By the Chairman of the Executive Board and Managing Director of the International Monetary Fund ¹—Per Jacobsson

May I first of all thank the many Governors who have spoken appreciatively of the Fund’s activities during the last year, and also acknowledge the kind words that have been directed to me personally.

I hope I made it clear in my opening address how important the work had proved to be that was done in the years of relatively slight business activity. It is, indeed, true, as the Governor for India said, that “the promptness of the Fund’s decisions in the last year is a tribute to the ground that was carefully laid in earlier years.” My distinguished predecessors, Mr. Camille Gutt and Mr. Ivar Rooth, must be gratified to see, as the Governor for Australia indicated, that the long hard pull during the lean years of the Fund is now coming to fruition in this way. May I also pay a tribute to my old friend, H. Merle Cochran, whose many qualities have been and will remain invaluable to the Fund—and not least his ability to gain the confidence of the persons from our member countries whom he has met all over the world.

It has particularly pleased me to find how much appreciation has been expressed with regard to the technical assistance and the annual consultations undertaken by the Fund. These are generally handled by the officials of the Fund who have to be not only competent but also diplomatic in dealing with the many policy matters of the member countries. There are, of course, also many members of the staff whose field of activity is more permanently in Washington. Theirs can be no cloistered virtue. How could it with so many Executive Directors and Alternates always about in the house. This may also be the time to emphasize how important are the visits of members of the staff to member countries for consultations and other purposes since these are the contacts which are most useful in broadening the experience of the staff, to which in particular the Governor for Mexico referred.

It was, I think, clear from the discussions on Tuesday that the general principles which are followed by the Fund command wide support. I am particularly glad to note that the principles governing the use of the Fund’s resources have been endorsed by many Governors. There was also welcome support for the Executive Board’s recent decision on multiple currency practices.¹ It was particularly encouraging to hear from the Governors from Bolivia and Paraguay of the satisfactory experiences of their countries since they have abandoned multiple currency practices. The Governor for Bolivia had a striking phrase in his speech to the effect that the Bolivian experience in monetary matters over the last 25 years had been “painful but instructive.”

The Governor for Mexico emphasized that the Fund’s effective resources could be increased by the encouragement of further drawings in currencies other than the U.S. dollar, and the Governor for Greece had an ingenious suggestion for increasing the Fund’s resources by means of stand-by arrangements with creditor countries. It was my impression of the discussion on Tuesday that the question of the adequacy of the Fund’s resources was increasingly in the minds of member countries, and this question was combined with a preoccupation as to the trends of world liquidity. The many interesting suggestions which were put forward will, of course, be studied further in the Fund.

Before turning to more general matters, I should like to say, in connection with the suggestions involving the work of the Executive Board, that I agree with the Governor for Canada that the Fund should maintain a flexible attitude. The Fund will do its best to promote close contact with member countries and thus to increase its effectiveness as an institution.

While the suggestions and observations with regard to Fund activities have been useful and significant, particular interest was attached in Tuesday’s debate to the more general aspects of the international financial scene and, especially, to the statements made by the Governors for the Federal Republic of Germany and the United Kingdom. It was the purpose of these statements to make people realize that recent government declarations with regard to the exchange parities of these countries were, indeed, to be taken seriously, there being no intention whatsoever of deviating from those declarations. “That,” as the Chancellor of the Exchequer said, “is that.” It seems at present to be difficult to make people believe that one means what one says but, in these cases, the evidence is there to see. These were not just statements; they have been backed up by appropriate measures to insure their validity.

Many Governors have commented upon the respective obligations of creditor and debtor countries. The steps that are already being taken to restore a better balance in world payments indicate that our members are conscious of these considerations. In Germany, measures have thus been taken to stimulate domestic investment and to facilitate the inflow of imports. More may yet need to be done but, as I said on Tuesday, the Germans are surely most anxious themselves that, insofar as it depends on them, their strong creditor position should not expose the monetary structure in Europe to any undue strain.

The Governor for the Netherlands, moreover, thought that too much attention had been attached to differences in parities and too little to the trends in internal policies. People are too keen to come to the conclusion that a change in parities can settle matters, when it is really a question of a change in internal policy.

As many Governors have indicated, it would be unfortunate if debtor countries, in restoring their payments position, were to revert to trade restrictions and, particularly, to bilateralism and discrimination. It is gratifying to note that, in the main, recent payments difficulties have not been met in this way. The United Kingdom, which is not even a debtor country on current account, has taken a series of internal measures to overcome its payments difficulties. The Governor for that country has stated unequivocally that these measures will be pushed to the lengths necessary for them to be effective. One immediate result of these declarations will be that the debates in Europe and elsewhere on appropriate measures to restore a better balance need no longer be bedeviled by doubts about exchange parities.

I was particularly interested in the comments of the Governors for the underdeveloped countries. It was my impression that the differences of opinion between the underdeveloped countries and the already industrialized countries are now less pronounced than they were a few years ago. Not a single Governor from an underdeveloped country expressed the belief that additional resources could be created by inflation. On the contrary, there were forthright statements on the dangers of inflation.

It has also been realized that it is not only a question of shortage of capital. The Governor for India pointed out that “there is hardly any underdeveloped country where productivity cannot be increased even in the short run by intensive organizational and other efforts.” And as far as capital movements are concerned, I think that with goodwill on both sides, some constructive solution can be arrived at and arrangements found that will lead to an improvement in the standard of living on a broad basis.

I am confident, Mr. Chairman, that under your distinguished guidance we have, this week, made a useful contribution to international financial stability.

We in the Fund shall try to go forward into the coming year with added vigor in the knowledge that there is agreement on the main principles governing Fund activities and the objectives which we seek to realize.

For us who serve the Fund here in Washington, this has been an interesting and valuable occasion. I hope that our Governors and visitors, too, will have the same impression. And it is my firm conviction that time will ratify the decisions which have been so strongly restated at our Meetings this week.