IMF History (1966-1971) Volume 1

Chapter 30: Complexities in the Process of Policymaking

International Monetary Fund
Published Date:
February 1996
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The Basic Structure of the Fund underwent little change in the six years 1966–71. The process of policymaking continued to involve the same institutional framework as that established when the Fund was created. Policymaking was carried out through five major instruments—member governments, the Board of Governors, the Executive Board, the Managing Director, and the staff.1 Even the organization of the staff remained roughly the same. There were, however, very important developments in the functioning of each of the five instruments, and the relationships between them became more complex. In addition, new trends emerged that were harbingers of major changes to be made in the Fund’s process of policymaking after 1971. Also, with the growth of the Fund’s activities there was an increase in the size of the staff.

Membership: Formation of Groups

The addition of 17 members from the end of 1965 to the end of 1971, noted in Chapter 28, brought the total to 120 at the end of 1971, four times the original membership (30 countries at the end of 1945). Since most of the independent nations of the world had joined the Fund, only a few countries were still not members.

The most significant development among the Fund’s member governments in the period reviewed here was undoubtedly the extent to which they organized themselves into rather formal groups outside the Fund to discuss, and even to agree on, their mutual positions on international monetary issues.

Of these groups, probably the most attention centered on the Group of Ten. Beginning in about 1963 the Finance Ministers and the Central Bank Governors of the ten main industrial members of the Fund—Belgium, Canada, France, the Federal Republic of Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom, and the United States—began to meet frequently as the Group of Ten. Their objective at the time was to examine the prospective need for additional liquidity in the international monetary system. When the problems involved became technical, requiring deeper study, they designated Deputies, who also began to meet regularly.2 Gradually the Group of Ten, both at the ministerial level and at the deputy level, undertook also to consider other problems basic to the international monetary system. The Group of Ten discussed, for example, increases in Fund quotas and realignment of the par values of the currencies of their own countries, subjects which went well beyond the questions arising in connection with the General Arrangements to Borrow, which had been the origin of the Group of Ten.3

Similarly, after the establishment on January 1, 1958 of the European Economic Community, the six countries comprising it—Belgium, France, the Federal Republic of Germany, Italy, Luxembourg, and the Netherlands—met from time to time in formal sessions and eventually began also to consult each other concerning their external monetary and economic positions, and to coordinate their positions on the international monetary questions being discussed in the Executive Board of the Fund.

The developing countries, too, began to set up separate forums in which to consider their common economic problems. When the Unctad was being formed and planning to hold its first session in Geneva in 1964, the developing countries joined together, on June 15, 1964, into the Group of Seventy-Seven.4 Some seven years later, in November 1971, at the ministerial meeting of the Group in Lima, in a desire to have a body parallel to the Group of Ten, especially in anticipation of discussions on reforming the international monetary system which were beginning to take place, the developing countries set up an Intergovernmental Group of Twenty-Four on International Monetary Affairs. This Group was to consist of 24 Finance Ministers or senior monetary or financial authorities, 8 appointed by each of the African, Asian, and Latin American contingents of the Group of Seventy-Seven. However, any member of the Group of Seventy-Seven might participate in all meetings and deliberations and, just as the Group of Seventy-Seven gradually increased to 96 countries, nearly all of which were represented at meetings, so were the meetings of the Group of Twenty-Four usually attended by representatives from more than 24 countries.

As part of its functions, the Group of Twenty-Four was to review the progress of the international monetary system, take cognizance of studies by the International Monetary Fund, keep the members of the Group of Seventy-Seven informed, “evaluate events in the monetary field, as well as any decisions which might be taken by a single country or group of countries within the framework of the International Monetary Fund, relating to the interests of the developing countries,” and recommend coordinated positions in international bodies.5 The Group of Twenty-Four was modeled to some extent on the Group of Ten. Hence, there were to be Deputies; these would consist of the Deputies of the Group of Twenty-Four plus those Executive Directors of the Fund who were appointed or elected exclusively by developing members.

These Executive Directors, nine in all, in effect constituted still another, less formal, group. The “G-9 Caucus,” or Group of Nine, which started to meet in 1966, continued to meet, usually monthly, even after the creation of the Group of Twenty-Four.

Reasons for Groups

The trend toward separate groupings in which members met outside the Fund’s mechanism to deliberate and discuss their positions on international monetary questions reflected partly the greater interdependence in economic and financial affairs among particular groupings of countries that had come about by the mid-1960s. Among the industrial countries, for example, economic and financial developments in one country now affected directly and almost instantaneously the financial and economic conditions of others. As was seen in Chapter 1, cooperation between the central banks of the industrial countries, in the form of swap and other lending arrangements, had become imperative as early as 1961. Growing economic and financial interdependence also meant that official decisions in the monetary field taken by one country could immediately undo the policies of others. Also contributing to the formation of groups were the recurrent disruptions that began to occur after 1967 in the previously smooth functioning of the international monetary system. As was described in Chapters 22 and 26, urgent decisions were required that had to be taken at the ministerial level. The Group of Ten, therefore, seemed to its members to be a natural successor to the previous ad hoc meetings and contacts of central bankers of the large industrial nations: informal inter-central-bank cooperation was made more formal and was broadened.

Just as the Group of Ten broadened its concerns, so did the eec countries: the extension of their consultations to international financial subjects seemed a logical outgrowth of their consultations on domestic economic policies. In the same way, the developing countries gradually came to the view that, by meeting separately from the industrial and the more developed countries, they could better study and examine their own particular needs in the international economic and monetary fields.

Compelling as these reasons were for the formation of these groups, yet another circumstance explained their existence, a circumstance which was indicative of what began to happen in the area of international economic and monetary relations after about 1965. Acting in unison, groups of countries could do what one or two countries could no longer do. Countries had become economically, and perhaps politically as well, so coequal and interdependent that no longer could one country, the United States included, or even two or three countries together, dominate decisions relating to international monetary affairs. The creation of the Fund itself, for instance, had been the result of decisions taken in 1943 and 1944 primarily by the United Kingdom and the United States; other countries joined on the terms that were for the most part specified by these two powers. Moreover, during the Fund’s first two decades, the views of the United States, virtually the sole source of large amounts of investment capital, advanced technology, and the latest managerial and marketing techniques, dominated the international rules and institutions governing world economic relations. In general, in the Fund’s decisions, the views of the United States prevailed. By the mid-1960s, however, the interests of a much wider range of countries had to be fully considered, and their agreement secured, before decisions relating to the international monetary system could be taken. In this circumstance, groups of countries, certainly when acting together, could be assured that their opinions were articulated and respected.

In short, they could exert more influence as a unit. By the latter part of 1971 groups had an especially strong motive for presenting their views in this way: the issues to be resolved encompassed the whole of the international monetary mechanism, and were soon to encompass virtually all international economic transactions—trade, investment, and capital—as well as the monetary system.

Implications for the Fund

Because members discussed within groups the leading questions on which the Fund was working toward decisions, and the positions that they would take in the Board of Governors or in the Executive Board, the existence of groups began to have great effect on the decision-making process of the Fund. The influence of the Group of Ten and of the eec on the Fund’s actions has been visible at a number of points in the foregoing chapters, especially in the chapters on SDRs. While the Fund’s membership by and large accepted the existence of groups, the influence of some groups, most notably the Group of Ten, which had a majority of the total voting power in the Fund, caused considerable concern within the Fund during the years reviewed here, as the reader will recall from Parts One and Two. In fact, it was the existence of the Group of Ten that impelled the formation of some other groups, especially the Group of Twenty-Four.

Not only did these various groups exist, and not only were they increasingly active, but they also began to take somewhat conflicting positions. In fact, by 1971 the crystallization of the membership into groups holding somewhat diverse positions on major international monetary questions had become a trend. By then the major industrial countries no longer saw their interests as identical with each other, and the positions of some were often diametrically opposed to the positions of others. In addition, there had emerged an increasing consciousness of the differing interests as between developed and developing members; and after a generation of political independence, growth, and development, with heavy emphasis on education, the developing members had produced leaders in the science of economic theory and policy who were able to formulate and articulate the views of the developing members. Thus, by the end of the period reviewed in this volume positions on international monetary matters tended to be more polarized than before. The international monetary cooperation that had characterized the Fund’s first twenty years had become increasingly more elusive. As a result, the agreement of the Fund’s membership in 1969 on the creation of an SDR facility and on its activation in 1970 seemed, in retrospect, to represent the zenith of international cooperation in the monetary field for the next several years.

Board of Governors: Growth in Size and Powers

The Board of Governors was affected by two changes of note in the years 1966–71. The first change related to size. As countries joined the Fund and the World Bank, the increasing number of Governors and Alternate Governors became particularly apparent when, accompanied by expanding delegations and greater numbers of advisors, they gathered for their Annual Meetings. The Annual Meetings became massive affairs. Not only were there more and larger delegations from member countries; representatives of a lengthening list of international organizations also attended. More and more bankers and economic experts were invited as special guests, and hundreds of press officers came to cover the deliberations. By way of illustration, it may be noted that the 1971 Annual Meeting, held in Washington, was attended by 3,175 persons, exclusive of Bank and Fund staff; of this number, members’ delegations made up about 1,800.

The growing size of the Board of Governors prompted the taking of further informal measures to enable the work conducted at an Annual Meeting to be completed within the customary five days.6 Attempts were made, for instance, to avoid two speeches being given by the same delegation, that is, one by the Governor of the Fund and one by the Governor of the World Bank; the member was to select which Governor would speak on its behalf. This limitation was particularly relevant to the bigger members. Governors from groups of smaller members were encouraged to select one of their number to be spokesman.

The size of the plenary sessions, together with the desire of Governors from some countries to take advantage of the occasion to hold meetings among themselves, led to an increasing number of meetings or caucuses in addition to the Annual Meeting itself. Governors from regions with similar interests wished to meet separately in smaller groupings. Some of the groups mentioned above, such as the Group of Ten, met immediately before or at the time of an Annual Meeting. Meetings of Governors for Latin American and for African members at the time of the Annual Meeting became traditional and fairly formalized: the Managing Director attended the meetings both to address these groups of Governors and to answer their questions. Gradually, too, the presence of high-level and well-known monetary officials from all over the world led to contemporaneous seminars, conferences, and lectures, such as the lectures sponsored by the Per Jacobsson Foundation. All in all, already by 1968 the number of ancillary meetings had reached a total of 35 and, for the staff of the Secretary’s Department, the time and effort involved in arranging and servicing ancillary meetings were about equal to the time and effort spent on the Governors’ plenary sessions.

The second noteworthy change in the Board of Governors in the years 1966 through 1971 was in the growth of its powers. The amendments to the Articles of Agreement that became effective on July 28, 1969 added to the powers that were expressly reserved to the Board of Governors, that is, the powers that could not be delegated to the Executive Directors. Many of the newly reserved powers dealt with SDRs: only the Governors could, for example, allocate or cancel SDRs, provide that the duration of a basic period for allocation should be other than five years, change the rates of allocation, or modify the rules for reconstitution. In addition, power was reserved to the Governors, inter alia, to decide on the mitigation of the effects of payment of increases in quotas following a general review of quotas, to revise the provisions on repurchases, and to make transfers to the Fund’s General Reserve from any special reserve.7

The augmented decision-making power of the Board of Governors—both legally under the amended Articles of Agreement and effectively because only the highest-ranking monetary officials could take decisions on the perplexing questions confronting the international monetary system—meant that by the late 1960s the Annual Meeting of the Board of Governors was increasingly the focal point for international monetary decisions and was being regarded more and more as the occasion when decisions that had not been possible earlier might be taken. Between Annual Meetings, technical studies might be made and preliminary reports written, even reports containing recommendations by the Executive Board. But the hard political decisions necessary to resolve the questions outstanding had to await the gathering of the Ministers of Finance and Governors of central banks that composed the Fund’s Board of Governors. Key decisions might not be taken in full plenary sessions—most often they were not. Instead, they were taken in committee or in ancillary meetings. All in all, the Annual Meeting became an important decision-taking event.

Executive Board: Increasing Functions

As had been the situation since the origin of the Fund, so during the years reviewed here, the Executive Directors were the organ of the Fund that was in continuous session and was responsible for the conduct of the general operations of the Fund. It was through the Executive Directors that members continued to exercise a close control over the Fund’s day-to-day activities.8

In the early part of the period covered in this volume, the Executive Board exercised its responsibilities in the main by administering the international monetary system set up at Bretton Woods in 1944 and by ensuring that the Fund developed ways and means to keep its Articles of Agreement relevant to the demands made upon the Fund by the changing circumstances of the world economy. Its primary responsibilities, as in the past, reflected the Fund’s three principal functions: regulatory, financial, and consultative.

In its regulatory role, the Executive Board, through the consultation procedures and moral suasion, sought to ensure that members adhered to the general principles of conduct with respect to exchange rates and international payments laid down in the Articles. The Board served also as custodian of certain widely accepted, but purely informal, propositions with respect to the appropriate methods of balance of payments adjustment and of international monetary policy and behavior. The Executive Board of the Fund was, in effect, an international conscience.

The Executive Board spent more time in its financial role than in its regulatory role, however. First, it was responsible for the basic policies and techniques for the use by members of the Fund’s financial resources. For instance, in the years 1966–71 the Board liberalized the compensatory financing facility; introduced a new buffer stock financing facility; implemented a general increase in quotas and various selective quota increases; reviewed the conditions under which members might use the Fund’s resources through stand-by arrangements; assumed responsibility for further evolution in the Fund’s policies with regard to the selection of currencies used in drawings and repurchases, charges for the use of the Fund’s resources, and repurchases; and took a number of decisions with regard to the Fund’s assets, including its policies on replenishment of currencies and on sales of gold. Second, it applied established policies and techniques to specific members’ requests for purchases and stand-by arrangements and to members’ proposals for scheduling and rescheduling repurchases.

As a consultative body, the Executive Board served as the central forum in which the monetary and payments problems of the world in general and of individual countries in particular were discussed. Members’ economic situations and prospects were reviewed at length in connection with the Article VIII and Article XIV consultations. These consultations, often accompanied by requests for financial aid, constituted much of the Board’s work. The Board also undertook a similar review when a member proposed a change in its exchange rate or par value, or when a member requested a stand-by arrangement or a drawing. Indeed, the Fund was the instrument of multilateral cooperation in international finance because the Executive Board constituted the only effective forum in the field in which the views of over a hundred countries of all sizes and in all stages of economic development could be taken into account on a continuous basis.

Although the regulatory, financial, and consultative functions occupied a great deal of the Board’s time, an increasing proportion of its efforts during the years 1966–71 was devoted to the establishment of new policies, either directly or through recommendations to the Board of Governors. When in the second half of the 1960s it became apparent that the Articles of Agreement required revision, the Executive Board was called upon to serve as an innovative force in adapting the Fund to changed circumstances. Its role in connection with the establishment, use, and development of the SDR facility has been described in Parts One and Two. Its consideration and approval of complementary changes in the By-Laws for submission to the Board of Governors, and the working out of changes in the Rules and Regulations, have been described in Chapter 13.

An especially vital role of the Executive Board with regard to SDRs came after the facility was incorporated into the Articles of Agreement. In order to make the new facility operational, much pathbreaking had to be done. As was described in Chapters 10 and 11, in the latter part of 1969 considerable attention was devoted to discussing and agreeing on features of the SDR arrangements that had to be worked out before SDRs could actually be allocated. Also, the Board was charged with the continuing responsibility for deciding upon quarterly designation plans and their application; its decisions in these matters had a major bearing on the channeling of SDRs among participants.

In the latter part of the period reviewed here, when the international monetary system was subjected to mounting pressures, the Executive Board had to concern itself with even more fundamental questions. In Part Five have been described, for example, its examination of the exchange rate adjustment mechanism in 1969 and 1970 and its adoption of a temporary regime of central rates and wider margins in December 1971. Also described have been the attempts to alleviate the problems involved in conducting the Fund’s financial operations in the circumstances that prevailed after August 15, 1971. Finally, as 1971 came to a close, the Board was starting to consider intensively many of the issues involved in a comprehensive reform of the monetary system.

Of the other responsibilities and functions, one in particular should be noted. The Executive Directors were required by the By-Laws to prepare for the Board of Governors an Annual Report discussing the operations and policies of the Fund and making recommendations to the Board of Governors on the problems confronting the Fund. As part of the Annual Report, the Executive Directors were to review the operation of the Special Drawing Account and the adequacy of global reserves; this requirement was, of course, added after the amendment of the Articles of Agreement in July 1969.9 The Annual Reports of the Executive Directors to the Board of Governors for the fiscal years 1965/66 through 1970/71 were, like those for earlier years, valuable sources of information to member governments and others on, among other things, the international economic and monetary situation, and they served as a guide to Governors in preparing for their participation in Annual Meetings. The Executive Directors devoted much time and attention to reviewing and approving the content of their Annual Reports.

Illustrative of the work of Executive Directors are some figures for the hours devoted to meetings in the calendar year 1971. In that year they held 138 formal and 19 informal sessions, for a cumulative total of 288 hours, of which 129 hours were devoted to policy matters (including floating exchange rates, currency realignment, the mechanism of exchange rate adjustment, and SDRs), 111 hours to more than two hundred country subjects, 29 hours to the Annual Report, and 20 hours to administrative matters. The Board took a total of 553 decisions, a record high number and 184 more than in 1965. For these decisions, careful preparatory work was, of course, necessary. Executive Directors also served on several standing and ad hoc committees.

In addition to the above workload, Executive Directors traveled frequently to the countries that appointed or elected them in order to attend discussions between the staff and the officials of member countries in connection with Article VIII and Article XIV consultations, to confer with their authorities, and to report to their Governors on developments in the Fund.

Executive Board: Changes in Composition

After the tenth biennial election of Executive Directors in 1964, the Executive Board consisted of 20 Executive Directors. The five members with the largest quotas appointed one Director each; the remaining 15 Directors were elected for two-year terms by the other members.10

Until November 1, 1970, the five members that appointed Directors were the United States, the United Kingdom, France, India, and the Federal Republic of Germany. After the fifth general review of quotas, Japan became the member with the fifth largest quota and was therefore entitled to appoint an Executive Director, and India ceased to be in that position. As has been mentioned in Chapter 16, the Board of Governors adopted a resolution agreeing to the proposed rules for the conduct of the 1970 regular election of Executive Directors, the implications of which were that India would continue to appoint a Director until the next regular election of Executive Directors in 1972, and that, with effect from November 1, 1970, Japan would also appoint a Director, instead of electing one as in the past.11 There were thus, in the two-year interim from 1970 to 1972, 6 appointed Directors; the total number of Executive Directors remained at 20, however. In the 1970 regular election of Executive Directors, Burma, Ceylon, Laos, Malaysia, Nepal, Singapore, and Thailand did not cast votes for any of the Executive Directors that were elected, and they designated the Executive Director appointed by Japan to look after their interests in the Fund until the 1972 election.

Several changes in the composition of the Executive Board took place in the six years described in this volume, especially after the biennial elections of 1966, 1968, and 1970, and as countries appointing Executive Directors, with the exception of the United States, continued to change their appointees with a regular periodicity. The changes in the composition of the Executive Board—both Executive Directors and Alternates—are listed in Appendices A–1, A–2, and A–3 to this volume. But a few highlights may be noted. Several Directors served for most of the period covered in this history: Messrs. Dale, Kafka, Lieftinck, Saad, Suzuki, Tann, van Campenhout, and Yaméogo. Some Directors returned to the Board for a second time, having served earlier: Messrs. Asp, Escobar, Friis, Madan, and Prasad. Two Directors, Messrs. Saad and Tann, retired, after more than two decades on the Executive Board.

Mr. Saad’s retirement, at the age of 70, came after more than 24 consecutive years as an Executive Director. His departure meant that there were no longer on the Board any of the Directors who had served on the first Board. From the time he was elected to the first Board of Executive Directors in March 1946 until he retired from the Board on October 31, 1970, not only did Mr. Saad look after the interests of the Middle Eastern members that elected him, but he was also known for his persistent efforts first to establish and later to uphold the Fund’s authority in international finance and monetary affairs. A lawyer by training, he played a prominent part in Executive Board decisions involving the Fund’s jurisdiction. He served for many years as chairman of the Executive Board Committee on Interpretation (of the Articles of Agreement). He headed the Fund’s delegations to conferences to design a proposed International Trade Organization and later to meetings of the gatt. These activities were described in the earlier history.12 In the years reviewed here he continued to be a zealous guardian of the authority of the Fund and of the Executive Board. For instance, in the course of the discussions leading to the establishment of SDRs, he felt so strongly that the Group of Ten should not involve itself in the Fund’s business that he refused to attend the Joint Meetings of Executive Directors and the Deputies of the Group of Ten.

After leaving the Executive Board, Mr. Saad remained the Governor of the Fund for Saudi Arabia and was named Principal Resident Representative of Saudi Arabia to the International Monetary Fund, with the rank of Ambassador, and continued to have an office at the headquarters of the Fund. He was succeeded on the Executive Board with effect from November 1, 1970 by Mr. Deif (Egypt).

Mr. Tann’s retirement in 1970 was after 20 years as an Executive Director. He had been the Executive Director appointed by the Republic of China from July 11, 1950 to October 31, 1960, at which time the Federal Republic of Germany had replaced the Republic of China as one of the members with the five largest quotas. Mr. Tann then became the Executive Director elected by the Republic of China, Korea, Viet-Nam, and the Philippines. He served in this capacity for another 10 years before retiring on October 31, 1970. He was succeeded, with effect from November 1, 1970, by Mr. Peh Yuan Hsu.

During the period reviewed in this volume there were three Alternate Executive Directors who left the Board after more than, or close to, two decades of service: Mr. H. M. H. A. van der Valk (Netherlands), Mr. John S. Hooker (United States), and Mr. Albert Mansour (Egypt). Mr. van der Valk joined the staff of the Fund in December 1946 as a Division Chief in the Research Department. In May 1949 he was appointed by Mr. J. W. Beyen as his Alternate on the Executive Board, and he was subsequently reappointed by Mr. D. Crena de Iongh and by Mr. Lieftinck. Mr. van der Valk remained as Alternate Executive Director until his retirement from the Board on November 30, 1968, after 22 years in the Fund.

Mr. Hooker was appointed by Mr. Southard as his Alternate in January 1950. In 1962, when Mr. Dale succeeded Mr. Southard, Mr. Hooker became Alternate Executive Director to Mr. Dale, and remained as Alternate Executive Director until his retirement on March 31, 1970.

Mr. Mansour became Alternate Executive Director to Mr. Saad in November 1951, and continued in that capacity until he retired, on October 31, 1970, when Mr. Saad retired.

Executive Board: Composition at End of 1971

As a result of the changes in the composition of the Executive Board in the six years 1966–71, the Board was considerably different on December 31, 1971 than it was on January 1, 1966. There had, nevertheless, been some continuity and several of the Executive Directors had served for long periods of time. Senior in length of service were Mr. van Campenhout, who at the end of 1971 had been on the Board for 17 years; Mr. Lieftinck, who had served for 16 years; and Mr. Dale, who had served for 9 years. By then, Mr. Kafka, Mr. Suzuki, and Mr. Yaméogo had also already been Executive Directors for 5 years, Mr. Palamenghi-Crispi for 4, and Mr. Schleiminger and Mr. Kharmawan for 3. Of the remaining members of the Executive Board, Mr. Mitchell was appointed in 1969 and Mr. Brand and Mr. Viénot in 1970, Messrs. Brofoss, Deif, Hsu, Massad, Omwony, and Ugueto were elected in 1970, and Messrs. Prasad and Bryce came to the Board in 1971.

The Executive Directors serving at the end of 1971 possessed individual qualifications covering a wide spectrum of economic and financial experience, and several had held very high posts in their countries before joining the Executive Board. Nearly all had been closely associated with the work of the Fund, several having previously been Governors, Executive Directors, Alternate Executive Directors, or members of the staff.

Mr. van Campenhout had been head of the Belgian Economic Mission in London during World War II. He was appointed as the Fund’s first General Counsel in 1946, in which capacity he served for 8 years before becoming an Executive Director. After 1960 he was also an Executive Director of the World Bank.

Mr. Lieftinck had been the Minister of Finance of the Netherlands during the critical period immediately following World War II and had been responsible for the monetary and financial policies that shaped the Netherlands’ postwar recovery. He was also Executive Director of the World Bank.

Mr. Dale had been Deputy Assistant Secretary for International Affairs in the U.S. Department of Commerce, Program Manager for International Research of the Stanford Research Institute in Washington, and U.S. Treasury Representative in the Middle East.

Mr. Kafka had been Director of the Brazilian Institute of Economics and later Advisor to the Superintendency of Money and Credit, the predecessor of the Central Bank of Brazil, and then Advisor to the Minister of Finance; earlier, he had been an Alternate Executive Director and a member of the staff of the Fund.

Mr. Suzuki had been Special Advisor to the Minister of Finance of Japan and Special Assistant to the Minister of Foreign Affairs; he had also been a Deputy of the Group of Ten and a member of Working Party 3 of the oecd. For the 5 years 1966–70 he was an Executive Director of the World Bank as well as of the Fund.

Mr. Yaméogo had been an Alternate Executive Director before becoming Executive Director, and he had also been a member of the staff of the Fund; previously, he had been Director of the Treasury and, later, Minister of National Economy, in Upper Volta.

Mr. Palamenghi-Crispi (Italy) had been Managing Director and Deputy President of the Somali National Bank and a Director of the Bank of Italy; for 5 years he had been Alternate Governor of the World Bank for Somalia.

Mr. Schleiminger had been Deputy Head of the Department of International Organizations of the Deutsche Bundesbank for 10 years; he had previously been on the German Delegation to the oeec and Chairman of the Alternate Members of the Managing Board of the epu.

Mr. Kharmawan had been Chief Economic Advisor of the Central Bank of Indonesia and, later, an Executive Director of the Asian Development Bank.

Mr. Mitchell had been Deputy Under Secretary of State for the Department of Economic Affairs dealing with External Economic Affairs and, later, Deputy Secretary of the Ministry of Agriculture, Fisheries and Food, of the United Kingdom. He was also Executive Director of the World Bank.

Mr. Brand, as an official of the Australian Treasury for many years, had been the First Assistant Secretary of the Revenue Loans and Investment Division.

Mr. Viénot, long with the Ministry of Finance of France, had more recently been Deputy Director of the Direction du Trésor, and had also been Chairman of the Economic and Development Review Committee of the oecd; he, too, was an Executive Director of the World Bank at the same time that he was Executive Director of the Fund.

Mr. Brofoss had been the Minister of Finance and the Minister of Commerce of Norway and, later, the Governor of the Bank of Norway; in the last capacity he had also been the Governor of the Fund for Norway for 16 years.

Mr. Deif had been Minister of the Treasury of Egypt and, in that capacity, had also been Governor of the Fund for Egypt.

Mr. Hsu had been the Minister of Finance and, later, the Governor of the Central Bank of China; in these capacities he had been the Governor of the Fund and the World Bank for the Republic of China for 4 years and the Governor of the Fund for another 5 years.

Mr. Massad had been Vice President and then President of the Central Bank of Chile and Chairman of the Board of Governors of the Center for Latin American Monetary Studies; he had been the Governor of the Fund and the World Bank for Chile for 5 years.

Mr. Omwony (Kenya) had been Personnel Manager of the East African Posts and Telecommunications Corporation before his appointment as Alternate Executive Director.

Mr. Ugueto had been Director General of the Ministry of Finance of Venezuela and, in the Finance Minister’s absence, Acting Minister; he had also been Secretary to the Caucus of the Fund and World Bank Governors for the Latin American members and for the Philippines, and Deputy Chief of Mission in the Embassy of Venezuela in Washington.

Mr. Prasad had been Economic Advisor of the Reserve Bank of India before his first term as Executive Director of the Fund, and had then been Assistant Director of the Economic Staff of the World Bank, Economic Advisor to the Prime Minister of Nigeria, and Director of the Asian Institute for Economic Development Planning of the United Nations.

Mr. Bryce had been Deputy Minister of Finance and Economic Advisor to the Prime Minister of Canada and an Executive Director of the World Bank.

The Alternate Executive Directors generally had fewer years of service on the Executive Board, but they, too, had had varying experience in monetary and financial matters, including the work of the Fund. They are listed here in alphabetical order.

Mr. Al-Atrash had been Director of the Credit Department in the Central Bank of Syria, and for some years had been Advisor to the Syrian delegation to the Annual Meetings of the Board of Governors.

Mr. Arriazu (Argentina) had been Technical Assistant to the Executive Director before being appointed Alternate Executive Director in 1968.

Mr. Beaurain had been Chargé de mission au Cabinet of the Ministry of Finance of France.

Mr. Bustelo had been Chief of the Balance of Payments Division of the Ministry of Commerce of Spain.

Mr. Caranicas, from 1952 to 1968, had served as Alternate Executive Director to the Executive Director elected by Italy, Greece, Spain, and Portugal, and then returned in 1970 as Alternate Executive Director to Mr. Kharmawan; before becoming an Alternate Executive Director, Mr. Caranicas had been Secretary General of the Ministry of National Economy and the Ministry of Agriculture of Greece.

Mr. de Vries (Netherlands) had, for 5 years, been Director for Monetary Affairs of the eec and a member of the Monetary Committee of the eec.

Miss Fuenfgelt had been with the Ministry of Economics of the Federal Republic of Germany for 8 years and a member of the Fund staff for 2 years; she had also been an Alternate Deputy in the Group of Ten.

Mr. Gilchrist, long with the Bank of England, had been Assistant to the Chief of the Overseas Department.

Mr. González, for 20 years with the Central Bank of Costa Rica, had been Director of the Department of Economic Studies.

Mr. Hanh had been Governor of the National Bank of Viet-Nam and Minister of Finance and Minister of National Economy.

Mr. Harley had been Director of the Office of International Financial Policy Coordination and Operations in the U.S. Treasury.

Mr. Jónsson had been Economic Advisor to the Central Bank of Iceland.

Mr. Marathe, for 13 years with the Ministry of Finance of India, had been Economic Advisor to the Indian Government.

Mr. Martins had been Chief of the Economics Department of the Central Bank of Brazil.

Mr. Mills had been Director of the Central Planning Unit in Jamaica and had been Deputy Director of Statistics in the Central Bureau of Statistics.

Mr. Nicol-Cole had been first Deputy Governor and then Governor of the Bank of Sierra Leone, and had been Alternate Governor and Governor of the Fund and the World Bank for Sierra Leone.

Mr. Rajaobelina, serving with the Ministry of Finance of the Malagasy Republic, had been Financial Advisor to the Secretary of State.

Mr. Satow had been Senior Advisor for International Affairs in the Bank of Japan and had been on the Fund staff.

Mr. Schneider had been Deputy Head of the Foreign Section of the Economic Research Department of the Austrian National Bank and, earlier, Technical Assistant to the Executive Director.

Mr. Smit had been Deputy Secretary for Finance in the South African Treasury and Head of the Foreign Trade Relations Division of the Department of Commerce and Industries.

Executive Board: Size and Structure

In the course of the preparation of the rules for the conduct of the 1970 regular election of Executive Directors, questions were raised about the size and structure of the Executive Board.13 One of the questions related to the optimal size of the Board. At issue was whether the number of Executive Directors should be increased from 20 to 21, by adding to the number of elected Directors. Under Article XII, Section 3 (b), of the Articles of Agreement, when countries not listed in Schedule A entered the Fund, the Board of Governors, by a four-fifths majority of the total voting power, might increase the number of Executive Directors to be elected. In the course of the Board’s discussion in 1970, it was observed that each increase in the number of Executive Directors to be elected in the past had been based on the acceptance of membership by countries that had, as a minimum, the number of votes considered appropriate for an increase in the circumstances then prevailing. In 1970 the application of that test did not justify an increase. It was also pointed out, however, that the approach followed in the past was not mandatory under the Articles, and that it was proper to take into account other factors, including the effect of the size of the Board on the dispatch of its business, in establishing the number of Executive Directors to be elected.

Another question that was considered stemmed from a request that the rules of election be arranged so as to assure two seats for the African members. The two additions, in 1963 and 1964, to the number of elected Executive Directors had been based principally on the entry into the Fund during the early 1960s of a large number of countries in Africa. Under the present rules, however, it was conceivable that, in an election, groupings of members could be such that the African members would no longer have two representatives on the Executive Board. Moreover, even the present groupings meant that the Executive Directors elected by African members had a large number of members to take care of, Mr. Omwony with 15 constituents and Mr. Yaméogo with 18. Mr. Deif was another Executive Director with a large constituency: he was elected by 13 members, including three in Africa, and he looked after the interests of another country that was in the process of joining the Fund.

During the discussion in the Executive Board, there was broad support for the view that, if the large number of African countries were able to elect only one Executive Director, the burden on him would be excessive, and the efficient conduct of the business of the Executive Directors as a group, particularly when the interests of the African members were involved, would be hindered. There was widespread support among the Executive Directors for the view that African members should have the opportunity to elect two Executive Directors. The Executive Directors strongly preferred as a matter of principle to keep the existing number of Directors at 20. They noted that even increasing the membership of the Board from 20 to 21 by introducing into the Articles provisions like Article XII, Section 3 (b) (iv), would not necessarily ensure a solution to the African problem: other new regional groups might be formed that could compete in elections. Were “Africa” to receive the same special treatment as the “Latin American Republics,” with separate provisions in the Articles assuring them of seats on the Executive Board, there might be requests for similar treatment for “Asia,” or “Southeast Asia,” or the “Middle East,” or even “Europe.”

The Executive Directors did not propose to reach any conclusions on these questions before the 1970 election. They believed that these and other questions related to the size and structure of the Executive Board deserved further study. Accordingly, paragraph 7 of the report of the Executive Directors to the Board of Governors on the rules for the 1970 election stated that

the Executive Directors consider it desirable to continue to give attention to the problems of the size and structure of the Executive Board. They intend to complete a study of these matters within 2 years, bearing in mind the recurrent need to prepare for the biennial elections of Executive Directors.

After the 1970 election, the Executive Directors discussed a number of topics connected with the size and structure of the Executive Board. They considered the consequences for the Executive Board of the potential membership in the Fund of numerous small states. They discussed the implications of distributing directorships on the basis of geographical or other patterns. They debated two fundamental questions concerning the existing distribution of voting power: Should voting power in the Fund continue to vary according to the size of a member’s quota? Should the number of basic votes which each member received regardless of the size of its quota continue to be 250? They considered what additional assistance might be given to Executive Directors with ever-heavier workloads. And they discussed the possibility of new rules of election favoring large groups of members.

These basic questions concerning the size and structure of the Executive Board were still unanswered as 1971 closed. One consequence of the discussions during 1971 was that the Executive Board changed the Fund’s administrative rules to provide for the appointment of an “Advisor to Executive Director” to assist each Executive Director who was elected by more than 10 members. Advisors to Executive Directors were subject in most respects to the same terms and conditions of service as were the Executive Directors and their Alternates. At the end of 1971, three Executive Directors had Advisors. In addition, after June 1969 each Executive Director was entitled to four assistants, no more than two of whom might be technical assistants.

Managing Director

The work and decisions of the Fund are the fruits of a rich interchange of views and ideas among the Executive Directors, the management, and the staff, in a process that has been described in the earlier history and elsewhere.14 Hence, it is difficult to single out the contribution of any individual. However, the position and influence of the Managing Director are of such moment that much that the Fund accomplishes during his time in office reflects his leadership.

Mr. Pierre-Paul Schweitzer was the Managing Director and the Chairman of the Executive Directors during the six years reviewed in this volume. Of the four Managing Directors that had served since the Fund’s inception, he was the youngest and the only one to be appointed to and to serve a full second term. His first term began on September 1, 1963 and his second term ended on August 31, 1973.15 Inasmuch as he was still Managing Director after 1971, a summing up of Mr. Schweitzer’s leadership of the Fund might better await an account of the Fund’s history that includes 1972 and 1973. Nonetheless, the years related here were definitely “Schweitzer years,” and this narration would be incomplete without an attempt to describe his imprint on the policies and activities of the Fund that have been recounted in the foregoing chapters.

Almost immediately upon taking office, Mr. Schweitzer became known as the first Managing Director of the Fund to be particularly concerned about the developing countries, and as one who was eager to see that solutions to the world’s monetary problems were truly international, reflecting the interests of the developing, as well as of the industrialized, nations. The prime illustration of Mr. Schweitzer’s concern for the developing countries is, of course, his effort on their behalf in the formation of the SDR facility. We have seen in Part One how, in the protracted deliberations concerning international liquidity from 1963 through 1967, he stressed time and time again, publicly, that techniques for adding to the world’s liquidity should include all countries, rich and poor alike, on an equal basis. This position was contrary to the then fashionable views in industrial countries. We have further seen that, in order to bring about such a solution, he worked quietly behind the scenes, putting forward his own proposal for a universal scheme operated through an international body, the Fund, or an affiliate thereof. And we have noted that these and other private initiatives by Mr. Schweitzer were immensely instrumental in shaping the character of the arrangement to create liquidity that was finally agreed upon—special drawing rights created by the Fund for all its members in proportion to their quotas.

Economists and laymen outside the inner official circles of those involved in the negotiations have often expressed regret that no link between liquidity creation and development finance was set up on the occasion of the initial agreement on the SDR facility. It is, therefore, to be emphasized that the scheme established represented, in the circumstances of the mid-1960s, a signal victory for the Fund and most especially for Mr. Schweitzer. The greatness of his achievement is likely to become even more apparent should SDRs take on a central role in a reformed international monetary system.

Undoubtedly the SDRs were the apogee of Mr. Schweitzer’s achievements during his tenure in the Fund. But a number of other developments in the Fund’s policies and activities related in this volume were also a reflection of his understanding of, and close attention to, the problems of developing countries: the liberalization and extension of the compensatory financing facility; the introduction of the buffer stock financing facility; and—a development in which Mr. Schweitzer took particular pride—the large growth in the Fund’s technical assistance programs after he became Managing Director. From Part Five the reader will recall, too, that when the par value system came apart in 1971, and many were concerned about the adverse consequences for the major industrial nations, it was Mr. Schweitzer who pointed out the painful implications for the developing countries.

The developing nations were very responsive to what they recognized to be a shift in the Fund’s attitudes. Especially among the Latin American countries, which had been sharply critical of many of the Fund’s policies during the 1950s, was Mr. Schweitzer able to reverse the image of the Fund.

While it was a fortunate circumstance that Mr. Schweitzer was Managing Director when so many newly emerging countries were becoming members of the Fund, he did not confine his efforts to developing members. Presiding over the Fund during the worst international monetary crises by far since the Fund was created in 1944, he participated in the negotiations that led, among other things, to a two-tier market for gold, to devaluation of the pound sterling and the French franc, to large stand-by arrangements for the United Kingdom and France, to revaluation of the deutsche mark, to the currency realignments of the Smithsonian agreement, to the establishment in the Fund of a temporary regime of central rates and wider margins, and to the formation of a Committee of Twenty, representing all the Fund’s members, to consider monetary reform.16 In these negotiations, which involved monetary officials of the highest rank from the largest member countries, who oftentimes held conflicting positions, Mr. Schweitzer usually maintained a “low profile,” working quietly and diplomatically to see what consensus might be possible. During his years in office, international monetary and financial problems became more complex and the danger of conflicting national interests increased. Working closely with the senior staff of the Fund, as was his custom, he sought solutions that would not damage the economies of other countries and that would be in the best interests of the international community at large. A dedicated internationalist, Mr. Schweitzer sought to preserve, in a period of turmoil, the harmonious cooperation that had gradually been built up among the Fund’s members in less troublesome times.

Much of his work was necessarily outside the limelight, but he often spoke out on leading questions and made public pronouncements when he believed they would be useful. In addition, he traveled extensively throughout the world to promote international monetary cooperation and to strengthen member relations. He became a prominent world figure in monetary affairs. He was called upon to make speeches before banking groups, international commissions and conferences, and the like; he appeared on a number of occasions before the press and on television; he was awarded honorary degrees by the Universities of Leeds and Wales and by Harvard, Yale, George Washington, and New York Universities.

A man of unusual charm, warmth, and modesty, the officials with whom he dealt became his friends, and he was admired, respected, and held in great affection by his staff.

Deputy Managing Director

Mr. Frank A. Southard, Jr., became the Deputy Managing Director on October 31, 1962 (while Mr. Per Jacobsson was the Managing Director) and was reappointed to a second five-year term beginning November 1, 1967. He was in that post during all of Mr. Schweitzer’s tenure.17

In the complex of relationships, many of which are informal, between the Managing Director and the Deputy Managing Director, between them (as the management) and the Executive Directors, and between the management and the staff, it is even more difficult than in the instance of the Managing Director to disentangle the contribution of the Deputy Managing Director. Nonetheless, it is important to note here that Mr. Southard worked very closely and harmoniously with Mr. Schweitzer as a management team. To that team, Mr. Southard, who from February 1949 to November 1962 had been the Executive Director for the United States, brought his intimate familiarity with the Fund’s policies and their origin and evolution; his widespread acquaintance with the financial officials of member countries, the Executive Directors, and the Fund staff; and his eminent qualifications as an economist. Mr. Southard was very much involved in the development of the Fund’s policies and activities described in this history, participating in informal discussions on a number of levels—including discussions by the Managing Director with officials of member countries, consulting the Executive Directors, and offering his advice and judgment to the Managing Director. With a keen sense of the historical significance of the events taking place, Mr. Southard made concise but complete summary accounts of many of these informal discussions.

The Deputy Managing Director also had the primary responsibility for the administration of the staff. This function included not only organizing the staff and preparing the budget but also playing a major role in planning, with the senior staff, the studies undertaken, the assignments given, and the composition of missions sent to member countries, and seeing final reports through to completion. The meticulous care, conscientiousness, and industry with which Mr. Southard carried out these responsibilities, his prodigious output, and his sensitive concern for the staff were often a source of marvel to those with whom he worked.

Mr. Southard was identified with certain projects in which he had keen personal interest. He was instrumental, for example, in establishing the IMF Institute and the programs of technical assistance in central banking, fiscal affairs, and statistics, and he followed these activities closely. He also initiated several of the Fund’s publications, such as the periodical Finance and Development, the histories of the Fund, and the Pamphlet Series.

In sum, Mr. Southard, serving in two capacities for 25 years, with all five Managing Directors, provided the Fund’s policymaking process and its management and administration with continuity, and facilitated the transitions from one Managing Director to another.

Staff: Organization and Expansion


In the first few years after Mr. Schweitzer became Managing Director and Mr. Southard became Deputy Managing Director, several changes had been made in the organization of the staff.18 The Central Banking Service, the Fiscal Affairs Department, and the IMF Institute had been established; the Exchange Restrictions Department had been converted, with newly defined functions, into the Exchange and Trade Relations Department; and the Office of Administration, the Secretary’s Office, and the Treasurer’s Office had been elevated to departments and given additional responsibilities. In 1968, the Bureau of Statistics was formed as an entity separate from the Research and Statistics Department, and the latter was renamed the Research Department. Thereafter, the basic organization of the staff remained unaltered.

The staff continued to be organized into 14 departments plus the Bureau of Statistics and certain other units in the Office of the Managing Director. The departments were, in alphabetical order, the Administration Department, the African Department, the Asian Department, the Central Banking Service, the European Department, the Exchange and Trade Relations Department, the Fiscal Affairs Department, the IMF Institute, the Legal Department, the Middle Eastern Department, the Research Department, the Secretary’s Department, the Treasurer’s Department, and the Western Hemisphere Department. There were also the Office in Europe (Paris), the Office in Geneva, the Special Representative to the United Nations, the Information Office, and the Internal Auditor, all of which were, in the organizational structure, a part of the Managing Director’s Office. Appendix C to this volume provides an organizational chart.

Rapid Expansion

Within the organizational structure described above, the number of staff from April 30, 1966 (the end of the fiscal year) to April 30, 1972 rose from 750 to 1,175 in what was by far the largest expansion in any six-year interval so far in the Fund’s history, including even the first years. By the standards of most international organizations, however, the Fund was still relatively small.

The expansion took place in all departments and offices. There was an impressive growth in the five Area Departments because concentrated work on the problems of individual member countries continued to be the main task. The four functional departments, the IMF Institute, and the Bureau of Statistics added considerably to their staffs because of heavier responsibilities for the development of the Fund’s general policies dealing with exchange rates, monetary stabilization, and fiscal affairs, because of the growth of technical assistance and training, and because of the impact on the research programs of larger and more numerous operations.

There were repercussions of the Fund’s greater activity in the Administration Department, the Secretary’s Department, and the Treasurer’s Department. The increased demands on these departments were partly of an internal nature. Personnel recruitment, in-service training, general office services, and administrative payments, for example, all increased, not only because of the enlargement of the staff but also because of the engagement of numerous outside technical experts. But the demands made on these departments may have reflected even more the provision of greater services to member countries. For instance, in the Secretary’s Department some of the staff began to work on a year-round basis to arrange the Annual Meetings. The flow of documentation and communications between the Fund and member countries accelerated to a point where additional staff were engaged in record-keeping, communications, mailing, and the like.

A dramatic increase in the Secretary’s Department was in the staff involved in “language services.” At the request of member countries, more and more of the Fund’s documents were translated from English (the official language of the Fund) into other languages, especially French; publications were put out in more languages; and increasing use was made of simultaneous interpretation at meetings, lectures, and conferences. It followed that the staff employed in language work quadrupled. Fifty of the additional staff members taken on after the fiscal year 1965/66 were accounted for by the Language Services Division, and by 1971/72 this Division alone accounted for 6 per cent of the total staff.19

Also especially marked was the growth of the Treasurer’s Department, which became the third largest department. Not only were administrative functions of the Treasurer’s Department enlarged as transactions reached record high levels, but its operational duties were also greatly augmented. And there was now both a General Account and a Special Drawing Account to be operated. Many more reports on developments in the financial accounts of the Fund and in gold markets also had to be issued. Beginning in 1966, moreover, as a matter of deliberate management decision, the Treasurer’s Department was charged, in conjunction with the Legal and Research Departments, with greater responsibility for the formulation of the Fund’s financial policies, such as those in connection with general quota reviews, the formula for calculating quotas, and the designation plans for SDRs. As a result of all of these factors, the staff of the Treasurer’s Department increased and in the fiscal year 1971/72 was more than two and a half times its size six years earlier.

The greater volume of the Fund’s activities was reflected in the expansion of the other departments and offices as well. The Legal Department, occupied with amending the Articles of Agreement, with examining the legal implications of the actions members were taking to cope with recurrent international monetary crises, and with considering the possibilities of further amendments to the Articles, added somewhat to the number of lawyers employed. The staff of the Joint Bank-Fund Library likewise increased; with the continued growth of its collection to over 110,000 volumes and nearly 3,000 journals and 150 newspapers in 36 languages, it had become a world-renowned collection of materials on monetary and financial affairs and economic development. The Library, too, engaged in more technical assistance, by assembling and distributing lists of books and articles on economic development, money and banking, and public finance to central banks, government agencies, and faculties of economics in member countries. As their functions expanded, the Information Office, the Office of the Internal Auditor, and the Offices in Paris and Geneva also acquired additional personnel.

The increase in staff could be absorbed without creating additional departments because the existing departments included some, such as the Central Banking Service, the Fiscal Affairs Department, and the IMF Institute, that were relatively new and still in the process of staffing. A related factor was that several more divisions within each department were established. The division became the principal organizational unit, and the Division Chief was given enlarged duties and responsibilities.

Greater Use of Electronic Data Processing

Another aspect of the work of the staff was the increasing use of electronic data processing. The Joint Computer Center went into operation in 1968, when the Fund and the World Bank purchased a large general purpose computer. Jobs which in the past had been done with computer facilities outside the organizations were quickly adapted for operation on the jointly owned computer, and new programs and systems began to be devised. Reference was made in Chapter 29 to the Data Fund organized and operated by the Bureau of Statistics, a system which some of the Area Departments began to use to examine quantitatively the relationships between economic variables in member countries. The Research Department, which had been using computers in its studies for many years, adapted its existing programs to the new computer, and undertook a number of further econometric studies relating, for example, to financial programming, exchange rates, and export performance. The Research Department continued its participation with outside groups of econometricians in Project Link, a project aimed at developing a world trade model. The Treasurer’s Department used the computer for operations in the General Account and, after the allocation of SDRs, in the Special Drawing Account; for calculations relating to quotas and to data on monetary reserves; and for disbursements of payroll and pension payments.

The staff of most departments included increasing numbers of young economists trained in modern statistical and econometric methods, and personnel specially trained in electronic data processing (such as systems analysts, programmers, and keypunch operators) were assigned to the Research Department, the Treasurer’s Department, and the Bureau of Statistics. A Data Processing Division was set up in the Administration Department to act as liaison with the World Bank and to provide assistance to those departments or divisions that did not have specially trained personnel.

In addition to processing data by electronic means, the staff made use of the latest equipment for typing and reproducing an ever-expanding flow of documents.

Geographic Distribution

The Fund had always taken particular pride in the diverse national origins of its staff. That this diversity had widened considerably by 1971 is suggested by a few facts and figures. The staff at the end of the fiscal year 1970/71 (1,106 people) was drawn from 82 countries. The largest numbers were, as in the past, from the United States and the United Kingdom, but in 1971 these countries accounted for only about 28 per cent and 10 per cent, respectively, of the total staff. The next largest numbers, in absolute terms, came from 9 countries; these were, in descending order of the number therefrom, France, Canada, India, Australia, the Philippines, the Federal Republic of Germany, Italy, the Netherlands, and Japan; the numbers of staff members from each of these countries ranged from 60 to 20. In addition, between 20 and 10 staff members came from each of 15 countries, which, in descending order of the number therefrom, were Chile, Jamaica, Korea, Haiti, Peru, Spain, Belgium, Bolivia, the Republic of China, Norway, Greece, Egypt, Brazil, Finland, and Trinidad and Tobago. And at least 5 staff members came from each of the following countries: Argentina, Austria, Burma, Ceylon, Colombia, Denmark, Ecuador, Guyana, Iran, Ireland, Mexico, New Zealand, Nicaragua, Nigeria, Pakistan, Panama, Portugal, Sweden, Thailand, and Turkey.

Worldwide recruitment efforts were a significant factor in explaining the diversity achieved. In the years 1966–71 there was a 60 per cent expansion of staff, but only 15 per cent of the additional staff came from the United States and 10 per cent from the United Kingdom. Instead, they came from a wide range of member countries, with the largest absolute numbers from, in descending order, France, India, Canada, Italy, Australia, the Philippines, Jamaica, Peru, Spain, Bolivia, Chile, Korea, the Federal Republic of Germany, Haiti, Japan, Finland, Norway, and Iceland. Furthermore, staff was recruited for the first time from Algeria, the Khmer Republic (Cambodia), Cameroon, Dahomey, Guyana, Israel, Kenya, Malaysia, Mali, Mauritania, Morocco, Singapore, Tunisia, Uganda, Upper Volta, and Zambia.

A wide diversity of nationality was also to be found among the senior officials. The 150 staff members at the level of Division Chief or above on February 28, 1971 were from 35 countries.

The staff was international in another, and more important, respect. Regardless of nationality, the staff worked together as a body of international civil servants, in the interests of the Fund, and did not try to represent, or lobby for, the national interests of particular member governments.

Staff: Teamwork, Anonymity, and Long Service

A brief description of how the work of the staff was carried out in the twenty years from 1945 to 1965 was given in the earlier history.20 The same description applied to the six years from 1966 to 1971. As the size of the staff increased, two points of emphasis became especially important: teamwork and general anonymity.

The end product of virtually all of the work done by the staff in the period described here was the result of the combined efforts of many people. There were divisions of responsibility, of course, but in carrying out their responsibilities, staff from the various departments continuously pooled and shared their information and ideas and their specialized knowledge and experience. Although differing opinions among the staff might well have been aired and considered prior to the formulation of “a staff view,” what was presented to the Executive Directors was a consensus. For example, a staff team undertaking a mission to a member country to conduct discussions in connection with a consultation conferred with the senior staff of a number of departments, both in advance of departure and upon return to headquarters. The subsequent report on the discussions was drafted by the mission team and, after approval by the departments concerned, was sent to the Executive Directors as a Staff Memorandum (SM series) prepared “by the staff representatives” who were on the mission. General policy papers evolved gradually through a process in which the personnel of several departments consulted and coordinated very closely. These papers, too, were sent to the Executive Directors as Staff Memoranda without specifying the names of the individuals concerned; they contained an identification only of the departments that had major responsibility for their preparation.

This collaboration meant that the papers sent to the Executive Directors reflected the combined views of the staff. Then, having received the approval of the Managing Director or of the Deputy Managing Director or, often, of both, these papers had the support of the management. The collaboration among the staff also meant that it was almost never possible to separate from the final product the contribution of an individual. Furthermore, much of the work of the Fund involved confidential information and discussions that could not be revealed except to “insiders.” Hence, while the work of individual staff members was well known within the organization and among colleagues, and often among the monetary and financial officials of member countries, most of the members of the staff, like civil servants throughout the world, remained anonymous to all but a very limited number of people.

These factors explain the absence in this narrative of staff names, except for the few mentioned in the chapters on SDRs; those staff members were in a unique capacity, representing the Managing Director and speaking on his behalf in forums outside the Fund. The Fund’s history, nevertheless, involves not only events and issues in the economic and financial fields and the formation of related policies; it also involves people. Indeed, the foregoing chapters are filled with names of many of the monetary officials involved in the history of the Fund in these years. To personalize further the account contained in this history, and particularly to give identity to the often-used term “the Fund staff,” we now mention a number of staff members who, by virtue of their seniority and their long service, were in a special category: all Directors of Departments, of Offices, and of one Bureau, plus those with the rank of Division Chief or above who had served for more than 20 years by the end of 1971. The listing of names is in line with the trend of recent years toward reducing, at least to some extent, the anonymity of the staff. For example, names appeared on red reports, in the Annual Report on Exchange Restrictions, and on the volumes of the earlier history. At times the staff on missions in member countries were identified in the local press. Signed articles (as in the past) appeared in Staff Papers and Finance and Development.

Because the staff, regardless of nationality, worked as a cohesive body of international civil servants, the nationalities of individual staff members are not indicated below.

In order of length of service, the Directors of Departments and Offices and of the Bureau of Statistics at the end of 1971 were as follows:

Mr. Jan V. Mládek, the Director of the Central Banking Service, was elected by Czechoslovakia in March 1946 to be on the first Board of Executive Directors. After serving as an Executive Director for two years, Mr. Mládek joined the staff. In 1953 he became the Director of the Paris Office, a position he held for nearly 8 years, and in 1961 he was placed temporarily in charge of the newly created African Department, pending the appointment of an African. When the Central Banking Service was formed in 1964, Mr. Mládek became the Director.

Mr. Phillip Thorson, the Director of the Administration Department, was one of the “oldest” staff members, in terms of length of service. Mr. Thorson was one of the very few original members of the staff when the staff was established on April 8, 1946. He held a senior post in the Secretary’s Office for 8 years and in May 1954 was appointed Director of what was then the Office of Administration and later became the Administration Department. Thus, at the end of 1971, Mr. Thorson had been the Director of Administration for over 17 years.

Three other Directors of Departments, the Director of the Bureau of Statistics, and the Director of the Office in Europe (Paris) also came to the staff in 1946, and one came in January 1947. They too had had 25 or more years of continuous service on the staff at the end of 1971:

Mr. Earl Hicks began his career in the Fund in July 1946, undertaking the amassing of the financial statistics that culminated shortly thereafter in the monthly bulletin, International Financial Statistics. From then on, Mr. Hicks was continuously identified with the responsibility for the Fund’s financial statistics. When the Bureau of Statistics was set up in 1968, he became the Director.

Mr. Ernest Sturc joined the Research Department as a Division Chief in September 1946. Subsequently he served for a number of years as Deputy Director in the European Department. In January 1965 he was appointed Director of the Exchange Restrictions Department. In May 1965 that department became the Exchange and Trade Relations Department, with new responsibilities. Mr. Sturc continued as the Director, in which capacity he was serving at the end of 1971.

Mr. Jorge Del Canto was also among the Fund’s earliest staff members, joining the staff in September 1946. From the outset and continuously thereafter, Mr. Del Canto was closely associated with the Fund’s work with its Latin American members, and in May 1957 he became the Director of the Western Hemisphere Department, which was composed of Latin America, Canada, and the United States. At the end of 1971 Mr. Del Canto had been involved in the Fund’s Latin American work for more than 25 years and in charge of the Western Hemisphere Department for over 14 years.

Mr. Joseph Gold came to the staff in October 1946. After several years as a senior lawyer in the Legal Department, he became the head of that department (which carried the title General Counsel) in 1960. Mr. Gold was made The General Counsel in May 1966. This was a new position in the Fund, even though it carried the former title, because the former position was changed to Director, in which position Mr. Gold also continued to serve.

Mr. Jean-Paul Sallé, who in 1963 was made the Director of the Office in Europe (Paris), joined the staff in December 1946. Mr. Sallé had already been with the Paris Office for many years before becoming the Director, and earlier had worked at headquarters on the Fund’s relations with its European members.

Mr. J. J. Polak joined the staff of the Research Department in January 1947. Initially responsible for formulating and directing the Fund’s quantitative and econometric research, Mr. Polak’s responsibilities were gradually enlarged. After several years as Deputy Director in the Research and Statistics Department he became the Director in 1958. He was appointed The Economic Counsellor, the first such post in the Fund, in May 1966, and continued to serve also as the Director of the Research Department.

The Directors of three departments and the Director of the IMF Institute had been with the Fund since the early 1950s:

Mr. F. A. G. Keesing joined the staff of the Exchange Restrictions Department in 1951 as an Advisor and remained with that department until May 1964. With the creation of the IMF Institute, Mr. Keesing became its first Director.21

Mr. Richard Goode joined the staff in 1951 and for the next 8 years held senior posts successively in the Research Department and the Asian Department. In 1959 he left the Fund to go to the Brookings Institution. In 1965 Mr. Goode returned to head the newly established Fiscal Affairs Department.

The Middle Eastern Department was headed by staff who had been with the Fund for over 15 years. Mr. Anwar Ali became the Director in October 1954. However, in 1958 he went on a special assignment as Governor of the Saudi Arabian Monetary Agency (central bank), and Mr. John W. Gunter, who had joined the staff of the Middle Eastern Department in 1953, acted as Director. After 1965, when Mr. Anwar Ali continued in Saudi Arabia, on leave of absence from the Fund, Mr. Gunter became officially the Acting Director.

Mr. W. Lawrence Hebbard had been on the staff for more than 12 years when he was appointed Secretary of the Fund in January 1967. He came to the Fund in 1954 as a Division Chief in the Exchange Restrictions Department, and later became an Assistant Director in that department. Upon the retirement of Mr. Roman L. Home in December 1966, Mr. Hebbard became the Secretary of the Fund. (The Secretary is also the administrative head of the Secretary’s Department.)

At the time of his retirement at the end of 1966, Mr. Home had been on the staff for more than 20 years and had been Secretary since January 1, 1953.

The periods of service of the Directors of the four remaining departments were relatively shorter, but they too had been with the Fund for several years:

Mr. D. S. Savkar joined the staff in June 1959 as the Director of the Asian Department. Having been an Alternate Executive Director from 1948 to 1951, Mr. Savkar was familiar with the work of the Fund.22

Mr. L. A. Whittome joined the staff as the Director of the European Department in August 1964. Mr. Whittome had previously had a 14-year career with the Bank of England, where, since 1962, he had held the post of Deputy Chief Cashier.

Mr. Walter O. Habermeier was an Alternate Executive Director from 1962 to 1965 and became a member of the staff of the Treasurer’s Department in 1966. The Treasurer of the Fund, Mr. Oscar L. Altman, died in December 1968, and Mr. Habermeier was appointed Treasurer in February 1969. (The Treasurer of the Fund is also the administrative head of the Treasurer’s Department.)

At the time of his death, Mr. Altman had been on the staff for more than 20 years. He joined the staff as an Assistant to the Managing Director with general responsibility for administration and then became the first Director of Administration. In 1956 he moved to the Research and Statistics Department as Advisor, and he was subsequently promoted to Deputy Director of that department. In May 1966 the Treasurer’s Department acquired expanded responsibilities and functions and Mr. Altman was appointed Treasurer.

Mr. Mamoudou Touré joined the staff as the Director of the African Department in April 1967. Mr. Touré had previously held a variety of positions. Just prior to his appointment to the Fund staff, he had been Director of the UN African Institute for Economic Development and Planning in Dakar.

Mr. Edgar Jones, who was appointed in 1967 as the Director of the Office in Geneva, had been with the Fund since 1953. Before moving to Geneva to take charge of the office in October 1965 (when it was established on a provisional basis), Mr. Jones was Deputy Director of the Exchange Restrictions Department, and had been in that department for 12 years.

By the end of 1971 dozens of other senior staff members had also accumulated 20 to 25 years of experience in the Fund. In the following paragraphs they are listed by department, taking the departments in alphabetical order and the staff within the departments in order of length of service.

In the Administration Department, Mr. Walter H. Windsor, senior Assistant Director, came to the staff on the very first day the staff was established, and, beginning with the organization of the Fund’s first offices in temporary quarters in the Washington Hotel, he was subsequently involved, with other staff, in providing the Fund with office space. This involvement included the construction of the new headquarters described in the following section. Mr. William M. Avery, Assistant Director, was similarly a member of the administrative staff from June 1946, and was responsible for, among other things, overseeing services and supplies, transportation, and graphic arts. Mr. Martin L. Loftus, the Librarian of the Joint Bank-Fund Library, came to the Fund in September 1946, as the staff was just being organized, to establish the Library and to begin assembling volumes, acquiring back publications, and the like. Thereafter, he continued in charge of the growing collection. Mr. Kenneth N. Clark, appointed Deputy Director of the department in 1966, joined the staff in 1947 and in subsequent years worked at a senior level on a variety of administrative and personnel matters. Mr. Henri H. P. King, Assistant Director, in charge of preparing the administrative budget, joined the staff in 1948; for several years, Mr. King performed a variety of administrative and personnel tasks.

In the African Department, Mr. Charles L. Merwin, Deputy Director from 1964 onward, had come to the Fund in 1946. He was in the Research Department from 1946 to 1952, and helped to start the collection and statistical presentation of balance of payments data; then he worked in the European Department from 1952 to 1964. Mr. Ali R. Bengur, Senior Advisor, had been on the staff since 1947 and had been associated with the Fund’s work on some of its European member countries and on Middle Eastern member countries before he undertook assignments on African member countries. Likewise, Messrs. D. Boushehri and Alberto S. Foz were staff in the African Department who joined the Fund in the early years, and who worked previously on member countries in other geographic regions, Mr. Boushehri in the Middle East and Mr. Foz in Latin America.

The Asian Department, too, had three staff members whose periods of service began before 1950. Mr. W. John R. Woodley, Deputy Director, had been with the Fund, except for a 3-year interval, since July 1948, working on problems of exchange restrictions and multiple exchange rates prior to moving to the Asian Department, where he became Deputy Director in 1966. Mr. Andreas Abadjis, Senior Advisor, had been on the staff since September 1948 and had been with the Research Department and with the European Department before beginning work on Asian member countries. Mr. Albert A. Mattera, Senior Advisor, came to the Fund in 1949 and dealt with matters of exchange control and multiple exchange rates prior to taking up assignments on the Asian member countries.

Besides the Director, the Central Banking Service had three senior people with long experience in the Fund. Mr. Marcin R. Wyczalkowski joined the staff in 1946 as an economist in the Research Department and later was in the European Department before becoming Senior Advisor in the Central Banking Service in 1967. Mr. Rudolf Kroc, Senior Advisor, joined what was then the Operations Department in 1947; subsequently he took on a number of special assignments, particularly in regard to technical assistance, and was a senior officer in the Treasurer’s Department before joining the Central Banking Service. Mr. Graeme S. Dorrance joined the staff in 1951 and was a Senior Economist and a Division Chief in the Research Department before going to the Central Banking Service.

In the European Department, both of the Deputy Directors and the three Senior Advisors had had more than 20 years of experience on the staff in 1971. Mr. Albin Pfeifer, who came to the staff in October 1946, had long been working on European problems and had been with the Paris Office and with the African Department before becoming Deputy Director in the European Department in 1966. Mr. Poul Høst-Madsen came to the Fund in November 1946 and had been in the Research Department before becoming Deputy Director in the European Department in 1966. Mr. Rolf Evensen, who became a Senior Advisor in 1970, had been on the staff since 1947, working continuously with European member countries. Mr. Brian Rose, appointed a Senior Advisor in 1966, had been on the staff also since 1947, dealing primarily with European member countries. Mr. H. Ponsen, appointed a Senior Advisor in 1966, had been on the staff since 1950, also dealing with European member countries.

In the Exchange and Trade Relations Department, four senior staff members had had at least two decades of experience with the Fund by the end of 1971. Mr. Erik Elmholt, Advisor, and participant in any number of annual consultation missions, joined the staff in 1949. Mr. C. David Finch, appointed Deputy Director in 1966, joined the staff in 1950 and was previously with the Research Department and the Western Hemisphere Department. Mr. J. H. C. de Looper, Advisor, who was primarily responsible for the Annual Report on Exchange Restrictions, also joined the staff in 1950. Mr. Timothy Sweeney, who became a Senior Advisor in 1966, had come to the Fund in 1951 and had served with the Research Department, the Western Hemisphere Department, and the Fiscal Affairs Department.

In the Fiscal Affairs Department, Mr. Jakob Saper, appointed Deputy Director when the department was established in 1964, had been with the staff since 1947, working on a range of administrative and accounting matters.

In the IMF Institute, Mr. Herbert K. Zassenhaus, Deputy Director, had been on the staff since 1951 and had had a varied career in the Research Department, the Exchange and Trade Relations Department, and the Western Hemisphere Department.

Other than The General Counsel, three members of the senior legal staff had been handling a variety of legal problems continuously for more than 20 years. Ms. Philine R. Lachman, a Senior Counsellor since 1969, joined the Legal Department in 1947. Mr. Albert S. Gerstein, who became a Deputy General Counsel in 1964, joined the Fund’s corps of lawyers in 1948. Mr. George P. Nicoletopoulos, who likewise became a Deputy General Counsel in 1964, came to the legal staff in 1950.

In the Middle Eastern Department, Mr. M. M. Hassanein, Advisor, joined the staff in 1950. Mr. A. S. Ray, Deputy Director since 1967, had been with that department since 1951. Mr. A. K. El Selehdar, Chief of the Arabian Peninsula Division, also joined the staff in 1951. These staff members all participated in a variety of assignments on the Middle Eastern member countries.

In the Research Department none of the senior staff, apart from The Economic Counsellor, had, by the end of 1971, served on the staff for a full two decades. However, many members of the long-standing staff of other departments—including several Directors and Deputy Directors of Departments and Senior Advisors mentioned elsewhere in this account—had started their careers in the Fund as economists in the Research Department.

The Secretary’s Department had a number of long-standing senior staff members. Mrs. Katherine F. Magurn joined the staff in September 1946 and had been in charge of language services before becoming an Assistant Secretary in 1970. Mr. Roger V. Anderson, the Deputy Secretary and the Chief Editor since 1967, joined the staff in October 1946 and worked in the Research Department and then for many years in the Exchange Restrictions Department, where, among other things, he dealt with the Fund’s relations with the gatt. Mr. George E. Bishop, managing the Fund’s official communications with members and Governors, had been handling that assignment since 1947. Miss Marie C. Stark, appointed Archivist in 1951, had been in charge of the Fund’s records, documents, and archives since 1947. Mr. D. E. Brantley, appointed in 1970 as Assistant Secretary for Annual Meetings, headed a joint Fund-Bank office charged with arranging Annual Meetings, work which he had already been doing for some years; joining the Fund in 1949, he previously had been with the administrative staff, where he was instrumental in launching the first training programs.

The Treasurer’s Department similarly had several senior staff members who had been with the Fund for more than 20 years and who had been dealing continuously with the Fund’s operational and administrative accounts: Mr. Carl B. Fink came in 1947, Mr. Walter T. Powers in 1948, and Mr. Charles E. Jones in 1949. Mr. Frederick C. Dirks, who was transferred as Senior Advisor to the Treasurer’s Department in 1968, had joined the staff in 1950, and had been in the Western Hemisphere Department and the IMF Institute.

In the Western Hemisphere Department, both Deputy Directors and three additional senior staff members had not only been with the Fund for nearly 25 years but, except for one, their careers in the Fund had been devoted entirely to Latin America. Mr. Edison V. Zayas, Chief of the Grancolombian Division, joined the staff in 1946 and for the next 25 years worked on a number of Latin American member countries. Mr. E. Walter Robichek joined the staff in February 1947 and thereafter worked continuously and intensively with many of the Latin American member countries, serving in a number of departments as the staff’s structure was reorganized; Mr. Robichek became Deputy Director of the Western Hemisphere Department in 1961. Mr. Richard A. Radford, Advisor, who at the end of 1971 had been working with Latin American member countries for several years, joined the staff in June 1947 and had previously worked in several other departments. Mr. Paul J. Brand, Senior Advisor as of the end of 1971, joined the staff in August 1947 and thereafter had a 24-year career of dealing with the Latin American member countries. Mr. Fernando A. Vera, appointed Deputy Director in 1966, joined the staff in 1948, and subsequently dealt continuously with Latin American member countries.

In the Bureau of Statistics were five senior staff members who came to the Fund before 1950 and who subsequently spent all, or practically all, of their careers in the Fund handling the financial statistics of member countries. Messrs. Akira P. Nose, Advisor, and Robert L. Praetorius, Chief of the General Statistics Division, joined the staff in 1946, Messrs. Leonello Boccia, Advisor, and José C. Sánchiz, Chief of the Financial Statistics Division (B), in 1947, and Mr. Dan R. Silling, Chief of the Financial Statistics Division (A), in 1949. Hence, by the end of 1971 they had intimate familiarity with the collecting, compiling, and publishing of the Fund’s financial data.

Some of the senior staff in the Office of the Managing Director also had had more than two decades of experience in the Fund. Mr. Gordon Williams, the Special Representative to the United Nations, joined the staff in 1946, and for most of his career in the Fund he had been responsible for overseeing the complex of relationships between the Fund and the UN family. Mr. J. William Lowe, the Internal Auditor, joined the staff early in 1947, so that by the end of 1971 he had worked on the Fund’s accounting controls and procedures for many years. Mr. Jay H. Reid, Chief Information Officer, joined the staff in 1948 to be in charge of the Fund’s information and public relations activities. As time went on these activities expanded and Mr. Reid’s responsibilities increased.

Three staff members who retired before the end of 1971 had joined the Fund staff in the early years and served for more than 20 years before retiring, attaining ranks equivalent to those mentioned above. Mr. Eduardo Laso, who joined the staff in 1946, was an economist and Division Chief in the Western Hemisphere Department before he moved, in 1967, to the IMF Institute where he became an Advisor and later an Assistant Director. Mr. C. C. Liang, who also joined the staff in 1946, was Chief of the Far Eastern Division in the Research Department and in the Asian Department, and later became an Advisor. Mr. Henry C. Murphy, who joined the staff in 1949, was Chief of the Finance Division in the Research Department before becoming Deputy Director in the Asian Department and, later, Senior Advisor in the Fiscal Affairs Department.

Young when they joined the Fund’s staff—most being in their early or mid-thirties and some in their twenties—the afore-mentioned staff members by the mid-1960s were, together with the Governors, the Executive Directors, and the management, among the Fund’s top policymakers.

Other staff members with fewer years of service also had a major role in the formulation and implementation of several of the policies described in this narrative, or in the research underlying those policies. There were some 70 additional members of the staff, most of whom came to the Fund either in the late 1950s or in the 1960s, who by 1971 had attained Division Chief status or higher. Three among them, all being Deputy Directors during the years reviewed here, should be mentioned in particular. Mr. J. Marcus Fleming, who was appointed Deputy Director of the Research Department in 1964, joined the Research Department’s staff in 1954 as Chief of the Special Studies Division. Mr. Charles F. Schwartz, appointed Deputy Director of the Research Department in 1966, joined the staff of the Western Hemisphere Department in 1959 as Chief of the North American Division. Mr. Jacques Waïtzenegger, who was appointed Deputy Director of the African Department in 1964, had been an Alternate Executive Director from 1960 to 1964.

As the Fund celebrated its twenty-fifth anniversary in 1971, there were many other individuals among the supporting staff who had served for over two decades and, indeed, several who had served for a quarter of a century. Surely, one of the salient features of the staff was its long experience in the Fund. Appendix B lists the names of all staff members who held the rank of Division Chief or above at the end of 1971.

New Headquarters Building

The building referred to in Chapter 19 in the discussion of the budget was under construction by late in 1970. The Fund and the World Bank were already occupying the block between 18th and 19th Streets, bounded by G Street on the south and H Street on the north.23 Forecasts of the growth of personnel suggested that the Fund would be out of space in its existing headquarters by the middle of 1970. With a view to expansion, the Fund had started in 1966 to acquire property on the west side of 19th Street.

Because of complications with land acquisition, it was decided to construct a building in three phases. Initially, Phase I was to involve the construction of additional office space, and not a new headquarters building. But by mid-1969 enough land had been acquired to permit a substantial broadening of Phase I, and the Executive Board, after considerable deliberation, in December 1969 approved a revised plan under which the Fund would build a new headquarters building and sell the buildings it now owned to the World Bank. A tunnel would be constructed under 19th Street to provide an all-weather passage for pedestrians between the new Fund building and the World Bank. Construction of the new headquarters proceeded beyond 1971 into 1972 and early 1973.24

In the spring of 1970 the World Bank completed construction of a new building in Paris at 66 Avenue d’Iena to house its European Office, and also to house the Fund’s Office in Europe, for which the Fund rented space from the Bank.

The Fund as 1971 Ended

When 1971 came to a close, the international monetary system that had been designed a little more than a quarter of a century earlier with the Fund as the institutional center had been disrupted, and discussions and negotiations on measures to improve, overhaul, or reform it were under way. In these circumstances, the Fund was suspended between the collapse of the old order and the initiation of a new one the features of which would take some years to work out.

As the issues involved in working out an improved or reformed system began to be debated, it quickly became apparent that opposing views might be very difficult to reconcile. Hence, the period of transition through which the Fund had been passing in the previous six years, the period in which the par value system had come under severe stress and had eventually collapsed, seemed likely to extend for however long it might take to negotiate and complete the reform of the international monetary system.

The precise character that the Fund might develop in the future looked uncertain. A few even went so far as to intimate that the Fund had outlived its usefulness. They suggested, for example, that in a world of massive capital flows, giant multinational corporations, and private banking operations on a huge and global scale, the international consultative and regulatory techniques exemplified by the Fund were slow, cumbersome, and inadequate. Reliance would have to be placed virtually entirely on market mechanisms.

Such pessimistic views about the Fund were extreme, however, even at the time. A number of countertrends suggested that the Fund in the future could, quite conceivably, be given even greater responsibilities in the international monetary system. Several economists and monetary experts were advocating that the Fund become “truly an international central bank,” in which all monetary reserves would be deposited. Some monetary officials in key government posts were suggesting that the Fund’s new reserve asset, the SDR, should be made the primary reserve for international transactions. Others were recommending that the Fund be given somewhat greater functions in the field of international trade, in addition to those it already had in the monetary and exchange fields. Most important of all, perhaps, was that nations meeting in smaller groups were having increasing difficulties among themselves in agreeing not only on international monetary arrangements but also on a number of other economic and political issues.

It was in this spirit of optimism about the Fund that Mr. Schweitzer addressed the Governors at the 1971 Annual Meeting:

What is at stake is the question of consolidating the achievements of a quarter of a century—or of jeopardizing those achievements. In trade and payments, we seek to preserve a liberal regime governed by international rules. In the aid field, the continuing goal is effective action in recognition of common interests and responsibilities. With respect to exchange rates, the pressing need is to improve upon established procedures for maintaining exchange stability and allowing for necessary adjustments in a way that avoids conflict. In the sphere of international liquidity, the challenge is to utilize the instrument of SDRs and other facilities of the Fund as a means of assuring effective control of the world’s reserves.

On all these fronts, we must now move forward with enthusiasm and high purpose.25

For a brief description of the Fund’s policymaking process as of the end of 1965, see History, 1945–65, Vol. II, Chap. 1. A more detailed account of the process as of September 1972 can be found in Joseph Gold, Voting and Decisions in the International Monetary Fund: An Essay on the Law and Practice of the Fund (Washington, 1972). (Hereinafter cited as Gold, Voting and Decisions.)

The regular meetings of the Group of Ten on the questions concerning international liquidity and the establishment of SDRs in the Fund have been described in detail in Parts One and Two.

See Chaps. 16 and 26.

Proceedings of the United Nations Conference on Trade and Development, Volume I: Final Act and Report (New York, 1964), pp. 66–68.

The Declaration and Principles of the Action Programme of Lima, adopted by the Group of Seventy-Seven at the Second Ministerial Meeting on November 7, 1971, MM/77/11/11, November 9, 1971, Part Three, Section A (I), pars. 13 and 14 (b). This document was also circulated by the United Nations Conference on Trade and Development as TD/143, November 12, 1971, and by the UN General Assembly as A/C.2/270, November 15, 1971.

For a description of earlier measures, introduced in 1963, see History, 1945–65, Vol. I, p. 500.

For a fuller discussion of the powers reserved to the Board of Governors, see Gold, Voting and Decisions, pp. 9–15.

Article XII, Sections 3 (a) and (g) and 4 (b). Although the organ was referred to in the Articles of Agreement as the Executive Directors, it became more common in the Fund to refer to the organ as the Executive Board and to the members of that Board as the Executive Directors (or Alternate Executive Directors). The latter practice has been followed in this history.

By-Laws, Sec. 10; Vol. II below, p. 161.

The provisions of the Articles of Agreement concerning the appointment and election of Executive Directors, how these provisions were implemented from 1946 through 1970, the voting strength of individual Directors, and how this strength was determined and exercised have been described in Gold, Voting and Decisions.

Resolution No. 25-5, adopted by the Board of Governors effective September 10, 1970, Summary Proceedings, 1970, p. 262. For the rules for the conduct of the election and the results of the 1970 regular election, see ibid., pp. 243–49 and 249–53.

See History, 1945–65, Vol. I, pp. 165–66, 173–75, 198, 224, 246, 251, 269–70, 310–12, 370, 376, 390, 404, 420, 506, 529, 566, and 577; and Vol. II, pp. 94–95, 334, 337, and 340.

These rules can be found in Gold, Voting and Decisions, pp. 243–48, and in Summary Proceedings, 1970, pp. 243–49.

History, 1945–65, Vol. II, pp. 10–17, and Gold, Voting and Decisions, pp. 171–80.

The period from 1963 through the end of 1965 was covered in History, 1945–65.

The formal name of the Committee of Twenty was Committee of the Board of Governors on Reform of the International Monetary System and Related Issues.

Mr. Southard’s second term, which would have ended on November 1, 1972, was extended. He resigned as the Deputy Managing Director on March 1, 1974, which was the twenty-fifth anniversary of his arrival in the Fund, and retired on April 30, 1974. In September 1973, Mr. H. Johannes Witteveen had succeeded Mr. Schweitzer as the Managing Director.

The reader interested in tracing the origins of the various departments and their functions is referred to History, 1945–65, Vol. I; see the listing under Staff, Organization of, in Index A, p. 648. A brief description of the organization of the staff as of the end of 1965 may be found in History, 1945–65, Vol. II, p. 10.

In 1972 a separate Bureau of Language Services was formed under Mr. J. S. Haszard.

History, 1945–65, Vol. II, pp. 12–14 and 16–17.

Mr. Keesing died in September 1972 and was succeeded by Mr. Gérard M. Teyssier, who had been Deputy Director of the IMF Institute since 1967. From 1964 to 1967 Mr. Teyssier had been an Alternate Executive Director.

When Mr. Savkar retired in 1972, he was succeeded by Mr. Tun Thin. Mr. Tun Thin had been an Alternate Executive Director from 1957 to 1959, when he joined the staff of the Asian Department.

The construction of the Fund’s headquarters in 1958 and its extension in 1966 were described in History, 1945–65, Vol. I, p. 560.

The first occupants moved into the building in February 1973. The new headquarters was officially opened on August 17, 1973. The 13-story structure, between 19th and 20th Streets, bounded by G Street on the south and H Street on the north, was the result of close teamwork between the responsible Fund officers, the designers, and the contractor. Vincent G. Kling & Partners were the architects and interior designers, Clas, Riggs, Owens & Ramos the consulting architects, and the Charles H. Tompkins Company the contractor. What was now called Phase II was delayed pending the Fund’s acquisition of the remaining land in the block.

Opening Address by the Managing Director, Summary Proceedings, 1971, p. 15.

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