Chapter

Address by the President of the United States of America1

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1965
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Author(s)
Lyndon B. Johnson

It is a great pleasure to meet with you, the leaders of international finance, and to bid you Godspeed on your labors for another year.

This year marks the twenty-first birthday of both the International Monetary Fund and the World Bank. And so, from what Woodrow Wilson once called the “fountains of enthusiasm” soon came the foundations of achievement.

Today your two great organizations stand at the center of a remarkable system of international cooperation. They have fostered the unprecedented economic growth of the free world.

The international monetary system merits a new and imaginative look—not because its past performance has been faulty but because a new situation faces us.

For nearly 20 years the United States spent and invested more money in foreign lands than it earned from its own exports and investments. The gold and dollar reserves of our friends, particularly in the developed world, were strengthened—even while their economies grew and prospered.

When a nation’s reserves are good and growing it can trade with confidence. The nations of the free world have been doing just that, trading with confidence and in ever-increasing volume.

American dollar deficits have been one of the important factors in this greatest and best-sustained period of prosperity that the world has ever known. The U.S. deficit made it possible for many nations to develop their own currencies as strong and convertible sources of international finance.

It is no longer appropriate or possible for one country alone—through its deficits—to be largely responsible for the creation of world reserves. Moreover, the erosion of U.S. reserves could not go on indefinitely. Thus the United States has taken firm action to arrest the dollar drain. Should further action be necessary in the future, such action will be taken.

I want to be very clear about this, because we must, in our own interest and in the interest of those who rely on the dollar as a reserve currency, maintain our payments in equilibrium. This we will do. The world not only expects but the world requires that the dollar be as good as gold.

The long period of large U.S. deficits has come to an end. If growth is to continue and trade is to expand, we must provide an effective and adequate substitute.

Providing for World Growth

This is not a matter of an immediate crisis. But it is a matter on which we must begin to act—now. We must begin now to provide machinery for the creation of additional reserves. Gold alone will not be enough to support the healthy growth which the entire world demands. It will not be enough in the future any more than it has been in the past.

There is no shortage of plans for reforming the world’s monetary system. But let us try to choose the best. Let us remember the best is sometimes the enemy of the possible. Let us not become so preoccupied by questions of mere detail that we end up doing nothing. Ours is a large and a growing world. It has a large and growing trade. So let us provide for this growth.

Men who manage money are usually conservative. They should be. No one wants a banker who is careless with other people’s money. But let us be clear about what it means in this case to be conservative. It does not mean inaction. Nor does it mean inadequate action.

Twenty-one years ago at Bretton Woods it was not the course of conservatism to cling to the monetary system which we then inherited. The men who were meeting on the slopes of Mount Washington knew that they had to move ahead. And they were proven right.

And so it is today.

The job of building sound and effective institutions for financing world trade is never finished. On February 10 of this year, in announcing a new program to bring the U.S. balance of payments into equilibrium, I said:

“We must press forward with our studies and beyond, to action—evolving arrangements which will continue to meet the needs of a fast growing world economy. Unless we can make timely progress, international monetary difficulties will exercise a stubborn and increasingly frustrating drag on our policies for prosperity and progress at home and throughout the world.”

Now, during your meeting this week, you have taken a major action to assure the continued sound and stable growth of the international monetary system. I refer to the procedural undertakings of the Managing Director of the Fund and the Finance Ministers and central bank governors of the ten leading industrial nations. There begin immediately negotiations to seek basic agreement on plans to insure, among other things, that the free world’s future reserve needs are adequately met.

So I want to congratulate the Managing Director and the Ministers. I look forward to the results of the work of their deputies next year. Their later collaboration with the Executive Directors of the International Monetary Fund representing all of the 103-nation members of the Fund will have my consuming interest. Meanwhile, I think it important that the International Monetary Fund—under the able leadership of Pierre-Paul Schweitzer—continue its important work on international monetary arrangements and cooperate actively with the Group of Ten.

I am proud of the role played in the discussions that preceded the Ministers’ decision by U.S. representatives, including my own Secretary of the Treasury, Henry Fowler.

Education and International Development

Earlier this week the farsighted President of the World Bank, George Woods, spoke on another subject of great importance—international development. And I hope that the leaders of all the other free nations of the world paid as close attention to Mr. Woods’ views as I did. He spoke with eloquence and with directness of the problem of development—and of the growing impatience of both developed and developing nations over the pace of progress.

One important way to help accelerate this pace, in my judgment—and it is a matter that bankers ought to be as interested in as they are in money—is education, the opportunities of education. Education is the guardian genius of all the liberties of all of us, including our money supply.

Earlier this month I announced the establishment of a new task force to chart a world-wide educational endeavor for all peoples.

At that time, I noted that today, as we meet here, more than 700 million adults—4 out of 10 of the world’s population—cannot read or write. And that is a matter that ought to concern every human being in the world. Almost half the nations of the globe are crippled by illiteracy among half or more of their people.

This task force will prepare a course of action and recommend to me ways and means to lighten the burden of ignorance and illiteracy throughout the world and what at least our nation can do in participating in that advance. I would presume to suggest and ask you to consider how the World Bank and the International Monetary Fund, and the great leaders associated with these endeavors, might contribute your might to this effort. Perhaps the Bank and the Fund could expand and diversify the concept embodied in the Bank’s Economic Development Institute and the IMF Institute.

I began my career as a public school teacher working with the boys and girls in the high school back in my home State. But I spent my evenings teaching bankers. And the thing that gave me the greatest satisfaction was that the men that dealt with dollars all day would spend their evenings coming to learn about people, because there is a direct relationship.

So I would hope that such an expanded program might draw upon the educational facilities of all the member nations of the World Bank and the Fund, including the United States of America. Where necessary, it would meet not only the educational expenses but also the living expenses of its students.

Such a program would increase the flow of teachers and engineers and economists and administrators and technical experts and men who create and produce wealth and dollars and money and gold in those countries which really need them most, because increasing educational opportunity is only one of the ways that we human beings must meet the pressing demands of the times and the demands upon human beings for development and for advance and for progress, as opposed to laissez faire and the status quo.

The Needs Are Urgent

In all of the areas of development—wherever you look, whatever you see in the areas of development—the needs are urgent.

In my country we knew no such urgency in the course of our development. In the early days attendant to our birth, we were an underpopulated nation. Beyond the villages and the towns were virgin forests and deep rivers and wild game and rich and fertile soil. In this environment a man’s life was what he chose to make of it. The opportunity was there. The opportunity was seized.

But there is no such cushion of time among the developing nations of the world today as we meet here. In many of these nations the land is overcrowded. The people are poor. The soil is already worn out and tired. There is only the relentless crush of human needs—and a flickering of hope.

Well, we need to nourish that hope if we are worthy of the title that we bear of leaders of the world. We need to nourish and preserve and advance and bring to fulfillment that hope.

And in this I am not speaking solely to the nations represented in this room. I have found, in my 35 years of public life, that it is usually governments who find it difficult to communicate with each other. Little trouble in finding the pathways to friendship is found among the people themselves.

In this world that is shrunk by the jet and frightened by the atom, the peoples—the peoples of every country—must urge and demand their governments to join together in dealing with the problems that really concern people and that really matter in the lives of human beings.

There is so much to be done in the world to develop minds and to preserve bodies. And no one nation alone is going to be able to do it. No one group of nations can succeed—either in Viet-Nam, where, as the terror of aggression finally ends, the healing hand of reconstruction must begin, or anywhere men set out to win a better life.

This is work that must challenge and should challenge us all—every industrial country, including the countries of Eastern Europe, and including the Soviet Union.

So this is our task.

The world of tomorrow—peaceful, healthy, beautiful, educated—all this awaits us if only we, led by bankers, stir ourselves to move forward toward it.

Delivered at the Closing Joint Session, October 1, 1965.

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