Chapter

Address by the Honorable Yun-wu Wang2

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1948
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Chairman of the Boards of Governors of the International Monetary Fund and the International Bank for Reconstruction and Development

Gentlemen, as Chairman of the Boards of Governors of the International Monetary Fund and the International Bank for Reconstruction and Development, I welcome the representatives of our member countries to the Third Annual Meeting. I am sure that I may speak for all in expressing our appreciation to the United States in offering facilities for meeting here. Many of us have come from very distant countries to participate in these meetings. All of us have left urgent and pressing problems at home, but we are present here because we recognize that in these meetings we are offered the opportunity to promote the interests of our own countries in a way which cannot be done working by ourselves.

As we meet today economic and financial difficulties beset many nations. It is a melancholy reflection that one does not speak of peace and that the blessings of peace are, indeed, still denied to the world.

Noteworthy progress, nevertheless, has been made during the past year in bringing order out of chaos and getting the world back to work. In many war-shaken economies, production has attained or exceeded the prewar volume. The arteries of transportation have been joined together again. The flow of goods has gained increasingly in speed and volume. Budgets generally are moving toward better balance, and policies toward more realistic exchange rates are gradually being adopted. The progress, however, has been too slow and on too small a scale to repair the damage of the war and to meet the needs of the present emergency. Many budgets continue to be strained and balance of payments deficits continue to make heavy inroads on dollar resources already dangerously reduced.

Our primary concern must be the actions which the Fund and the Bank can take towards overcoming the many economic and financial difficulties of all our member countries. However, before turning our attention to these immediate interests, I should like to express some views on matters of deep and grave concern to the countries in that region of the world from which I come—the Far East and Asia.

China is still in the throes of grave political and economic difficulties, and great efforts are still needed to reach a reasonable degree of stability and prosperity. We in China feel that our own unfortunate experiences may give us a keener and more profound realization of many world problems than we would otherwise have. We can appreciate both the aspirations and the difficulties of countries suffering from the destruction of war and enemy occupation. We can also sympathize with the countries which feel that they have not in the past received an adequate share of the world’s material goods and which are determined that their people shall in the future enjoy higher standards of living.

Our experience enables us to understand how political difficulties hamper and, at times, make impossible the adoption of reasonable and desirable economic measures; how considerations of national security frequently must override urgent economic goals. We understand the desires of those who urge us to do more and still more towards achieving economic and social stability, but we cannot escape the reality of actual conditions.

The aid which the United States has thus far extended for world reconstruction is truly generous and magnificent. Were it not for the billions of dollars which the American people have spent in helping in the reconstruction of war-torn countries, the progress already made would have been impossible. Were it not for the aid extended by the United States, many of us would now be measuring the rate of deterioration of our economies, instead of measuring, as we may do now, the rate of recovery.

The profound understanding and sympathy of the American people for the needs of other countries were truly reflected when, at a critical juncture in world history, after already having spent huge sums on world reconstruction, a new and equally generous program of foreign aid was conceived and proposed by the United States itself. Were it not for the ERP and the promise it holds out for the future, as well as the aid already given, instead of our coming together here to cooperate in achieving a more prosperous and stable world economy, the various countries of the world would have probably been engaged in desperate efforts to prevent utter ruin. It is the existence of the ERP program which provides us with the basis for confidence in the future.

Other countries also have made contributions, at no small sacrifice to themselves. For example, the Canadian people, seemingly not to be outdone by their Southern neighbors, have, on a population basis, given aid in the same magnitudes as the United States.

Western Europe, as is well known, has been the principal recipient of this aid from the United States and Canada. The guiding philosophy has been that world stability and prosperity cannot be obtained without stability in that area. Moreover, after achieving reconstruction there, the desired economic goals can be achieved more quickly and permanently in other areas.

The recent actions of the United States guarantee that Western European reconstruction will go forward and it is now well-nigh certain that recovery there will be achieved. More exertion will be required by the countries involved to meet their problems. Important changes in their present domestic programs and in the character of their foreign trade may well be necessary to achieve the monetary stability and international equilibrium which is desired. But most important is the simple fact that Europe’s shortage of means of payment, particularly in the so-called hard currencies, has been greatly reduced. It is essential that every effort be made to hasten European reconstruction and place it on a sound and enduring foundation.

However, in the existing preoccupation with European problems there is the danger that the fundamental truth will be overlooked, that economic well-being in the world as a whole depends upon completing the reconstruction of other areas of the world and upon making further progress in the development of less industrialized economies.

The reconstruction of the war-devastated areas of the Far East is still largely a task for the future. Our areas were poor to start with. We had little to lose that we could afford to lose, and yet we lost a great deal. We still have the resources and the manpower eager to rebuild our economies. But in justice to the peoples of these countries we must point out that more external assistance is required if reconstruction and development are not to be dangerously delayed.

Similarly, much remains to be done for the further industrialization of the less developed economies in Latin America, the Middle East and elsewhere. Most of these countries have been fortunate in escaping the devastation of war. They have, however, not been able to escape the difficulties of inflation which were fundamentally caused by war-created conditions. For them, the war also meant a slowing down, if not a halting, of their development programs. Their eagerness to push ahead along these lines as quickly as possible is understandable. Because these areas are relatively underdeveloped, the pace at which they can industrialize their economies depends in part upon external assistance.

In supporting programs for the further industrialization of the less developed areas of Asia, the Middle East, Latin America and other regions, and for the quickest possible reconstruction of Europe, we are advocating measures essential to building the kind of world economy envisaged in the establishment of the Bank and the Fund. The Bank was to help provide the needed funds both for reconstruction and development. And it cannot be overemphasized that for many war-devastated countries development and reconstruction are closely, and at times inseparably, related. The Fund was to help establish an environment of stable exchange rates and orderly and fair exchange practices. Their combined efforts were to help make possible a steady expansion of world trade and flow of capital and the establishment of a stable world economy. These are also the aims of the ERP and other similar programs. Thus, the activities of the Fund and Bank become part of a much larger program having common problems and common objectives.

If these common problems are overcome and the common objectives achieved, the present burden on the United States will be reduced. At the same time higher standards of living and, what is perhaps more important, a greater sense of security and well-being will be enjoyed by Europe, Asia, Latin America and elsewhere.

The Fund and the Bank have already made a positive and significant contribution to world reconstruction and stability. The sums which have been made available by the Fund and the Bank to member countries are not great as compared with other assistance, particularly that granted by the United States, but the assistance of these institutions came to the recipient countries at times when their loss of gold and dollar reserves had become so great as to endanger their reconstruction programs, and when aid from other quarters was being delayed for unavoidable reasons.

Although it is not spectacular, I believe that an important service rendered by our two institutions has been the formulation and dissemination of agreed principles and standards to govern the conduct and execution of the economic and financial policies of member countries. Dependent upon each other as all countries are, it clearly profits us to coordinate our thinking, to discuss and exchange ideas. Our gathering together at annual meetings and the continuing close contacts throughout the year between the member countries and the Executive Directors and their staffs, to whom, and to the Managing Director of the Fund and the President of the Bank, I wish to pay tribute for their most valuable service, can be a profound influence towards these ends. I need only recall the difficulties during the inter-war period of establishing techniques for international consultation and action in the financial field to emphasize the advantages of what we now have.

The scope of operations of the Fund and of the Bank may be expected to broaden and they should play an increasing part in removing the economic and financial ills which now plague so large a part of the world. Above all, closer awareness of each other which we have in the smaller world in which we live today requires of all a greater understanding and a more wholehearted desire for cooperation.

The Fund and the Bank have been designed as permanent international institutions and even in this early stage of their history they must, therefore, take account not only of the pressing immediate problems of international finance, but also of the longer term objectives of the two institutions.

If I may, I should like to conclude by suggesting as a guide for the work of this conference an ancient Chinese proverb, “If a man take no thought for what is distant, he will find sorrow at hand.”

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