chapter 5 Some Special Problems of Membership

International Monetary Fund
Published Date:
October 1985
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Aftermath of War

It was recalled in Chapter 1 that at the Bretton Woods Conference proposals were made to exclude certain countries from membership until certain events had occurred.1 These proposals, which were related to the war, were rejected. Similar issues arose in connection with the applications of some countries after the Fund had come into existence.

The effect of the absence of a treaty of peace was considered in connection with the applications of Italy and Austria. Membership for Italy was opposed on the ground that it had not yet entered into a treaty, but it was not clear whether the objection was one of law or policy. It was explained in connection with Austria’s application that the issue was raised as one of policy. The objection failed in both cases.

The question of former enemy status arose on the application of Finland. On June 27, 1941, Finland resumed military operations against the U. S. S. R. and allied itself with Germany for this purpose. The United Kingdom declared war on Finland on December 6, 1941, and the United States broke off diplomatic relations with Finland on June 30, 1944. On September 4, 1944, Finland ceased all operations against the U. S. S. R., withdrew from the war against the United Nations, and broke off relations with Germany. An armistice was signed on September 19, 1944 with the U. S. S. R. and the United Kingdom on behalf of the United Nations with which Finland had been at war, and a treaty of peace was signed on February 10, 1947. Finland applied for membership in April 1947. The wartime status of Finland was dismissed as a barrier to membership.

Japan occupied Siam in December 1941, and Siam declared war on the United Kingdom and the United States on January 25, 1942. The United States never considered itself at war with Siam because it did not regard the declaration of war to be a reflection of the will of the people. The state of war with the United Kingdom was terminated by treaty on January 1, 1946. Siam applied for membership in June 1948. No question was raised about the wartime status of Siam when its application was being considered.

The application of Turkey raised a question that resulted from its status as a neutral during the war. On February 22, 1944, the Secretary of the Treasury of the United States issued a declaration that referred to the warning issued by the United States and certain other countries among the United Nations “to all concerned, and in particular to persons in neutral countries,” that they intended to do their utmost to frustrate the looting of assets by the Axis powers. One form of looting had been the seizure of gold owned by the plundered countries, which had been sold to countries maintaining relations with the Axis powers. The U. S. Government declared that it would not recognize the transfer of title to looted gold, and that the Treasury would not buy gold from any country that had not broken off relations with the Axis powers, or from any country that after the date of the declaration acquired gold from any country that had not broken off relations with the Axis powers, unless the Treasury was satisfied that the gold had not been acquired directly or indirectly from the Axis powers or was not gold that was being released because of the direct or indirect acquisition of gold from the Axis powers. Resolution VI of the Bretton Woods Conference recommended that the governments of all countries represented at the Conference should call upon the governments of neutral countries to take measures to prevent (a) the disposition or transfer within their territories of any assets, including gold, belonging to the government of or individuals or institutions within any of the United Nations that had been occupied by the enemy, and (b) the concealment within their territories of assets belonging to the government of or individuals or institutions within enemy countries, or to enemy leaders, their associates, or collaborators.2

In response to a request from the executive director appointed by the United States, the U. S. Treasury explained in a letter dated September 16, 1946 the problems that the admission of countries might raise in connection with the U. S. declaration on gold. Two problems could be foreseen with the admission of countries that were not among the 36 that had already adopted the declaration or adhered to its principles. First, if a neutral or another country that had acquired gold directly or indirectly from the Axis powers were admitted to the Fund before making a settlement with the Allies in respect of looted gold, the country would be able to use gold in transactions with the Fund and obtain U. S. dollars even though it would not be able to sell that gold to the United States. Second, in these same circumstances the country would be able to act as a conduit for disposal to the Fund of looted gold held by other countries.

The question was raised in committee whether the adherence by Turkey to the principles of Resolution VI should be made a condition of membership. The Executive Directors decided not to include a term in the draft resolution that it would recommend to the Board of Governors, because it was reported that diplomatic negotiations on the adherence of Turkey to the principles of the U. S. declaration on gold and Resolution VI would probably be completed before the Board of Governors acted on the recommendation. The Executive Directors agreed, however, that their report would draw the attention of the Board to the absence of a term. The committee of the Board of Governors that considered the draft resolution reported to the Board that satisfactory assurance had been received on the adherence of Turkey to the resolution and the declaration,3 and the Board adopted the membership resolution.

The negotiation of the Articles in a time of war produced questions of interpretation for the Fund as well as questions of eligibility or terms for membership. In the drafting of the Articles, it was necessary to mitigate the strictness of a number of provisions for the benefit of members if their territories had been occupied by the enemy 4 or were still a theater of major hostilities.5 It will be seen in Chapter 7 that the question arose whether Italy was a country that had been occupied by the enemy. Other questions have involved the period within which a provision obviously related to the war can be considered operative. For example, a member may avail itself of transitional arrangements that modify the obligations of convertibility under Article VIII, Sections 2, 3, and 4, but the transitional arrangements are said by Article XIV, Section 2, to be available in the “post-war transitional period.” Notwithstanding this language, the Fund still allows new members to have the benefit of them. The same provision permits members “whose territories have been occupied by the enemy” and are availing themselves of the transitional arrangements to “introduce where necessary” restrictions on payments and transfers for current international transactions. This power to introduce restrictions without the need to get the approval of the Fund was based on the consideration that members occupied by the enemy might have exchange systems that had been forced on them by the enemy. Therefore, they might need the opportunity to establish their own systems and thus enjoy the privilege that had been exercised by members that had not been occupied by the enemy. The Fund holds the view that the introduction of restrictions under Article XIV, Section 2, can be justified no longer and that in effect the power has lapsed even though the transitional arrangements are still in effect.

State-Controlled Economies

U. S. S. R. at Bretton Woods

The fourth draft of the Keynes Plan referred in the following terms to the possible membership of the U. S. S. R. in the Clearing Union:

The position of Russia, which might be a third founder, if she can be a party to so capitalist-looking an institution, would need special consideration.6

There was no comparable statement in the final version fourteen months later.

The commentary that was part of the draft of the White Plan dated April 1942 was more detailed in its discussion of the possible membership of the U. S. S. R. in the Stabilization Fund:

Restrictions on membership.

No restrictions as to membership should be imposed on grounds of the particular economic structure adopted by any country.

There are certain to be some persons or governments, who either out of fear, or prejudice, or dislike would wish to exclude countries with socialist economies from participation in an international undertaking of the character described in the previous pages. Yet to exclude a country such as Russia would be an egregious error. Russia, despite her socialist economy could both contribute and profit by participation. To deny her the privileges of joining in this cooperative effort to improve world economic relations would be to repeat the tragic errors of the last generation, and introduce a very discordant note in the new era millions everywhere are hoping for. If the Russian Government is willing to participate, her counsel in the preliminary negotiations should be as eagerly sought as that of any other country, and her membership in both Fund and Bank equally as welcome.

A socialist economy like a capitalistic economy engages in international trade and financial transactions which can be either beneficial or harmful to other countries. In fact, because the conduct of foreign trade and international financial transactions is so completely under the control of the government in a socialist economy, there is all the more reason to attempt to get them to join in a cooperative attempt to introduce stability in international economic relationships and a higher level of trade.

Furthermore, no one can know what direction some of the smaller liberated states will take in the shaping of their economic structures. There is likely to be, during the next decade or two, a variety of economic systems and it would seem desirable that these should not be discouraged from cooperating with the others so long as they are willing to agree to conduct their international economic affairs in accordance with principles acceptable to the United Nations.7

Nothing in the commentary indicates how White saw membership for a “socialist economy” within a Stabilization Fund that was conceived in terms of market economies. He may have assumed that there were accommodations of a technical character that could be devised. The Fund’s jurisdiction applies only to practices that directly regulate payments, and it does not apply, therefore, to practices that directly regulate trade. If the U. S. S. R. concentrated all trading in the hands of the state, so that citizens could not enter into transactions, there would be no restrictions on, or discriminatory currency arrangements with respect to, the making of payments for current international transactions related to trade within the meaning of the Articles.8 The Government would not restrict payments for imports that it had authorized. If exporters to the U. S. S. R. were paid with currencies other than rubles, there would be no restriction on transfers from rubles. The analysis cannot be applied to tourist expenditures, and if these were limited, the practice would constitute a restriction on the making of payments for current international transactions. It was not unreasonable to hope that restrictions of this kind might be relaxed in time, so that the legal problems associated with requests for a prolonged or indefinite approval of restrictions would not arise. This analysis, however, is incomplete because it is impossible to tell what view was taken of the explicit or implicit multiple currency practices and discriminatory currency arrangements that have been features of systems not based on market economics.

The final version of the White Plan contained no commentary and therefore no statement on the membership of the U. S. S. R. comparable to the one that has been quoted from the earlier version. There was no change of attitude among U. S. officials, however, and Russian officials were consulted in 1943 in the course of the intensive discussions of the White Plan before its publication.9 From January 3 through May 10, 1944, a series of meetings took place in Washington between a formal Soviet delegation and members of the U. S. Interdepartmental Committee that was working on the project for a Fund and Bank. The first nine of these meetings, held between January 3 and March 14, were concerned with the Fund.

The U. S. S. R. sent a delegation of six officials, assisted by three advisors and fourteen other technicians and clerical assistants, to the Atlantic City and Bretton Woods Conferences. M. S. Stepanov, Deputy People’s Commissar of Foreign Trade and leader of the delegation, was elected one of the four vice-chairmen of the Bretton Woods Conference. In addition, a representative of the U. S. S. R. was on the Steering Committee, another was the chairman of Committee No. 2, on the Operations of the Fund, of Commission I, and representatives also served on the Drafting Committee and various ad hoc committees of Commission I.10 Mr. Stepanov signed the Final Act of the Conference. He declared that his delegation “deems it its duty to submit the Draft Agreement on the Fund prepared by this Conference for the consideration of the U. S. S. R. Government, reserving the full right of the U. S. S. R. Government to make a free and independent study of the Draft and to decide all questions connected therewith.” 11 The U. S. S. R. sent an observer to the inaugural meeting of the Board of Governors in Savannah, Georgia, in March 1946, and the resolution that permitted countries listed in Schedule A to enter the Fund until the end of 1946 on the same terms as original members was inspired by the wish to facilitate membership for the U. S. S. R.12

The U. S. S. R. has not joined the Fund.13 The Fund’s History records that in response to a review of preparations to join the Fund that was undertaken by the U. S. Treasury in November 1945:

No formal refusal to join the Fund was forthcoming from the Soviet Government, whose representatives merely stated to U. S. officials that Moscow needed more time to consider the terms of the Agreement. The reasons why the U. S. S. R. did not proceed with membership, despite the active participation of the Soviet delegation in the Bretton Woods meetings and the amendment of drafts of several provisions of the Articles to meet Soviet views, can therefore only be guessed. Some indication of the attitude of the U. S. S. R. may be found in the difficulties raised by the Soviet delegation in discussions with the U. S. Interdepartmental Committee in the first quarter of 1944. Other reasons may be inferred from the reservations which the Soviet delegation attached to the minutes of the final meeting of Commission I at Bretton Woods, although it is noteworthy that these did not include an objection to the provision of information, which had throughout seemed likely to be an obstacle. But the timing was probably also important. By the end of 1945 the European war had been over for six months and the war with Japan for four. Lend-Lease aid had been cut off, and those frictions between East and West that Churchill later described as an iron curtain had begun to assert themselves. The high tide of cooperation between the U. S. S. R. and the Atlantic powers, at least in financial affairs, had passed.14

The criticisms by representatives of the U. S. S. R. during the discussions of the Joint Statement and at Atlantic City included dissatisfaction with the formula for voting power. The U. S. S. R. wanted a formula that would increase its voting power to at least 10 per cent of the total voting power of all members. One explanation of this interest may have been the provision in the Joint Statement that gave each member having at least 10 per cent of aggregate quotas a veto over a uniform proportionate increase or decrease in the par values of the currencies of members, i.e., a change in the price of gold.15 The U. S. S. R. also wanted a reduction in the gold subscription of countries that had been occupied by the enemy, and the exclusion of newly mined gold from the obligation of members to use gold in repurchases of their currencies from the Fund after using the Fund’s resources. In addition, the U. S. S. R. proposed a special provision that would enable it to change the par value of the ruble, on the ground that the exchange rate for the ruble had no international significance. The U. S. S. R. wanted other provisions under which it would not be obliged to give consideration to the views of the Fund on monetary or economic policy, perhaps on the ground that it was engaged in state trading, or to provide any more information than was agreed between it and the Fund, perhaps for the same reason.16 Finally, it did not want the Fund to be able to make informal communications of its views or to publish reports to a member without the member’s consent.17

Some of these objections were resolved in one way or another at the Bretton Woods Conference. Schedule B, paragraph 4, of the Articles permitted members that had suffered the occupation of their metropolitan territories by the enemy to exclude from certain calculations the gold produced from mines within those territories during the five years after entry into force of the Articles. The exclusion was permitted in the calculation of monetary reserves on which repurchase obligations are based.18 Article IV, Section 5 (e), permits a member to change the par value of its currency without the concurrence of the Fund “if the change does not affect the international transactions of members of the Fund.” 19

The U. S. S. R. delegation did not enter a reservation against Article XII, Section 8, at Bretton Woods, even though it lost on its motion proposing that the Fund should not communicate views or publish reports to a member without its consent.20 Perhaps the U. S. S. R. was mollified by the last sentence in Article XII, Section 8, which seems to have been designed to accommodate it: “The Fund shall not publish a report involving changes in the fundamental structure of the economic organization of members.”

The problem of the information to be provided by members to the Fund arose at Atlantic City and was sent to a Special Committee on Furnishing Information consisting of five persons, one of whom was a representative of the U. S. S. R. and acted as chairman. It was always realized that the successful operation of the Fund would depend on the willingness of members to provide adequate information. The report of the Special Committee, which was made available to the Bretton Woods Conference, stated that the committee had considered the advisability of a provision that would be formulated in general terms and require members to furnish the information needed for the operations of the Fund, as against a provision that would require members to provide specific categories of data. Some members of the committee had been willing to accept a general obligation on the assumptions that the Fund would be reasonable in its demands for information and would make allowances for members that had limited statistical services.

The committee agreed to attempt a listing of minimum essential information with an escape clause that would permit a member to plead that it was unable to supply certain information but not that it wished to withhold information in its possession. The committee noted that the listing of information would have the advantage of putting members on notice of the information they would be required to supply and would encourage the development of new statistical and other information. Alternative lists were produced by the committee, of which the shorter list was supported by the representative of the U. S. S. R.21 The longer list was close to the final text of Article VIII, Section 5 (a).

The committee reported that it had discussed at some length the question of requiring information on gold production. This category was included in the longer but not the shorter list. One view in the committee had been that there was nothing in the draft Articles to show that information on gold production was required under any specific provision, but in any event the information might be inferred, although with some margin of error, from data on gold holdings and gold movements. The opposing view was that it “would be very useful and indeed essential” for the Fund to know about current additions to gold supply as a result of new production, independently of information relating to movements into and out of private hoards. The category of information relating to gold production remained in the final text of the provision.22

The U. S. S. R. delegation felt that it was unable to undertake to provide certain information without specific authority from Moscow, and the delegation sought it during the Conference. It may be assumed that authority was forthcoming, because the delegation entered no reservation to Article VIII, Section 5 (a), in the minutes of Commission I. Section 5 (b) of Article VIII declares that the Fund, in requesting information, shall take into account the varying ability of members to furnish the data requested, and that members shall be under no obligation to furnish information in such detail that the affairs of individuals or corporations are disclosed. Members undertake, however, to furnish the desired information in as detailed and accurate a manner as is practicable and to avoid mere estimates as far as possible. Under Section 5 (c), the Fund may arrange to obtain further information by agreement with members.

A calculation of quotas by the U. S. Treasury in June 1943 arrived at a quota of $763 million for the U. S. S. R. in a Fund in which proposed quotas would total $10,064 million. The corresponding figures as communicated by the U. S. Treasury to the United Kingdom at some time before February 1944 were $900 million and $8,490 million, and the figures provided by the U. S. Treasury to the Committee on Quotas at the Bretton Woods Conference were $763 million and $8,409 million.23 The quota for the U. S. S. R. included in Schedule A was $1,200 million in a Fund in which the total of all quotas included in the Schedule was $8,800 million.24 The quota in Schedule A would have been 13.64 per cent of total quotas, and on the basis of them the U. S. S. R. would have had 12.37 per cent of the total voting power.25 The Joint Statement declared that total quotas of about $8 billion if all the United and Associated Nations joined the organization would correspond to a total of $10 billion for the world as a whole. The quota of the U. S. S. R. would have been 12.00 per cent of that total.26 The quota was the third largest in Schedule A and would have given the U. S. S. R. the right to appoint an executive director.27 The provision under which the members with the five largest quotas appoint executive directors was written in that form because one or more of these quotas might fall below any minimum that might be prescribed as the basis for the right to appoint. It was considered undesirable, however, to prescribe that certain members should always have the right to appoint executive directors.

At the Bretton Woods Conference, the following reservations and comments by the Soviet delegation were recorded in the minutes of Commission 1: 28

(1) Under Article III, Section 3, an original member must pay a minimum gold subscription of the lesser of two amounts: 25 per cent of its quota or 10 per cent of its net official holdings of gold and U. S. dollars on a defined date. The U. S. S. R. proposed that a country that had suffered substantial damage to its home territories from enemy occupation or hostilities during the war should be able to reduce its gold subscription to 75 per cent of the amount that it would have to pay but for this special provision.29 One is led to assume that 10 per cent of the gold holdings of the U. S. S. R. was a substantial amount, although the issue was more than financial. The reduction in gold subscription was seen as recognition of the sacrifices of the U. S. S. R. as an occupied country.30

(2) According to Article V, Section 8 (f), all charges payable by members to the Fund must be paid in gold, but if a member’s monetary reserves are less than its quota it must pay in gold only a certain proportion of the charges that are due and must pay the balance in its own currency. The U. S. S. R. proposed that there should be a uniform rule for payment wholly in gold or partly in gold and partly in the payor’s currency, without reference to the level of monetary reserves.31

(3) Under Article V, Section 7 (b), there are three separate, but possibly cumulative, ways in which obligations can accrue that require a member to use its monetary reserves in repurchase of its currency from the Fund to the extent that the Fund’s holdings of the currency exceed 75 per cent of the member’s quota (i.e., the amount in excess of the normal currency subscription). There are obligations in certain circumstances for a member to use its monetary reserves in amounts equal to half the increase in the Fund’s holdings of the member’s currency and half the increase in the member’s monetary reserves that have occurred in any financial year of the Fund. In addition, a member may have to use the full amount of an increase in its monetary reserves in any financial year that can be attributed to payments made to the member in a currency other than that of payor or payee, after deducting the other obligations that have been calculated.

The delegation of the U. S. S. R. preferred the provision in the Joint Statement under which, if a member’s holdings of gold and gold-convertible exchange exceeded its quota, the member would be required to pay with gold for half of its net purchases during a financial year.32

It is not clear which of the obligations of Article V, Section 7 (b), would have been replaced by the provision in the Joint Statement had the preference of the U. S. S. R. prevailed. As a minimum, it would have replaced the third obligation, and it may be assumed that the reason for the proposal was that the U. S. S. R. expected to receive payments in “third” currencies. It is a curious reflection that the third obligation has been a dead letter because the Fund has found no satisfactory way of applying Article V, Section 7 (b) (ii), in which it is set forth.

(4) According to Article XIII, Section 2 (b), initially at least one half of the Fund’s gold holdings had to be held in the depository designated by the member in whose territories the Fund had its principal office, i.e., the United States, and at least 40 per cent had to be held in the depositories designated by the other four members having the largest quotas. The U. S. S. R. wished to provide that the gold held in each of these four depositories should be not less than the gold subscription of the member designating the depository.33

(5) Article XIX (i) defines payments for current transactions, and members are obligated under Article VIII, Section 2 (a), to refrain from imposing restrictions on these payments. “Moderate remittances for family living expenses” are within the definition. The delegation of the U. S. S. R. proposed the deletion of this category from the definition, arguing that the Fund would have the power under Article XIX (i) “upon the agreement with the members concerned, [to] determine whether certain specific transactions … are to be regarded as current transactions or capital transactions.” 34

(6) Under Article XIX (a) of the original Articles, a member’s monetary reserves were defined as its net official holdings of gold, the convertible currencies of other members, and the currencies of any nonmembers that the Fund might specify. Article XIX (b) provides that official holdings are central holdings, i.e., the holdings of a member’s treasury, central bank, stabilization fund, or similar fiscal agency. Under Article XIX (c) and (e), the official holdings that constitute a member’s monetary reserves may be deemed to include the holdings of other official institutions or other banks within its territories, if the Fund finds that the holdings are substantially in excess of working balances. Certain obligations, notably the obligations to repurchase under Article V, Section 7 (b), that have been described, depend on calculations of monetary reserves. The Soviet delegation pointed out that in the U. S. S. R. banking operations related to international transactions were conducted normally by the central bank, the State Bank of the U. S. S. R. The delegation noted, therefore, that the Fund in calculating the net foreign exchange holdings of the U. S. S. R. should take into account the necessity for the State Bank to maintain working balances abroad.

The position of the U. S. S. R. was that in arriving at net official holdings a deduction should be made for working balances held by a central institution. The Fund decided in due course that a deduction of this kind could be made only in connection with the holdings of other official institutions and other banks but not from the holdings of a central institution.35 The word “net” in Article XIX (a) as agreed at Bretton Woods referred exclusively to the deduction of “currency liabilities” under the original text of Article XIX (e). When the Articles were amended in 1969 in order to move to a gross concept of monetary reserves, the deduction in respect of currency liabilities was deleted, and as a consequence the word “net” was excised as a qualification of official holdings.36

Practice of Fund

Some experts have questioned whether countries with state-controlled economies can be fitted into the framework of obligations under the Articles:

When all external trade is concentrated in the hands of the government which alone decides at what prices goods to be exported will be bought from the local producers, or imported goods will be sold in the home market, a pledge to abolish exchange restrictions and to abstain from discriminatory or multiple currency practices makes little sense. Such a government will buy or sell in international trade whatever and whenever it decides to buy or sell at whatever prices it considers acceptable. Those prices need not have any influence at all on the internal price level in the country.37

According to another expert, the problem is not that a country has a socialist economic system and maintains a state monopoly of all foreign trade, but that, as indicated in the passage quoted above, the prices of the exports of such a country may bear no necessary relation to domestic costs and the internal prices of imports no relation to foreign export prices. Such a system, he holds, makes exchange rates meaningless.38 Nevertheless, there can be no doubt about the willingness at Bretton Woods to have these countries become members. One of the two authors who have been cited admits that Article IV, Section 5 (e), was adopted in order to recognize that in effect the exchange rate for the currency of such a country would be meaningless, and the other notes that the Articles “contain certain clauses that are completely unexplainable but from the angle of some Soviet idiosyncrasy.” 39

The Fund has not refused to admit applicants with state-controlled economies. For example, Burma at the time of its application had under way plans for a socialist economy, and the participation of the state in economic activity had been extended already to foreign trade, commercial aviation, and some manufacturing industries. Some countries, after joining the Fund, have moved from economies based predominantly on market mechanisms toward greater central direction and insulation of their economies from external influences. At the time of Romania’s application, its socialist sector, including state and cooperative units, accounted for more than 90 per cent of the social product, the concept in use that most closely approximates the gross national product of other members of the Fund. Foreign trade is a state monopoly, and all imports and exports are licensed by the Government in accordance with national plans and international trade agreements. At the time of its application, Romania was a party to 71 bilateral trade agreements and 23 payments agreements with members of the Fund. The currency of Romania, the leu (lei in the plural) has an official gold content. The domestic price of each product involved in foreign trade is fixed by official action. The domestic price is compared with an assumed world price for that product converted into lei on the basis of the official value of the leu and a premium. Exporters and importers are subject to a system of compensations and levies in respect of the difference shown by this comparison. These calculations are made whatever may be the foreign price actually paid or received in an individual transaction. The implicit exchange rate can vary therefore with each transaction, and the role of the exchange rate in general is radically different from its role in the economies of other members.

The admission of countries with state-controlled economies does not imply that in consultations with them the Fund will refrain from urging that they will benefit from the reduction and eventual elimination of discrimination, bilateralism, multiple rates of exchange, and other practices incompatible with the purposes of the Fund. This advice is tempered with patience, and throughout extensive periods the Fund may go on approving practices that are inconsistent with the Articles unless approved.

Small States

International law has not developed any criterion of minimum size as an element in the definition of states. An increasing number of territories that are small according to some criterion but are independent have been recognized as states, and they have given rise to what is sometimes called the problem for international organizations of ministates or microstates.40 New states are anxious to join international organizations as testimony to their new status, and ex-colonial territories see in membership opportunities to reduce the tutelage that the former colonial power may still exercise in fact and to obtain assistance from an international organization.41 The problem is not whether smallness is incompatible with statehood, but whether small states are capable of performing the obligations of membership in an international organization. A study by the UN Institute for Training and Research contains a list of territories with populations below 1 million that had achieved already, or might be expected to achieve, recognition as states.42 The criteria for inclusion in such a list are obviously arbitrary, but on the basis of the criteria employed in the study there were 96 territories, including the Holy See.43

The League of Nations discussed the question of the admission of small states, and considered the suggestion that they be permitted to have no more than associate membership, but the idea was rejected because it involved too many difficulties. Luxembourg was admitted to membership in the League, but the request of Liechtenstein was rejected for such reasons as its limited area and small population, lack of an army, and dependence on other states for the diplomatic representation of its subjects abroad, the control of its customs, and the administration of various services.

The problem of small states has created concern in the United Nations since 1965, and a number of proposals have been made, some merely for study and others for the establishment of criteria for membership or for the creation of a special kind of membership. As a result of these initiatives, the Security Council has established a committee of experts consisting of all members of the Council to study the problem of microstates and their relationships with the United Nations.44 One of the suggestions before the committee contemplates the creation of an associate membership that would not encompass the rights to vote and to hold office or the obligation to make financial contributions.45 The states that would have this form of membership would enjoy all the benefits of membership that were appropriate to their condition, and the form of membership, though limited to some extent, would symbolize independence. Other suggestions that have been made are for voluntary renunciation of voting rights and of the right to stand for election to certain organs,46 representation by a state that is already a member, and participation confined to the circumstances in which the interests of a small state are involved.47

Schedule A is sufficient evidence that the drafters of the Fund’s Articles contemplated membership for countries with small quotas. Table 1 shows the countries that had the five largest and the six smallest quotas among those listed and the proportion of total voting power that these countries would have had if all the countries listed in the Schedule, but no others, had become members. Although the negotiators foresaw membership for countries with small quotas and small proportions of the total voting power, extraordinary prescience would have been necessary to foresee the present number of members with small quotas.

Table 1.Five Largest and Six Smallest Quotas in Schedule A
Quota 1Per Cent of Total

Voting Power 2
United States2,750.0028.03
United Kingdom1,300.0013.38
U. S. S. R.1,200.0012.37
El Salvador2.500.28

Expressed in millions of U. S. dollars of the weight and fineness in effect on July 1, 1944.

Computed without the votes of Denmark, which was included in Schedule A without an assigned quota. Differences in quota may not be reflected in the percentages shown here because percentages have been rounded.

Expressed in millions of U. S. dollars of the weight and fineness in effect on July 1, 1944.

Computed without the votes of Denmark, which was included in Schedule A without an assigned quota. Differences in quota may not be reflected in the percentages shown here because percentages have been rounded.

The precedents established by the drafters and by subsequent practice would have made it difficult to find the basis for a policy of exclusion that would not have discriminated in favor of existing members and against applicants. If any imaginable policy of exclusion had applied in the past, it would probably have prevented the admission of some countries that have become members.

Yet another reason why there has been no disposition to develop a policy of exclusion has been the provision in the Articles of the World Bank that an applicant, to qualify for membership, must have been admitted to the Fund.48 The need for development is not related to size, however size may be defined. The Fund has not been prepared to withhold membership and obstruct the assistance that the Bank and its affiliates can give in promoting development.

Problems of Small Quotas

Although the Fund has never adopted a policy of excluding countries on the basis of the quotas for which they would qualify, it has been concerned with the problems of small quotas. From 1956 to 1967 it applied a policy that assured members of a minimum quota, on the theory that quotas below a certain amount would not promote the purposes of the Fund. The original minimum of $7.5 million was increased at one stage to $11.25 million, and later an applicant was given the option of choosing either $7.5 million or $11.25 million. If the figure calculated on the basis of national income, imports and exports, monetary reserves, and other economic data was less than the minimum, the country was not excluded from membership, but on the contrary was offered a quota equal to the minimum.49 In time, beginning with the resolution for The Gambia, the minimum became unjustifiably high, and even burdensome, for some applicants, and the policy was abandoned. The alternative of a new minimum was not adopted. An applicant that qualifies for a small quota is offered one that is realistic in relation to its economy, although not one that is so small that it would be merely a token quota.

Of the 96 territories in the UN study that has been referred to, 22 have become members of the Fund so far. Their quotas on May 21, 1973 and their proportions of the total voting power of all members on that date are shown in Table 2.

Table 2.Members Listed in Unitar Study1
Quota 2Per Cent of Total

Voting Power 3
Congo, People’s Republic13.000.12
Equatorial Guinea8.000.10
Gambia, The7.000.10
Trinidad and Tobago63.000.27
United Arab Emirates15.000.12
Western Samoa2.000.08

Members, quotas, and voting power as of May 21, 1973.

Expressed in millions of special drawing rights (SDRs).

In the General Account. Differences in quota may not be reflected in the percentages shown here because percentages have been rounded.

Members, quotas, and voting power as of May 21, 1973.

Expressed in millions of special drawing rights (SDRs).

In the General Account. Differences in quota may not be reflected in the percentages shown here because percentages have been rounded.

As of May 21, 1973 Western Samoa had the smallest quota in the Fund, but Table 2 is not a list of the smallest quotas. There are 16 members not listed in Table 2 that have quotas of SDR 20 million or less. These are shown in Table 3. Comparison with the largest quotas in the Fund, as set forth in Table 4, will give an impression of the smallness of small quotas.

Table 3.Members Not Listed in Unitar Study That Have Small Quotas1
Quota 2Per Cent of Total

Voting Power 3
Central African Republic13.000.12
Upper Volta13.000.12
Yemen Arab Republic10.000.11

As of May 21, 1973.

Expressed in millions of special drawing rights (SDRs).

In the General Account. Differences in the quota may not be reflected the percentages shown here because percentages have been rounded.

As of May 21, 1973.

Expressed in millions of special drawing rights (SDRs).

In the General Account. Differences in the quota may not be reflected the percentages shown here because percentages have been rounded.

Table 4.Members with Largest Quotas1
Quota 2Per Cent of Total

Voting Power 3
United States6,700.0020.82
United Kingdom2,800.008.75

As of May 21, 1973.

Expressed in millions of special drawing rights (SDRs).

In the General Account.

As of May 21, 1973.

Expressed in millions of special drawing rights (SDRs).

In the General Account.

Effects of Increased Membership

The Fund has not regarded the problem of small states in international organizations as particularly troublesome, although it has been raised in the recent past. The voting power of small states is not a serious problem because of the Fund’s system of weighted voting power. Each member has 250 votes plus 1 vote for each portion of its quota equivalent to 100,000 U. S. dollars of the weight and fineness in effect on July 1, 1944.50 As a result, small states have small proportions of the total voting power.

The concern that has been expressed has been connected with the election of executive directors. At the present time there are twenty executive directors, of whom five are appointed by the 5 members with the largest quotas, three are elected by the 20 American Republics not entitled to make an appointment, and twelve are elected by the remaining members of the Fund. An executive director regards the members that elected him as his constituency, and he casts a number of votes that is equivalent to the combined voting power of the members that make up that constituency. In the election of executive directors that became effective on November 1, 1972, the largest constituency numbered 18 members, and was followed by two constituencies of 16 members each and another of 12 members. The number of members within some constituencies would increase with a larger membership, and the burden on a director of keeping in contact with and taking care of the interests of the members that elected him would be even greater. It is, of course, possible to increase the number of elected executive directors, but there has been a reluctance to go beyond the present total because of the risk that the Executive Directors would cease to be an effective executive organ.

A different facet of the problem has been the prospect that with the increase in the number of votes cast by members in the elections of executive directors, resulting from the increase in the number of members with quotas of all sizes, the election of a nominee by members with small quotas may become impossible. A large group of members with what they regard as homogeneous interests may be unable to elect an executive director because their total voting power is outweighed by other groups of members that combine to elect executive directors. They may combine solely for the purpose of electing an executive director and not because they have homogeneous interests, and this may intensify the reactions of other members against what they feel is not a natural group. The problem was debated by the Executive Directors in the period between the regular biennial elections of 1970 and 1972 in relation to the two directors who had been elected by two groups of members in Africa in the election of 1970. The members that had elected these two directors pointed out that the two additions, in 1963 and 1964, to the number of elected executive directors were based principally on the entry into the Fund during the early 1960s of a large number of countries in Africa. The members that had elected the two executive directors in 1970 were fearful that they might not succeed in 1972 or in later elections in electing more than one executive director. In the election of 1970, one director had been elected by 18 members in Africa with voting power that ranged from 0.12 per cent to 0.46 per cent of the total voting power of members of the Fund, and the other director had been elected by 15 members with voting power that ranged from 0.11 per cent to 0.50 per cent of the total. The executive director elected by 18 members had the largest constituency in the Fund but was nevertheless the director who cast the smallest number of votes in the Executive Directors. If it became necessary to increase this constituency in order to elect an executive director, the chances that two directors could be elected by members in Africa would be reduced and the burden on one director of taking care of the interests of an even larger constituency might become intolerable. It was argued on behalf of the African members directly involved that these results would harm not only their interests but also the effectiveness of the Executive Directors.

One proposal that was examined was the adoption of a rule of election under which a nominee would be deemed to be elected if a specified number of members cast their votes for him, even though the total of their votes did not amount to the minimum that was prescribed for the election of a director. Under the Articles, the Board of Governors may increase the number of executive directors to be elected when countries not listed in Schedule A join the Fund,51 and this condition was satisfied many years ago. The increase in the number of executive directors is determined by comparison with the number of executive directors provided for by the Articles and not with the number elected in the last election. Obviously, the Board of Governors has flexibility under these provisions in determining the number of directors to be elected in any regular biennial election. The conduct of a biennial election is governed by the provisions of Schedule C, “supplemented by such regulations as the Fund deems appropriate.” Moreover, when the Board of Governors increases the number of executive directors to be elected beyond the original number, it must issue regulations making appropriate changes in the proportion of votes required to elect directors under the provisions of Schedule C.52

It was not possible, however, to solve the predicament of the two directors elected by groups of members in Africa by the use of the powers referred to. A regulation providing that a nominee would be deemed to be elected if he received the votes of a specified number of members even though their voting power did not amount to the prescribed minimum would not supplement the provisions of Schedule C. Such a regulation would contradict the normal electoral principle of the Schedule that a nominee receiving more votes takes precedence over a nominee receiving fewer. Furthermore, a regulation providing for the election of a nominee receiving the votes of a specified number of members would not be a change in the proportion of votes required to elect executive directors because it would be unrelated to percentages of the total voting power of the members eligible to participate in an election.

There was some discussion of the desirability of amending the Articles in the future to provide for the election of executive directors on the basis of the number of members voting for them. The Executive Directors were not wholly in favor of the idea and refrained from endorsing it. One objection to the idea was inconsistency with normal electoral principles and with the Fund’s system of weighted voting power. Another objection was that if the number of members was set too high the problem would not be solved, whereas if the number was set too low the increase in the number of executive directors might reduce their effectiveness as an organ.

The debate produced two results. The first was a report in which the Executive Directors informed the Board of Governors that they had held discussions in 1970 in which there had been broad support for the view that if the numerous members in Africa were able to elect only one executive director, the burden on him would be excessive. The report also said that there had been concern that the election of only one director might hinder the efficient conduct of the business of the Executive Directors, particularly when the interests of these members were involved. There was widespread support, therefore, for the view that these members should have the opportunity to elect two executive directors. The report reiterated the concern that was expressed in 1970 and implied that if two executive directors were not elected by these members, the Executive Directors would provide for the election of an additional executive director in which the members in Africa that had failed to elect an executive director would be eligible to participate.53 The Board of Governors, acting on the recommendation of the Executive Directors, adopted a resolution noting the report, and in particular the paragraphs in which the Executive Directors had expressed their concern and had implied the solution they would support should it become necessary.54

The second result of the debate was an increase in the assistance available to certain executive directors. The Articles provide that each executive director shall appoint an alternate. He may participate in all meetings of the Executive Directors without the power to vote if his principal is present, but he has full power to act when his principal is not present.55 The By-Laws provide that it is the duty of an executive director and his alternate to devote all the time and attention to the business of the Fund that its interests require and, between them, to be continuously available at the principal office of the Fund.56 The Articles do not permit an executive director to appoint two alternates even if his constituency is a large one. He may find some amelioration of his difficulties in the provision of the By-Laws that permits the appointment of a temporary alternate if both the director and his alternate are unable to be available at the principal office of the Fund for such reasons as ill health or absence on the business of the Fund, but an executive director may not appoint a temporary alternate to act for him for more than 15 business days in the course of any financial year. The Fund has now made special provision for the benefit of an executive director who has been elected by more than 10 members. He may appoint an advisor to assist him at all times, and in addition the advisor may serve as temporary alternate for an additional aggregate period not exceeding 15 business days in the course of any financial year.57

The increase in the number of members, of all sizes, has produced constituencies for the election of executive directors that are not only large but also diverse. Only a few directors elected with effect from November 1, 1972 were elected by constituencies that had little or no geographical rationale. But there is considerable diversity if other criteria are applied. Constituencies tend to include some members that are developed and others that are developing, some in surplus and others in deficit, some “creditors” and others “debtors” in their relations with the Fund, and some holding more and others less than their cumulative allocations of special drawing rights. An executive director can cast the number of votes allotted to his constituency only as a unit, and therefore if his constituency is diverse, he may feel that it is difficult for him to take a position on some issues in the Fund. This state of affairs explains why, increasingly, a director in taking a position explains for the record the different views held by members in his constituency. If he does volunteer this information, he is nevertheless regarded as taking a unified position if there is voting or if the sense of the meeting is being ascertained.

The difficulties that can be created by an increased membership in the Fund are not confined to the organization of the Executive Directors and to the activities of individual directors. The staff must include experts on the economies of all members, so that an increase in the size of the professional staff must be contemplated. Searching consultations are conducted annually with almost every member of the Fund and engross much of the time of both the staff and the Executive Directors.

One inevitable effect of an increase in the membership of the Fund is the necessity for action by a larger number of members in order that certain decisions can be taken. The total voting power of even a large number of small states may have little influence on the adoption of proposed decisions for which certain proportions of total voting power are required. For example, certain decisions of the Fund can be taken only by majorities of two thirds, three fourths, four fifths, or 85 per cent of the total voting power of members.58 On December 31, 1973, if these decisions were being taken by the Board of Governors, the decisions could have been taken by the governors appointed by no more than 17, 26, 34, or 44 of the 126 members of the Fund. Some decisions, however, cannot be taken unless a majority of the governors vote in favor of them,59 and small countries may exercise greater influence on the Fund’s ability to adopt these decisions however modest their voting power may be. This influence must not be exaggerated, because the decisions are far from having everyday importance. Similarly, increases in the number of members affect the existence of a quorum for meetings of the Board of Governors. A quorum consists of a majority of the Board of Governors exercising not less than two thirds of the total voting power.

Proposals for amendment of the Articles become effective on acceptance by at least three fifths of the members if they have at least four fifths of the total voting power. For the amendment of three provisions, acceptance by all members is required.60 For amendment, therefore, members can have an influence that is not proportionate to their voting power, but of course other factors help to determine whether an apparent power of veto is realistic.

The problems that small countries pose for the Fund have not been serious enough to persuade the Fund to establish criteria for membership based on the size of territory, population, or the economy of applicants. It was always contemplated that small countries would join the Fund, and this was one reason why each member was given 250 basic votes in addition to the number of votes proportionate to quota. The basic votes were intended to give all members some sense of participation in the affairs of the Fund no matter how small a member might be.61

1See p. 17 above.
2Procs. and Docs., pp. 939–41.
3Summary Proceedings, 1946, pp. 67–68.
4Article III, Section 3 (d); Article XIV, Section 2; Article XX, Sections 2 (h) and 4 (a), (b), (d), (e), and (g); Schedule B, paragraph 4. Some provisions that do not refer explicitly to wartime conditions were nevertheless influenced by them, e.g., Article IV, Sections 5 (c) (i), and Article XIV, Section 3.
5Article XX, Section 4 (a) and (g).
6History, Vol. III, p. 15.
7Ibid., pp. 72–73. This statement was echoed on September 27, 1946 by Mr. John W. Snyder, Secretary of the Treasury of the United States and Chairman of the Boards of Governors, at the first annual meeting of the Fund and the Bank: “Among the problems with which the Boards of Governors will want to deal at this meeting is that of considering the applications for membership which have been made since the Fund and Bank came into existence. It has always been contemplated that eventually other nations would want to join. Obviously, the Fund and Bank will gain strength if the largest possible number of peace-loving nations join with us. All but six of the 44 nations represented at the Bretton Woods Conference have joined the Fund and all but seven are members of the Bank. I sincerely hope that all peace-loving countries will see their advantage in becoming members of both institutions in the very near future. Cooperation in the economic world is no less important than cooperation in the political world. It is essential to the peace and prosperity of all nations that they operate under the same fundamental rules in their business dealings with one another. The charters of the Fund and Bank are drawn broadly enough to encompass various types of economic and trading systems. In this world of rapid change and widely differing systems of economic and political organization, it is essential that we reach an agreement on common standards of fair practice in international dealings.”—Summary Proceedings, 1946, pp. 36–37.See also Raymond F. Mikesell, “Negotiating at Bretton Woods, 1944,” in Negotiating with the Russians, Raymond Dennett and Joseph E. Johnson, eds. (Boston, 1951), p. 106. (Hereinafter referred to as Mikesell, “Negotiating at Bretton Woods.”)
8See, however, Mikesell, “Negotiating at Bretton Woods,” p. 110.
9History, Vol. I, pp. 31, 77–78.
10Procs. and Docs., pp. 68–69, 104, 154, 437, 649, 1783–84.
11Ibid., pp. 1208–1209.
12Mikesell, “Negotiating at Bretton Woods,” p. 114.
13Its representatives have commented frequently on the activities of the Fund at the meetings of the Economic and Social Council of the United Nations at which the Managing Director presents the Fund’s Annual Report. See, for example, the record of meetings of November 17, 1972, 53rd Session (E/SR. 1844, November 22, 1972, pp. 12–13); October 29, 1971, 51st Session (E/SR. 1805, November 2, 1971, p. 15); October 27, 1971, 51st Session (E/SR. 1801, October 29, 1971, pp. 6–7); February 25, 1966, 40th Session (E/SR. 1407, March 1, 1966, pp. 19–21).
14History, Vol. I, p. 117.
15History, Vol. I, p. 81, and Vol. III, p. 133. See also Article IV, Section 7, of the original Articles: “Uniform changes in par values.—Notwithstanding the provisions of Section 5 (b) of this Article, the Fund by a majority of the total voting power may make uniform proportionate changes in the par values of the currencies of all members, provided each such change is approved by every member which has ten percent or more of the total of the quotas. …”
16History, Vol. I, pp. 77–78, 82.
17Article XII, Section 8. Procs. and Docs., pp. 1087–88. According to Professor Mikesell, Soviet representatives proposed in the bilateral discussions with the U. S. technicians that the Fund, immediately after its inauguration, should make large credits available to countries that had been occupied by the enemy. The U. S. representatives objected that the Fund’s resources were not intended for rehabilitation and reconstruction. The Soviet representatives dropped the proposal, but pursued it in connection with the World Bank.—Mikesell, “Negotiating at Bretton Woods,” p. 109.
18Article V, Section 7 (b).
19See Joseph Gold, “The Legal Structure of the Par Value System,” Law and Policy in International Business, Vol. 5 (1973), pp. 169–70. (Hereinafter referred to as Gold, “Legal Structure of Par Value System.”)
20Procs. and Docs., pp. 1087–88, 1090–91.
21Ibid., pp. 36, 141–43, 267.
22Blum, Morgenthau Diaries, 1941–45, pp. 263–65.
23History, Vol. I, pp. 95–99.
24See also Blum, Morgenthau Diaries, 1941–45, pp. 261 ff.
25‘The weighted voting system inside these [the Bretton Woods] organizations has particularly drawn heavy barrage from Soviet commentators. …”—Chris Osakwe, The Participation of the Soviet Union in Universal International Organizations: A Political and Legal Analysis of Soviet Strategies and Aspirations Inside ILO, UNESCO and WHO (Leiden, 1972), p. 177.
26It is impossible to say what proportion of the total voting power the U. S. S. R. would have had because this figure would depend on the number of members that represented the difference between $8 billion and $10 billion. A member’s voting power consists of votes proportionate to quota plus 250 basic votes that are unrelated to quota.
27Article XII, Section 3 (b) (i).
28Procs. and Docs., pp. 1086–88, 1090–91. It was agreed that reservations should be confined to the minutes of the Commission and omitted from the Final Act and records of the Conference (pp. 1045, 1209).
29Ibid., p. 1090.
30Blum, Morgenthau Diaries, 1941–45, pp. 262–63.
31Procs. and Docs., p. 1090.
32Provision III, 7 (b). See History, Vol. III, p. 133, and Procs. and Docs., p. 1633.
33Procs. and Docs., p. 1088.
34Procs. and Docs., p. 1091.
35Decision No. 298-3, April 14, 1948, Selected Decisions, pp. 122–25.
36See Joseph Gold, “Les définitions des réserves d’un pays dans le droit du Fonds Monétaire International,” Bulletin d‘Information et de Documentation, Banque Nationale de Belgique, XLVme année, Vol. II, No. 5, November 1970, pp. 636–39. See also Gold, Reform of Fund, pp. 35–36, and Procs. and Docs., p. 628.
37J. W. Beyen, Money in a Maelstrom (New York, 1949), p. 170. (Hereinafter referred to as Beyen, Money in a Maelstrom.)
38Mikesell, “Negotiating at Bretton Woods,” pp. 110, 115. See also Nikola Miljanić, “Market Forces in a Socialist Economy: The Financial Market Aspect—The Case of Yugoslavia,” in Convertibility, Multilateralism and Freedom: World Economic Policy in the Seventies—Essays in Honour of Reinhard Kamitz, Wolfgang Schmitz, ed. (Vienna, 1972), pp. 337–46, and Marcin R. Wyczalkowski, “Communist Economics and Currency Convertibility,” Staff Papers, International Monetary Fund, Vol. XIII (1966), pp. 155–97.
39Beyen, Money in a Maelstrom, p. 171.
40An extensive literature exists on this problem and is still growing. For recent contributions, see M. H. Mendelson, “Diminutive States in the United Nations,” International and Comparative Law Quarterly, Vol. 21 (1972), pp. 609–30 (hereinafter referred to as Mendelson, “Diminutive States”), Stephen M. Schwebel, “Mini-States and a More Effective United Nations,” American Journal of International Law, Vol. 67 (1973), pp. 108–16, and Michael M. Gunter, “The Problem of Ministate Membership in the United Nations System: Recent Attempts Towards a Solution,” Columbia Journal of Transnational Law, Vol. 12 (1973), pp. 464–86.
41For example, the statement of reasons included in the Bill to authorize the Republic of the Ivory Coast to become a member of the Fund and the World Bank Group declared that since the Ivory Coast, which had acquired international sovereignty on July 7, 1960, was resolved to build up its economic and financial independence, it could not stand aloof from the international organizations that were created by the Bretton Woods Agreements to promote financial and economic cooperation among the nations. See also S. Jayakumar, “Small Nations at the United Nations: The Experience of Singapore,” Denver Journal of International Law and Policy, Vol. 3 (1973), pp. 95–106.
42United Nations Institute for Training and Research, Small States & Territories: Status and Problems, a Unitar study by Jacques Rapaport, Ernest Muteba, and Joseph J. Therattil (New York, 1971), pp. 59–78.
43See also Mendelson, “Diminutive States,” p. 612.
44UN Security Council, Official Records, 24th Year, 1506th Meeting, August 29, 1969, and Press Release SC/3119, August 29, 1969. Yearbook of UN, 1969, pp. 260–62.
45In urging study of the problem, one delegate pointed out in the Security Council that the approximately 50 territories that might gain independence in the future would have a total population of about 4.5 million, which would be smaller than any of the 69 most populous states that were then members or 0.2 per cent of the total population of the existing members. If these territories became members, they would be able to defeat a resolution of the General Assembly for which there was unanimous support among the present members.—UN Security Council, Official Records, 24th Year, 1505th Meeting, August 27, 1969, p. 2.
46UN Doc. S/9836, June 15, 1970.
47Mendelson, “Diminutive States,” p. 623.
48Art. II, Sec. 1, of the Articles of Agreement of the International Bank for Reconstruction and Development (ibrd).
49History, Vol. I, pp. 390–91. Enlargement of Fund Resources Through Increases in Quotas: Report by the Executive Directors to the Board of Governors of the International Monetary Fund (Washington, 1958), pp. 14–15. (The report was also published in History, Vol. III; see pp. 428–29.)
51Article XII, Section 3 (b).
52Article XII, Section 3 (d).
53Report of the Executive Directors to the Board of Governors on the size and structure of the Executive Board, approved by the Executive Directors on July 24, 1972, Annual Report, 1973, pp. 94–95.
54Resolution No. 27-12, adopted by the Board of Governors effective August 31, 1972, Summary Proceedings, 1972, pp. 357–58, and Annual Report, 1973, p. 95.
55Article XII, Section 3 (e). See also Gold, Voting and Decisions, p. 118.
56By-Laws, Section 14 (d). See also Gold, Voting and Decisions, pp. 86–87.
57By-Laws, Section 14 (d). Gold, Voting and Decisions, p. 118. Report of the Executive Directors to the Board of Governors on the size and structure of the Executive Board, approved by the Executive Directors on July 24, 1972, Annual Report, 1973, p. 95.
58See Gold, Voting and Decisions, pp. 127–51, 163.
59Ibid., p. 157. Article XV, Section 2 (b).
60Article XVII (a) and (b). See also Gold, Voting and Decisions, pp. 162–63.
61History, Vol. III, pp. 76–77, 93.

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