STATEMENT BY SECRETARY OF THE TREASURY ROBERT B.ANDERSON, GOVERNOR FOR THE U.S. AT THE JOINT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01676R001100130068-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 14, 2016
• Document Release Date: April 17, 2003
• Sequence Number: 68
• Publication Date: September 28, 1959
• Content Type: PREL

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TREASURY DEPARTMENT
Washington
STATEMENT BY SECRETARY OF THE TREASURY ROBERT B. ANDERSON,
GOVERNOR FOR THE UNITED STATES AT THE JOINT MEETING OF
THE BOARDS OF GOVERNORS OF THE INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT, THE INTERNATIONAL MONETARY
FUND, AND THE INTERNATIONAL FINANCE CORPORATION, SHERATON-
PARK HOTEL, WASHINGTON,, D. C., MONDAY, SEPTEMBER 28, 1959,
ABOUT 11:00 A.M.,EDT.
Mr. Chairman,, Governors:
I wish to join, both personally and on behalf of my Delegation, in
the welcome extended to all of you by the President of the United States.
We hope your stay here will be pleasant and that these deliberations, so
notably inaugurated, Yr. Chairman,by your thoughtful address, will be highly
productive.
At last year's meeting, the Governors considered the need for both the
Bank and the Fund to increase their financial rapacity in order to assist
more effectively with the problens of economic development and financial
and economic stability. The member countries have acted with cispatch to
approve the proposals formulated by the Executive Directors. I am sure that
not only the financial response itself but also the clear expression of con-
fidence in the Bank and the Fund will greatly enhance the usefulness of
these two institutions in their future operations.
We have seen in recent years intensified efforts in the less developed
countries represented here to move ahead economically. The Fund and the
Bank,, in their respective roles, have done much to help, and as a result of
their new resources they will be in a better position to meet appropriate
demands on their funds. I-Iowever, the needs of the less developed countries
to attain sound and sustainable growth,, still further challenge the economic
and financial statesmanship which this group, coming here from the many
nations of the Free world, has shown in the past.
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Those of us from the industrial countries have seen impressive gains
in our economies. New and higher levels of economic activity have been
achieved. This has been reassuring to the United States since our inter-
national activities over many years have been directed toward cooperating
in the post-war reconstruction of other industrial countries as well as
in helping the efforts of the less developed areas. We welcome the return
of these other industrial countries to an economic position where they
are capable to an increasing extent of participating, both directly and
through international financial institutions, in supplementing the basic
efforts of the developing countries themselves.
I do not think it appropriate for me to comment on the mechanisms of
carrying out direct financial relations between other countries. I would
like, however, to say that the very character of development financing
requires longer term lending than has been available from many existing
national financial institutions.
There is a need, in addition to these direct efforts of each of us#
for further joint action by those represented here to help progress of the
less developed areas in a way which will not bear heavily on their external
payments. I refer to the International Development Association, which is
on the agenda of the Bank meeting. You will recall that at last year's
meeting, at the direction of President Eisenhower, I stated the view of
my Government that an International Development Association as an affiliate
of the International Bank warranted serious study. I had no definite
course of action to suggest at that time for such an association, but ex-
pressed the hope that you would all give thought to this matter.
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The subsequent informal discussions with many of you and your repre-
sentatives encouraged my Government to feel that this institution would
be both feasible and desirable. As a result of our further study, and
greatly aided by the valuable opinions received in our consultations,
we have outlined our thoughts on the basic framework of an International
Development Association. These ideas were circulated by the President
of the Bank to each of you early in August. In forwarding that letter to
you, Mr. Black expressed his view that such an Association could be a
valuable supplement to the efforts of the International Bank.
We all realize that there are situations in the less developed countries
where a sound project may require financing which cannot be provided under
the criteria of our established international lending institutions. It
would be unfortunate if we did not help in these situations, where often
only a, relatively small margin of capital is needed. It would be equally
regrettable if, in jointly meeting this responsibility, we set up an
organization which competed or conflicted with the operations of our other
proven international institutions. It is, therefore, of great importance
to accomplish this purpose by establishing the new institution within the
framework of the IGRD. In this manner we will not impair this existing
lending institution which can meet the needs of bankable projects. We
also want to be sure that we are sufficiently imaginative and resourceful
to bring about effective use of two forms of credit and at the same time
sufficiently discriminating so that we add to, rather than take from, the
capacity of existing sound organizations.
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It is equally important that an effort of this nature be made through
an institution the membership of which consists of the community of free
nations subscribing to the sound monetary policies represented by the IUF
and adhering to the belief that the maximum accomplishment of any society
can be attained within the framework of free economies. If we can accomplish
these objectives, we can make a contribution of lasting benefit to the
less developed countries.
We recognize that we are breaking new ground in an international under-
taking of this sort. Because it is new we need to approach it with an
attitude of flexibility. The Executive Directors of the IBRD have the
experience and resourcefulness to develop effective policies and we can
confidently rely on them in their task of carrying out the operations of
this new institution.
The proposed International Development Association provides the
opportunity for member countries to join together to further economic
progress in the less developed areas. The positive effort we will be mak-
ing through this new institution will be an additional and effective answer
to the challenge before us. The need for it is clear. Accordingly, the
United States has introduced a resolution asking the Bank's Executive
Directors to formulate articles of agreement for the International Develop-
ment Association after full consideration of all aspects which they deem
pertinent. The Eacecutive Directors have more than adequately demonstrated
their ability in the past to pursue this kind of task expeditiouslyo
your approval of this resolution when it is presented fo- action.
I urge
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(From National Advisory Council Report published August 1959)
PROPOSED INTERNATIONAL DEVELOPMENT ASSOCIATION
THE SECRETARY OF THE TREASURY,
Washington, July 31, 1969.
Hon. EUGENE R. BLACK,
President, International Bank for Reconstruction and Development,
Washington, D.C.
MY DEAR MR. BLACK: At the opening joint session of the 1958 annual meeting
of the International Bank for Reconstruction and Development and the Inter-
national Monetary Fund at New Delhi, I called attention to the fact that the
United States was. studying a proposal to establish an International Development
.Association as an affiliate of the International Bank. President Eisenhower had
earlier asked me to ascertain the attitudes of member governments toward the
proposal, and, if the creation of an International Development Association ap-
peared feasible, to initiate negotiations to that end.
The New Delhi meeting offered an opportunity for fruitful contacts among the
Governors of the Bank, and the preliminary responses to the International De-
velopment Association proposal voiced there were encouraging. Since last Octo-
ber, we in the U.S. Government have been engaged in further study of the Inter-
national Development Association in an attempt to formulate a more specific
project. We have had subsequent discussions with other members of the Bank,
and many members have shown a favorable attitude toward the concept of an
International Development Association. We are continuing our discussions with
other Bank members.
You will recall that as a basis for these discussions the U.S. Executive Director
of the Bank recently circulated to all the other Directors an informal paper giving
the major outlines of an International Development Association as we presently
visualize it. We realized that in many cases a Director would be in a position
to give only his personal views, and would not have the considered views of the
government or governments he represents. Nevertheless, the reactions of Direc-
tors to this informal paper were useful and illuminating, and we have kept these
in mind in drawing up the memorandum which I have attached to this letter.
We have been much impressed, as I am sure you also have been, with the role
played by the Executive Board of the Bank in bringing to fruition several com-
plex proposals in the recent past. The International Finance Corporation, for
example, came into being after a proposal was formulated in the Board of Execu-
tive Directors and submitted to the member governments for approval. Just
last year, the Executive Directors were charged with the task of submitting an
appropriate proposal for increasing the Bank's resources. This task was success-
fully discharged, and governments are now acting on the resolutions drafted in
the Executive Board. I believe the Executive Directors, in the case of the Inter-
national Development Association, can again perform the invaluable function
of taking the basic outline of an idea and fashioning it into a specific proposal. I
am convinced that there exists a sufficiently broad base of support for an Inter-
iiational Development Association among the member governments that a plan
carefully worked out by the Executive Directors would meet with widespread
acceptance.
It is my hope that this year's meeting of the Governors will be the occasion for
taking definite steps looking toward the establishment of an International Develop,
ment Association along the lines of the attached paper. As Governor for the
United States, I am planning to place before the Board of Governors in September
a resolution calling upon the Executive Directors to study carefully the question
of establishing an International Development Association and, if feasible, to
formulate articles of agreement for appropriate submission to the member govern-
ments. I would appreciate it, therefore, if you would place the subject of the
International Development Association on the agenda for the September meeting.
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The formal text of a resolution will be transmitted to the Bank by the United
States at the proper time.
If the Executive Directors make their recommendations within a reasonable
time and if" these recommendations are expeditiously presented to member gov-
ernments, the matter could be acted upon formally by member governments
early in 1960. In the case of the United States, this would mean that the Congress
would consider the International Development Association during the 1960
session.
I am certain you will agree with me that the question of establishing an Inter-
national Development Association is a matter of the first importance, and that the
assent of the Governors at the annual meeting to a resolution calling for a study
and recommendations by the Executive Directors would be a significant step
toward the desired goal. It is my hope that between now and September the idea
will receive earnest consideration within the member governments, and that the
Governors will be in a position to support the U.S. resolution when it is offered.
In this connection, I request that you forward a copy of this letter to each of the
Governors, together with any comments you might consider appropriate.
Sincerely yours,
ROBERT B. ANDERSON,
Governor for the United States,
International Bank for Reconstruction and Development.
Attachment: Guidelines for Use in IBRD Executive Directors' Study of a
Proposed International Development Association.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, ?
Washington, D.C., August 3, 1959.
My DEAR GovERNOR: The Governor for the United States has requested me to
forward to you and the other Governors of the Bank the attached letter concerning
the International Development Association. The letter expresses the Governor's
intention to introduce a resolution on that subject at the next annual meeting
and rgquests that the matter be placed on the agenda for that meeting.
I have often said that in many less-developed countries the achievement of
reasonable rates of growth will require more external capital than can properly
be provided by conventional loans of the kind which the International Bank is
authorized to make, and that there would he substantial advantage in channeling
a large part of such further external aid through a soundly organized international
institution. This is the essential concept of the proposed International Develop-
ment Association. It is my opinion that, given suitable resources and functions,
such an institution would be a valuable supplement to the International Bank's
efforts to meet the pressing problems of development financing in the world today.
Without expressing any views at this stage on specific aspects of the proposal,
I can .say that I am fully in accord with the suggestion of the Governor for the
'1Jnited States that our meeting in September should he the occasion for taking
action looking toward its consideration and, as I would hope, toward the estab-
-lishment of an International Development Association.
Yours sincerely,
EUGENE R. BLACK, President.
Attachments. (The attachments consist of the letter from the U.S. Governor
to the President of the Bank and the "Guidelines" paper appended thereto.
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GUIDELINES FOR USE IN IBRD ExECUTIvE DIRECTORS' STUDY OF A PROPOSED
INTERNATIONAL DEVELOPMENT ASsoCIATION (IDA)
To facilitate the consideration of the IDA by the Executive Directors, the
United States submits herein certain guidelines which it hopes will form the basic
framework of the proposed organization.
1. Purpose.-The purpose of the International Development Association
would be to promote, by financing sound projects of high priority, the economic
development of less-developed member countries whose needs cannot be ade-
quately met under International Bank lending programs.
2. Structure.-IDA should be a close affiliate of the IBRD; membership in IDA
would be open to all members of the IBRD. IDA should be a separate financial
entity, but should be manned by IBRD personnel.
3. Voting.-Voting should be on a weighted basis, according to capital sub-
scribed.
4. Size.-The authorized capital of IDA should be $1 billion. Members would
pay in 50 percent of their subscriptions initially, and the remainder in equal
installments over 5 years.
5. U.S. subscription.-The U.S. subscription would be proportional to the U.S.
subscription in the International Bank, taking into account the proposed increases
.in the IBRD. This would amount to about $320 million.
6. Replenish7nent.-At 5-year intervals the Governors of IDA should consider
the desirability of increasing the capital of the institution. Any increase would
require approval of three-fourths of the total voting power. Each member
would have the right, although not the obligation, to subscribe to a portion of the
increase in accordance with its proportion of the initial capital. The Board of
Governors could also, by three-fourths vote, approve an increase in capital at any
other time, provided prior capital obligations of members have been substantially
discharged.
7. Currency subscribed.-Members would make their subscriptions in part in
gold or fully convertible currencies, and in part in their own national currencies.
Each payment made under the installment arrangements mentioned in paragraph
4 would consist in part of gold or fully convertible currencies, and in part of na-
tional currencies, in the proportions set forth in paragraph 8. The basis on which
each part of a member's subscription may be used by IDA is also outlined in
paragraph 8.
8. Use of currencies subscribed.-Twenty percent of each payment by each
member should be in gold or in fully convertible currencies which would be freely
disposable by IDA. The remaining 80 percent should be in national currencies
and should be usable at a minimum for procurement of nationally produced goods
and services for use in connection with IDA-financed development projects within
the country concerned, or for procurement of nationally produced goods and
services for export and use elsewhere in connection with IDA-financed projects.
In no event would IDA engage in financing trade in commodities not related to
IDA-financed development project,,.
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In addition to the basic minimum usability of the 80 percent of subscriptions
paid in national currency, there should be provision in regard to. this 80 percent
for-
(a) The convertibility of 30 percent as required by IDA. The obligation
to make this portion of its national currency convertible on demand should
extend to all members except those to whom IDA granted a suspension of
the obligation. This suspension would not be given to any'of the industrial-
ized countries, and countries receiving suspensions should not have an aggre-
gate of more than about a quarter of total subscriptions.
(b) The convertibility of the remaining 50 percent of subscriptions paid
in national currency by the industrialized countries if and when all of the
industrialized countries agree to such a move. The United States would
make this portion of its subscription available on a fully convertible basis
so long as the other industrial countries do the same.
Under these arrangements, the IDA would have the responsibility for taking
account of the economic position of a less-developed country in using such a
country's currency, from whatever,source acquired. An operating principle of
IDA would be that IDA would maintain reasonably uniform rates of usage
among the subscri tions in national currencies which become convertible as pro-
vided in (a) or (b) above, after first using the holdings of the currency of the
country of procurement.
9. Borrowing authority.--IDA should have authority to borrow from member
governments or other sources.
10. Special resources provided in local currencies.-Arrangements should be made
to permit IDA to receive from one member the currency of another member.
Transfers of such currency would be over and above the member's subscription
to the regular capital of IDA. Currencies so transferred should be available on
terms which impose no greater restrictions on their use by IDA than previously
applied to their use. Efforts would be made to secure the agreement of member
countries, in accepting the IDA charter, to cooperate in facilitating reasonable
transfers to IDA of their currency which another country wishes to make available.
The member would receive nonvoting "special development certificates" in
exchange for currency provided. These certificates would carry a right of
recovery of any such currency remaining upon liquidation of IDA. In addition,
holders of certificates would be eligible to receive half of net operating profits
derived from use of the resources provided.
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