It is my privilege and that of my colleague, Dr. Kaissouni, to welcome you most cordially to this Joint Session of the Tenth Annual Meeting of the Boards of Governors of the International Bank for Reconstruction and Development and the International Monetary Fund. In particular, I am happy to welcome the honorable representatives of Afghanistan and the Republic of Korea, which joined the Bank and the Fund during the year.

It is my privilege and that of my colleague, Dr. Kaissouni, to welcome you most cordially to this Joint Session of the Tenth Annual Meeting of the Boards of Governors of the International Bank for Reconstruction and Development and the International Monetary Fund. In particular, I am happy to welcome the honorable representatives of Afghanistan and the Republic of Korea, which joined the Bank and the Fund during the year.

On behalf of all the Governors, I wish to extend warm greetings to the Turkish people and the Turkish Government. We thank our host country for the arrangements they have made and for the opportunity afforded us to meet in this historic crossroads between the East and the West.

I am particularly happy that this Meeting is being held in this great and beautiful city of Istanbul which symbolizes the rich and glorious history of the past together with the achievements and aspirations of modern Turkey. This Meeting offers a unique opportunity to many of the Governors to visit some of the many historic places in Turkey, and also to visit some of the neighboring countries of the Middle East, the birthplace of many great civilizations. I can assure you of the welcome and hospitality which is our tradition. We want you to know these countries, to understand their problems, and to realize their prospects.

Our two institutions are approaching the end of their first decade. With this anniversary in mind, and from the vantage point of this meeting place, I want to say something about economic development, and about the role of the Bank and the Fund in connection with it.

There is no country in the world whose people and government do not recognize that orderly and continuous economic growth is the indispensable basis of welfare. This is true of countries in all stages of development, from the greatest industrial power to the smallest so-called “underdeveloped” country. If the advanced industrial countries fail to maintain a substantial rate of growth of the economy, the results will appear in declining employment and a lower standard of life. In the case of France, for example, a recent estimate is that 1.5 million jobs must be created in the next ten years if the economy is to keep pace with population growth. But the underdeveloped countries are goaded by an even sharper necessity to attain and maintain a satisfactory rate of growth. Starting as they do from a lower standard of living, they must find ways of increasing production not only to deal with annual population growth, but to augment consumption per capita.

Economic development is, then, the universal need. But it presses most urgently for satisfaction in the underdeveloped countries. The reasons are clear—they arise from the characteristics of the economies of these countries, and from the special difficulties confronting economic development in them.

First, the underdeveloped countries are under intense social and political pressures to speed up their economic growth. Direction and momentum are even more urgently needed in these countries than in the industrially advanced countries. If these countries are to develop integrated and diversified industry and agriculture within any reasonable period of time, they must find ways of accelerating the building of the basic physical plant of a modern economy, particularly in the fields of communications and power.

Second, the mobilization of domestic savings is no less essential in underdeveloped countries than in industrially advanced countries, and yet is much more difficult. It is no less essential because every country must rely primarily on its own savings for economic development. Let me cite one example of this. Canadian economic expansion in the last ten years has been so dramatic in speed and scope as to attract wide interest. Foreign capital has shared in this expansion; but the striking fact is that about 95 per cent of net capital formation in Canada since the war has come from domestic savings. To mobilize savings in most underdeveloped countries is difficult, and, if the country is poor, the total savings will be disappointingly small in any event. But to induce these savings and to make them available for national economic development, it is necessary to change investment habits, to improve and even to establish financial institutions, to reform the fiscal system, and to perfect and safeguard the currency and the foreign exchange system.

Finally, foreign capital must be encouraged because it is a vital element in economic development. Even though chief reliance must be placed on domestic savings, imported capital is an essential supplement. To cite again the case of Canada, only a small part of total investment since the war has come from abroad. But this imported capital has helped to accelerate Canadian development. It has provided funds for industries such as petroleum and iron ore, where large amounts of capital are needed for a single investment. And it has given Canada access to foreign technology on a wider scale. Of course, it is not enough for the underdeveloped countries to provide opportunities for foreign capital. The developed countries on their part must continue their efforts to facilitate the flow of capital to other parts of the world.

I should now like to comment on the contributions which the Bank and the Fund have made in instituting a concerted attack upon these problems. I attended the Inaugural Meeting of the Boards of Governors of the Bank and the Fund in Savannah in 1946 and have attended all of the Annual Meetings since then. Moreover, I have been in a position to observe closely the concrete assistance rendered by these two institutions over the past decade, in their day-to-day consideration of specific problems confronting individual member countries.

I have pointed out that economic development requires financing, technical skills, and stable economies. The Bank and the Fund have been able to make notable contributions toward all three.

As regards financing, the main responsibility lies with the Bank. In the past decade the Bank has made loans totaling over $2 billion to some 40 member countries. It has provided an important instrument by which underdeveloped countries can tap the savings of the industrial countries. The Bank has in the past year achieved new successes in its drive to enlist private capital in development work. It raised almost $100 million through sales of its borrowers’ obligations. Even more striking was the development by the Bank of a new way of making external government bonds suit the taste of investors in major capital exporting countries. By Unking loans to public bond offerings in the United States, the Bank helped to add $45 million to the international flow of capital. Let us turn for a moment to the Bank’s lending. Since the close of the financial year, a further $112 million has been lent—all of it in the underdeveloped regions. But, in the future to which we may look forward, we hope to see the Bank playing in the Middle East countries and the other underdeveloped countries a more active role as lender and technical adviser—and, perhaps, also as borrower.

The Fund has had transactions with 27 member countries exceeding $1 billion. These transactions, while not directly related to specific development projects, have helped to provide the stability of international trade and payments necessary for progress in development.

The loans of the Bank and the transactions of the Fund are published facts and are well known throughout the world. I should like, therefore, to lay particular emphasis on the contribution which these institutions make in the field of technical knowledge. As an integral part of pursuing its objectives each institution has, of necessity, mobilized a vast store of technical ability which is constantly available to member countries.

Member countries have found the Fund an unfailing source of sound technical advice in the financial field. This advice has dealt with matters such as public finance, central and commercial banking, and foreign exchange matters. I know that many of you present here today have, during the course of the past few years, consulted personally with the Fund’s experts on these matters. From my contacts and conversations with you, I know, too, that the Fund’s advice, given during these consultations, has been of considerable assistance to you. The Fund’s chief intent has been to help members to achieve and maintain sound currencies, and to deal effectively with inflation, particularly under the stress of aggressive development programs. As to foreign exchange, the Fund has continuously sought to advise members how best to maintain, or to work toward, a convertible unitary exchange rate which is the core of the exchange system envisaged in the Fund’s Articles. The remarkable improvement in international payments that has taken place in recent years has, in large part, been the result of the sounder monetary policies pursued in many member countries. The Fund has been unremitting in urging such policies on its members; and, in many instances, the measures that were taken are the direct consequence of the technical knowledge made available by the Fund.

The Bank, on its part, has brought to member countries a great store of technical knowledge, otherwise not likely to be available to the country concerned, in its consideration of specific projects and over-all development programs. It has made broad development surveys. It has brought international experience to bear on the complex problems of development, recruiting experts from many member countries. Not only in large missions, not only in providing experts for special problems, but also in the course of its day-to-day lending problems, the Bank has taken the opportunity to give specialized technical help where it has been needed.

I should now like to look forward a moment to our second decade, which is about to begin. If we approach the future with aggressiveness and diligence, tempered by prudence, there can be large advances in economic development in the next ten years, and the Bank and the Fund can be of great assistance. Both of our institutions are well prepared to make continuing and expanding contributions to development, and thus to the general welfare of all members.

The Bank is already giving increasing attention to underdeveloped countries as the period of postwar reconstruction draws to an end. A new institution—the International Finance Corporation—is also being formed under the supervision of the Bank. This should help to make a modest beginning in making new types of investment, and also facilitate the flow of private capital to desirable projects. I hope that the Bank will continue to seek out new ways in which it can be of assistance to its members, and particularly those in the most urgent need of economic development.

The Fund is similarly well prepared to be of continuing assistance in the future. It is in a very liquid position. There will be many times in the future when members will need to draw on the Fund, and I am sure that under present policies, described in the Annual Report, the Fund can take care of all appropriate requests.

But in my view the consultative and advisory services of the Fund promise even more benefit. This is true of most countries which have so much yet to do to perfect their financial institutions and to strengthen their currencies so that there may be success in the task of economic development.

The Fund’s trainee program has already proved a success and should be augmented. As a logical extension of its training activities, the Bank is starting an institute for training senior officials of member countries in the problems of development.

The Bank and the Fund are ideally placed to help members. They can send missions quickly, whether one expert or several. They can give advice quietly and without publicity—often an absolute necessity in the financial field. I hope the Bank and the Fund will be vigilant and energetic to maintain staffs large enough in numbers and high enough in capability and experience so that they can be prepared to give even greater and more effective service to members.

As we begin this Meeting which brings the Bank and the Fund close to the end of their first ten years, I wish them a vigorous and courageous and effective second ten years.


Delivered at the Opening Ceremonies, September 12, 1955. As the Meeting was held jointly with the Bank, Mr. Saad, Governor of the Bank for Egypt, presided over Joint Sessions of the Boards of Governors while Dr. Kaissouni, Governor of the Fund for Egypt, presided as Chairman at Sessions of the Board of Governors of the Fund.

Other addresses delivered at the Opening Ceremonies are reproduced in Appendix II.