Message From President Truman¹

THE WHITE HOUSE

Washington

September 23, 1946

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 complete success in your important work.

Very sincerely yours,

Harry S. Truman

Address by the Honorable John W. Snyder²

Chairman of the Boards of Governors of the International Bank for Reconstruction and Development and the International Monetary Fund.

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 complex, and would require unprecedented international cooperation. These expectations have been realized; the magnitude of our postwar international economic and financial problems has more than taxed our individual abilities. We must now actively assume our share in the task of building a permanent peace and providing a prosperous 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 Conference 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 Directors 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 excellent 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 operating agencies in their appointed fields. If I may be permitted to express the keynote of this second meeting of the Boards of Governors, 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 immediate postwar and the longer term monetary and financial needs of the world.

I think we may take pride in saying that since the end of the war, 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 overcome, 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 leadership in positive action toward international peace and economic stability, through encouraging the formation of the United Nations 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 financial aid in an earnest effort to reestablish economic equilibrium in the war-devastated countries, as well as in those countries materially affected by the effects of the war. In making this contribution, the United States has been prompted not only by its recognition 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 together.

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 reconstruction requirements but in the expectation that the International 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 flow 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 economic goal of the United Nations is productive employment for all who are able and willing to work, and better living standards for everyone.

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 otherwise, 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 international 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 overnight 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 possible. 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 uneconomic consequences of improper exchange rates, and avoid the competitive undermining of the exchange rate structure, we must determine by cooperative action a pattern of rates which will be consistent with the maintenance of international equilibrium and stability of international currency values. An early stabilization of exchange rates at their proper levels will give encouragement 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 complicated 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 acceptable standards to which all countries are willing to adhere. 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 applications 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 peace-loving nations join with us. All but six of the 44 nations represented at the Bretton Woods Conference have joined the Fund and all but seven are members of the Bank. I sincerely hope 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 fundamental 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 economic and political organization, it is essential that we reach an agreement on common standards of fair practice in international 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 governments 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 governments and, above all, the hopeful people they represent.

The spirit of cooperation and enthusiasm which we show here, will carry over 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 cooperation, 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.

Address by Mr. Camille Gutt³

Mr. Chairman, I present to the Board of Governors the Annual Report of the Executive Directors of the International Monetary Fund. I regard it as a privilege to have the honor to place before you this first statement of the work of the Fund.

We all share a great satisfaction in the realization that the Bretton Woods Institutions are at last at work. It is over-shadowed by the deep regret that we are deprived of the presence of Lord Keynes on this occasion. We shall miss his wise council and his good fellowship.

We have no miracles to report, unless it is that the International Monetary Fund is proceeding with its work. This is simply a report of duties that have been performed and of tasks that lie ahead.

It is impossible to give in detail in an Annual Report the great mass of day-to-day work involved in placing a new institution in operation. All that can be done is to highlight the major developments. On May 6, the Executive Directors held their first meeting in Washington. They have worked steadily since then to transform the Fund from a blueprint into a functioning institution. The progress we have made is very largely the result of their labors.

In this, they have been ably assisted by a staff of one hundred people from fifteen countries. It has not been easy to build up a staff of the high standard of technical competence that is required for our work, especially as we must, as far as possible, take account of geographic distribution. There is everywhere a shortage of the kind of personnel our organization needs. For this reason, the staff is being recruited slowly and carefully. It is hoped that as time goes on we shall draw on every member of the Fund, and that we shall have a representative international staff.

The Executive Directors have been particularly concerned with making careful preparation for beginning the operations of the Fund. They have, during the past few months, devoted a large part of their time to the Rules and Regulations which are presented to you for review. These Rules and Regulations will facilitate smooth everyday operation of the Fund and ease its working relations with members.

Because the Fund is engaged in a new field of international economic cooperation, it is not possible to foresee all the questions that will come up in the course of our work. From time to time there will be need, therefore, for modifications in our Rules and Regulations. As changes and additions become necessary, they will be made on the basis of experience, and they will be presented at future meetings of the Board of Governors for your review.

With the progress already made in organization, the Fund has reached the stage where it will soon be in a position to engage in exchange transactions. The Executive Directors decided, therefore, to request member governments to communicate to the Fund the par value of their currencies as provided in the Fund Agreement. These communicated par values will be considered by the Fund and members, and it is hoped that before many months elapse, the Fund will reach agreement with most countries on the initial par value of their currencies.

The Executive Directors are mindful that conditions are not ideal for determining at this time the ultimate structure of exchange rates. Agricultural and industrial production is still below the pre-war level in the twelve member countries in Europe and Asia that were occupied by the enemy. Additional foreign capital is necessary for reconstructing the war-devastated areas. Nearly all countries are suffering from inflationary pressures and some currencies will have to be rehabilitated. Other international ecnonomic problems, particularly commercial policy, remain to be dealt with. And many grave political problems must be settled before there can be confidence in an enduring peace.

Notwithstanding these difficulties, the Executive Directors have come to the conclusion that it is desirable to proceed now with establishing initial par values for currencies that already have an element of stability. For the currencies of other countries, agreement on par values can be postponed until their economic and monetary situation becomes more stable. In the meantime, a core of exchange stability in the initial par values will make it possible gradually to fit all currencies into the world structure of exchange rates. In this way, the prospect of establishing orderly exchange arrangements will be greatly enhanced.

The Fund will begin exchange transactions with members as soon as practicable after agreement on initial parities. The Executive Directors are aware that this course involves some risks, but they believe that the risks are outweighed by the advantages. There will doubtless be times during the coming year when some members will need temporary assistance in meeting deficits in their balance of payments. If they can get such help from the Fund, the prospect of maintaining stability of the exchange will be greatly improved. In those cases in which a member is not in a position to use the resources of the Fund in an appropriate manner for temporary assistance, the Fund can postpone exchange transactions with that member in accordance with the Fund Agreement.

I call to your attention this statement from the Annual Report to which the Executive Directors wish to give special emphasis:

It is clear that in starting operations at a time when much remains to be done in reconstructing the war-devastated economies, the Fund runs the risk that some of its resources may be used for other than temporary assistance. There will at times be differences of opinion as to whether a member is making proper use of the Fund’s resources. There are certain to be disappointments because of the restraints placed on use of the Fund’s resources by some members. And there will, no doubt, be errors of judgment in assuming risks of one kind or another. The Executive Directors consider it their duty to bring to the attention of the Board of Governors the fact that in the early period of its operations, the Fund may take risks that would not be justified under normal circumstances.

For a variety of reasons, the exposure to risk may not, however, be as great as might appear at first sight. First, certain creditor countries in a position to do so have already made substantial loans to aid in reconstruction. Second, the International Bank will supplement what reconstruction loans are made available directly by governments and through the private capital market. Third, as indicated above, the Executive Directors will exercise the power to limit or postpone exchange operations with countries whose economies are so out of balance that their use of the Fund’s resources would be contrary to the purposes of the Fund Agreement, or prejudicial to the Fund or the members. Finally, the Executive Directors will have the situation under constant review and will take appropriate action if the situation warrants.

There is no disposition among the Executive Directors to underestimate the difficulties or to over-estimate the scope of the Fund’s work. The Fund cannot itself solve the economic problems which face the world. It was not intended to do so. The Fund can help to promote the balanced expansion of international trade and investment and, in this way, contribute to the maintenance of high levels of employment and real income. But only through appropriate national and international economic policies in a world at peace can these employment and production goals be achieved. The Fund will do its best to keep the machinery in motion. It will need the help of the other international economic organizations. But the major part of the task must be done by the countries themselves.

The powers of the Fund are limited, but its influence can be great. There is much the Fund can do, in its special field, to help in restoring the world economy. It provides a center of order and stability toward which all countries can progress and from which they can secure help in reaching this goal. We cannot sit back and wait for normal times. We must do everything possible to meet the problems of the present and prepare to meet the problems of the future. There will always be some seemingly good reasons for doing nothing. But there are better reasons for constructive action directed toward worthwhile ends. Our task is to give now an element of strength and assurance, of firm determination to achieve our objectives, which can be of notable help in dealing with post-war problems.

There is another important matter in connection with the work of the Fund. The countries that have joined the Fund have accepted the principle that the economic well-being of each country depends in large measure on the well-being of all. They have given to the Fund important powers in dealing with international economic problems. If the Fund is to succeed in the task with which it has been entrusted, it must approach these problems from a truly international point of view.

That is the spirit that has prevailed among the Executive Directors. There has been a broad understanding and a conciliatory attitude that augurs well for the future of the Fund. The Executive Directors have discussed fully and frankly the problems they foresee. While there have been differences of opinion, the Executive Directors have been unanimous in their desire to deal in a practical way with each question as it has arisen. It is gratifying to me to have the opportunity to work with them and with you to bring to fruition the high ideals of Bretton Woods.

Resolution No. 1. Amendment of By-Laws⁴

Resolved:

A. That Sections 3,4, 5, and 6 of the By-Laws of the Fund be amended to read as follows:

Section 3. Meetings 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 shall 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 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 Fund or of members of the Fund having in the aggregate one-fourth of the total voting power. Whenever any member of the Fund shall request the Executive Directors to call a special meeting of the Board of Governors, the Managing Director shall notify all members of the Fund 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.

Section 4. Notice of meeting of the Board of Governors.

The Managing Director shall cause notice of the time and place of each meeting of the Board of Governors to be given to each member of the Fund 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 ten 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 temporary alternate of a Governor.

(b) The Chairman of the Board of Governors in consultation 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 Managing Director 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 Fund with the notice of such meeting.

(b) Additional subjects may be placed on the agenda for any meeting of the Board of Governors by any Governor provided that he shall give notice thereof to the Managing Director not less than seven days prior to the date set for such meeting. In special circumstances the Managing Director, 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 Managing Director 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 Fund.

(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 Board of Governors jointly with the Managing Director, 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 Fund a new Section 24 to read as follows:

Section 24. Amendment of 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.

Resolution No. 2. Rules and Regulations⁵

Resolved:

That the Board of Governors of the Fund hereby notifies the Executive Directors that it has reviewed the Rules and Regulations, as adopted by the Executive Directors, and has no changes to suggest.

Resolutions No. 3. Request of Mexico for Information on Monetary Uses of Silver ⁶

Whereas, due to the shortage of time, the magnitude of other problems on the agenda, and other limiting factors, it was not possible to give sufficient consideration to the international aspects of silver, nor to make definite recommendations, at the time of the Bretton Woods Conference;

Whereas, in Article I(i) of the Articles of Agreement of the International Monetary Fund it is stated that one of the principal purposes of the Fund is to promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems;

Whereas, it was the sense of the “Statement Regarding Silver’’ included in the Final Act, that the subject merited further study by the interested nations;

Whereas, one of the prevailing factors of disequilibrium, accentuated by the disruptive forces of the recent war, is a distorted distribution of international monetary reserves, involving difficult problems of readjustment;

Whereas, some member countries may consider of the utmost importance, to take the necessary measures to place their fiscal and monetary systems on sound bases, as a preceding or parallel condition to international action on other fundamental issues of monetary policy;

Whereas, several member countries may contemplate the use of silver as a prime constituent, in their efforts to bring about the necessary fiscal and monetary reforms as well as in making other essential economic adjustments, but are hampered by technical and financial problems arising from the use of silver for monetary purposes;

Whereas, the problem falls within the purposes set forth by the Fund Agreement, and several member countries are interested in it,

Therefore, in recognition of these premises, the Board of Governors of the International Monetary Fund hereby resolves that:

The Fund shall gather whatever material is available and obtainable on the monetary uses of silver; the real function of silver coins; risks and uncertainties of its monetary uses; possibilities of cooperation in the use of silver for monetary purposes, et cetera. In general, the Fund shall gather material, statistical or otherwise, which could be useful in facilitating discussions on the subject in an international conference among interested member countries.

Resolution No. 4. Voting by Denmark ⁷

The Board of Governors hereby resolves that, at 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 raised 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 Fund.

Resolution No. 5. Membership for Lebanon ⁸

Whereas, the Government of the Republic of Lebanon has applied for admission to membership in the International Monetary Fund in accordance with Section 2 of Article II of the Articles of Agreement of the Fund; and

Whereas, pursuant to Section 21 of the By-Laws of the Fund, the Executive Directors, after consultation with representatives of the Government of the Republic of Lebanon have made recommendations to the Board of Governors with regard to the quota 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 Government of the Republic of Lebanon shall be admitted to membership in the Fund shall be as follows:

• 1. Definitions: As used in this resolution:

  • (a) The term “Lebanon” means the Government of Republic of Lebanon.

  • (b) The term “Fund” means International Monetary Fund.

  • (c) The term “Articles” means the Articles of Agreement of the Fund.

  • (d) The terms “dollars” or $” mean United States dollars of the weight and fineness in effect on July 1, 1944.

• 2. Quota and Subscription. The quota of Lebanon shall be $4,500,000.00. Its subscription shall be equal to its quota.

• 3. Payments on Subscription: At the time it deposits the instrument referred to in Section 5 (a) below, in accordance with Article XX, Section 2(a), Lebanon shall pay to the Fund 1/100 of one per cent of its quota in gold or United States dollars.

• 4. Par Values: Within thirty days after the Fund so requests, Lebanon shall communicate to the Fund the par value of its currency based on the rates of exchange prevailing on the date Lebanon becomes a member of the Fund. The par value of the currency of Lebanon shall be established in accordance with the provisions of Article XX, Section 4(b), (c), (f), (g), and (i), except that the period of 90 days specified by Article XX, Section 4(b), shall begin on the date the request from the Fund is received.

• 5. Date of Membership: Lebanon shall become a member of the Fund, subject to the terms and conditions set forth in this resolution, as from the date when Lebanon has complied with both of the following requirements:

  • (a) Lebanon shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; and

  • (b) Lebanon shall sign the original copy of the Articles held in the Archives of the Government of the United States of America.

• 6. Limitation on Period for Acceptance of Membership: Lebanon may accept membership in the Fund pursuant to this resolution until April 15, 1947.

Resolution No. 6. Membership for Italy ⁹

Whereas, the Government of the Republic of Italy has applied for admission to membership in the International Monetary Fund in accordance with Section 2 of Article II of the Articles of Agreement of the Fund; and

Whereas, pursuant to Section 21 of the By-Laws of the Fund, 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 quota 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 resolves that the terms and conditions upon which the Government of the Republic of Italy shall be admitted to membership in the Fund shall be as follows:

• 1. Definitions: As used in this resolution:

  • (a) The term “Italy” means the Government of the Republic of Italy.

  • (b) The term “Fund” means International Monetary Fund.

  • (c) The term “Articles” means the Articles of Agreement of the Fund.

  • (d) The terms “dollars” or “$” mean United States dollars of the weight and fineness in effect on July 1, 1944.

• 2. Quota and Subscription: The quota of Italy shall be $180,000,000.00. Its subscription shall be equal to its quota.

• 3. Payments on Subscription: At the time it deposits the instrument referred to in Section 5 (a) below, in accordance with Article XX, Section 2(a), Italy shall pay to the Fund 1/100 of one per cent of its quota in gold or United States dollars.

• 4. Par Values: Within thirty days after the Fund so requests, Italy shall communicate to the Fund the par value of its currency based on the rates of exchange prevailing on the date Italy becomes a member of the Fund. The par value of the currency of Italy shall be established in accordance with the provisions of Article XX, Section 4(b), (c), (d), (e), (f), (g), and (i), except that the period of 90 days specified by Article XX, Section 4(b), shall begin on the date the request from the Fund is received. Article III, Section 3 (d), the parenthetical statement of Article XIV, Section 2, and the final paragraph (4) of Schedule B shall apply to Italy.

• 5. Date of Membership: Italy shall become a member of the Fund, subject to the terms and conditions set forth in this resolution, as from the date when Italy has complied with both of the following requirements:

  • (a) Italy shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; and

  • (b) Italy shall sign the original copy of the Articles held in the Archives of the Government of the United States of America.

• 6. Limitation on Period for Acceptance of Membership: Italy may accept membership in the Fund pursuant to this resolution until April 15, 1947.

Resolution No. 7. Membership for Syria ¹⁰

Whereas, the Government of the Republic of Syria has applied for admission to membership in the International Monetary Fund in accordance with Section 2 of Article II of the Articles of Agreement of the Fund; and

Whereas, pursuant to Section 21 of the By-Laws of the Fund, 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 quota to be subscribed by Syria 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 Government of the Republic of Syria shall be admitted to membership in the Fund shall be as follows:

• 1. Definitions: As used in this resolution:

  • (a) The term “Syria” means the Government of the Republic of Syria.

  • (b) The term “Fund” means International Monetary Fund.

  • (c) The term “Articles” means the Articles of Agreement of the Fund.

  • (d) The terms “dollars” or “$” mean United States dollars of the weight and fineness in effect on July 1, 1944.

• 2. Quota and Subscription. The quota of Syria shall be $6,500,000.00. Its subscription shall be equal to its quota.

• 3. Payments on Subscription: At the time it deposits the instrument referred to in Section 5 (a) below, in accordance with Article XX, Section 2(a), Syria shall pay to the Fund 1/100 of one per cent of its quota in gold or United States dollars.

• 4. Par Values: Within thirty days after the Fund so requests, Syria shall communicate to the Fund the par value of its currency based on the rates of exchange prevailing on the date Syria becomes a member of the Fund. The par value of the currency of Syria shall be established in accordance with the provisions of Article XX, Section 4(b), (c), (f), (g), and (i), except that the period of 90 days specified by Article XX, Section 4 (b), shall begin on the date the request from the Fund is received.

• 5. Date of Membership. Syria shall become a member of the Fund, subject to the terms and conditions set forth in this resolution, as from the date when Syria has 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 Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; and

  • (b) Syria shall sign the original copy of the Articles held in the Archives of the Government of the United States of America.

• 6. Limitation on Period for Acceptance of Membership: Syria may accept membership in the Fund pursuant to this resolution until April 15, 1947.

Resolution No. 8. Membership for Turkey ¹¹

Whereas, the Government of the Republic of Turkey has applied for admission to membership in the International Monetary Fund in accordance with Section 2 of Article II of the Articles of Agreement of the Fund; and

Whereas, pursuant to Section 21 of the By-Laws of the Fund, 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 quota 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 which the Government of the Republic of Turkey shall be admitted to membership in the Fund 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 “Fund” means International Monetary Fund.

  • (c) The term “Articles” means the Articles of Agreement of the Fund.

  • (d) The terms “dollars” or “$” mean United States dollars of the weight and fineness in effect on July 1, 1944.

• 2. Quota and Subscription: The quota of Turkey shall be $43,000,000.00. Its subscription shall be equal to its quota.

• 3. Payments on Subscription: At the time it deposits the instrument referred to in Section 5 (a) below, in accordance with Article XX, Section 2(a), Turkey shall pay to the Fund 1/100 of one per cent of its quota in gold or United States dollars.

• 4. Par Values: Within thirty days after the Fund so requests, Turkey shall communicate to the Fund the par value of its currency based on the rates of exchange prevailing on the date Turkey becomes a member of the Fund. The par value of the currency of Turkey shall be established in accordance with the provisions of Article XX, Section 4 (b), (c), (f), (g), and (i), except that the period of 90 days specified by Article XX, Section 4(b), shall begin on the date the request from the Fund is received.

• 5. Date of Membership: Turkey shall become a member of the Fund, subject to the terms and conditions set forth in this resolution, or from the date when Turkey has complied with both of the following requirements:

  • (a) Turkey shall deposit with the Government of the United States of America an instrument stating that it has accepted in accordance with its law the Articles and all the terms and conditions prescribed in this resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this resolution; and

  • (b) Turkey shall sign the original copy of the Articles held in the Archives of the Government of the United States of America.

• 6. Limitation on Period for Acceptance of Membership: Turkey may accept membership in the Fund pursuant to this resolution until April 15, 1947.

Resolution No. 9. Annex of Financial Statement to Annual Report of Executive Directors¹²

Resolved:

That the Board of Governors considers the financial statement annexed to the annual report of the Executive Directors as fulfilling the requirements of annual financial reporting, for the year ending June 30, 1946, by the Executive Directors to the Board of Governors.

Resolution No. 10. Establishment and Functions of an Auditing Committee ¹³

Resolved:

That, as an interim arrangement, the external audit of the accounts of the Fund shall be performed by an Auditing Committee which shall consist of a small group of persons, three or four in number, chosen from the Auditing Departments of Treasuries of the same number of members.

That the Executive Directors be requested to give further consideration to the auditing requirements of the Fund in its capacity as an organization representing, and having responsibility to, the Governments; to consider particularly the due requirements relating to the auditing of accounts and auditing of authority, and to report thereon at the next annual general meeting of the Board of Governors.

Resolution No. 11. Request for Increase in Quota of Iran ¹⁴

Resolved:

That the request of the Governor for Iran for an increase in the quota of Iran is referred to the Executive Directors with the request that they report their recommendations to the Board of Governors.

Resolution No. 12. Adjustment of Quota for Paraguay ¹⁵

Resolved:

That the quota of Paraguay in the Fund should be adjusted to a figure of $3,500,000, provided that this adjustment shall become effective when Paraguay applies for a proportionate increase in its subscription in the Bank.

Resolution No. 13. Adjustment of Quota for France ¹⁶

Resolved:

That the quota of France in the Fund should be adjusted to a figure of $525,000,000, it being understood that France has already applied for a proportionate increase in its subscription in the Bank.

Resolution No. 14. Site for Second Annual Meeting of Board of Governors¹⁷

Resolved:

That the Chairman shall convene the second annual meeting of the Board of Governors of the International Monetary Fund in London, England, in the month of September, 1947.

Resolution No. 15. Election of Officers of the Board of Governors ¹⁸

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-Chairmen of the Board of Governors of the International Monetary Fund, to hold their respective offices from the termination of this meeting until the election of officers of the International Monetary Fund takes place at the close of the next annual meeting.

Resolution No. 16. Establishment of Procedures Committee ¹⁹

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 Monetary Fund takes place at the next annual meeting for consultation at the discretion of the Chairman, normally by correspondence and also if occasion requires by convening immediately before the annual meeting of the Board. The Procedures Committee shall consist of the Governors of the following members:

Belgium, Canada, Chile, China, Cuba, Czechoslovakia, France, India, Iran, Norway, LJriited Kingdom, and United States.

The Chairman, Vice-Chairman, and reporting member shall be the Governors of the United Kingdom, China, and Czechoslovakia, respectively.

First Report of the Procedures Committee

September 28, 1946.

Chairman:	United States
Vice-Chairman:	United Kingdom
Reporting Member:	Egypt

View Table

Chairman:	United States
Vice-Chairman:	United Kingdom
Reporting Member:	Egypt

Members: Belgium, Brazil, Canada, China, France, India, Mexico, Netherlands, Poland.

The Procedures Committee had its first meeting at 10 a.m., September 28, with Mr. John W. Snyder as the Chairman.

The first subject matter was the Agenda.

The Procedures Committee had before it a letter from the Managing Director of the Fund proposing a revised agenda, and a request from Denmark which was to be placed on the agenda. After consideration the Procedures Committee agreed to recommend the following agenda for the first annual meeting of the Board of Governors:

• 1. Organization of Meeting.

• 2. Report of Executive Directors.

• 3. Proposed Amendments of By-Laws.

• 4. Rules and Regulations.

• 5. Resolution on Silver.

• 6. Voting by Denmark.

• 7. Requests for Revisions of Quotas.

• 8. Applications for Membership of Lebanon, Italy, Syria and Turkey.

• 9. Financial Statement.

• 10. Election of Officers and Place of Next Annual Meeting.

The second subject matter was the number and terms of reference of Committees. The purpose was 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:

1. Recommendations of the Executive Directors respecting amendments to the By-Laws (Document No. 3), which is a matter for action by the Board of Executive Directors.

2. Rules and Regulations which are annexed to the Annual Report of the Executive Directors and which are subject to review by the Board of Governors.

3. Proposed resolution on silver submitted by the Governor for Mexico.

4. The request of Denmark to be allowed to cast its votes for one of the present Executive Directors of the Fund.

B. Committee on Quota Revisions. Its purpose is to consider and report on the recommendations of the Executive Directors, if such are made.

C. Committee on New Members. Its purpose is to consider the reports by the Executive Directors concerning Lebanon (Document No. 5), Italy (Document No. 6), Syria (Document No. 7), and Turkey (Document No. 8), and to make recommendations to the Board of Governors for action concerning these applications.

D. Financial Committee. Its purpose is to consider and report on the financial statement which is annexed to the annual report of the Executive Directors.

The third subject matter was the composition of Committees. The Procedures Committee recommends that the composition of these Committees should be as follows:

A. Committee on Rules and Regulations: Chairman, Union of South Africa; Vice-Chairman, Czechoslovakia; Reporting Delegate, Belgium; Members: Canada, Chile, China, Colombia, Denmark, Ethiopia, France, India, Luxembourg, Mexico, Panama, Philippine Republic, United Kingdom, and the United States.

B. Committee on Quota Revisions: Chairman, Norway; Vice-Chairman, Iceland; Reporting Delegate, Mexico; Members: Brazil, Canada, China, Cuba, Ecuador, France, India, Paraguay, Poland, Union of South Africa, United Kingdom, United States, and Uruguay.

C. Committee on Membership: Chairman, Greece; Vice-Chairman, Honduras; Reporting Delegate, Netherlands; Members: Bolivia, China, Costa Rica, Dominican Republic, Egypt, El Salvador, France, Guatemala, India, Iran, Iraq, Peru, United Kingdom, United States, and Yugoslavia.

D. Financial Committee: Chairman, Brazil; Vice-Chairman, Chile; Reporting Delegate, Poland; Members: China, Colombia, Cuba, Czechoslovakia, France, India, Iraq, Nicaragua, Norway, Philippine Republic, United Kingdom, United States, and Yugoslavia.

The fourth subject matter contained the resolutions concerning the first annual meeting.

The Procedures Committee recommends that the Board of Governors adopt the following resolutions concerning the procedures of the First Annual Meeting:

(a) 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 Fund is presented shall be open to the press and public. Other meetings of the Board of Governors and their committees shall be closed.

(b) 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.

(c) Additions to Agenda.

RESOLVED:

That after the initial agenda for the first annual meeting of the Board of Governors has been adopted, additions to the agenda shall be submitted in writing to the Procedures Committee at least 24 hours before the time of consideration by the Board of Governors.

(d) 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 Monetary Fund to the Governments of Australia, Haiti, and Venezuela, who are signatories of the Bretton Woods Agreements and who have indicated that they are prepared to send observers.

(e) Invitations to International Organizations.

RESOLVED:

That the Chairman is authorized to extend formal invitations to the Economic and Social Council of the United Nations, the Food and Agriculture Organization of the United Nations, the Provisional International Civil Aviation Organization, the International 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 Monetary Fund.

The Procedures Committee considered that the observers should be allowed to sit at all meetings of the Board of Governors, except committee meetings.

In accordance with previous practice, the Procedures Committee recommends that Governors, Alternates, and Advisers may attend any Committee whose proceedings they wish to observe, with the exception of the Procedures Committee.

The Report ivas approved and adopted by the Board of Governors at the second session, September 28, 1946.

Second Report of the Procedures Committee

October 2, 1946.

The Procedures Committee met this morning at 9:45 a.m. under the chairmanship of Mr. John W. Snyder, and considered the request submitted by the Governor for Iran for an increase of its quota. The request reads as follows:

“Dear Mr. Snyder:

“You doubtless recollect that at Bretton Woods, Mr. Ebtehaj, Governor of our Central Bank, took the stand that the quota of $25 million allotted to Iran in the Fund was inadequate, and maintained that it should be considerably increased.

“Similarly, at Savannah, Dr. Nassr referred to this matter and stated that it would be brought up again at the annual meeting.

“I should, therefore, appreciate it very much if you would arrange to have the question of increasing Iran’s quota placed on the agenda of the next meeting of the Board of Governors and given the most favorable consideration.

“Yours sincerely,

“Hussein Ala, Ambassador and Alternate Governor.”

The Procedures Committee considered this matter and recommends to the Board of Governors the following resolution:

RESOLVED:

That the request of the Governor for Iran for an increase in the quota of Iran is referred to the Executive Directors with the request that they report their recommendations to the Board of Governors.

The report was approved and adopted by the Board of Governors at the fourth session, October 2, 1946.

Third Report of the Procedures Committee

October 3, 1946.

The Committee on Procedures met this morning at 9:30 a.m. under the chairmanship of Mr. John W. Snyder. The first item considered was the invitation to Liberia. The Committee recommends that the Board of Governors of the Fund adopt the following resolution:

RESOLVED:

That the Chairman is authorized to extend a formal invitation to send observers to the first annual meeting of the Board of Governors of the International Monetary Fund to the Government of Liberia, who is a signatory of the Bretton Woods Agreement and who has indicated that Liberia is prepared to send observers.

The second item considered was the site of the next annual meeting. The Committee recommends that the Board of Governors of the Fund adopt the following resolution:

RESOLVED:

That the Chairman shall convene the second annual meeting of the Board of Governors of the International Monetary Fund in London. England, in the month of September 1947.

The third item considered was the election of officers of the Board of Governors. The Committee recommends that the Board of Governors of the Fund adopt the following resolution:

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-Chairmen of the Board of Governors of the International Monetary Fund, to hold their respective offices from the termination of this meeting until the election of officers of the International Monetary Fund takes place at the close of the next annual meeting.

The fourth item considered was the formation of the Procedures Committee. The Committee recommends that the Board of Governors of the Fund adopt the following resolution:

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 Monetary Fund takes place at the next annual meeting, for consultation at the discretion of the Chairman, normally by correspondence, and also if occasion requires by convening immediately before the annual meeting of the board. The Procedures Committee shall consist of the Governors 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.

The report was approved and adopted by the Board of Governors at the fifth session, October 3, 1946.

Report of the Committee on Rules and Regulations

October 1, 1946.

Chairman:	Union of South Africa
Vice-Chairman:	Czechoslovakia
Reporting Delegate:	Belgium

View Table

Chairman:	Union of South Africa
Vice-Chairman:	Czechoslovakia
Reporting Delegate:	Belgium

Members: Canada, Chile, China, Colombia, Denmark, Ethiopia, France, India, Luxembourg, Mexico, Panama, Philippine Republic, United Kingdom, United States.

The Committee on Rules and Regulations held its first meeting at 2 p.m., September 30, and its second meeting at 3 p.m., October 1, under the chairmanship of Mr. J. E. Holloway.

The Committee on Rules and Regulations recommends to the Board of Governors that it amend the By-Laws of the Fund as follows:

A. That Sections 3,4, 5, and 6 of the By-Laws of the Fund be amended to read as follows:

Section 3. Meetings 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 shall 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 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 Fund or of members of the Fund having in the aggregate one-fourth of the total voting power. Whenever any member of the Fund shall request the Executive Directors to call a special meeting of the Board of Governors, the Managing Director shall notify all members of the Fund 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.

Section 4. Notice of meetings of the Board of Governors.

The Managing Director shall cause notice of the time and place of each meeting of the Board of Governors to be given to each member of the Fund 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 ten 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 temporary alternate of a Governor.

(b) The Chairman of the Board of Governors in consultation 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 Managing Director 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 Fund with the notice of such meeting.

(b) Additional subjects may be placed on the agenda for any meeting of the Board of Governors by any Governor provided that he shall give notice thereof to the Managing Director not less than seven days prior to the date set for such meeting. In special circumstances the Managing Director, 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 Managing Director 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 Fund.

(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 Board of Governors jointly with the Managing Director, 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 Fund a new Section 24 to read as follows:

Section 24. Amendment of 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 Committee on Membership

October 1, 1946.

Chairman:	Greece
Vice-Chairman:	Honduras
Reporting Delegate:	Netherlands

View Table

Chairman:	Greece
Vice-Chairman:	Honduras
Reporting Delegate:	Netherlands

Members: Bolivia, China, Costa Rica, Dominican Republic, Egypt, El Salvador, France, Guatemala, India, Iran, Iraq, Peru, United Kingdom, United States, 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 September 28, 1946. The Committee, under the chairmanship of Governor Xenophon Zolotas, representing Greece, has concluded its deliberations in two meetings, held on September 30 and October 1, 1946.

The Committee considered the applications for membership received from the Governments of Italy, Lebanon, Syria, and Turkey, together with the report on the subject submitted to the Board of Governors by the Managing Director and with the Draft Resolutions attached to that report.

The Draft Resolutions relating to the terms and conditions on which Lebanon, Syria, and Turkey should be admitted to membership in the Fund were approved unanimously, with minor verbal changes, after a brief discussion during which satisfactory assurance was received on the adherence of Turkey to Bretton Woods Recommendation No. 6 on Enemy Assets and Looted Property, and to the Declaration on Gold Purchases of February 22, 1944.

As to the Draft Resolution relating to the terms and conditions on which Italy should be admitted to membership in the Fund, the member for Yugoslavia asked for postponement of the case until the conclusion of the Peace Treaty with Italy. The member for Yugoslavia pointed out that, in his opinion, former enemy countries should not be admitted in advance of even neutral countries, and before it is possible to see clearly the economic and financial position of the country and its obligations with respect to the United Nations which suffered from that country’s aggression. The Yugoslavian member stressed the fact that an unhurried and unanimous decision on the case would be preferable, especially as a peace treaty might be signed in the near future.

On the other hand, the member for the United States expressed the opinion that there is nothing in international law which would render Italy incompetent to accept membership in the International Monetary Fund.

The status of co-belligerent was granted to Italy by the Allies as early as October 1943, and all but two of the United Nations have now extended, in one form or another, diplomatic recognition to the Italian Government. Moreover, in view of Italy’s contribution to the war against Germany and the status of the new Italian Government, the Allies undertook to relax the Armistice terms previously imposed upon Italy.

It is highly desirable to bring Italy back into the international economic community. Some steps have already been taken in this direction with the readmittance of Italy to membership in the International Labor Office in 1945, and with the trade and other agreements concluded by the United States and other powers with Italy.

The admission of Italy in the Fund is desirable not only from the point of view of the applicant country, but also from the point of view of the rest of the world economic community and of the Fund itself.

These views were supported by the member for the United Kingdom, with the proviso, agreed to by the member for the United States, that in view of the special circumstances surrounding the Italian case, the admission of Italy would not constitute a precedent for the admission of any other former enemy country.

The Committee decided to recommend to the Board of Governors to adopt the Draft Resolution on the acceptance of Italy to membership in the International Monetary Fund, with the same minor verbal alterations as were adopted in the cases of Lebanon, Syria, and Turkey, and with the proviso mentioned above.

The member for Yugoslavia dissented from its recommendation and made the declaration (1) that the motion of Yugoslavia for postponement is not directed against the Italian people, but was made for the reason that an ex-enemy country cannot be accepted in the Fund before it has concluded a peace treaty; and, (2) that the delegation from Yugoslavia reserves its right to express its position toward this decision at a later opportunity.

I have the honor in the name of the Committee to recommend to the Board of Governors the adoption of the appended Draft Resolutions relating to the terms and conditions on which Italy, Lebanon, Syria, and Turkey, should be admitted to membership in the Fund.

Report of the Committee on Quota Revisions

October 1, 1946.

Chairman:	Norway
Vice-Chairman:	Iceland
Reporting Delegate:	Mexico

View Table

Chairman:	Norway
Vice-Chairman:	Iceland
Reporting Delegate:	Mexico

Members: Brazil, Canada, China, Cuba, Ecuador, France, India, Paraguay, Poland, Union of South Africa, United Kingdom, United States, Uruguay.

The Committee on Quota Revisions met on September 30, at 5:30 p.m., and on October 1 at 4:15 p.m., under the chairmanship of Mr. Gunnar Jahn, Governor from Norway. The Committee considered the recommendations of the Executive Directors with regard to the adjustment of the quotas of Paraguay and France contained in the following letter from Mr. Camille Gutt to the Chairman of the Board of Governors:

“September 30, 1946.

“Dear Mr. Chairman:

“The Executive Directors have considered the requests received from the Governments of Paraguay and France for adjustments of their quotas in the Fund and have asked me to communicate their recommendations to the first annual meeting of the Board of Governors.

“In considering requests for adjustments of quotas the Executive Board has kept in view not only the particular merits of each application based on pertinent statistical data, but also certain broader aspects involved in the adjustment of the quota of a member. The Executive Board took as a point of departure relevant economic data and supplemented this by the consideration of other significant factors. Among these factors were:

1. The absolute magnitude of a particular adjustment and its effect on the relationship between the aggregate quotas of members whose currencies may be anticipated to be in great demand and the aggregate quotas of members whose currencies may be less in demand.

2. The possible consequence of altering at this time the pattern of quotas established at Bretton Woods.

3. The decision by these Governments to make application for an adjustment in subscription acceptable to the Bank.

The Executive Directors therefore recommend that:

a. The quota of Paraquay in the Fund should be adjusted to a figure of $3,500,000.

b. The quota of France in the Fund should be adjusted to a figure of $525 million.”

The Governor for India requested that the following statement be incorporated in this report:

“September 30, 1946.

“Statement of India’s position in connection with the proposed increase in France’s quota.

“In connection with the proposed increase in France’s quota, I should like to make India’s position quite clear. At the outset, I would state that India would have preferred the Board not to entertain any such applications for changes in quotas so soon after the Fund has started, and even before we have had experience of how the present quotas worked. But as France feels very strongly that the quota assigned to her at Bretton Woods was too low and as the Executive Directors see some justification in France’s case, India would not object to France being granted the additional quota. If the proposed change had, however, been such that it disturbed the relative positions of the different countries, then India would have been forced to object.

“We also note the grounds on which France’s quota has been increased and we presume the same principles will be followed when India or any other country finds it necessary to come up with a request for a change in the quota. It may be that we have to come up for revision of her quota in a short time. As the Board is aware, India protested at Bretton Woods as strongly as France against the small size of the quota assigned to her. We were overruled, however, as France was, and we accepted our present quota under protest. If, when trade and exchange operations start, we find the quota inadequate for our requirements, we shall be forced to come up with a request for revision. At that time we hope India would be treated in the same manner and on the same principles as France.”

The Alternate Governor for China stated that his Government had applied to the Board of Governors and to the Executive Directors for an adjustment in China’s quota. In view of the action taken on the French request for quota adjustment, he wished to make the following statement:

“September 30, 1946.

“Statement on the Question of Adjustment of Quota made by China.

“In view of the recommendation made by the Board of Executive Directors of the Fund that the quota of Paraguay be increased to $3,500,000 and that of France to $525 million without disturbing the relative positions of the member countries, China is willing to support this recommendation and to withdraw her request.”

The delegate for the United States requested that additions be made to the proposed action of Paraguay and France to make clear that the adjustment in the quota of Paraguay was conditional on Paraguay’s applying to the Bank for an additional increase in her subscription to the Bank and that France had already made such application.

The Alternate Governor for France made the following statement:

“I wish to state on behalf of the French Delegation how much we appreciate the proposal now submitted to the Committee for an adjustment of the quota of France, and why we shall vote in favor of it.

“You all know that as early as the Bretton Woods Conference, the French Delegation stated that the quota assigned to France did not correspond to the part played by her and the French Union in the world economy. You are also well aware that if determined only on the basis of comparative statistics, the quota of France would be far above the figure of $ 5 2 5 million which is the one now being proposed to your vote.

“But we were told that under the present circumstances, it would be difficult to give complete satisfaction to France. Therefore, we shall cast our vote in favor of the proposal. We hope, however, that in the future there will be opportunities to allow France the full share of responsibility we still feel she is entitled to, and she is ready to assume, in the activities of the International Fund and Bank.”

The Governor for Paraguay made the following statement:

“The Delegation of Paraguay had requested a quota of $ 5 million, but, after hearing the report made by the Chairman and taking into consideration the explanations offered by several Executive Directors, we want to state our acceptance of the formula under consideration. We want also to express our gratitude for the attention given to the request of Paraguay and to place on record that we are fully conscious of the good will demonstrated towards us.”

The recommendations of the Executive Directors together with the clarification proposed by the United States representative were unanimously concurred in.

Accordingly, the Committee on Quota Revisions, having considered the recommendation of the Executive Directors with regard to the adjustment of the quotas of Paraguay and France, recommends that:

• A. The quota of Paraguay in the Fund should be adjusted to a figure of $3,500,000 provided that this adjustment shall become effective when Paraguay applies for a proportionate increase in its subscription in the Bank.

• B. The quota of France in the Fund should be adjusted to a figure of $525 million, it being understood that France has already applied for a proportionate increase in its subscription in the Bank.

The Report was approved and adopted by the Board of Governors at the fourth session, October 2, 1946.

Report of the Financial Committee

September 30, 1946.

Chairman:	Brazil
Vice-Chairman:	Chile
Reporting Delegate:	Poland

View Table

Chairman:	Brazil
Vice-Chairman:	Chile
Reporting Delegate:	Poland

Members: China, Colombia, Cuba, Czechoslovakia, France, India, Iraq, Nicaragua, Norway, Philippine Republic, United Kingdom, United States, Yugoslavia.

I have the honor to present the following report:

The Financial Committee met at 5 p.m., Monday, September 30, 1946, with Mr. Francisco Alves dos Santos-Filho as Chairman.

The Financial Committee had before it, and gave consideration to, the “Statement of Receipts and Payments from Inception to June 30, 1946,” as annexed to the Annual Report of the Executive Directors.

The Financial Committee recommends that the Board of Governors adopt the following resolution:

RESOLVED:

That the Board of Governors considers the financial statement annexed to the Annual Report of the Executive Directors as fulfilling the requirements of annual financial reporting, for the year ending June 30, 1946, by the Executive Directors to the Board of Governors.²⁰

The Financial Committee had before it, and gave consideration to a proposed auditing procedure received by the Chairman of the Board from the Executive Directors.

The Financial Committee recommends that the Board of Governors adopt the following resolution: ²¹

RESOLVED:

That [as an interim arrangement] the external audit of the accounts of the Fund shall be performed by an Auditing Committee which shall consist of a small group of persons, three or four in number, chosen from the Auditing Departments of Treasuries of the same number of members.

[That the Executive Directors be requested to give further consideration to the auditing requirements of the Fund in its capacity as an organization representing, and having responsibility to, the Governments; to consider particularly the due requirements relating to the auditing of accounts and auditing of authority, and to report thereon at the next annual general meeting of the Board of Governors.]

The Report as amended was approved and adopted by the Board of Governors at the fourth session, October 2, 1946.