percent of the unimpaired subscribed capital, reserves and surplus of the Bank. Section 4. Conditions on which the Bank may guarantee or make loans The Bank may guarantee, participate in, or make loans to any member or any political sub-division thereof and any busi­ ness, industrial, and agricultural enterprise in the territories of a member, subject to the following conditions:

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(i) When the member in whose territories the project is located is not itself the borrower, the member or the central bank or some comparable agency of the mem­ ber which is acceptable to the Bank, fully guarantees the repayment of the principal and the payment of interest and other charges on the loan. (ii) The Bank is satisned that in the prevailing market con­ ditions the borrower would be unable otherwise to obtain the loan under conditions which in the opinion of the Bank are reasonable for the borrower. (iii ) A competent committee, as provided for in Article V, Section 7, has submitted a written report recommend- ing the project after a careful study of the merits of the proposal. (iv) In the opinion of the Bank the rate of interest and other charges are reasonable and such rate, charges and the schedule for repayment of principal are appro­ priate to the project. (v) In making or guaranteeing a loan, the Bank shall pay due regard to the prospects that the borrower, and, if the borrower is not a member, that the guarantor, will be in position to meet its obligations under the loan; and the Bank shall act prudently in the interests both of the particular member in whose territories the pro- ject is located and of the members as a whole. ( vi) In guaranteeing a loan made by other investors, the Bank receives suitable compensation for its risk. ( vii) Loans made or guaranteed by the Bank shall, except in special circumstances, be for the purpose of specinc projects of reconstruction or development. Section 5. Use of loans guaranteed, participated in or made by the Bank ( a) The Bank shall impose no conditions that the proceeds of a loan shall be spent in the territories of any particular mem­ ber or members. (b) The Bank shall make arrangements to ensure that the proceeds of any loan are used only for the purposes for which the loan was granted, with due attention to considerations of economy and efficiency and without regard to political or other non-economic influences or considerations. ( c ) In the case of loans made by the Bank, it shall open an account in the name of the borrower and the amount of the loan shall be credited to this account in the currency or currencies in which the loan is made. The borrower shall be permitted by the

121 ARTICLES OF AGREEMENT

Bank to draw on this account only to meet expenses in connec­ tion with the project as they are actually incurred.

ARTICLE IV OPERATIONS Section 1. Methods of making or facilitating loans ( a) The Bank may make or facilitate loans which satisfy the general conditions of Article III in any of the following ways: . (i) By making or participating in direct loans out of its own funds corresponding to its unimpaired paid-up capital and surplus and, subject to Section 6 of this Article, to its reserves. (ii) By making or participating in direct loans out of funds raised in the market of a member, or otherwise bor- rowed by the Bank. . (iii) By guaranteeing in whole or in part loans made by private investors through the usual investment channels. (b) The Bank may borrow funds under (a) (ii) above or guarantee loans under (a) (iii) above only with the approval of the member in whose markets the funds are raised and the mem­ ber in whose currency the loan is denominated, and only if those members agree that the proceeds may be exchanged for the cur­ rency of any other member without restriction.

Section 2. Availability and transferability of currencies ( a ) Currencies paid into the Bank under Article II, Sec­ tion 7 (i), shall be loaned only with the approval in each case of the member whose currency is involved; provided, however, that if necessary, after the Bank's subscribed capital has been entirely called, such currencies shall, without restriction by the members whose currencies are offered, be used or exchanged for the currencies required to meet contractual payments of interest, other charges or amortization on the Bank's own borrow­ ings, or to meet the Bank's liabilities with respect to such con­ tractual payments on loans guaranteed by the Bank. (b) Currencies received by the Bank from borrowers or guarantors in payment on account of principal of direct loans made with currencies referred to in (a) above shall be exchanged for the currencies of other members or reloaned only with the approval in each case of the members whose currencies are in­ volved; provided, however, that if necessary, after the Bank's subscribed capital has been entirely called, such currencies shall,

122 ARTICLES OF AGREEMENT without restriction by the members whose currencies are offered, be used or exchanged for the currencies required to meet con­ tractual payments of interest, other charges or amortization on the Bank's own borrowings, or to meet the Bank's liabilities with respect to such contractual payments on loans guaranteed by the Bank. ( c) Currencies received by the Bank from borrowers or guar­ antors in payment on account of principal of direct loans made by the Bank under Section 1 (a) (ii) of this Article, shall be held and used, without restriction by the members, to make amorti­ zation payments, or to anticipate payment of or repurchase part or all of the Bank's own obligations. ( d) All other currencies available to the Bank, including those raised in the market or otherwise borrowed under Section 1 (a) (ii) of this Article, those obtained by .the sale of gold, those re­ ceived as payments of interest and other charges for direct loans made under Sections 1 (a) (i) and (ii), and those received as payments of commissions and other charges under Section 1 (a) (iii), shall be used or exchanged for other currencies or gold re­ quired in the operations of the Bank without restriction by the members whose currencies are offered. ( e) Currencies raised in the markets of members by borro~­ ers on loans guaranteed by the Bank under Section 1 (a) (iii) of this Article, shall also be used or exchanged for other curren­ cies without restriction by such members.

Section 3. Provision of currencies for direct loans The following provisions shall apply to direct loans under Sec­ ~ions 1 (a) (i) and (ii) of this Article: ( a) The Bank shall furnish the borrower with such currencies of members, other than the member in whose territories the pro­ ject is located, as are needed by the borrower for expenditures to be made in the territories of such other members to carry out the purposes of the loan. (b) The Bank may, in exceptional circumstances when local currency required for the purposes of the loan cannot be raised by the borrower on reasonable terms, provide the borrower as part of the loan with an appropriate amount of that currency. ( c) The Bank, if the project gives rise indirectly to an in­ creased need for foreign exchange by the member in whose terri-

123 ARTICLES OF AGREEMENT tories the project is located, may in exceptional circumstances provide the borrower as part of the loan with an appropriate amount of gold or foreign exchange not in excess of the borrow­ er's local expenditure in connection with the purposes of the loan. ( d) The Bank may, in exceptional circumstances, at the re­ quest of a member in whose territories a portion of the loan is spent, repurchase with gold or foreign exchange a part of that member's currency thus spent but in no case shall the part so repurchased exceed the amount by which the expenditure of the loan in those territories gives rise to an increased need for for­ eign exchange. Section 4. Payment provisions for direct loans Loan contracts under Section 1 (a) (i) or (ii) of this Article shall be made in accordance with the following payment provis­ ions: ( a) The terms and conditions of interest and amortization payments, maturity and dates of payment of each loan shall be determined by the Bank. The Bank shall also determine the rate and any other terms and conditions of commission to be charged in connection with such loan. In the case of loans made under Section 1 (a) (ii) of this Ar­ ticle during the first ten years of the Bank's operations, this rate of commission shall be not less than one percent per annum and not greater than one and one-half percent per annum, and shall be charged on the outstanding portion of any such loan. At the end of this period of ten years, the rate of commission may be re­ duced by the Bank with respect both to the outstanding portions of loans already made and to future loans, if the reserves accum­ ulated by the Bank under Section 6 of this Article and out of other earnings are considered by it sufficient to justify a reduc­ tion. In the case of future loans the Bank shall also have discre­ tion to increase the rate of commission beyond the above limit, if experience indicates that an increase is advisable. (b) All loan contracts shall stipulate the currency or curren­ cies in which payments under the contract shall be made to the Bank. At the option of the borrower, however, such payments may be made in gold, or subject to the agreement of the Bank, in the currency of a member other than that prescribed in the contract.

124 ARTICLES OF AGREEMENT

(i) In the case of loans made under Section 1 (a) (i) of this Article, the loan contracts shall provide that pay­ ments to the Bank of interest, other charges and amor­ tization shall be made in the currency loaned, unless the member whose currency is loaned agrees that such payments shall be made in some other specified cur­ rency or currencies. These payments, subject to the provisions of Article II, Section 9 (c), shall be equiva­ lent to the value of such contractual payments at the time the loans were made, in terms of a currency speci­ fied for the purpose by the Bank by a three-fourths majority of the total voting power. (ii) In the case of loans made under Section 1 (a) (ii) of this Article, the total amount outstanding and payable to the Bank in anyone currency shall at no time exceed the total amount of the outstanding borrowings made by the Bank under Section 1 (a) (ii) and payable in the same currency. ( c) If a member suffers from an acute exchange string­ ency, so that the service of any loan contracted by that member or guaranteed by it or by one of its agencies cannot be provided in the stipulated manner, the member concerned may apply to the Bank for a relaxation of the conditions of payment. If the Bank is satisfied that some relaxation is in the interests of the par­ ticular member and of the operations of the Bank and of its members as a whole, it may take action under either, or both, of the following paragraphs with respect to the whole, or part, of the annual service: (i) The Bank may, in its discretion, make arrangements with the member concerned to accept service payments on the loan in the member's currency for periods not to exceed three years upon appropriate terms regarding the use of such currency and the maintenance of its foreign exchange value; and for the repurchase of such currency on appropriate terms. (ii) The Bank may modify the terms of amortization or extend the life of the loan, or both. Section 5. Guarantees ( a ) In guaranteeing a loan placed through the usual in­ vestment channels, the Bank shall charge a guarantee commis­ sion payable periodically on the amount of the loan outstanding at a rate determined by the Bank. During the first ten years of the Bank's operations, this rate shall be iIot less than one percent per annum and not greater than one and one-half percent per annum. At the end of this period of ten years, the rate of ARTICLES OF AGREEMENT commission may be reduced by the Bank with respect both to the outstanding portions of loans already guaranteeed and to fu­ ture loans if the reserves accumulated by the Bank under Section 6 of this Article and out of other earnings are considered by it sufficient to justify a reduction. In the case of- future loans the Bank shall also have discretion to increase the rate of commis­ sion beyond the above limit, if experience indicates that an in­ crease is advisable. (b) Guarantee commissions shall be paid directly to the Bank by the borrower. ( c ) Guarantees by the Bank shall provide that the Bank may terminate its liability with respect to interest if, upon default by the borrower and by the guarantor, if any, the Bank offers to purchase, at par and interest accrued to a date designated in the offer, the bonds or other obligations guaranteed. ( d) The Bank shall have power to determine any other terms and conditions of the guarantee.

Section 6. Special reserve The amount of commissions received by the Bank under Sections 4 and 5 of this Article shall be set aside as a special reserve, which shall be kept available for meeting liabilities of the Bank in accordance with Section 7 of this Article. The special reserve shall be held in such liquid form, permitted under this Agreement, as the Executive Directors may decide. Section 7. Methods of meeting liabilities of the Bank in case of defaults In cases of default on loans made, participated in, or guaran­ teed by the Bank: ( a) The Bank shall make such arrangements as may be feasible to adjust the obligations under the loans, including ar­ rangements under or analogous to those provided in Section 4 (c) of this Article. (b) The payments in discharge of the Bank's liabilities on borrowings or guarantees under Sections 1 (a) (ii) and (iii) of this Article shall be charged: (i) first, against the special reserve provided in Section 6 of this Article. (ii) then, to the extent necessary and at the discretion of the Bank, against the other reserves, surplus and capi­ tal available to the Bank. 126 ARTICLES OF AGREEMENT

( c) Whenever necessary to meet contractual payments of interest, other charges or amortization on the Bank's own bor­ rowings, or to meet the Bank's liabilities with respect to similar payments on loans guaranteed by it, the Bank may call an appro­ priate amount of the unpaid subscriptions of members in accord­ ance with Article II, Sections 5 and 7. Moreover, if it believes that a default may be of long duration, the Bank may call an additional amount of such unpaid subscriptions not to exceed in anyone year one percent of the total subscriptions of the mem­ bers for the following purposes: (i) To redeem prior to maturity, or otherwise discharge its liability on, all or part of the outstanding principal of any loan guaranteed by it in respect of which the debtor is in default. (ii) To repurchase, or otherwise discharge its liability on, all or part of its own outstanding borrowings. Section 8. Miscellaneous operations In addition to the operations specified elsewhere in this Agreement, the Bank shall have the power: (i) To buy and sell securities it has issued and to buy and sell securities which it has guaranteed or in which it has invested, provided that the Bank shall obtain the approval of the member in whose territories the securi­ ties are to be bought or sold. (ii) To guarantee securities in which it has invested for the purpose of facilitating their sale. (iii) To borrow the currency of any member with the ap­ proval of that member. (iv) To buy and sell such other securities as the Directors by a three-fourths majority of the total voting power may deem proper for the investment of all or part of the special reserve under Section 6 of this Article. In exercising the powers conferred by this Section, the Bank may deal with any person, partnership, association, corporation or other legal entity in the territories of any member. Section 9. Warning to be placed on securities Every security guaranteed or issued by the Bank shall bear on its face a conspicuous statement to the effect that it is not an obligation of any government unless expressly stated on the se­ curity. Sectioll 10. Political activity prohibited The Bank and its officers shall not interfere in the political

127 ARTICLES OJ' AGREEMENT affairs of any member; nor shall they be influenced in their deciJ­ ions by the political character of the member or members con­ cerned. Only economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially in order to achieve the purposes stated in Article I.

ARTICLE V ORGANIZATION AND MANAGEMENT Section 1. Structure of the Bank The Bank shall have a Board of Governors, Executive Direc­ tors, a President and such other officers and staff to perform such duties as the Bank may determine. Section 2. Board of Governors ( a) All the powers of the Bank shall be vested in the Board of Governors consisting of one governor and one alternate ap­ pointed by each member in such manner as it may determine. Each governor and each alternate shall serve for five years, sub­ ject to the pleasure of the member appointing him, and may be reappointed. No alternate may vote except in the absence of his principal. The Board shall select one of the governors as Chairman. (b) The Board of Governors may delegate to the Executive Directors authority to exercise any powers of the Board, except the power to: (i) Admit new members and determine the conditions of their admission; ( ii) Increase or decrease the capital stock; (iii) Suspend a member; (iv) Decide appeals from interpretations of this Agreement given by the Executive Directors; (v) Make arrangements to cooperate with other internation­ al organizations (other than informal arrangements of a temporary and adminstrative character); (vi) Decide to suspend permanently the operations of the Bank and to distribute its assets; (vii) Determine the distribution of the net income of the Bank. ( c ) The Board of Governors shall hold an annual meeting and such other meetings as may be provided for by the Board or called by the Executive Directors. Meetings of the Board shall be called by the Directors whenever requested by five members or by members having one-quarter of the total voting power.

128 ARTICLES OF AGREEMENT

( d) A quorum for any meeting of the Board of Governors shall be a majority of the Governors, exercising not less than two­ thirds of the total voting power. ( e ) The Board of Governors may by regulation establish a procedure whereby the Executive Directors, when they deem such action to be in the best interests of the Bank, may obtain a vote of the Governors on a specific question without calling a meeting of the Board. (f) The Board of Governors, and the Executive Directors to the extent authorized, may adopt such rules and regulations as may be necessary or appropriate to conduct the business of the Bank. ( g) Governors and alternates shall serve as such without compensation from the Bank, but the Bank shall pay them rea­ sonable expenses incurred in attending meetings. (h) The Board of Governors shall determine the remunera­ tion to be paid to the Executive Directors and the salary and terms of the contract of service of the President. Section 3. Voting (a) Each member shall have two hundred fifty votes plus one additional vote for each share of stock held. (b) Except as otherwise specifically provided, all matters before the Bank shall be decided by a majority of the votes cast. Section 4. Executive Directors ( a ) The Executive Directors shall be responsible for the conduct of the general operations of the Bank, and for this pur­ pose, shall exercise all the powers delegated to them by the Board of Governors. (b) There shall be twelve Executive Directors, who need not be governors, and of whom: (i) five shall be appointed, one by each of the five mem­ bers having the largest number of shares; (ii) seven shall be elected according to Schedule B by all the Governors other than those appointed by the five members referred to in (i) above. For the purpose of this paragraph, "members" means govern­ ments of countries whose names are set forth in Schedule A, whe­ ther they are original members or become members in accord­ ance with Article II, Section 1 (b). When governments of other countries become members, the Board of Governors may, by a four-fifths majority of the total voting power, increase the total

129 ARTICLES OF AGREEMENT number of directors by increasing the number of directors to be elected. Executive directors shall be appointed or elected every two years. ( c) Each executive director shall appoint an alternate with full power to act for him when he is not present. When the ex­ ecutive directors appointing them are present, alternates may par­ ticipate in meetings but shall not vote. ( d) Directors shall continue in office until their successors are appointed or elected. If the office of an elected director be­ comes vacant more than ninety days before the end of his term, another director shall be elected for the remainder of the term by the governors who elected the former director. A majority of the votes cast shall be required for election. While the office re­ mains vacant, the alternate of the former director shall exercise his powers, except that of appointing an alternate. ( e ) The Executive Directors shall function in continuous session at the principal office of the Bank and shall meet as often as the business of the Bank may require. (f) A quorum for any meeting of the Executive Directors shall be a majority of the Directors, exercising not less than one­ half of the total voting power. (g) Each appointed director shall be entitled to cast the number of votes allotted under Section 3 of this Article to the member appointing him. Each elected director shall be entitled to cast the number of votes which counted toward his election. All the votes which a director is entitled to cast shall be cast as a unit. (h) The Board of Governors shall adopt regulations under which a member not entitled to appoint a director under (b) above may send a representative to attend any meeting of the Ex­ ecutive Directors when a request made by, or a matter particularly affecting, that member is under consideration. (i) The Executive Directors may appoint such committees as they deem advisable. Membership of such committees need not be limited to governors or directors or their alternates. Section 5. President and staff ( a) The Executive Directors shall select a President who shall not be a governor or an executive director or an alternate for either. The President shall be Chairman of the Executive

130 ARTICLES OF AGREEMENT

'Directors, but shall have no vote except a deciding vote in case of an equal division. He may participate in meetings of the Board of Governors, but shall not vote at such meetings. The President shall cease to hold office when the Executive Directors so decide. (b) The President shall be chief of the operating staff of the Bank and shall conduct, under the direction of the Executive Directors, the ordinary business of the Bank. Subject to the gen­ eral control of the Executive Directors, he shall be responsible for the organization, appointment and dismissal of the officers and staff. ( c) The President, officers and staff of the Bank, in the discharge of their offices, owe their duty entirely to the Bank and to no other authority. Each member of the Bank shall respect the international character of this duty and shall refrain from all attempts to influence any of them in the discharge of their duties. ( d) In appointing the officers and staff the President shall, subject to the paramount importance of securing the highest standards of efficiency and of technical competence, pay due regard to the importance of recruiting personnel on as wide a geographical basis as possible.

Section 6. Advisory Council ( a ) There shall be an Advisory Council of not less than seven persons selected by the Board of Governors including rep­ resentatives of banking, commercial, industrial, labor, and agri­ cultural interests, and with as wide a national representation as possible. In those fields where specialized international organi­ zations exist, the members of the Council representative of those fields shall be selected in agreement with such organizations. The Council shall advise the Bank on matters of general policy. The Council shall meet annually and on such other occasions as the Bank may request. (b) Councillors shall serve for two years and may be reap­ pointed. They shall be paid their reasonable expenses incurred on behalf of the Bank. Section 7. Loan committees The committees required to report on loans under Article III, Section 4, shall be appointed by the Bank. Each such com­ mittee shall include an expert selected by the governor repre­ senting the member in whose territories the project is located and

131

------,- -" -- , ARTICLES OF AGREEMENT

one or more members of the technical staff of the Bank. Section 8. Relationship to other international O1'ganizations ( a) The Bank, within the terms of this Agreement, shall cooperate with any general international organization and with public international organizations having specialized responsi­ bilities in related fields. Any arrangements for such cooperation which would involve a modification of any provision of this Agreement may be effected only after amendment to this Agree­ ment under Article VIII. (b) In making decisions on applications for loans or guaran­ tees relating to matters directly within the competence of any international organization of the types specified in the preceding paragraph and participated in primarily by members of the Bank, the Bank shall give consideration to the views and recommenda­ tions of such organization. Section 9. Location of offices ( a) The principal office of the Bank shall be located in the territory of the member hoiding the greatest number of shares. (Q) The Bank may establish agencies or branch offices in the territories of any member of the Bank.

Section 10. Regional offices and councils ( a) The Bank may establish regional offices and determine the location of, and the areas to be covered by, each regional office. (b) Each regional office shall be advised by a regional council representative of the entire area and selected in such manner as the Bank may decide.

Section 11. Depositories ( a) Each member shall designate its central bank as a depository for all the Bank's holdings of its currency or, if it has no central bank, it shall designate such other institution as may be acceptable to the Bank. (b) The Bank may hold other assets, including gold, in depositories designated by the five members having the largest number of shares and in such other designated depositories as the Bank may select. Initially, at least one-half of the gold holdings of the Bank shall be held in the depository designated by the

132 ARTICLES OF AGREEMENT member in whose territory the Bank has its principal office, and at least forty percent shall be held in the depositories designated by the remaining four members referred to above, each of such depositories to hold, initially, not less than the amount of gold paid on the shares of the member designating it. However, all transfers of gold by the Bank shall be made with due regard to the costs of transport and anticipated requirements of the Bank. In an emergency the Executive Directors may transfer all or any part of the Bank's gold holdings to any place where they can be adequately protected. Section 12. Form of holdings of currency The Bank shall accept from any member, in place of any part of the member's currency, paid in to the Bank under Article II, Section 7 (i), or to meet amortization payments on loans made with such currency, and not needed by the Bank in its operations, notes or similar obligations issued by the Govern­ ment of the member or the depository designated by such mem­ ber, which shall be non-negotiable, non-interest-bearing and pay­ able at their par value on demand by credit to the account of the Bank in the designated depository. Section 13. Publication of reports and provision of information ( a ) The Bank shall publish an annual report containing an audited statement of its accounts and shall circulate to members at intervals of three months or less a summary statement of its financial position and a profit and loss statement showing the results of its operations. (b) The Bank may publish such other reports as it deems desirable to carry out its purposes. ( c) Copies of all reports, statements and publications made under this section shall be distributed to members.

Section 14. Allocation of net income ( a) The Board of Governors shall determine annually what part of the Bank's net income, after making provision for reserves, shall be allocated to surplus and what part, if any, shall be dis­ tributed. (b) If any part is distributed, up to two percent non-cum­ ulative shall be paid, as a first charge against the distribution for any year, to each member on the basis of the average amount of the loans outstanding during the year made under Article IV,

133 ARTICLES OF AGREEMENT

Section 1 (a) (i), out of cun-ency con-esponding to its subscrip­ tion. If two percent is paid as a first charge, any balance remain­ ing to be distributed shall be paid to all members in proportion to their shares. Payments to each member shall be made in its own I currency, or if that currency is not available in other cur­ rency acceptable to the member. If such payments are made in cun-encies other than the member's own currency, the transfer of the currency and its use by the receiving member after pay­ ment shall be without restriction by the members.

ARTICLE VI WITHDRAWAL AND SUSPENSION OF MEMBERSHIP: SUSPENSION OF OPERATIONS Section 1. Right of members to withdraw Any member may withdraw from the Bank at any time by transmitting a notice in writing to the Bank at its principal office. Withdrawal shall become effective on the date such notice is re­ ceived.

Section 2. Suspension of membership If a member fails to fulfill any of its obligations to the Bank, the Bank may suspend its membership by decision of a majority of the Governors, exercising a majority of the total voting power. The member so sllspended shall automatically cease to be a mem­ ber one year from the date of its suspension unless a decision is taken by the same majority to restore the member to good stand­ ing. While under suspension, a member shall not be entitled to exercise any rights under this Agreement, except the right of withdrawal, but shall remain subject to all obligations. Section 3. Cessation of membership in International Monetary Fund Any member which ceases to be a member of the Internat­ ional Monetary Fund shall automatically cease after three months to be a member of the Bank unless the Bank by three-fourths of the total voting power has agreed to allow it to remain a member. Section 4. Settlement of accounts with governments ceasing to be members (a) When a government ceases to be a member, it shall

134 ARTICLES OF AGREEMENT remain liable for its direct obligations to the Bank and for its contingent liabilities to the Bank so long as any part of the loans or guarantees contracted before it ceased to be a member are outstanding; but it shall cease to incur liabilities with respect to loans and guarantees entered into thereafter by the Bank and to share either in the income or the expenses of the Bank. (b) At the time a government ceases to be a member, the Bank shall arrange for the repurchase of its shares as a part of the settlement of accounts with such government in accordance with the provisions of (c) and (d) below. For this purpose the repurchase price of the shares shall be the value shown by the books of the Bank on the day the government ceases to be a member. ( c) The payment for shares repurchased by the Bank under this section shall be governed by the following conditions: (i) Any amount due to the government for its shares shall be withheld so long as the government, its central bank or any of its agencies remains liable, as borrower or guarantor, to the Bank and such amount may, at the option of the Bank, be applied on any such liability as it matures. No amount shall be withheld on account of the liability of the government resulting from its sub­ scription for shares under Article II, Section 5 (ii). In any event, no amount due to a member for its shares shall be paid until six months after the date upon which the government ceases to be a member. (ii) Payments for shares may be made from time to time, upon their surrender by the government, to the extent by which the amount due as the repurchase price in (b) above exceeds the aggregate of liabilities on loans and guarantees in (c) (i) above until the former mem­ ber has received the full repurchase price. (iii ) Payments shall be made in the currency of the country receiving payment or at the option of the Bank in gold. (iv) If losses are sustained by the Bank on any guarantees, participations in loans, or loans which were outstand­ ing on the date when the government ceased to be a member, and the amount of such losses exceeds the amount of the reserve provided against losses on the date when the government ceased to be a member, such government shall be obligated to repay upon de­ mand the amount by which the repurchase price of its shares would have been reduced, if the losses had been taken into account when the repurchase price was de­ termined. In addition, the former member government shall remain liable on any call for unpaid subscriptions

135 ARTICLES OF AGREEMENT

under Article II, Section 5 (ii), to the extent that it would have been required to respond if the impairment of capital had occurred and the call had been made at . the time the repurchase price of its shares was determ­ ined. ( d) If the Bank suspends permanently its operations under Section 5 (b) of this Article, within six months of the date upon which any government ceases to be a member, all rights of such government shall be determined by the provisions of Section 5 of this Article.

Section 5. Suspension of operations and settlement of obligations (a) In an emergency the Executive Directors may suspend temporarily operations in respect of new loans and guarantees pending an opportunity for further consideration and action by the Board of Governors. (b) The Bank may suspend permanently its operations in respect of new loans and guarantees by vote of a majority of the Governors, exercising a majority of the total voting power. After such suspension of operations the Bank shall forthwith cease all activities, except those incident to the orderly realization, con­ servation, and preservation of its assets and settlement of its obligations. ( c) The liability of all members for uncalled subscriptions to the capital stock of the Bank and in respect of the depreciation of their own currencies shall continue until all claims of creditors, including all contingent claims, shall have been discharged. ( d) All creditors holding direct claims shall be paid out of the assets of the Bank, and then out of payments to the Bank on calls on unpaid subscriptions. Before making any payments to creditors holding direct claims, the Executive Directors shall make such arrangements as are necessary, in their judgment, to insure a distribution to holders of contingent claims ratably with credi­ tors holding direct claims. (e) No distribution shall be made to members on account of their subscriptions to the capital stock of the Bank until (i) all liabilities to creditors have been discharged or pro­ vided for, and (ii) a majority of the Govemors, exercising a majority of the total voting power, have decided to make a distri­ bution. (f) After a decision to make a distribution has been taken

136 ARTICLES OF AGREEMENT under (e) above, the Executive Directors may by a two-third~ majority vote make successive distributions of the assets of the Bank to members until all of the assets have been distributed. This distribution shall be subject to the prior settlement of all outstanding claims of the Bank against each member. (g) Before any distribution of assets is made, the Executive Directors shall fix the proportionate share of each member accord­ ing to the ratio of its shareholding to the total outstanding shares of the Bank. (h) The Executive Directors shall value the assets to be distributed as at the date of distribution and then proceed to distribute in the following manner: (i) There shall be paid to each member in its own obliga­ tions or those of its official agencies or legal entities within its territories, insofar as they are available for distribution, an amount equivalent in value to its pro­ portionate share of the total amount to be distributed. (ii) Any balance due to a member after payment has been made under (i) above shall be paid, in its own curency, insofar as it is held by the Bank, up to an amount equiv­ alent in value to such balance. (iii) Any balance due to a member after payment has been made under (i) and (ii) above shall be paid in gold or currency acceptable to the member, insofar as they are held by the Bank, up to an amount equivalent in value to such balance. (iv) Any remaining assets held by the Bank after payments have been made to members under (i), (ii), and (iii) above shall be distributed pro rata among the members. (i) Any member receiving assets distributed by the Bank in acordance with (h) above, shall enjoy the same rights with respect to such assets as the Bank enjoyed prior to their distri­ bution.

ARTICLE VII STATUS, IMMUNITIES AND PRIVILEGES Section 1. Purposes of Article To enable the Bank to fulfill the functions with which it is entrusted, the status, immunities and privileges set forth in this Article shall be accorded to the Bank in the territories of each member. Section 2. Status of the Bank The Bank shall possess full juridical personality, and, in par-

137 ARTICLES OF AGREEMENT ticular, the capacity: (i) to contract; (ii) to acquire and dispose of immovable and movable prop­ erty; (iii) to institute legal proceedings. Section 3. Position of the Bank with regard to judicial process Actions may be brought against the Bank only in a court of competent jurisdiction in the territories of a member in which the Bank has an office, has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities. No actions shall, however, be brought by members or persons acting for or deriving claims from members. The property and assets of the Bank shall, wheresoever located and by whom­ soever held, be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Bank. Section 4. Immunity of assets from seizure Property and assets of the Bank, wherever located and by whomsoever held, shall be immune from search, requisition, con­ fiscation, expropriation or any other form of seizure by executive or legislative action. Section 5. Immunity of archives The archives of the Bank shall be inviolable. Section 6. Freedom of assets from restrictions To the extent necessary to carry out the operations provided for in this Agreement and subject to the provisions of this Agree­ ment, all property and assets of the Bank shall be free from restric­ tions, regulations, controls and moratoria of any nature. Section 7. Privilege for communications The official communications of the Bank shall be accorded by each member the same treatment that it accords to the official communications of other members. Section 8. Immunities and privileges of officers and employees All governors, executive directors, alternates, officers and employees of the Bank (i) shall be immune from legal process with respect to acts performed by them in their official capacity except when. the Bank waives this immunity; ( ii) not being local nationals, shall be accorded the same immunities from immigration restrictions, alien regis- 138 ARTICLES OF AGREEMENT

tration requirements and national service obligations and the same facilities as regards exchange restrictions as are accorded by members to the representatives, officials, and employees of comparable rank of other members; ( iii) shall be granted the same treatment in respect of trav­ elling facilities as is accorded by members to represen­ tatives, officials and employees of comparable rank of other members. Section 9. Immunities from taxation (a) The Bank, its assets, property, income and its opera­ tions and transactions authorized by this Agreement, shall be immune from all taxation and from all customs duties. The Bank shall also be immune from liability for the collection or payment of any tax or duty. (b) No tax shall be levied on or in respect of salaries and emoluments paid by the Bank to executive directors, alternates, officials or employees of the Bank who are not local citizens, local subjects, or other local nationals. (c) No taxation of any kind shall be levied on any obligation or security issued by the Bank (including any dividend or in­ terest thereon) by whomsoever held- (i) which discriminates against such obligation or security solely because it is issued by the Bank; or (ii) if the sole jurisdictional basis for such taxation is the place or currency in which it is issued, made payable or paid, or the location of any office or place of business maintained by the Bank. (d) No taxation of any kind shall be levied on any obliga­ tion or security guaranteed by the Bank (including any dividend or interest thereon) by whomsoever held- (i) which discriminates against such obligation or. security solely because it is guaranteed by the Bank; or (ii) if the sole jurisdictional basis for such taxation is the location of any office or place of business maintained by the Bank. Section 10. Application of Article Each member shall take such action as is r.ecessary in its own territories for the purpose of making effective in terms of its own law the principles set forth in this Article and shall inform the Bank of the detailed action which it has taken.

139 ARTICLES OF AGREEMENT

ARTICLE VIII AMENDMENTS ( a) Any proposal to introduce modifications in this Agree­ ment, whether emanating from a member, a governor or the Ex­ ecutive Directors, shall be communicated to the Chairman of the Board of Governors who shall bring the proposal before the Board. If the proposed amendment is approved by the Board the Bank shall, by circular letter or telegram, ask all members whether they accept the proposed amendment. When three-fifths of the members, having four-fifths of the total voting power, have ac­ cepted the proposed amendment, the Bank shall certify the fact by formal communication addressed to an members. (b) Notwithstanding (a) above, acceptance by an mem­ bers is required in the case of any amendment modifying (i) the right to withdraw from the Bank provided in Article VI, Section 1; (ii) the right secured by Article II, Section 3 (c); ( iii) the limitation on liability provided in Article II, Section 6. ( c ) Amendments shall enter into force for all members three months after the date of the formal communication unless a shorter period is specified in the circular letter or telegram . • ARTICLE IX INTERPRETA TION ( a ) Any question of interpretation of the provisions of this Agreement arising between any member and the Bank or between any members of the Bank shall be submitted' to the Executive Directors for their decision. If the question particularly affects any member not entitled to appoint an executive director, it shall be entitled to representation in accordance with Article V, Sec­ tion 4 (h). (b) In any case where the Executive Directors have given a decision under (a) above, any member may require that the question be referred to the Board of Governors, whose decision shall be final. Pending the result of the reference to the Board, the Bank may, so far as it deems necessary, act on the basis of the decision of the Executive Directors. ( c ) Whenever a disagreement arises between the Bank and a country which has ceased to be a member, or between the Bank and any member during the permanent suspension of the Bank,

140

...... _-_._---- ARTICLES OF AGREEMENT

ARTICLE VIII AMENDMENTS ( a) Any proposal to introduce modifications in this Agree­ ment, whether emanating from a member, a governor or the Ex­ ecutive Directors, shall be communicated to the Chairman of the Board of Governors who shall bring the proposal before the Board. If the proposed amendment is approved by the Board the Bank shall, by circular letter or telegram, ask all members whether they accept the proposed amendment. When three-fifths of the members, having four-fifths of the total voting power, have ac­ cepted the proposed amendment, the Bank shall certify the fact by formal communication addressed to all members. (b) Notwithstanding (a) above, acceptance by all mem­ bers is required in the case of any amendment modifying (i) the right to withdraw from the Bank provided in Article VI, Section 1; (ii) the right secured by Article II, Section 3 (c); (iii) the limitation on liability provided in Article II, Section 6. ( c ) Amendments shall enter into force for all members three months after the date of the formal communication unless a shorter period is specified in the circular letter or telegram . • ARTICLE IX INTERPRETATION ( a) Any question of interpretation of the provisions of this Agreement arising between any member and the Bank or between any members of the Bank shall be submitted' to the Executive Directors for their decision. If the question particularly affects any member not entitled to appoint an executive director, it shall be entitled to representation in accordance with Article V, Sec­ tion 4 (h). (b) In any case where the Executive Directors have given a decision under (a) above, any member may require that the question be referred to the Board of Governors, whose decision shall be final. Pending the result of the reference to the Board, the Bank may, so far as it deems necessary, act on the basis of the decision of the Executive Directors. ( c ) Whenever a disagreement arises between the Bank and a country which has ceased to be a member, or between the Bank and any member during the permanent suspension of the Bank,

140 ARTICLES OF AGREEMENT such disagreement shall be submitted to arbitration by a tribunal of three arbitrators, one appOinted by the Bank, another by the country involved and an umpire who, unless the parties other­ wise agree, shall be appointed by the President of the Permanent Court of International Justice or such other authority as may have been prescribed by regulation adopted by the Bank. The umpire shall have full power to settle all questions of procedure in any case where the parties are in disagreement with respect thereto. ARTICLE X APPROVAL DEEMED GIVEN Whenever the approval of any member is required before any act may be done by the Bank, except in Article VIII, approval shall be deemed to have been given unless the member presents an objection within such reasonable period as the Bank may fix in notifying the member of the proposed act. ARTICLE XI FINAL PROVISIONS Section 1. Entry into force This Agreement shall enter into force when it has been signed on behalf of governments whose minimum subscriptions comprise not less than sixty-five percent of the total subscriptions set forth in Schedule A and when the instruments referred to in Section 2 (a) of this Article have been deposited on their behalf, but in no event shall this Agreement enter into force before May 1, 1945. Section 2. Signature ( a) Each government on whose behalf this Agreement is signed shall deposit with the Government of the United States of America an instrument setting forth that it has accepted this Agreement in accordance with its law and has taken all steps necessary to enable it to carry out all of its obligations under this Agreement. (b) Each government shall become a member of the Bank as from the date of the deposit on its behalf of the instrument re­ ferred to in (a) above, except that no government shall become a member before this Agreement enters into force under Section 1 of this Article. ( c) The Government of the United States of America shall inform the governments of all countries whose names are set forth

141 ARTICLES OF AGREEMENT

in Schedule A, and all governments whose membership is ap­ proved in accordance with Article II, Section 1 (b), of all signa­ hues of this Agreement and of the deposit of all instruments referred to in (a) above. ( d) At the time this Agreement is signed on its behalf, each government shall transmit to the Government of the United States of America one one-hundredth of one percent of the price of each share in gold or United States dollars for the purpose of meeting administrative expenses of the Bank. This payment shall be credited on account of the payment to be made in accord­ ance with Article II, Section 8 (a). The Government of the United States of America shall hold such funds in a special deposit account and shall transmit them to the Board of Govern­ ors of the Bank when the initial meeting has been called under Section 3 of this Article. If this Agreement has not come into force by December 31, 1945, the Government of the United States of America shall return such funds to the governments that transmitted them. ( e) This Agreement shall remain open for signature at Washington on behalf of the governments of the countries whose names are set forth in Schedule A until December 31, 1945. (f) After December 31, 1945, this Agreement shall be open for signature on behalf of the government of any country whose membership has been approved in accordance with Article II, Section 1 (b). (g) By their signature of this Agreement, all governments accept it both on their own behalf and in respect of all their colonies, overseas territories, all territories under their protec­ tion, suzerainty, or authority and all territories in respect of which they exercise a mandate. (h) In the case of governments whose metropolitan terri­ tories have been under enemy occupation, the deposit of the instrument referred to in (a) above may be delayed until one hundred and eighty days after the date on which these territories have been liberated. If, however, it is not deposited by any such government before the expiration of this period, the signature affixed on behalf of that government shall become void and the portion of its subscription paid under (d) above shall be re­ turned to it. (i) Paragraphs (d) and (h) shall come into force with

142 ARTICLES OF AGREEMENT regard to each signatory government as from the date of its signature. Section 3. Inauguration of the Bank ( a) As soon as this Agreement enters into force under Section 1 of this Article, each member shall appoint a governor and the member to whom the largest number of shares is allo­ cated in Schedule A shall call the first meeting of the Board of Governors. (b) At the first meeting of the Board of Governors, arrange­ ments shall be made for the selection of provisional executive directors. The governments of the five countries, to which the largest number of shares are allocated in Schedule A, shall appoint provisional executive directors. If one or more of such governments have not become members, the executive director­ ships which they would be entitled to fill shall remain vacant until they become members, or until January 1, 1946, whichever is the earlier. Seven provisional executive directors shall be elected in accordance with the provisions of Schedule B and shall remain in office until the date of the first regular election of executive directors which shall be held as soon as practicable after January 1, 1946. ( c ) The Board of Governors may delegate to the provis­ ional executive directors any powers except those which rrJay not be delegated to the Executive Directors. ( d) The Bank shall notify members when it is ready to commence operations. DONE at Washington, in a single copy which shall remain deposited in the archives of the Government of the United States of America, which shall transmit certified copies to all govern­ ments whose names are set forth in Schedule A and to all govern­ ments whose membership is approved in accordance with Article II, Section 1 (b).

143 ARTICLES OF AGREEMENT

SCHEDULE A SUBSCRIPTIONS (miUioWl of dollars) (miUions of doUa,s) Australia 200 India 400 Belgium 225 Iran 24 Bolivia 7 Iraq 6 Brazil 105 Liberia .5 Canada 325 Luxembourg 10 Chile 35 Mexico 65 China 600 Netherlands 275 Colombia 35 New Zealand 50 Costa Rica 2 Nicaragua .8 Cuba 35 Norway 50 Czechoslovakia 125 Panama .2 "Denmark Paraguay .8 Dominican Republic 2 Peru 17.5 Ecuador 3.2 Philippine Commonwealth 15 Egypt 40 Poland 125 EI Salvador 1 Union of South Mrica 100 Ethiopia 3 Union of Soviet Socialist France 450 Republics 1200 Greece 25 United Kingdom 1300 United States 3175 Guatemala 2 Uruguay 10.5 Haiti 2 Venezuela 10.5 Honduras 1 Yugoslavia 40 Iceland 1 Total 9100 "The quota of Denmark shall be determined by the Bank after Denmark accepts membership in accordance with these Articles of Agreement. SCHEDULE B ELECTION OF EXECUTIVE DIRECTORS 1. The election of the elective executive directors shall be by ballot of the Governors eligible to vote under Article V, Section 4 (b). 2. In balloting for the elective executive directors, each governor eligible to vote shall cast for one person all of the votes to which the member appointing him is entitled under Section 3 of Article V. The seven persons receiving the greatest number of votes shall be executive directors, except that no person who receives less than fourteen percent of the total of the votes which can be cast (eligible votes) shall be considered elected. 3. When seven persons are not elected on the first ballot, a second ballot shall be held in which the person who received the lowest number of votes shall be ineligible for election and in which there shall vote only (a) those governors who voted in the first ballot for a person not elected and (b) those governors whose votes for a person elected are deemed under 4 below to have raised the votes cast for that person above fifteen percent of the eligible votes.

144 ARTICLES OF AGREEMENT

4. In determining whether the votes cast by a governor are to be deemed to have raised the total of any person above fifteen percent of the eligible votes, the fifteen percent shall be deemed to include, first, the votes of the governor casting the largest number of votes for such person, then the votes of the governor casting the next largest number, and so on until fifteen percent is reached. 5. Any governor, part of whose votes must be counted in order to raise the total of any person above fourteen percent, shall be considered as casting all of his votes for such person even if the total votes for such person thereby exceed fifteen percent. 6. If, after the second ballot, seven persons have not been elected, further ballots shall be held on the same principles until seven persons have been elected, provided that after six persons are elected, the seventh may be elected by a simple majority of the remaining votes and shall be deemed to have been elecbl

145 SIGNATORIES TO THE ARTICLES OF AGREEMENT

For BELGIUM For INDIA L.A. GOFFIN G. S. BAJPAI For BOLIVIA For IRAN V. ANDRADE HUSSEIN ALA For BRAZIL For IRAQ FERNANDO LOBO ALI JAWDAT For CANADA For LUXEMBOURG LESTER B. PEARsON HUGUES LE GALLAIS For CHILE For MEXICO MARCIAL MORA A. E. MONLEROS For CHINA For THE NETHERLANDS WEI TAO-MING A. LOUDON For COSTA RICA For NICARAGUA GUTlENEZ G. S. SACASA For CUBA For NORWAY GUILLERMO BELT W. MUNTHE MORGENS­ For CZECHOSLOVAKIA. TIERNE V. HURBAN For PANAMA For DENMARK J. J. VALLARINO HENRIK KAUFFMANN For PARAGUAY For DOMINICAN REPUBLIC CELSO R. VELAZQUEZ EMILIO G. GODOY For PERU For ECUADOR H. FERNANDEZ-DAvn.A GALOPLAZA For THE PHILIPPINE For EGYPT COMMONWEALTH ANIS AZER CARLOS P. RoMULO For EL SALVADOR For POLAND H. D. CASTRO OSKAR LANGE For ETHIOPIA For UNION OF SOUTH G. TESEMMA AFRICA For FRANCE H. T. ANDREWS H. BONNET For THE UNITED KINGDOM For GREECE HALIFAX C. P. DIAMANTOPOULOS For THE UNITED STATES For GUATEMALA OF AMERICA J. G. GRANADOS FRED M. VINSON For HONDURAS For URUGUAY JULIAN R. CACERAS CESAR MONTRO B For ICELAND For YUGOSLAVIA THOR THORS STANOJE SIMIC

146 TABLE 1 Voting Power and Subscriptions of Member Countries (as of September 27, 1946)

, Voting power of Required subscriptions to member countries International Bank Amount which may International Bank Total subscription be used (in Country millions of dollars) ----~------I-----~-----I Amount F Only to Number Per cent (in Per cent or, meet of votes of total millions of total Bank s Bank's f ______1______.1 _____ 1______of dollars) 1------own loans OlgabI" lonl

Belgium ...... 2,500 2.90 225.0 2.93 45.00 180.00 Bolivia ...... 320 .37 7.0 .09 1.40 5.60 Brazil ...... 1,300 1.51 105.0 1.37 21.00 84.00 Canada ...... 3,500 4.06 325.0 4.24 65.00 260.00 Chile ...... 600 .70 35.0 .46 7.00 28.00

China ...... 6,250 7.25 600.0 7.82 120.00 480.00 Costa Rica ...... 270 .31 2.0 .03 .40 1.60 Cuba ...... 600 .70 35.0 .46 7.00 28.00 Czechoslovakia ...... 1,500 1.74 125.0 1.63 25.00 100.00

Denmark ...... : ...... 930 1.08 68.0 .89 13.60 54.40 Dominican Republic ...... 270 .31 2.0 .03 .40 1.60 Ecuador ...... 282 .33 3.2 .04 .64 2.56 Egypt ...... 650 .75 40.0 .52 8.00 32.00 El Salvador ...... 260 .30 1.0 .01 .20 .80

Ethiopia ...... 280 .32 3.0 .04 .60 2.40 France ...... 4,750 5.51 450.0 5.87 90.00 360.00 Greece ...... 500 .58 25.0 .33 5.00 20.00 Guatemala ...... 270 .31 2.0 .03 .40 1.60 Honduras ...... 260 .30 1.0 .01 .20 .80

Iceland ...... 260 .30 1.0 .01 .20 .80 India ...... 4,250 4.93 400.0 5.22 80.00 320.00 Iran ...... 490 .57 24.0 .31 4.80 19.20 Iraq ...... 310 .36 6.0 .08 1.20 4.80 Luxembourg ...... 350 .41 10.0 .13 2.00 8.00

Mexico ...... 900 1.04 65.0 .85 13.00 52.00 Netherlands ...... 3,000 3.48 275.0 3.59 55.00 220.00 Nicaragua ...... 258 .30 .8 .01 .16 .64 Norway ...... 750 .87 50.0 .65 10.00 40.00 Panama ...... 252 .29 .2 (') .04 .16

Paraguay ...... 258 .30 .8 .01 .16 .64 Peru ...... 425 .49 17.5 .23 3.50 14.00 Philippine Republic ...... 4<10 .45 15.0 .20 3.00 12.00 Poland ...... 1,500 1.74 125.0 1.63 25.00 100.00 Union of South Africa ...... 1,250 1.45 100.0 1.30 20.00 80.00 United Kingdom ...... 13,250 15.37 1,300.0 16.95 260.00 1,040.00 United States ...... 32,000 37.12 3,175.0 41.40 635.00 2,540.00 Uruguay ...... 355 .41 10.5 .14 2.10 8.40 Yugoslavia ...... 650 .75 40.0 .52 8.00 32.00

Total...... 86.200 "100.00 7,670.0 '100.00 1,534.00 6,136.00

1 Less than .005 per cent. I The figures shown in the table do not add to 100.00 because of rounding. 147 'fABLE 2 Voting Power of Executive Directors* (as of September 27, 1946)

Number Per cent of of total voting votes power Directors appointed by: 1. United States ...... 32,000 37.53 2. United Kingdom ...... 13,250 15.54 3. China ...... 6,250 7.33 4. France ...... 4,750 5.57 5. India ...... 4,250 4.98 Elected Directors 6. Beyen (Netherlands), elected by votes of: Netherlands ...... 3,000 Union of South Africa ...... 1.250 4,250 4.98 7. Ansiaux (Belgium), elected by votes of: Belgium ...... 2,500 Norway ...... 750 Luxembourg ...... 350 Iceland ...... 260 3,860 4.53 8. Moller (Chile), elected by votes of: Brazil ...... 1,300 Chile ...... 600 Philippine Republic ...... 400 Bolivia ...... 320 Costa Rica ...... 270 Guatemala ...... 270 Paraguay ...... 258 Panama ...... 252 3,670 4.30 9. Baranski (Poland), elected by votes of: Czechoslovakia ...... 1,500 Poland ...... 1,500 Yugoslavia ...... 650 3,650 4.2t1 10. Machado (Cuba), elected by votes of: Mexico ...... 900 Cuba ...... 600 Peru ...... 425 Uruguay ...... 355 Ecuador ...... 282 Dominican Republic ...... 270 El Salvador ...... 260 Honduras ...... 260 Nicaragua ...... 258 3,610 4.23 11. Bryce (Canada), elected by votes of: Canada ...... 3,500 3,500 4.11 12. Varvaressos (Greece), elected by votes of: Egypt ...... 650 Greece ...... 500 Iran ...... 490 Iraq ...... 310 Ethiopia ...... 280 2,230 2.62 Total ...... 1--:8=5"'::/2-=-70;:------wD.OO--

-The total number of votes and the percentage distribution of the voting power of member countries are affected by the fact that Denmark did not join in time to participate in the election~ ,

148 INTERNATIONAL BANK. FOR RECONSTRUCT10N AND DEVELOPMENT

Officers (As of September 27, 1946)

President...... , .. , .... ,., ... EUGENE MEYER

Vice President...... HAROLD D. SMITH

Assistants to the President ..... ,.... RICHARD H. DEMUTH JOHN H. FERGUSON

Secretary . ... M. M. MENDELS

Treasurer (Acting) ...... D. CRENA DE IONGH

General Counsel. . .. CHESTER A. McLAIN

Loan Director (Acting) ...... J. W.BEYEN

Research Director .... LEONARD B. llisT