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PROCEEDINGS AND DOCUMENTS OF THE United Nations Monetary and Financial Conference BRETTON WOODS, N EW HAMPSHIRE J U L Y 1-22, 1944 Vol. I UNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON ! 1948 DEPARTMENT OF STATE Publication 2866 International Organization and Conference Series 1,3 DIVISION OF PUBLICATIONS OFFICE OF PUBLIC AFFAIRS For sale by the Superintendent of Documents, U . S. Government P rin tin g Office W ashington 25, D. C. - Price $3.50 Preface HESE volumes of Proceedings and Documents of the United Nations Monetary and Financial Conference held at Bretton Woods, New Hampshire, July 1-22, 1944, are intended pri marily as a collection of working papers. The documents included in this publication are reproduced exactly as they were issued at the Conference site, except for some slight rewording of docu ment titles, and with no attempt at editing. The substantive Conference documents have been arranged for publication in numerical order, except for certain types of docu ments such as press releases and French and Spanish translations, which were believed more properly to belong in appendixes. Appropriate annotations in the form of footnotes have been added where required. Certain types of documents of a purely admin istrative nature, such as announcements and news bulletins, have been omitted. In addition, the tables of contents and social and other announcements have been deleted from the issues of the Journal. A complete list of all documents issued at the Conference, with specific reference to those that have been omitted, has been included as Appendix II. A list of the symbols used to differen tiate the various series of documents has been included as Ap pendix III. The principal substantive documents are included in Volume I of the Proceedings; the remaining substantive material, together with a comprehensive index, will be found in Volume II. The reader wr find the index to be the key to the many documents ill contained in the two volumes. The Department of State, the International Monetary Fund, and the International Bank for Reconstruction and Development have collaborated in the arrangement of materials in these vol umes; they have also shared the initial costs of publication. T Contents Preface ............................................................................... Introduction .................................................................... Proceedings and Documents Issued at the Conference Introduction HEN currency systems were restored after the last war, there was little or no attempt at coordination of meas ures to provide stability; no machinery was set up to facilitate an orderly adjustment of exchange rates when funda mental conditions necessitated such a revision. The disturbances of the 1930’s, involving a resort to competitive currency deprecia tion, imposition of exchange restrictions, import quotas, and other devices which all but stifled trade, made it clear that im proved international financial arrangements were necessary. Cur rency and exchange difficulties are generally regarded as con tributing to a considerable extent to the economic and political breakdown of that period. During the war financial experts in all countries early came to the recognition that the postwar world would stand in great need of some stabilizing influence in the international financial field. . Discussion of international financial objectives and procedures was stimulated as the war progressed until the middle of 1943 when the first informal discussion of technical experts from a large number of countries was held in Washington. Following this meeting concrete proposals from Canada, China, France, Great Britain, and the United States were exchanged, and in April of 1944 the Joint Statement of Experts on the International Monetary Fund1 was published simultaneously in Washington, London, Moscow, Chungking, Ottawa, Rio de Janeiro, Mexico City, and Habana. The report was also published in full or ab breviated form in many other countries. It reported the views of the experts of the numerous consulting countries and constituted the basis for the development of the subsequent detailed plan. Time had not permitted preparation of a similar statement with respect to an international investment bank. The discussions had indicated a large measure of agreement on a proposal for the establishment of such a bank, but the plan was not so far ad vanced as that for the monetary fund. 1 This joint statem ent is printed in Appendix IV, p. 1629. V vi INTRODUCTION In May 1944 the President of the United States issued invita tions to the 44 United and Associated Nations to attend a con ference to be held at Bretton Woods, New Hampshire, in July 1944. The Conference was to discuss the proposed Monetary Fund within the terms of the Joint Statement and was to consider, if possible, the Bank proposal. In order to facilitate the work of the Conference and to work out some of the many details, a preliminary meeting was held at Atlantic City, New Jersey. On June 15 a group of American finan cial experts assembled there and were joined a few days later by experts from 15 other countries. The group worked intensively, endeavoring to deal with some of the unsettled questions and to produce a more finished document. At this preliminary conference the British experts presented suggestions on the Bank which in volved some changes from the earlier plan but which met with almost immediate approval of the experts of the other nations. It became clear that the Conference would be able to consider the establishment of an International Bank as well as a Fund. The group at Atlantic City went directly from there to the Conference at Bretton Woods, New Hampshire, which assembled on July 1, 1944. The Bretton Woods Conference worked in a spirit of complete cooperation and harmony. All the nations represented at Bretton Woods were interested in finding the best means for cooperation in dealing with international monetary and financial problems. Every country realized that the effectiveness of its own economic policies depended to a considerable extent upon removing the monetary disorders and obstructions that stifled world trade in the 1930’s. At the same time, every country represented at Bretton Woods was concerned with protecting its own interests. In this atmosphere of enlightened self-interest the United Nations found the basis for their mutual advantage. To carry out the work of the Conference three technical com missions were established upon which each delegation was repre sented. Commission I, under the chairmanship of Harry D. White, of the United States, was charged with formulating the Articles of Agreement of the International Monetary Fund; and Com mission II, under Lord Keynes, of the United Kingdom, assumed the same responsibility with respect to the International Bank for Reconstruction and Development. Commission III, under the chairmanship of Dr. Eduardo Suarez, of Mexico, was to consider other means of international financial cooperation. Each Commission, in turn, established several committees upon INTRODUCTION vii which all countries were represented to handle much of the pre paratory work. In addition numerous subcommittees were set up to deal with the more technical and controversial problems as they arose. As a general rule decisions were taken without formal vote except in the main commissions. The first weeks of the Conference were devoted almost ex clusively to the wr ork of Commission I on the International Mone tary Fund. In fact, a major portion of the Fund articles were in final form before Commission II on the Bank began to function actively. This accounts, in large part, for the degree of parallelism evident between the two instruments since many of the provisions of the Fund articles and decisions in Commission I were adapted for Bank purposes by Commission II in preparing the Bank arti cles. Thus, in a number of cases, the history of a provision in the Bank articles will require a careful check of the history of a parallel provision in the Fund articles. Procedurally, the work in Commission I on the Fund agreement commenced with the Secretariat’s distributing a preliminary draft of the proposed articles. In this working paper the pertinent provisions of the Joint Statement of Experts were set forth, to gether with such elaborations thereon as had been formulated by the various delegations separately or jointly at Atlantic City. All proposals relating to a specific provision of the Joint Statement were grouped together and designated as “alternatives” for con sideration by the Commission. The Commission allocated the various proposals to the major functional committees which were charged with developing the substantive provisions within their respective jurisdictions. As each committee completed its sub stantive work the articles were relayed to the Commission’s Draft ing Committee which was charged with preparing the final docu ment. Whenever, after exhaustive consideration, a committee failed to achieve substantial agreement on a problem, the Com mission transferred its consideration to the Special Committee. This body was given final authority to resolve disputed issues of substance, subject only to direct appeal to the Commission. The Special Committee was small in membership, but its technical competence together with its representative composition con tributed substantially to the achievement of final accord on many difficult issues. Commission II followed the same general procedural lines as those indicated for Commission I except that greater use was made of ad hoc committees and subcommittees and the functions of the Drafting and Special Committees of Commission I were viii INTRODUCTION more or less merged into a single Drafting Committee in the case of Commission II. Commission III, with a less sharply defined mandate from the Conference, employed a somewhat more flexible procedure. The principal accomplishments of the Conference were the draw ing up of two instruments—the Articles of Agreement of the Inter national Monetary Fund and the Articles of Agreement of the International Bank for Reconstruction and Development. The pro posal for the establishment of the first of these bodies, the Fund, was based on the premise that international financial cooperation and the establishment of conditions conducive to international trade are imperative to the economic welfare of the peoples of the world and to world peace. Agreement was therefore reached that there should be established an International Monetary Fund, with powers and resources deemed adequate to perform the tasks as signed to it, for the purpose of maintaining an international mone tary system to promote foreign trade and that all nations should thus work together toward the goal of world prosperity. The second organization projected by the Conference was the International Bank for Reconstruction and Development. Pro posals for the establishment of the Bank were based on the prem ise that postwar reconstruction and development are essential to the general economic interest, that it should be begun as soon as possible, and that expanded international investment is neces sary to establish part of the capital for reconstruction and devel opment. It was further agreed that a program for reconstruction and development would aid political stability and foster peace among all nations. In order to accomplish these aims, the Confer ence recommended that an International Bank for Reconstruction and Development be created and given the powers and resources to carry out the program. The Conference further recommended that the proposed Arti cles of Agreement for the establishment of the Fund and of the Bank2 should be studied carefully by the participating govern ments and that special attention should be given to the needs of those countries which had suffered from enemy occupation. In addition, the Conference adopted seven resolutions, state ments, and recommendations. Chief among them were: (1) a 2 The Articles of Agreement for the establishment of the Bank and of the Fund having been accepted by the requisite number of governments, the in augural meetings of the Boards of Governors of the International Bank for Reconstruction and Development and the International Monetary Fund were held simultaneously a t Wilmington Island near Savannah, Ga., Mar. 8-18, 1946. INTRODUCTION ix recommendation that the Bank for International Settlements be liquidated; (2) a statement that, since it was impossible to study the fluctuation of silver at this Conference, a further study be made by the interested governments; (3) a recommendation that all nations assist in the return of looted properties to their right ful owners; and (4) a general recommendation that all nations seek to cooperate more fully with each other to reduce obstacles to trade, to bring about the orderly marketing of stable com modities at fair prices, and to hasten the solution of various inter national economic problems. The Articles of Agreement of the International Monetary Fund and the Articles of Agreement of the International Bank for Re construction and Development were submitted for ratification to the member governments during 1945. The agreements entered into force on December 27, 1945, when representatives of 30 countries met and participated in a ceremony of signature held in Washington, D.C. The inaugural meeting of the Boards of Governors of the two institutions took place in Savannah, Georgia, on March 8, 1946. The reports of the proceedings of this and sub sequent meetings are available elsewhere in published form. Volume I PROCEEDINGS AND DOCUMENTS ISSUED AT THE CONFERENCE Proceedings and Documents Issued at the Conference Document 6 J OUR NA L UNITED N ATIONS No. 1 MONETARY AND FINANCIAL Bretton W o o d s, N ew Ham pshire ORDER OF THE CONFERENCE July 1, 1944 DAY Saturday, July 1, 1944 12 Noon 3 p.m. 5 p.m. 9 p.m. 10 p.m. Executive Meeting of the Chairmen of the Delegations Inaugural Plenary Session Reception by the Delegation of the United States Committee on Rules and Regulations Committee on Nominations Banquet Room Auditorium The Hemicycle Room A Room B (P. 2) T e m p o r a r y P r e s id e n t of t h e C o n f e r e n c e , S e c r e t a r y G e n e r a l , a n d T e c h n ic a l S e c r e t a r y G e n e r a l In accordance with established international practice, the Presi dent of the United States of America, as Chief of State of the country serving as host to the Conference, has designated the Chairman of the Delegation of the United States, the Honorable Henry Morgenthau, Jr., as Temporary President of the Confer ence, to serve until the election of the Permanent President. In further observance of international practice, the President has designated Warren Kelchner, Chief of the Division of Inter national Conferences, Department of State, as Secretary General of the Conference, and V. Frank Coe, Assistant Administrator, Foreign Economic Administration, as Technical Secretary Gen eral of the Conference. I n v it a t io n o f t h e U n it e d S t a t e s o f A m e r ic a to t h e C o n f e r e n c e A paraphrase of the circular note sent by the Secretary of State 3 4 MONETARY AND FINANCIAL CONFERENCE to the Washington missions, inviting them to attend the United Nations Monetary and Financial Conference, follows: The Secretary of State presents his compliments to Their Excel lencies and Messieurs, the chiefs of mission or principal represen tatives of the governments and authorities of the United Nations and the nations associated with them in this war, and refers to the Joint Statement of Technical Experts recommending the estab lishment of an international monetary fund and outlining the prin ciples for such a fund. The Government of the United States feels that the joint state ment marks an important step toward international economic co operation in the post-war world and is confident that others have been equally gratified by this evidence of the desire of the United Nations and the Nations associated with them in this war to co operate in meeting post-war economic problems. As a further step toward the realization of this objective, the President of the United States now proposes to call a United Na tions conference for the purpose of formulating proposals of a definite character for an international monetary fund and possibly a bank for reconstruction and development. Of course, it would be understood that the delegates would not be required to possess plenipotentiary powers and that the proposals formulated at the meeting would be submitted to the several governments and au thorities for acceptance or rejection. Accordingly, telegraphic instructions have been issued to the chiefs of the appropriate diplomatic missions of the United States to extend on behalf of the President a cordial invitation for the respective governments and authorities to send (p. 3) one or more delegates to the United Nations Monetary and Financial Conference to convene in the United States on July 1, 1944. The governments and authorities are being informed that the United States Delegation to the Conference will be under the chairmanship of the Secretary of the Treasury and that the names of the other United States delegates, as well as information concerning the site of the Conference and arrangements for the meeting, will be forwarded at a later date. The Government of the United States, believing that the early formulation of precise proposals for an international monetary fund and a bank for reconstruction and development is of vital concern to all of the United Nations group, hopes that favorable replies to the invitations extended on behalf of the President will be received at the earliest possible moment, together with the names of all of the members of the respective delegations. PROCEEDINGS AND DOCUMENTS 5 Mr. Hull will be glad to communicate from time to time to Their Excellencies and Messieurs, the chiefs of mission or principal rep resentatives, detailed information concerning the arrangements for the forthcoming Conference. D e p a r t m e n t of S ta t e , Washington, May 26, 194-4-. G o v e r n m e n t s a n d A u t h o r it ie s P a r t ic ip a t in g i n t h e Co n fe r e n c e French Committee of National Liberation Greece Guatemala H aiti Honduras Iceland India Iran Iraq Liberia Luxembourg Mexico Netherlands New Zealand Nicaragua A ustralia Belgium Bolivia Brazil Canada Chile China Colombia Costa Rica Cuba Czechoslovakia Dominican Republic Ecuador Egypt El Salvador Ethiopia Norway Panama Paraguay Peru Philippine Commonwealth Poland Union of South Africa Union of Soviet Socialist Republics United Kingdom United States of America Uruguay Venezuela Yugoslavia (P. 4) C r e d e n t ia l s o f D e l e g a t io n s It will be appreciated .if the chairmen of the respective delega tions will cause to be delivered to the Office of the Secretary Gen eral, room 138, before noon on Sunday, July 2, the necesary cre dentials in the form chosen by the respective governments or authorities. It is anticipated that, as is customary, the credentials will be in the form of a certificate, a communication from an ap propriate official of the accrediting government or authority, or a certification by the chief of mission at Washington. Document 7 UNITED N ATIONS MONETARY AND FINANCIAL CONFERENCE Agenda I. International Monetary Fund A. Purposes, Policies and Quotas of the Fund (Purposes and policies of the Fund, obligations of member 6 MONETARY AND FINANCIAL CONFERENCE countries, transitional arrangements for the period during which the Fund and member countries adopt the agreed poli cies, relationship of the Fund with the public and with non member countries, and relationship of member countries with non-member countries, to consider the quota of member coun tries, the basis for future revision of quotas, and payment of subscriptions in gold and local currency.) B. Operations of the Fund (Operations of the Fund including the sale of exchange, acquisition of gold by the Fund, borrowing by the Fund, charges levied by the Fund, determination of parities and changes in parities, guarantee of the value of the assets of the Fund, regulation of capital transactions, apportionment of scarce currencies, and provision for reserves and distri bution of profits.) C. Organization and Management (Establishment of governing boards, basis for voting, selec tion of officers, appointment of committees, location of offices and depositories, provision for by-laws and regulations, pub lication of reports by the Fund, information to be reported to the Fund by member countries, and suspension from mem bership, liquidation of reciprocal obligations on termination of membership, and general liquidation of the Fund.) I). Form and Status of the Fund (Nature of the agreement establishing the Fund, the legal position of the Fund in member countries, immunities of the Fund and its assets, amendment of the Fund agreement and the regulationship of the Fund to other international organi zations.) (P. 2) II. Bank fo r R econstruction and D evelopm ent A. Purposes, Policies, Capital and Subscription of the Bank. (Purposes and policies of the Bank, relationship of the Bank with the public and with non-member countries, and rela tionship of member countries with non-member countries, capital of the Bank, subscription of member countries, pro portion of subscriptions to be paid in, payment in gold and local currencies, further calls for payment on subscriptions and the reservation of part of the unpaid capital as a surety fund.) B. Operations of the Bank (Conditions under which the Bank may guarantee, partici pate in or make loans, the manner in which it will aid and 7 PROCEEDINGS AND DOCUMENTS encourage equity investment, provision for safeguarding funds lent by the Bank, guarantee of the value of the local currency assets of the Bank, provision for repayment of principal and interest, borrowing by the Bank, the limita tion on direct and contingent liabilities of the Bank, the charges the Bank may levy, provision for reserves and dis tribution of profits, security and foreign exchange transac tions the Bank may undertake, and other operations of the Bank.) C. Organization and Management (Establishment of governing boards, basis for voting, selec tion of officers, appointment of committees, location of offices and depositories, provision for by-laws and regulations, pub lication of reports by the Bank, withdrawal or suspension from membership, contingent liability of former members, and general liquidation of the Bank.) D. Form and Status of the Bank (Nature of the agreement establishing the Bank, the legal position of the Bank in member countries, immunities of the Bank and its assets, amendment of the Bank agreement and the relationship of the Bank to other international organiza tions.) III. Other Measures for International Financial Cooperation Document 8 G D /1 UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE Inaugural Plenary Session July 1, 1944 Assembly Hall, 3:00 p.m. Convening of the Conference by the Secretary General. Message from the President of the United States. Responses on behalf of the visiting delegations by the following: Address by the Chairman of the Delegation of China, the Honorable Hsiang-Hsi Kung. Address by the Chairman of the Delegation of Czechoslo vakia, the Honorable Ladislav Feierabend. 749013— 48— 2 MONETARY AND FINANCIAL CONFERENCE 8 Appointment by the Temporary President of the Members of the following Committees: Committee on Credentials Committee on Rules and Regulations Committee on Nominations Address by the Chairman of the Delegation of Mexico, the Hon orable Eduardo Suarez. Address by the Chairman of the Delegation of Brazil, the Honor able Arthur de Souza Costa. Address by the Chairman of the Delegation of Canada, the Hon orable J. L. Ilsley. Address by the Chairman of the Delegation of the Union of Soviet Socialist Republics, the Honorable M. S. Stepanov. Election of the Permanent President of the Conference. Adjournment. “The Star-Spangled Banner”. Document l l 1 G D /2 Correction o f G D / l UNITED N A T IO N S MONETARY AND FIN ANCIAL CONFERENCE Inaugural Plenary Session July 1, 1944 Assembly Hall, 3:00 p.m. Convening of the Conference by the Secretary General. Message from the President of the United States. Responses on behalf of the visiting delegations by the following: Address by the Chairman of the Delegation of China, the Honorable Hsiang-Hsi Kung. Address by the Chairman of the Delegation of Czechoslovakia, the Honorable Ladislav Feierabend. Appointment by the Temporary President of the Members of the following Committees: Committee on Credentials Committee on Rules and Regulations Committee on Nominations Address by the Chairman of the Delegation of Mexico, the Honorable Eduardo Suarez. 1 Document 11 is a corrected version of Document 8. PROCEEDINGS AND DOCUMENTS 9 Address by the Chairman of the Delegation of Brazil, the Honor able Arthur de Souza Costa. Address by the Chairman of the Delegation of Canada, the Honor able J. L. Ilsley. Address by the Chairman of the Delegation of the Union of Soviet Socialist Republics, the Honorable M. S. Stepanov. Election of the Permanent President of the Conference. Address of the Permanent President of the Conference. Adjournment. “The Star-Spangled Banner”. Document 13 UNITED NATIONS MONETARY AND FINANCIAL CONFERENCE Draft Regulations Document 14 C /R R /1 Regulations of the United Nations Monetary and Financial Conference Chapter I Re presentation Art. 1. Representation at the Conference shall be confined to the delegations accredited by the governments or authorities of the United Nations and the nations associated with them in the war, in response to the invitation extended by the President of the United States of America to participate in the United Nations Monetary and Financial Conference. Chapter II Personnel of the Conference S ec t io n I Temporary President Art. 2. The President of the United States of America shall designate the Temporary President of the Conference who shall preside at the opening session and shall continue to preside until the Conference elects a Permanent President. 10 MONETARY AND FINANCIAL CONFERENCE Art. 3. At the opening plenary session of the Conference, the Temporary President shall appoint the following committees: (a) Committee on Credentials, (b) Committee on Rules and Regulations, and (c) Committee on Nominations. S e c t io n II Permanent President Art. 4. The Permanent President of the Conference shall be elected by an absolute majority of the delegations of states rep resented at the Conference. Art. 5. The duties of the Permanent President shall be: First. To preside at the meetings of the Conference and to submit for consideration in their regular order the subjects con tained in the order of the day. Second. To concede the floor to the delegates in the order in which they may have requested it. Third. To decide all questions of order raised during the debates of the Conference. Nevertheless, if any delegate shall so request, the ruling made by the chair shall be submitted to the Conference for decision by a majority vote of the delegations. (p. 2) Fourth. To call for votes and to announce the result of the vote to the Conference. Fifth. To transmit to the delegates in advance, through the Sec retary General, the order of business of each plenary session. Sixth. To prescribe all necessary measures for the maintenance of order and strict compliance with the regulations. S ec t io n III Vice Presidents Art. 6. Four Vice Presidents shall be elected by an absolute majority of the delegations of states represented at the Conference. In the absence of the Permanent President, a Vice President shall preside at the plenary sessions of the Conference. A Vice Presi dent, when acting as President, shall have the same powers and duties as the President. S e c t io n IV Secretary General Art. 7. The Secretary General of the Conference shall be appointed by the President of the United States of America. The duties of the Secretary General are: First. To organize, direct, and coordinate the work of the sec retaries, assistant secretaries, secretaries of committees, inter PROCEEDINGS AND DOCUMENTS 11 preters, clerks and other employees whom the Government of the United States of America may appoint for service with the secretariat of the Conference. He shall also assist w7 ith and coordinate the work of the several Technical Commissions of the Conference. Second. To serve as the principal adviser to the President of the Conference on parliamentary, procedural and protocol mat ters. Third. To receive, distribute, and answer the official corre spondence of the Conference in conformity with the resolutions of that body. Fourth. To prepare, or cause to be prepared under his super vision, the minutes of the meetings of the Conference, the Com mittees, and the Technical Commissions in conformity wr the ith notes the secretaries shall furnish him. F ifth . To distribute among the Committees and Technical Com missions the matters on which they are required to present reports, and place at the disposal of the Committees everything that may be necessary for the discharge of their duties. (p. 3) Sixth. To prepare the order of the day in conformity with the instructions of the President. Seventh. To be the intermediary between the delegations or their respective members in matters relating to the Conference, and between the delegates and the authorities of the Government of the United States of America. Eighth. To perform such other functions as may be assigned to him by the regulations, by the Conference, or by the President. S ec tio n V Technical Secretary General Art. 8. The Technical Secretary General of the Conference shall be appointed with the approval of the President of the United States of America. The duties of the Technical Secretary General are: F irst. To coordinate the work of the Technical Commissions and their Committees. Second. To plan and supervise the work of the Secretaries of the Technical Commissions and their Committees. Third. To supervise the preparation of the reports and minutes of the Technical Commissions and their Committees. Fourth. To advise the delegations on questions pertaining to the technical work of the Conference. F ifth . To advise with the Secretary General on the preparation of the Final Act and the Proceedings of the Conference, 12 MONETARY AND FINANCIAL CONFERENCE S e c t io n VI Participants Art. 9. Participants in the Conference shall be limited to the following: (p. 4) (a) Delegates accredited by the governments and authorities to which the invitations on behalf of the President of the United States of America have been extended. Delegates accredited by the invited governments and authorities shall have the privilege of attending all plenary sessions and all meetings of the Technical Commissions of the Conference; shall have the privilege of addressing the plenary sessions and meetings of the Technical Commissions and their Committees subject only to regulations hereafter described; shall have the privilege of voting at all plenary or general sessions and at all of the Technical Commission and Committee meetings subject to restrictions here after specified concerning the casting of a delegation vote. (b) Technical advisers and other members of the delegations of the governments and authorities which have been invited to participate may attend with their delegates the plenary or com mittee sessions and meetings of the Technical Commissions but they shall not have the right to vote except as hereafter provided. Such other persons may attend as the Steering Committee of the Conference may determine. Chapter III General Committees of the Conference Art. 10. The following General Committees shall be consti tuted : (a) Committee on Nominations, composed of five members appointed by the Temporary President. The Nominating Com mittee shall propose candidates for the following offices: Perma nent President of the Conference; four Vice Presidents of the Con ference; Chairmen and Vice Chairmen and Reporting Delegates of the Commissions; Chairmen and Reporting Delegates of the Committees of Commissions I and II; and the members of the Steering Committee. (b) Steering Committee, composed of the President of the Conference as Chairman and ten other members elected by the Conference, following the receipt of the recommendations of the Committee on Nominations. (c) Committee on Credentials, composed of five members appointed by the Temporary President. PROCEEDINGS AND DOCUMENTS 13 (d) Committee on Rules and Regulations, composed of five members appointed by the Temporary President. (e) Coordinating Committee, composed of seven members, the Committee to be constituted by the Steering Committee. Art. 11. Prior to the first plenary session, a meeting of the Chairmen of the delegations shall be held at which the organiza tion of the Conference shall be considered and recommendations formulated for submission to the Conference at the first plenary session. (p.5) Chapter IV Art. 12. The Conference shall be divided into the following three Technical Commissions and Committees and such other Com mittees as the respective Commissions shall determine. C o m m is s io n I. International Monetary Fund Committee 1. Purposes, Policies and Obligations of the Fund. Committee 2. Operations of the Fund. Committee 3. Organization and Management. Committee 4. Form and Status of the Fund. C o m m is s io n II. Bank for Reconstruction and Development. Committee 1. Purposes, Policies, Capital and Subscription of the Bank. Committee 2. Operations of the Bank. Committee 3. Organization and Management. Committee 4. Form and Status of the Bank. Co m m is s io n III. Other Means of International Financial Coop eration. Art. 13. The Reporting Delegate of each Commission shall present to a plenary session of the Conference the conclusions at which the Technical Commissions may arrive after they have been reviewed by the Coordinating Committee. Art. 14. The representative of the Delegation elected as Chair man or as Recording Secretary of a Committee of a Technical Commission, shall be the Chairman of the Delegation indicated or such other member of that Delegation as the Chairman may desig nate. Art. 15. Each delegation shall be entitled to be represented by one or more of its members in each of the Technical Com missions. The names of such members shall be transmitted by each delegation to the Secretary General as soon as possible and in any event before the first regular meeting of each Commission. 14 MONETARY AND FINANCIAL CONFERENCE (P. 6) Chapter V Language of the Conference Art. 16. ference. English shall be the official language of the Con Chapter VI The Delegations Art. 17. A delegation not present at the session at which a vote is taken may deposit or transmit its vote in writing to the Secretary, which shall be counted provided it has been transmitted or deposited before the vote is declared closed. In this event, the delegation shall be considered as present and its vote counted. Art. 18. Each delegation shall be entitled to one vote, to be cast through the chairman or such member as may be designated to act for the delegation on questions considered at Technical Commission and Committee meetings or at the plenary sessions of the Conference. Delegations may arrange for the substitution of delegates at specified meetings in the manner provided in Ar ticle 26. Chapter VII , Meetings of the Conference Conference Committees, and Technical Commissions Art. 19. The first meeting of the Conference shall be held at the time and place designated by the Government of the United States of America and further sessions on such days as the Con ference may determine. Art. 20. Attendance by a majority of the nations participating in the Conference shall constitute a quorum at plenary sessions. Similarly, the presence of a majority of the delegations participat ing in the Technical Commissions shall constitute a quorum at the meetings of the respective Commissions and the presence of the same proportion of members of General Committees shall constitute a quorum. Art. 21. In the deliberations of the plenary sessions as well as in the Committees and Technical Commissions, the delegation of each state represented at the Conference shall have but one vote and the votes shall be taken separately in alphabetical order in the English language and recorded in the minutes of the re spective sessions. (p. 7) Art. 22. Votes as a general rule shall be taken orally unless any delegate should request that they be taken in writing. PROCEEDINGS AND DOCUMENTS 15 In this case each delegate shall deposit in an urn a ballot containing the name of the nation which it represents and the sense in which the vote is cast. The secretary shall read aloud these ballots, count the votes, and record the results. Art. 23. The Conference shall not proceed to vote on any re port, project or proposal relating to any of the subjects included in the agenda unless at least two-thirds of the nations attending the Conference are represented by one or more delegates. The same proportion of the delegations participating in the Technical Commissions shall be present before a vote is undertaken at Commission meetings. The General Committees likewise shall proceed to vote only with the attendance of at least two-thirds of their respective members. In the event of written voting at any session or meeting, the count shall be taken of the votes deposited in writing as provided for in Articles 21 and 22, the absent dele gates being considered present, only for the purpose of the vote, when they have submitted their vote in the manner indicated. Art. 24. Except in cases expressly indicated in these Regula tions, proposals, reports and projects under consideration by the Conference or by any of the Committees or Technical Commissions shall be considered approved when they have obtained the affirm ative vote of an absolute majority of the delegations represented by one or more of their members at the meeting where the vote is taken. Any delegation which may have deposited its vote in the manner prescribed in Article 18 shall be considered as present at the meeting. Art. 25. The following may attend the sessions of the Con ference and the meetings of the Technical Commissions and of their committees: the delegates, their technical advisers and other members of their delegations; members of the Secretariat of the Conference; and any others to whom the Steering Committee of the Conference may extend this privilege. Art. 26. Should it be impossible for a delegate to attend a particular session, either a plenary session or a meeting of a Tech nical Commission or Committee, the delegation may designate a member to substitute for him. In such case the one so designated shall have the right to voice and vote on behalf of his delegation. Notification of such appointment shall be communicated in advance to the Secretary General, to the Secretary of the Committee, or to the Secretary of the Technical Commission, as the case may be. Art. 27. The opening and closing sessions of the Conference shall be public. Other public sessions may be held when previously agreed upon and so ordered by a majority vote of the Steering 16 MONETARY AND FINANCIAL CONFERENCE Committee. The meetings of [p. 8] the Technical Commissions and their Committees shall be private unless otherwise ordered by a majority vote of the delegations. The meetings of the General Committees shall be private. Art. 28. All projects or proposals which a delegation may wish to present to the Conference shall be delivered to the Secretary General as soon as possible but not later than one week after the opening plenary session of the Conference. No project or proposal shall be considered until copies thereof shall have been distributed by the Secretary General among the participating delegations. No proposal of a topic which constitutes an addition to the agenda shall be included unless it has the consent of two-thirds of the Steering Committee. . Chapter VIII Minutes of the Sessions and Publications of the Meeting Art. 29. The Secretary General shall cause to be kept verbatim minutes of the public plenary sessions of the Conference. The Secretary General shall prepare a summarized record of the pro ceedings of private plenary sessions which shall be preserved in the archives of the Conference. Art. 30. The Secretary of each Technical Commission and of each Committee shall prepare brief minutes of each session which shall be approved by the respective Chairmen before pres entation to the Secretary General for distribution to the delega tions. These minutes shall contain a record of the conclusions at which the Commission or Committee may arrive. Art. 31. The minutes of all private meetings, whether of the Conference, the Technical Commissions or Committees, shall be available to the participating governments and authorities but shall be regarded as confidential. Art. 32. The conclusions at which the Conference may arrive shall be incorporated in a’ Final Act which shall be signed by the delegates at the final session. Art. 33. The Government of the United States of America shall publish the minutes of the public plenary sessions and the Final Act and shall forthwith transmit certified copies to the gov ernments participating in the Conference and to the delegates attending the sessions. Art. 34. The original minutes and the original copy of the Final Act shall be preserved in the archives of the Government of the United States of America to which they shall be sent by the Secretary General. PROCEEDINGS AND DOCUMENTS 17 (P. 9) Chapter IX Approval of and Amendments to the Regulations Art. 35 These regulations, after approval by an absolute ma jority of the delegations meeting in plenary session, shall be sub ject to subsequent modification only upon the recommendation, by a two-thirds vote, of the Steering Committee and by vote of two-thirds of the Conference meeting in plenary session. Document 21 C /R R /2 Notice of Meeting C o m m it t e e o n R u l e s a n d R e g u l a t io n s Saturday, July 1, 1944, 9:00 p.m.—Hemicycle Room Members: China ................................ .H. H. Kung, Chairman Nicaragua ........................ .Guillermo Sevilla Sacasa Poland .............................. .Ludwig Grosfeld Australia .......................... .Leslie G. Melville Secretary: Phillip Jessup Document 22 C /N /l Notice of Meeting C o m m it t e e o n N o m in a t io n s Saturday, July 1, 1944, 10:00 p.m.—Room B Members: New Zealand.................... .Walter Nash, Chairman Luxembourg .................... .Hugues Le Gallais Honduras .......................... .Julian R. Caceres Iceland .............................. .Magnus Sigurdsson Peru .................................. .Pedro Beltran Secretary: Mr. V. Frank Coe 18 MONETARY AND FINANCIAL CONFERENCE Document 23 C /C R /1 Notice of Meeting C o m m it t e e o n C r e d e n t ia l s Sunday, July 2, 9:00 p.m.—Room A Members: Cuba .................................. Eduardo I. Montoulieu, Chairman Netherlands...................... J. W. Beyen Union of South A frica .. . . S. F. N. Gie Liberia .............................. William E. Dennis Norway ............................ Wilhelm Keilhan Secretary: Edward G. Miller, Jr. Document 26 (21) Notice of Meeting C o m m it t e e o n R u l e s a n d R e g u l a t io n s Saturday, July 1, 1944, 9:00 p.m.—Hemicycle Room Members: China ................................ Nicaragua ........................ Poland .............................. Australia .......................... I r a q .................................... Secretary: Phillip Jessup H. H. Kung, Chairman Guillermo Sevilla Sacasa Ludwig Grosfeld Leslie G. Melville Ibrahim Kamal Document 28 J OURNAL UNITED NATIONS No. 2 MONETARY AND FINANCIAL Bretton W o o d s, N ew H am pshire ORDER OP THE CONFERENCE July 2, 1944 DAY Sunday, July 2, 1944 9 p.m. Committee on Credentials Room A PROCEEDINGS AND DOCUMENTS 19 (P. 6) I n a u g u r a l P l e n a r y S e ssio n (Auditorium, July 1, 3 p.m.) The Inaugural Plenary Session of the United Nations Monetary and Financial Conference met in the Auditorium at 3 p.m., July 1, 1944. The Conference was convened by the Secretary General, who announced that in accordance with international practice, the President of the United States had designated as Temporary Chairman of the Conference, the Honorable Henry Morgenthau, Jr. Mr. Morgenthau took the Chair and called on the Secretary General to read a message of welcome from% President of the the United States. The Honorable Hsiang-Hsi Kung, on behalf of the Delegation of China, and the Chairman of the Delegation of Czechoslovakia, the Honorable Ladislav Feierabend, responded. The Temporary President appointed the following committees, in accordance with a resolution introduced by Sir A. J. Raisman, Chairman of the Delegation of India, and duly seconded and passed by the Conference: C o m m it t e e o n C r e d e n t ia l s Cuba Netherlands Union of South Africa Liberia Norway C o m m it t e e China Nicaragua Poland Australia Iraq Eduardo I. Montoulieu, Chairman J. W. Beyen S. F. N. Gie William E. Dennis Wilhelm Keilhan on R u l e s a n d R eg u l a t io n s H. H. Kung, Chairman Guillermo Sevilla Sacasa Ludwig Grosfeld Leslie G. Melville Ibrahim Kamal C o m m it t e e o n N o m in a t io n s New Zealand Walter Nash, Chairman Luxembourg Hugues Le Gallais Honduras Julian R. Caceres Iceland Magnus Sigurdsson Peru Pedro Beltran The Chairman of the Delegation of Mexico, the Honorable Eduardo Suarez, nominated Secretary Morgenthau for Permanent President of the Conference. The motion was seconded by the Chairman of the Delegation of Brazil, the Honorable Arthur de Souza Costa, the Chairman of the Delegation of Canada, the 20 MONETARY AND FINANCIAL CONFERENCE Honorable J. L. Ilsley; and the Chairman of the Delegation of the Union of Soviet Socialist Republics, the Honorable M. S. Stepanov. Thereupon, Secretary Morgenthau was unanimously elected Permanent President of the Conference. Secretary Morgenthau addressed the Conference. (This and other addresses of the Inaugural Plenary Session have been printed and distributed separately.) The meeting was adjourned at 4:10 p.m. with the playing of The Star-Spangled Banner. (P. 7) • M e e t in g s o f G e n e r a l C o m m it t e e s The Committee on Rules and Regulations met on Saturday, July 1, 1944, at 9 p.m. in the Hemicycle Room with H. H. Kung (China) as Chairman. It will report to the plenary session at 10 a.m. on Monday. The Committee on Nominations met on Saturday, July 1, 1944, at 10 p.m. with Walter Nash (New Zealand) as Chairman. It will report to the plenary session at 10 a.m. on Monday. C o r r e c t io n i n D r a f t R e g u l a t io n s o f t h e C o n f e r e n c e A number of the mimeographed copies of the draft regulations of the Conference (Doc. No. 13) which were distributed on Sat urday evening contain a typographical error. Chapter III, article 10 (b) should read as follows: “ (b) Steering Committee, composed of the President of the Conference as Chairman and ten other members elected by the Conference, following the receipt of the recommendations of the Committee on Nominations.” C r e d e n t ia l s o f D e l e g a t io n s It will be appreciated if the chairmen of the respective delega tions will cause to be delivered to the Office of the Secretary Gen eral, room 136, before noon today, the necessary credentials in the form chosen by the respective governments or authorities. It is anticipated that, as is customary, the credentials will be in the form of a certificate, a communication from an appropriate official of the accrediting government or authority, or a certifica tion by the chief of mission at Washington. PROCEEDINGS AND DOCUMENTS 21 Document 32 SA/1 Document F-l July 1 ,1 9 4 4 Preliminary Draft of Suggested Articles of Agreement for the Establishment of an International Monetary Fund There is attached a preliminary draft of provisions which have been submitted to the Secretariat. At the top of each page there is set forth the pertinent pro vision of the Joint Statement of Principles. Immediately below appear alternative and supplementary texts submitted to the Secretariat. It is expected that further suggestions will be made and as they are presented to the Secretariat, they will be distributed for inclusion in the attached draft. The Secretariat has attempted to put the various proposals together in a manner which would be helpful in the consideration of the alternative provisions suggested. The order adopted con forms in general to the Joint Statement but is in no way indicative of where the provisions might appropriately appear in a final document. The Secretariat is aware of the possibility that errors and omis sions have been made in the attached draft, despite the care em ployed in its preparation. Accordingly, the Secretariat requests the indulgence of any delegation whose proposals may have been partially or wholly omitted or improperly presented. If the attention of the Secretariat is called to any error or omission, such error or omission will be corrected promptly. Three types of alternatives have been submitted: (1) Sugges tions that do not appear to make substantial changes in the Joint Statement provisions but merely modify the language for pur poses of clarity, (2) suggestions that substantially modify the Joint Statement provisions, and (3) suggestions that supplement the provisions of the Joint Statement. For the convenience of the reader, the Secretariat has used symbols to indicate the character of the alternative provisions submitted. In each case the char acterization is that of the Secretariat and, if errors have been made, the proper characterization (p. ii) should be communi cated to the Secretariat by the delegation proposing the alternative provision so that corrections can be made. The symbols employed are: * = No substantial change & = Substantial change # = Supplementary material 22 MONETARY AND FINANCIAL CONFERENCE (P- 1) J o in t S t a t e m e n t I I. Purpose and Policies of the Fund , The Fund will be guided in all its decisions by the purposes and policies set forth below: 1. To promote international monetary cooperation through a permanent institution which provides the machinery for consulta tion on international monetary problems. 2. To facilitate the expansion and balanced growth of inter national trade and to contribute in this way to the maintenance of a high level of employment and real income, which must be a primary objective of economic policy. 3. To give confidence to member countries by making the Fund’s resources available to them under adequate safeguards, thus giving members time to correct maladjustments in their bal ance of payments without resorting to measures destructive of national or international prosperity. 4. To promote exchange stability, to maintain orderly ex change arrangements among member countries, and to avoid competitive exchange depreciation. 5. To assist in the establishment of multilateral payments facilities on current transactions among member countries and in the elimination of foreign exchange restrictions which hamper the growth of world trade. 6. To shorten the periods and lessen the degree of disequilib rium in the international balance of payments of member coun tries. 7 /1 /4 4 J.S. Ar*. I (p. la) A lternative A The purposes of the International Monetary Fund are: * 1. To promote international monetary co-operation by pro viding permanent machinery for consultation on international monetary problems. * 2. To facilitate the expansion and balanced growth of interna tional trade and to contribute thereby to the maintenance of high levels of employment and real income, as a primary ob jective of economic policy. * 3. To give confidence to member countries by making the Fund’s resources available to them under adequate safeguards, thus giving them time to correct maladjustments in their balance PROCEEDINGS AND DOCUMENTS * * * * 23 of payments without resort to measures destructive of national or international prosperity. 4. To promote exchange stability, to maintain orderly ex change arrangements among member countries, and to avoid competitive exchange depreciation. 5. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade. 6. To shorten the periods and lessen the degree of disequi librium in the international balance of payments of-members. The Fund shall be guided in all its decisions by the purposes set forth above. 7 /1 /4 4 J.S. A r U (p -lb ) Alternative B (Substitute for Joint Statem ent I, subdivisions 2, 3, 4 and 6) * 2. To facilitate the expansion and balanced growth of inter national trade and to contribute to a high level of employment and real income which must be a primary objective of economic policy. & 3. To make the Fund’s resources available to members under adequate safeguards and to assist them to correct maladjust ments in their balance of payments without resort to measures destructive of national or international prosperity. & 4. To secure orderly changes in exchange rates among mem ber countries where necessary to correct exchange disequilib rium, thus promoting exchange stability and avoiding compet itive exchange depreciation. * 6. In accordance ivith the above principles, to shorten the periods and lessen the degree of disequilibrium in the interna tional balance of payments of member countries. Alternative C (Substitute for Joint Statem ent I, subdivision 2) & 2. To facilitate the expansion and balanced growth of inter national trade, to assist in the fuller utilisation of the resources of economically underdeveloped countries and to contribute thereby to the maintenance in the world as a whole of a high level of employment and real income, which must be a primary objective of economic policy; 7 4 9 0 1 3 — 48— 3 24 MONETARY AND FINANCIAL CONFERENCE Alternative D (Substitute for Joint Statement I, subdivision 4) & 4. To promote exchange stability and avoid competitive ex change depreciation by securing, where necessary to correct exchange disequilibrium, orderly changes in exchange rates among member countries. 7 /1 /4 4 J.S. Art. I (P. lc) Alternative E (Substitute the following for Joint Statement I, subdivision 4) & & 4. To promote exchange stability. 5. To avoid competitive exchange depreciation by securing, where necessary to correct fundamental disequilibria, orderly changes in par values of member currencies. Alternative F (Add as a new subdivision) # To correlate procedures for exchange stability, with a policy for the promotion of international investment by other international financial agencies and to evolve a working relationshio with such agencies. Alternative G (Add as a new subdivision) # To promote and facilitate the settlement of abnormal in debtedness arising out of the war. 7 /1 /4 4 J.S. Art. I (p. 2) J o in t S t a t e m e n t I I , 1 II. Subscription to the Fund 1. Member countries shall subscribe in gold and in their local funds amounts (quotas) to be agreed, which will amount altogether to about $8 billion if all the United and Associated Nations sub scribe to the Fund (corresponding to about $10 billion for the world as a whole). Alternative A # Section 1. Countries Eligible for Membership. The members of the Fund shall be those of the countries rep resented at the United Nations Monetary and Financial Con PROCEEDINGS AND DOCUMENTS 25 ference whose governments accept membership in the Fund. Membership in the Fund shall be open to other countries at such times and in accordance with such terms as may be pre scribed by the Fund. ^Section 2. Quotas. Each member shall be assigned a quota. The quotas of the countries represented at the United Nations Monetary and Fi nancial Conference shall be those set forth in Schedule A. (Schedule A to be added later) Quotas of other countries which become members of the Fund shall be determined by the Fund. # Section 3. Time and Place of Payment. Each member shall provide the Fund at the appropriate de pository with the full amount of its quota on or before the date fixed for exchange transactions in its currency to begin. Any member whose quota is increased shall provide the full amount of the increase within thirty days of the date on which the member approves the increase in its quota. 7 /1 /4 4 J.S. Art. II Sec. 1 (p. 2a) Alternative B (It is suggested to add to the text of A lternative A :) # Notwithstanding the fundamental principles on payment of quotas particular arrangements may be made with countries whose currency system has been disrupted as a result of enemy occupation. Such arrangements may not extend over more than nine months i.e., after nine months, at the latest, the obligations of the country will be the same as they would have been if such an exception had not been granted. The government of the respective country has to guarantee by a specific act that the fund will not suffer any loss because of that particular arrange ment. 7 /1 /4 4 J.S. Art. li Sec. 1 (P. 3) J o in t S ta te m e n t II, 2 2. The quotas may be revised from time to time but changes shall require a four-fifths vote and no member’s quota may be changed without its assent. MONETARY AND FINANCIAL CONFERENCE 26 Alternative A * Section 4. Adjustm ent of Quotas. The Fund may, at intervals of five years, adjust the quotas of the members. It may also, if it thinks fit, consider at any other time the adjustment of any particular quota at the request of the member concerned. A four-fifths majority vote shall be required for any change in quotas and no quota shall be changed without the consent of the member concerned. 7 /1 /4 4 J.S. Art. II Sec. 2 (P. 4) J o in t S t a t e m e n t II, 3 3. The obligatory gold subscription of a member country shall be fixed at 25 percent of its subscription (quota) or 10 percent of its holdiiigs of gold and gold-convertible exchange, whichever is the smaller. Alternative A * Section 5. Initial Payments. Each member shall pay in gold the smaller of (a) twenty-five percent of its quota or (b) ten percent of its official holdings of gold and gold-convertible exchange1 o n ------------. In the case of any member occupied by the enemy whose holdings are not ascertainable as o f ------------, the Fund shall fix an appropriate alternative date. The data necessary to determine official hold ings of gold and gold-convertible exchange shall be furnished by the members as provided in this Agreement. Each member shall pay the balance of its quota in its own currency. * Section 6. Payments When Quotas are Changed. (a) Each member whose quota is increased shall pay twentyfive percent of the increase in gold. Each member shall pay the balance of any increase in its own currency. If, however, on the date the member approves an increase, its holdings of gold and gold-convertible exchange are less than its new quota, the Fund may reduce the portion of the increase to be paid in gold. (b) Each member whose quota is reduced shall receive from the Fund within thirty days of the reduction an amount in its own currency or gold equal to the reduction. In making this 1The phrase “gold and gold-convertible exchange” is subject to definition and to such change in terminology as may be agreed. PROCEEDINGS AND DOCUMENTS 27 payment, the Fund shall pay to such member only the amount of gold necessary to prevent reducing the holdings of the Fund of that currency below seventy-five percent of such new quota of the member. 7 /1 /4 4 J.S. Art. II Sec. 3 (p. 4a) Alternative B (Add at the end of Joint Statement II, 3) & Any country represented at the United Nations Monetary and Financial Conference whose home areas have suffered from enemy occupation and hostilities during the present war, may reduce its gold payment to between seventy-five and fifty percent of the amount it would otherwise have to pay, dependent on the extent of the damage caused to it by the enemy occupation and hostilities. Alternative C (Add to Joint Statement II, 3) & Any country represented at the United Nations Monetary and Financial Conference whose home areas have suffered sub stantial damage from enemy action or occupation during the present war, may reduce its initial gold payment to --------per cent of the amount it would otherwise have to pay. 7 /1 /4 4 J.S. Art. II Sec. 3 (p. 5) III. Transactions with the Fund J o in t S ta te m e n t III, 1 1. Member countries shall deal with the Fund only through their Treasury, Central Bank, Stabilization Fund, or other fiscal agencies. The Fund’s account in a member’s currency shall be kept at the Central Bank of the member country. Alternative A * Section 1. Agencies Dealing with the Fund. Each member country shall deal with the Fund only through its Treasury, Central Bank, Stabilization Fund or other similar 28 MONETARY AND FINANCIAL CONFERENCE fiscal agency and the Fund shall deal only through the same agencies. (Second sentence of J.S. dealt with elsewhere) 7 /1 /4 4 J.S. Art! Ill Sec. 1 (p. 6) J o in t S ta te m e n t III, 2 2. A member shall be entitled to buy another member’s currency from the Fund in exchange for its own currency on the following conditions: (a) The member represents that the currency demanded is pres ently needed for making payments in that currency which are consistent with the purposes of the Fund. (b) The Fund has not given notice that its holdings of the cur rency demanded have become scarce in which case the pro visions of VI, below, come into force. (c) The Fund’s total holdings of the currency offered (after hav ing been restored, if below that figure, to 75 percent of the member’s quota) have not been increased by more than 25 percent of the member’s quota during the previous 12 months and do not exceed 200 percent of the quota. (d) The Fund has not previously given appropriate notice that the member is suspended from making further use of the Fund’s resources on the ground that it is using them in a manner contrary to the purposes and policies of the Fund; but the Fund shall not give such notice until it has presented to the member concerned a report setting forth its views and has allowed a suitable time for reply. The Fund in its discretion and on terms which safeguard its interests waive any of the conditions above. 7 /1 /4 4 J.S. Art. Ill Sec. 2 (p. 6a) Alternative A Section 2. Conditions upon which any Member may Purchase Currencies of other Members. A member shall be entitled to buy the currency of another member from the Fund in exchange for its own currency sub ject to the following conditions: * (1) The member initiating the purchase represents that the currency requested is presently needed for making pay PROCEEDINGS AND DOCUMENTS 29 ments in that currency which are consistent with the 'provisions of this Agreement; * (2) The Fund has not given notice under Article VI that its holdings of the currency requested have become scarce; * (3) The total holdings of the Fund in the currency of the member initiating the purchase (after having been re stored, if below that figure, to seventy-five percent of the quota of such member) have not increased during the pre vious twelve months by more than twenty-five percent of the quota of such member and do not exceed two hun dred percent of the quota; and & (4) The Fund has not previously declared under Section 3 of this Article that the member initiating the purchase is ineligible to use the resources of the Fund. The Fund may, in its discretion, and on terms which safeguard its interests, waive any of these conditions. In special circum stances, where the Fund considers it necessary, it may require collateral security as a condition of such waiver. & Section 2a. Conditions Governing Purchases for Capital Transfers. If the Fund’s holdings of the currency of a member have remained below 75 percent of its quota for a period not less than six months such member shall be entitled, notwithstanding the provisions of Article V, Section 1, to buy the currency of another member from the Fund for its own currency for any purpose, including capital transfers, provided, however, that 7 /1 /4 4 . J.S. Art. Ill Sec. 2 (p. 6b) purchases for capital transfers may not have the effect of raising the Fund's holdings of the currency of such member above 75 percent of its quota, or reducing the Fund's holdings of the currency purchased below 751 percent of the quota of the member whose currency is purchased. & Section 3. Declaring Members Ineligible to Use the Resources of the Fund. Whenever the Fund is of the opinion that any member is using the resources of the Fund in a manner contrary to the purposes and policies of the Fund, it shall present to the mem ber a report setting forth the views of the Fund and stating a suitable time for reply. After presenting such a report to a member the Fund may limit the use of its resources by the member. If no reply to the report is received from the member 1Should this figure be 60, 75 or 100 percent? 30 MONETARY AND FINANCIAL CONFERENCE within the stated time, or the reply received is unsatisfactory, the Fund may continue to limit the member’s use of the Fund’s resources or, after giving reasonable notice to the member, declare it ineligible to use the resources of the Fund. Alternative B (Substitute for Joint Statem ent III, 2 (c).) & (c) The Fund’s total holdings of the currency offered (after having been restored, if below that figure, to 75 percent of the member’s quota) have not been increased by more than w y 3 percent of the member’s quota during the previous 12 months and do not exceed 200 percent of the quota. 7 /1 /4 4 J.S. Art. Ill Sec. 2 (P. 6c) Alternative C (Amend Joint Statem ent III, 2 as follows:) * It is suggested to change the term “consistent with the pur poses of the Fund” to “consistent with the purposes and pro visions of the Fund.” Alternative D (Substitute for Joint Statem ent III, 2 (c).) & The total holdings of the Fund in the currency of the member country initiating the purchase shall not exceed 125% of the quota during the first, 150% of. the quota during the second, 175% of the quota during the third year of the operations of the Fund in that particular currency and 200% thereafter. 7 /1 /4 4 J.S. Art. Ill Sec. 2 (P. 7) J oint Statement III, 3 3. The operations on the Fund’s account will be limited to trans actions for the purpose of supplying a member country on the member’s initiative with another member’s currency in exchange for its own currency or for gold. Transactions provided for under 4 and 7, below, are not subject to this limitation. Alternative A * Section 4. Limitation on the operations of the Fund. Except as otherwise provided in this Agreement, operations PROCEEDINGS AND DOCUMENTS 31 for the account of the Fund shall be limited to transactions for the purpose of supplying a member, on the initiative of such member, with the currency of another member in exchange for the currency of the member initiating the transactions or for gold. 7 /1 /4 4 J.S. Art. Ill Sec. 3 (P. 8) III, 4 4. The Fund will be entitled at its option, with a view to pre venting a particular member's currency from becoming scarce: (a) To borrow its currency from a member country; (b) To offer gold to a member country in exchange for its currency. J o in t S t a t e m e n t Alternative A Section 5. Operations for the Purpose of Preventing Cur rencies from becoming scarce. The Fund may, if it deems such action appropriate to prevent the currency of any member from becoming scarce, take either or both of the following steps: & (1) Propose to the member that it lend such currency to the Fund or, with the approval of the member, borrow such currency within that country from some other source, but no member shall be under any obligation to lend its currency to the Fund or to approve the Fund's borrow ing its currency from any other source. * (2) Offer to buy the currency of that member with gold. Alternative B (Substitute for Joint Statement III, 4( b) ) & To sell gold to a member country in exchange for its currency. 7 /1 /4 4 J.S. Art. Ill Sec. 4 (p. 9) J o in t S t a t e m e n t III, 5 5. So long as a member country is entitled to buy another mem ber's currency from the Fund in exchange for its own currency, it shall be prepared to buy its own currency from that member with that member's currency or with gold. This shall not apply to cur rency subject to restrictions in conformity with IX, 3 below, or to holdings of currency which have accumulated as a result of MONETARY AND FINANCIAL CONFERENCE 32 transactions of a current account nature effected before the re moval by the member country of restrictions on multilateral clearing maintained or imposed under X, 2 below. Alternative A & Section 6. Multilateral International Clearing. Each member shall buy balances of its currency held by another member with currency of that member or, at the option of the member buying, with gold, if the member selling repre sents either that the balances in question have been currently acquired or that their conversion is needed for making currency payments which are consistent with the provisions of the Fund. This obligation shall not relate to transactions involving: (a) capital transfers, except those transactions referred to in the second and third sentences of V, 1, below; or (b) holdings of currency which have accumulated as a re sult of transactions effected before the removal by a member of restrictions on multilateral clearing main tained or imposed under X, 2, below; or (c) the provision of a currency which has been declared scarce under VI, above; or (d) holdings of currency acquired as a result of dealings illegal under the exchange regulations of the member which is asked to buy such currency; nor shall it apply to a member which has ceased to be entitled to buy currencies of other members from the Fund in exchange for its own currency. Nothing in this section shall be deemed to modify or affect the obligation of a member under IX, 2 and 3, below. (Proposed to be transferred in final draft to Article IX as Section 3) 7 /1 /4 4 J.S. Art. Ill Sec. 5 (p. 10) J o in t S t a t e m e n t II I , 6 6. A member country desiring to obtain, directly or indirectly, the currency of another member country for gold is expected, provided that it can do so with equal advantage, to acquire the currency by the sale of gold to the Fund. This shall not preclude the sale of newly-mined gold by a gold-producing country on any market. PROCEEDINGS AND DOCUMENTS 33 Alternative A * Section 7. Acquisition by Members of the currencies of other Members for Gold. Any member desiring to obtain, directly or indirectly, the currency of another member for gold shall, provided that it can do so with equal advantage, acquire the currency by the sale of gold to the Fund. Nothing in this Section shall be deemed to preclude any member from selling in any market the new production of gold from mines located within territory subject to its jurisdiction. 7 /1 /4 4 J.S. Art. Ill Sec. 6 ( P . 11 ) J o in t S t a t e m e n t III, 7 7. The Fund may also acquire gold from member countries in accordance with the following provisions: (a) A member country may repurchase from the Fund for gold any part of the latter’s holdings of its currency. (b) So long as a member’s holdings of gold and gold-convertible exchange exceed its quota, the Fund in selling foreign exchange to that country shall require that one-half of the net sales of such exchange during the Fund’s financial year be paid for with gold. (c) If at the end of the Fund’s financial year a member’s hold ings of gold and gold-convertible exchange have increased, the Fund may require up to one-half of the increase to be used to repurchase part of the Fund’s holdings of its cur rency so long as this does not reduce the Fund’s holdings of a country’s currency below 75 percent of its quota or the member’s holdings of gold and gold-convertible ex change below its quota. Alternative A Section 8. Other Acquisitions of Gold by the Fund. (To be submitted later.) Alternative B (Add to Joint Statem ent III, 7 ( b ) ) # This provision shall not be applied during five-year period from the beginning of the operations of the Fund to member countries who suffered particularly great damage from enemy occupation and hostilities. 34 MONETARY AND FINANCIAL CONFERENCE (Add to Joint Statem ent III, 7(c)) # This, provision shall not be applied during the period of restoration of economy to the newly-mined gold of member countries, whose home areas particularly suffered from enemy occupation and hostilities. 7 /1 /4 4 J.S. Art. Ill Sec. 7 (p. lla ) Alternative C Substitute for Joint Statem ent III, 7 ( c ) ) & (c) If at the end of any financial year of the Fund, the official holdings of gold and gold-convertible exchange of any member country have increased as compared to that mem ber's official holdings of gold and gold-convertible exchange at the moment of joining the Fund, the Fund may require . . . etc. . . . Alternative D & So long as a member's holdings of gold and gold-convertible exchange exceed its quota, the Fund in selling foreign exchange to that country shall require that one-half of the net sales of such exchange during the Fund's financial year be paid for with gold or gold-convertible exchange. The Fund, however, may in its discretion ivaive this condition tvith respect to any particular country if its application woidd reduce the facilities accorded by the Fund to that Country in a ivay contrary to the purposes and policies of the Fund and in particular to the purpose stated in 1(3). (Substitute for Joint Statem ent III, 7 ( b ) ) 7 /1 /4 4 J.S. Art. Ill Sec. 7 (P. 12) J oint Statement — no provisions The following material has been suggested as an addition to Article III. Alternative A # Section 9. Transferability and Guarantee of the Assets of the Fund. (a) All assets of the Fund shall, to the extent necessary to carry out the operations prescribed by this Agreement, be free from restrictions, regulations and controls of any nature imposed by members. PROCEEDINGS AND DOCUMENTS 35 (b) The currency of a member purchased from the Fund shall always be accepted by that member in payment of current account obligations due to that member. (c) All assets of the Fund shall be guaranteed by each mem ber against loss resulting from failure or default on the part of the depository designated by such member. 7 /1 /4 4 J.S. Art. Ill A d d ition a l Section (9) (P. 13) J oint Statement — no provision The following material has been suggested as an addition to Article III. A lternative A # Section 10. Charges and Commissions. (a) Any member buying the currency of any other member from the Fund in exchange for its own currency shall pay a service charge in addition to the parity price. (b) The Fund may levy a reasonable handling charge on any member buying gold from the Fund or selling gold to the Fund. (c) The Fund shall prescribe charges uniform among mem bers which shall be payable by any member on the amount of its currency in excess of its quota held by the Fund, as follows: (to be inserted later) (d) All charges and commissions shall be paid in gold. If, however, the member’s holdings of gold and gold-convertible exchange are less than one-half of its quota, it shall pay in gold that proportion which such holdings bear to one-half of its quota, and shall pay the balance in its own currency. A lternative B (Substitute for Section 10(c) of Alternative A) # The Fund shall levy a charge uniform to all countries, at a rate not more than 1 percent per annum, payable in gold, against any country on the amount of its currency held by the Fund in excess of the quota of that country. An additional charge, payable in gold, shall be levied by the Fund against any member country on the Fund’s holdings of its currency in excess of 200 percent of the quota of that country. 7 /1 /4 4 J.S. Art. Ill A d dition al Section (10) 36 MONETARY AND FINANCIAL CONFERENCE (p. 14) J oint Statement — no provisions The following material has been suggested as an addition to Article III. Alternative A # Section 11. Furnishing Information. The Fund may require members to furnish it with such in formation as it deems necessary for its operations. In request ing information the Fund shall, however, take into considera tion the ability of individual members to furnish the data asked for. The minimum amount of information necessary for the due carrying out of the Fund’s operations includes the following: (List of required information to be inserted) The Fund may arrange to obtain further information by agreement with the members. Alternative B (Substitute for list to be inserted in Alternative A) # I- Gold holdings of the Central Bank and the Treasury and their changes. 2 . Gold convertible exchange holdings of the Central Bank and the Treasury. 3. Movement of capital. 4. Foreign Trade data. 5. Other items of the balance of payments. 6. Rates of exchange and their changes. J.S. Art. Ill 7 /1 /4 4 A d d itio n a l Section (11) (P. 15) J oint Statement — no provisions The following material has been suggested as an addition to Article III. Alternative A # Section 12. Consideration of Representations of the Fund. The Fund may make representations to a member on mone tary or economic conditions and developments in such member which tend, or may tend, to produce a serious disequilibrium in the international balance of payments of members. A represen tative of the member country involved shall participate in the preparation of the Fund’s representations. The Fund shall not PROCEEDINGS AND DOCUMENTS 37 make representations which would involve changes in the funda mental structure of the economic organization of members. Alternative B # The Fund shall have at all times the right to communicate its views informally to any member on any matter arising under this Agreement. 7 /1 /4 4 J.Sv Arf. Ill A d dition al Section (12) (P. 16) J oint Statement IV, 1. IV. Par Values of Member Currencies 1. The par value of a member's currency shall be agreed with the Fund when it is admitted to membership, and shall be ex pressed in terms of gold. All transactions between the Fund and members shall be at par, subject to a fixed charge payable by the member making application to the Fund, and all transactions in member currencies shall be at rates within an agreed percentage of parity. Alternative A & Section 1. Par Values of the Currencies of Members. The par value of the currency of each member shall be ex pressed in terms of gold, as a common denominator, or in terms of a gold-convertible currency unit of the iveight and fineness in effect on July 1, 1944- All computations relating to currencies of members for the purpose of applying the provisions of this Agreement shall be on the basis of their par values. 7 /1 /4 4 J.S. Art. IV Sec. 1 (p .17) J oint Statement IV, 2, 3, 4. 2. Subject to 5, below, no change in the par value of a member's currency shall be made by the Fund without the country’s ap proval. Member countries agree not to propose a change in the parity of their currency unless they consider it appropriate to the correction of a fundamental disequilibrium. Changes shall be made only with the approval of the Fund, subject to the provisions below. 3. The Fund shall approve a requested change in the par value of a member’s currency, if it is essential to the correction of a fundamental disequilibrium. In particular, the Fund shall not 38 MONETARY AND FINANCIAL CONFERENCE reject a requested change, necessary to restore equilibrium, be cause of the domestic social or political policies of the country applying for a change. In considering a requested change, the Fund shall take into consideration the extreme uncertainties pre vailing at the time the parities of the currencies of the member countries were initially agreed upon. 4. After consulting the Fund, a member country may change the established parity of its currency, provided the proposed change, inclusive of any previous change since the establishment of the Fund, does not exceed 10 percent. In the case of application for a further change, not covered by the above and not exceeding 10 percent, the Fund shall give its decision within 2 days of re ceiving the application, if the applicant so requests. 7 /1 /4 4 J.S. Art. IV Secs 2 -4 (p. 17a) J oint Statement , IV, 2-4 . (All alternatives to be supplied later) J.S. Art. IV 7 /3 /4 4 Secs. 2 -4 ( P . 18) J oint Statement IV, 5 5. An agreed uniform change may be made in the gold value of member currencies, provided every member country having 10 percent or more of the aggregate quotas approves. A lternative A * Section 5. Uniform Changes in Par Values. Notwithstanding the provisions of Section 3 of this Article, the Fund by majority vote may make uniform proportionate changes in the par values of the currencies of all the members, provided each such change is approved by every country which has ten percent or more of the aggregate quotas. Such uniform changes shall be excluded from consideration in applying the provisions of Sections 4(3) and (4) of this Article. (J.S. IV, 4). 7 /1 /4 4 J.S. Art. IV Sec. 5 (P .19) J oint Statement —no provision The following material has been suggested as an addition to Article IV. PROCEEDINGS AND DOCUMENTS 39 A lternative A # Section 6. Protection of the Assets of the Fund. No change in the foreign exchange value of the currency of any member shall alter the gold value of the assets of the Fund. Whenever (i) the par value of a currency of a member is reduced, or (ii) the foreign exchange value of the currency of any member has depreciated within its jurisdiction to a significant extent in the opinion of the Fund, the member shall compensate the Fund by paying to the Fund within a reasonable time an amount of its own currency equal to the reduction in the gold value of the currency of such member held* by the Fund. Whenever the par value of the currency of any member has been increased the Fund shall compensate such member by returning, within a reasonable time, an amount in the cur rency of such member equal to the increase in the gold value of the currency of such member held by the Fund. 7 /1 /4 4 J.S. Art. IV A d d ition a l Section ( P .20) J oint Statement — no provision The following material has been suggested as an addition to Article IV. Alternative A Section 7. Separate currencies within a Member’s jurisdiction. # A member proposing a change in the par value of its cur rency shall be deemed, unless it declares otherwise, to be pro posing a corresponding change in the par value of the currencies of all territories under its jurisdiction. It shall however be open to a member to declare that its proposal relates either to the metropolitan currency alone, or to one or more specified subordinate currencies alone., or to the metropolitan currency and one or more specified subordinate currencies. Alternative B (Add to Joint Statement IV) # if separate currencies are used in different parts of the territory of a member country, the provisions of this article shall apply to each of these currencies. 7 /1 /4 4 J.S. Art. IV A d d ition a l Section 749013— 48— 4 40 MONETARY AND FINANCIAL CONFERENCE (P. 21) J oint Statement V, 1. V. Capital Transactions 1. A member country may not use the Fund’s resources to meet a large or sustained outflow of capital, and the Fund may require a member country to exercise controls to prevent such use of the resources of the Fund. This provision is not intended to prevent the use of the Fund’s resources for capital transactions of reason able amount required for the expansion of exports or in the ordinary course of trade, banking, or other business. Nor is it in tended to prevent capital movements which are met out of a member country’s own resources of gold and foreign exchange, provided such capital movements are in accordance with the pur poses of the Fund. Alternative A & Section 1. Use of the Resources of the Fund for Transfers of Capital. A member may not use the resources of the Fund to meet a large or sustained outflow of capital, and the Fund may request a member to exercise controls to prevent such use of the re sources of the Fund. If after receiving such request, a member fails to exercise appropriate controls the Fund may declare such member ineligible to use the resources of the Fund. This Section is not intended to prevent the use of the re sources of the Fund for capital transactions of reasonable amount required for the expansion of exports or in the ordinary course of trade, banking or other business. Capital movements which are met out of a member’s own resources of gold and foreign exchange, are not affected by this section, but members undertake that such capital movements will be in accord with the purposes of the Fund. 7 /1 /4 4 J.S. Art. V . Sec. 1 (P . 22) J oint Statement V, 2. 2. Subject to VI below, a member country may not use its con trol of capital movements to restrict payments for current trans actions or to delay unduly the transfer of funds in settlement of commitments. PROCEEDINGS AND DOCUMENTS 41 Alternative A * Section 2—Limitation on Controls of Capital Movements. Members may control international capital movements but no member may exercise such controls in a manner which will restrict payments for current transactions or which will unduly delay the transfer of funds in settlement of commitments, ex cept as provided in VI, 2 and in X. 7 /1 /4 4 J.S. Art. V Sec. 2 (P. 23) J o in t S ta te m e n t VI, 1, 2 VI. Apportionm ent of Scarce Currencies 1. When it becomes evident to the Fund that the demand for a member country's currency may soon exhaust the Fund's holdings of that currency, the Fund shall so inform member countries and propose an equitable method of apportioning the scarce currency. When a currency is thus declared scarce, the Fund shall issue a report embodying the causes of the scarcity and containing recom mendations designed to bring it to an end. 2. A decision by the Fund to apportion a scarce currency shall operate as an authorization to a member country, after consulta tion with the Fund, temporarily to restrict the freedom of ex change operations in the affected currency, and in determining the manner of restricting the demand and rationing the limited supply among its nationals, the member country shall have com plete jurisdiction. 7 /1 /4 4 J.S. Art. VI Sec. 1 & 2 (p. 23a) VI, 1 a n d 2 Alternative A J o in t S ta te m e n t # Section 1. General Scarcity. If the Fund finds that a general scarcity of a particular cur rency is developing, the Fund may so inform members and may issue a report setting forth the causes of the scarcity and con taining recommendations designed to bring it to an end. In the preparation of such report there shall participate a representa tive of the member the currency of which is involved. & Section 2. Scarcity of the Fund's Holdings. If it becomes evident to the Fund that the demand for a mem- MONETARY AND FINANCIAL CONFERENCE 42 ber’s currency seriously threatens the Fund’s ability to supply that currency, the Fund, whether or not it has acted under Section 1 above, shall formally declare such currency scarce and shall thenceforth apportion the existing and accruing supply of the scarce currency ivith due regard to the relative needs of members and the general international economic situation and any other pertinent considerations. The Fund shall also issue a report concerning its action. The formal declaration shall op erate as an authorization to each member, after consultation with the Fund, temporarily to restrict the freedom of exchange operations in the affected currency; and, in determining the manner of restricting the demand and rationing the limited supply among its nationals, the members shall have complete jurisdiction subject to the'provisions of Article IX , Section 2. (J.S.). 7 /1 /4 4 J.S. Art. V I Secs. 1 & 2 ( P .24) VII. Management of the Fund J o in t S t a t e m e n t VII, 1 1. The Fund shall be governed by a board on which each mem ber will be represented and by an executive committee. The ex ecutive committee shall consist of at least nine members including the representatives of the five countries with the largest quotas. (As to Executive Committee see p. 25) A lternative A # Section 1. Board of Governors. # (a) The administration of the Fund shall be vested in a Board of Governors consisting of one governor and one alternate appointed by each member in such manner as it may determine. Governors and alternates shall serve for five years, subject to the pleasure of their respective governments, and may be re appointed. No alternate may vote except in the absence of his governor. The Board shall select a chairman from its members. # (b) The Board of Governors may delegate to the Executive Directors authority to exercise any powers of the Board, except: (1) Determining what new members may be admitted and the conditions of their admission; (2) Approving a revision of quotas; (3) Approving an agreed uniform change in the par value of the currencies of all member countries; PROCEEDINGS AND DOCUMENTS 43 (4) Requiring a member to withdraw; (5) Deciding appeals against interpretations of the Agree ment by the Executive Directors given on application by a member country; (6) Making agreements to cooperate with other international organizations; (7) Deciding to liquidate the Fund. 7 /1 /4 4 J.S. Art. V II Sec. 1 (Board of Directors) (p.24a) # (c) The Board of Governors shall hold an annual meeting and such other meetings as may be provided for by the Board or convened by the Executive Directors. Meetings of the Board shall be convened by the Executive Directors whenever requested by one quarter of the members or by members having one quarter of the aggregate votes. # (d) The Board may by regulation establish a procedure whereby the Executive Directors, when they deem such action to be in the best interests of the Fund, may obtain a vote of the governors on a specific question in lieu of calling a meeting of the Board. ii (e) Governors and alternates shall serve as such without compensation from the Fund, but the Fund shall pay such reasonable expenses as are incurred by the governors and alter nates in attending any meetings. A lternative B (Substitute the following for section 1(c) of Alternative A :) (c) The Board of Governors shall hold an annual meeting and such other meetings as may be provided for by the Board or convened by the Executive Directors. Meetings of the Board shall be convened by the Executive Directors whenever requested by five member countries. Annual meetings shall not be held in the same country more than once in five years. 7 /1 /4 4 J.S. Art. V II Sec. 1 (Board of Directors) (p .25) J o in t S t a t e m e n t V I I , 1 1. The Fund shall be governed by a board on which each mem ber will be represented and by an executive committee. The ex ecutive committee shall consist of at least nine members including MONETARY AND FINANCIAL CONFERENCE 44 the representatives of the five countries with the largest quotas. (As to Board of Directors see p. 25) Alternative A # Section 2. The Executive Directors. # (a) There shall be twelve Executive Directors, namely, the General Manager, the governors representing the five member countries having the largest quotas, and six other governors elected biennially by the governors who are not automatically Executive Directors. The General Manager shall be chairman of the Executive Directors. The Executive Directors shall ex ercise all authority delegated to them by the Board of Governors and shall be in continuous session at the principal office of the Fund for at least the first three years of operations. In the ab sence of any Executive Director, his alternate on the Board of Governors may serve in his place. Executive Directors shall be compensated by the Fund in an amount fixed by the Board of Governors. Whenever a member country not having a governor among the Executive Directors has requested action or will be directly affected by a decision of the Executive Directors, the governor representing such country shall be entitled to be present at the meeting of the Executive Directors considering such request or decision, but he shall not be entitled to vote. # (b) In balloting for the elective Executive Directors, each governor eligible to vote shall cast for one governor all of the votes to which he is entitled under the first paragraph of Section 3 of this article (J.S. VII, 2) The six persons receiving the greatest number of votes shall be Executive Directors, except that no person who receives less than sixteen percent of the aggre gate eligible votes shall be considei'ed elected. When six persons 7 /1 /4 4 J.S. Art V! I, Sec. 1 (Executive Committee) are not elected on the initial balloting, a (p. 25a) second balloting shall be held in which the person receiving the lowest number of votes shall be ineligible for election and in which there shall vote only those governors who vote for a person not elected and these governors all or part of whose votes for a person elected are deemed to have raised the votes cast for such person above seventeen per cent of the aggregate eligible votes. In determining whether any part of the votes cast by a governor raised the total of any person above seventeen per cent, there shall be considered as not forming part of the excess the votes of PROCEEDINGS AND DOCUMENTS 45 the governor casting the largest number of votes for such per son, then the votes of the governor casting the next largest num ber, and so on until the total reaches seventeen per cent. Any governor whose votes are partly not in excess and partly in ex cess shall be eligible to vote in the second balloting only to the extent of the votes in excess. If enough additional persons are not elected on the second balloting to bring to six the total num ber each of whom has received at least sixteen per cent of the aggregate eligible votes, further ballots shall be taken on the same principles until six such persons have been elected, pro vided that after five persons are elected the sixth may be elected by a simple majority of the remaining votes and shall be deemed to have been elected by all such votes. # (c) Each governor who is automatically an Executive Direc tor shall be entitled to cast the number of votes alloted under Section 3 of this Article (J.S. VII, 2) to the country which he represents. Each elected Executive Director shall be entitled to cast the number of votes to which the governors who elected him would be entitled. A member whose election is due in part to his having received a portion of the votes of a particular governor shall be entitled to vote only those votes of such governor which contributed to his election. When the provisions of the second paragraph of Section 2 of this Article are ap7 /1 /4 4 J.S. Art. VI!, Sue. 1 (Executive CorismittGe) plicable to a vote (p. 25b) on any question the votes to which an Executive Director would otherwise be entitled shall be in creased or decreased proportionately. The General Manager shall have no vote. # (d) The Executive Directors may appoint such committees as they deem advisable. Membership of such committees need not be limited to governors and alternates. 7 /1 /4 4 J.S. Art. V li ; Soc. 1 (Executive Committee) (p. 25b) A lternative B (b) There shall be twelve Executive Directors, of whom x shall be appointed by the members having the x largest quotas, (the remaining y seats being filled by Executive Directors ap pointed by members chosen for this purpose by all the Gov ernors excluding those representing the members with the x largest quotas). The members so chosen shall have the power MONETARY AND FINANCIAL CONFERENCE 46 of appointment of directors for two years; at the end of this period any of the members may be chosen again or other mem bers may be chosen. The persons chosen as Executive Directors need not be Governors. The Executive Directors shall meet not less than once every three months. (c) The Executive Directors shall appoint as Chairman a suitable person who is not a Director. The Chairman may ap point a Director to act for him as Deputy Chairman. The Chairman of the Executive Directors, if he is not a Governor, may attend and speak at meetings of the Board. He shall be eligible to be elected as Chairman of the Board of Governors. (b) Executive Directors. The Executive Directors shall conduct all of the business of the Fund delegated to them by the Board of Governors. (c) The Chairman. (i) the Chairman shall reside at the Headquarters of the Fund and the Deputy Chairman must reside there at those times when he is acting for the Chairman; (ii) the Executive Directors may delegate to the Chair man or Deputy Chairman the power of performing on their behalf any of the functions delegated to them except the following, supposing they have been so delegated: 7 /1 /4 4 J.S. Art. V II, Sec. 1 (Executive Committee) (p.25c) (1) waiver of any of the conditions in III (2) ; (2) the exercise of the options of the Fund in 111(4); (3) all decisions on the par value of member cur rencies in IV (1-4) ; (4) all action relating to the apportionment of scarce currencies (V I ); (5) decision on the use of the resources of the Fund by a member who has withdrawn (VIII (4) as revised); (6) decision on X (3) as revised and X (4) as re vised ; (7) a formal interpretation of the Statute. (d) Voting. On questions before the Executive Directors, the Director PROCEEDINGS AND DOCUMENTS 47 appointed by the United States shall cast 6 votes, the Director appointed by the United Kingdom shall cast 3 votes, the Di rector appointed by the U.S.S.R. shall cast 2 votes, and all the other Directors shall cast 1 vote each. The appointed Chairman shall only have a casting vote in case of an equal division in the voting. In order to constitute a quorum for the Executive Directors there must be present Directors representing not less than onehalf of the total voting power of the Executive Directors and not less than six in number. 7 /1 /4 4 J.S. Art. V II, Sec. 1 (Executive Committee) ( P .26) J oint Statement TIT, 2, 3 2. The distribution of voting power on the board and the ex ecutive committee shall be closely related to the quotas. 3. Subject to II, 2 and IV, 5, all matters shall be settled by a majority of the votes. Alternative A & Section 3. Voting Each member shall have two hundred fifty votes plus one additional vote for each part of its quota equivalent to one hundred thousand United States dollars of the weight and fine ness in effect on July 1, 1944. Whenever a vote is required under Article III, each member shall be entitled to a number of votes modified from its normal number: (a) By the addition of one vote for the equivalent of each two hundred thousand United States dollars of the weight and fineness in effect on July 1, 1944 of net sales of its currency by the Fund (adjusted for its net transactions in gold), and (b) By the subtraction of one vote for the equivalent of each two hundred thousand such United States dollars of its net purchases of the currencies of other member countries from the Fund (adjusted for its net transac tions in gold). Except as otherwise specifically provided all matters before the Fund shall be decided by a majority of the aggregate votes cast. 7/1/44 J.S Art. V II Sec. 2 & 3 48 MONETARY AND FINANCIAL CONFERENCE (p. 26a) Alternative B (Substitute for Joint Statem ent III, 2 and 3.) & (a) On the Board of Governors the number of votes which each governor can cast shall be related to the quota of the mem ber appointing the governors; A quorum for the Board shall consist of not less than twothirds of the total voting power of the governors. 7 /1 /4 4 J.S. Art. V II Sec. 2 and 3 (P. 27) J oint Statement — no provision The following material has been suggested as an addition to Article VII. Alternative A # Section 4. The General Manager. The Board of Governors shall appoint and fix the compensa tion of a General Manager of the Fund and one or more As sistant General Managers. The General Manager shall be chief of the operating staff of the Fund and shall be a member ex officio of the Board of Governors. Alternative B (d) The Executive Directors shall appoint a General Man ager, being a person of knowledge and experience of the business. (e) The Chief Assistants of the General Manager shall be appointed by the Executive Directors, on the proposal of the General Manager. The General Manager and his Chief Assis tants shall be appointed under contract determinable by six months’ notice on either side. The continuance of the service of each of these officials shall be considered by the Executive Directors after every period of 5 years. (f) The General Manager shall conduct, under the general direction of the Chairman, the ordinary business of the Fund’s 7 /1 /4 4 J.S. Art. V II A d d itio n a l Section (4) work. Subject to the (p. 27a) general control of the Execu tive Directors, he shall be responsible for internal organization and the appointment and dismissal of subordinate staff. The General Manager shall be responsible to the Executive Directors for the accounts. (g) The Chairman, the Deputy-Chairman, the General Man PROCEEDINGS AND DOCUMENTS 49 ager and all the members of the staff shall be paid such salaries and expenses and serve under such conditions as the Fund may determine. 7 /1 /4 4 Article V II A d d ition a l Section (4) ( P .28) J oint Statement VII, 4 4. The Fund shall publish at short intervals a statement of its position showing the extent of its holdings of member currencies and of gold and its transactions in gold. A lternative A # Section 5. Publication of Reports The Fund shall publish an annual report containing an audited statement of its accounts and shall issue at intervals of three months or less, a summary statement of its transactions and its holdings of gold and currencies of members. The Fund may publish such other reports as it deems de sirable for carrying out its purposes and policies. 7 /1 /4 4 J.S. Art. V II Sec. 4 (P. 2 9 ) J oint Statement — no provisions The following material has been suggested as an addition to Article VII. A lternative A # Section 6. Depositories. (a) Each member country shall designate its central bank as a depository for all the Fund's holdings of its currency or, if it has no central bank, it shall designate such other institution as may be acceptable to the Fund. (b) The Fund may hold other assets, including gold, in des ignated depositories in the four members having the largest quotas and in such other depositories as the Fund may select. At least one-half of the holdings of gold of the Fund shall be held in the designated depository in the member in which the Fund has its principal office. In an emergency, the Execu tive Directors may transfer all or any part of the Fund's hold ings of gold to any place wT here it can be adequately protected. # Section 7. Form of Holdings of Currency. The Fund shall accept from any member in lieu of any part 50 MONETARY AND FINANCIAL CONFERENCE of the currency of that country not needed by the Fund in its operations, notes or similar obligations issued by the Govern ment of the country or the depository designated by such mem ber, which shall be non-negotiable, non-interest bearing and payable at their par value on demand by a credit to the cur rency account of the Fund in that country. 7 /1 /4 4 J.S Art. V II A d d itio n a l Sections (6 & 7) (p. 29a) A lternative B (Substitute for (b) under Section 6 of A lternative A) (b) Sums payable to the Fund in gold shall be placed at the disposal of the Fund at a depository indicated by the Fund. In indicating a depository the Fund shall pay regard to the con venience of the member, the costs of transport, and the ex pected requirements of the Fund. Gold and assets other than holdings of currency belonging to the Fund may be held in or moved to any depository as the Fund may determine. Alternative C (Substitute the following for subdivision (b) of Alternative A :) (b) Other assets of the Fund, including gold, shall be held in designated depositories, as a general rule, in the four mem ber countries having the largest quotas. About one-half of the holding of gold of the Fund shall be deposited in the designated depository in the country in which the Fund has its principal office. 7 /1 /4 4 J.S. Art. V II A d d itio n a l Section (6) (P. 30) J o i n t S t a t e m e n t — n o .p r o v isio n s The following material has been suggested as an addition to Article VII. Alternative A it Section 8. Relationship to other International Organizations. The Fund, within the terms of this Agreement, shall co operate with any general international organization and with public international organizations having specialized responsi bilities in related fields. Any arrangements for such coopera tion which would involve a modification of any o f the provisions PROCEEDINGS AND DOCUMENTS 51 of this Agreement may be effected only after amendment to this Agreement in conformity with the procedure set forth in A rticle---------. 7 /1 /4 4 J.S. Art. V II A d dition al Section (7) (P. 31) J o i n t S t a t e m e n t — no p r o v isio n s The following material has been suggested as an addition to Article V II: A lternative A # Section 9. Location of Offices. The principal office of the Fund shall be located in the mem ber having the largest quota, and agencies or branch offices may be established in any member or members. Alternative B The location of the principal office of the Fund shall be decided by the Fund at the first meeting of the Board of Governors, which shall take place in the territory of the mem ber having the largest quota. 7 /1 /4 4 J.S. Art. V II A d dition a l Section (9) (P. 3 2 ) J o i n t S t a t e m e n t — no p r o v isio n s The following material has been suggested as an addition to Article VII. A lternative A The Fund shall determine annually what part of its net income shall be placed to reserve and what part, if any, shall be dis tributed. 7 /1 /4 4 . J.S. Art. V II A d d ition a l Section (10) (p. 32a) (Alternative B continued) If any part is distributed, two per cent noncumulative shall be paid, as a first charge against the distribution of any year, to each member on the average amount during the year by which 75 percent of its quota exceeds the holdings by the Fund of its 52 MONETARY AND FINANCIAL CONFERENCE currency; and the balance to the members in proportion to their quotas. Payments to each member shall be made in its own cur rency. 7 /1 /4 4 J.S. Art. V II A d d itio n a l Section (10) (P. 33) J oint Statement — no provisions The following material has been suggested as an addition to Article VII. # Section 11. Miscellaneous Poxoers. In order to carry out its purposes, the Fund may: (1) Make contracts; (2) Acquire and dispose of real and personal property; (3) Institute legal proceedings in any court of competent jurisdiction; (4) Employ such staff as shall be necessary to conduct the business of the Fund; and (5) Adopt such rules or regulations as may be necessary or appropriate to conduct the business of the Fund. 7 /1 /4 4 J.S. Art. V II A d d itio n a l Section (10) (P. 34) J oint Statement VIII, 1 VIII. Withdrawal from the Fund 1. A member country may withdraw from the Fund by giving notice in writing. Alternative A * Section 1. Right of Members to Withdraw. Any member may withdraw from the Fund at any time by serving written notice on the Fund at its principal office. Withdrawal shall become effective on the date such notice is received. Alternative B & A member country may withdraw from the Fund by giving notice in writing and the right of withdrawal shall not be preju diced by membership of the Fund being made a condition of membership of any other international body. 7/1/44 J.S. Art. V III Sec. 1 PROCEEDINGS AND DOCUMENTS 53 (P .35) J o i n t S t a t e m e n t — 110 provision The following material has been suggested as an addition to Article VIII. Alternative A # Section 2. Suspension of Membership or Compulsory With drawal. (To be inserted later.) 7 /1 /4 4 J.S. Art. V III A d dition al Sec. (2) (P. 36) J o in t S ta te m e n t VIII, 2 & 3 2. The reciprocal obligations of the Fund and the country are to be liquidated within a reasonable time. 3. After a member country has given notice in writing of its withdrawal from the Fund, the Fund may not dispose of its hold ings of the country’s currency except in accordance with the arrangements made under 2, above. After a country has given notice of withdrawal, its use of the resources of the Fund is subject to the approval of the Fund. A lternative A Settlement of Accounts with Countries Ceasing to he Members. (To be inserted later) Alternative B (To be inserted later) J.S. Art. V III 7 /1 /4 4 Secs. 2 & 3 (P. 37) J o in t S t a t e m e n t — no provision The following material has been suggested as an addition to Article VIII. Alternative A # Section 4. Liquidation of the Fund. (To be inserted later) Alternative B (To be inserted later) 7/1/44 J.S. Art. V III A d d ition a l Section (4) 54 MONETARY AND FINANCIAL CONFERENCE ( P .38) J o in t S t a t e m e n t IX, 1 IX. Obligations of Member Countries 1. Not to buy gold at a price which exceed the agreed parity of its currency by more than a prescribed margin and not to sell gold at a price which falls below the agreed parity by more than a prescribed margin. Alternative A # Section 1. Purpose and Scope of Additional Undertakings (To be inserted later) * Section 2. Gold Purchases Based on Parity Prices No member country shall buy or sell gold from or to the mon etary authorities of another member at prices which vary from the agreed parity of its currency by more than a pre scribed margin. 7 / 1/44 J.S. Art. IX Sec. 1 (P .39) J oint Statement IX, 2 2. Not to allow exchange transactions in its market in curren cies of other members at rates outside a prescribed range based on the agreed parities. Alternative A & Section 3. Foreign Exchange Dealings Based on Par Values. (a) The Fund shall prescribe maximum and minimum rates for exchange transactions in the currencies of members, which shall not differ by more th an ---------percent from parity. (b) Each member undertakes, through appropriate measures authorized under this Agreement, not to permit within its juris diction an appreciation or depreciation of the exchange value of its own currency in terms of gold beyond the range prescribed under (a) above. A member whose monetary authorities in fact freely buy and sell gold within the prescribed range, to settle international transactions, shall be deemed to be fultilling this undertaking. (c) Exchange transactions in the territory of one member involving the currency of any other member, which evade or avoid the exchange regulations prescribed by that other mem PROCEEDINGS AND DOCUMENTS 55 ber and authorized by this Agreement, shall not be enforceable in the territory of any member. 7 /1 /4 4 J.S Art. IX Sec. 2 (p: 40) J o in t S t a t e m e n t IX , 3 3. Not to impose restrictions on payments for current inter national transactions with other member countries (other than those involving capital transfers or in accordance with VI, above) or to engage in any discriminatory currency arrangements or multiple currency practices without the approval of the Fund. Alternative A * Section 4. Exchange Controls on Current Payments. No member shall impose restrictions on the transfer into the currency of another member of the proceeds of current transactions with that member, or engage in any discriminatory currency arrangements or multiple currency practices unless authorized under this Agreement, or approved by the Fund. Alternative B * 4. Not to impose restrictions save as otherwise provided on payments for current international transactions with other member countries, or to engage in any discriminatory currency arrangements or multiple currency practices without the ap proval of the Fund. 7 /1 /4 4 J.S. Art. IX Sec. 3 (p. 41) J oint Statement — no provisions The following material has been suggested as an addition to Article IX: Alternative A * Section 5. Im m unity of Assets of the Fund. The Fund and its assets of whatsoever nature shall, where soever located and by whomsoever held, be exempt and immune from search, seizure, attachment, execution, requisition, confis cation, moratorium and expropriation in the territory of any member. 7 ,1 /4 4 J.S. Art. IX A d d itio n a l Sec. (5) 749018- -48 - 5 56 MONETARY AND FINANCIAL CONFERENCE (P. 42) J o i n t S t a t e m e n t — No Provisions The following material has been suggested as an addition to Article IX: # Section 6. Im munity from Suit. The Fund shall be immune from suit except when it consents to be sued. 7 /1 /4 4 J.S. Art. IX A d d itio n a l Sec. (6) (P. 43) J o in t S t a t e m e n t —No Provisions The following material has been suggested as an addition to Article IX : # Section 7. Restrictions on Taxation of Fund, its Employees and Obligations. (a) The Fund, its assets, property, income, activities, opera tions and transactions of whatsoever nature shall be exempt and immune from all taxation or liability for the collection or payment of any tax, including without limitation by reason of this enumeration, excises, duties, and imposts, imposed by any member or any political subdivision or taxing authority thereof. (b) No member, or any political subdivision or taxing author ity thereof shall impose or collect any tax on or measured by salaries or remunerations for personal services paid by the Fund to persons who are not citizens of such country. (c) (Provision concerning taxation of securities issued by the Fund to be inserted later.) 7 /1 /4 4 J.S. Art. IX A d d itio n a l Sec. (7) (P. 44) J o in t S t a t e m e n t X , 1-4 X. Transitional Arrangements 1. Since the Fund is not intended to provide facilities for relief or reconstruction or to deal with international indebtedness arising out of the war, the agreement of a member country to provisions III, 5 and IX, 3 above, shall not become operative until it is satis fied as to the arrangements at its disposal to facilitate the settle ment of the balance of payments differences during the early post-war transition period by means which will not unduly en cumber its facilities with the Fund. PROCEEDINGS AND DOCUMENTS 57 2. During this transition period member countries may main tain and adapt to changing circumstances exchange regulations of the character which have been in operation during the war, but they shall undertake to withdraw as soon as possible by pro gressive stages any restrictions which impede multilateral clear ing on current account. In their exchange policy they shall pay continuous regard to the principles and objectives of the Fund; and they shall take all possible measures to develop commercial and financial relations with other member countries which will facilitate international payments and the maintenance of exchange stability. 3. The Fund may make representations to any member that con ditions are favorable to withdrawal of particular restrictions or for the general abandonment of the restrictions inconsistent with IX, 3 above. Not later than 3 years after coming into force of the Fund any member still retaining any restrictions inconsistent with IX, 3 shall consult with the Fund as to their further reten tion. 4. In its relations with member countries, the Fund shall rec ognize that the transition period is one of change and adjustment, and in deciding on its attitude to any proposals presented by mem bers it shall give the member country the benefit of any reasonable doubt. Alternative A (To be inserted later) Alternative B (To be inserted later) 7 /1 /4 4 J.S. Art. x Secs. 1-4 (P .45) J oint Statement — No Provisions The following material has-been suggested as part of an addi tional Article (X I). Article XI — Amendments # Any governor or executive director desiring to introduce modifications in this Agreement shall communicate his proposal to the Chairman of the Board of Governors who shall bring the proposal before the Board of Governors. If the proposed amendment is approved by the Board of Governors by a majority of the aggregate votes, the Fund shall prepare a protocol, by dated circular letter, to the governments of all the members asking whether they accept the proposed modifications. When 58 MONETARY AND FINANCIAL CONFERENCE the governments of members haying four-fifths of the aggre gate votes, have accepted the proposed amendment, or, in the case of modifications of the right to withdraw from the Fund, wherl the governments of all of the members have accepted, the Fund shall certify the fact by means of a proces verbal, which it shall communicate to the governments of all members. The protocol will enter into force between all members three months from the date of the proces verbal unless a shorter period is specified in the protocol. Alternative B (Add the following to A lternative A) Notwithstanding the foregoing provisions (of Alternative A) amendments may be made to the following provisions of this Agreement, namely (unimportant provisions will be inserted later) by a four-fifths majority vote of the Board of Governors. 7 /1 /4 4 J.S. Art. XI (A d dition al Article) (P. 46) J o in t St a t e m e n t — No provisions The following material has been suggested as part of an addi tional Article (XII) on interpretation of the Agreement. Alternative A Article XII— Interpretation o f the Agreement # Section 1. Interpretation. All questions of interpretation of the provisions of this Agree ment between two or more member countries shall be resolved by the Fund. Whenever a disagreement arises between the Fund and a country which has ceased to be a member, or be tween the Fund and any member country after liquidation of the Fund, such disagreement shall be submitted to arbitration. Alternative B # (1) All questions which arise involving doubts or differences relating to the interpretation of the provisions of this Agreement shall be submitted to the Executive Directors of the Fund for their opinion. If the question is one which involves a dispute affecting particularly one (or more) member (s) and that (or those) member (s) are not represented among the Executive Directors by a Director appointed by it (or them) then that (or those) PROCEEDINGS AND DOCUMENTS # 59 member (s) may appoint a representative to take part in the discussions of this question of the Executive Di rectors on the same footing as the Directors. (2) In any case where the Executive Directors have given an opinion under paragraph (1) above, a member may re quire that the question be submitted to the Board and the opinion of the Board is final. Pending the result of the reference to the Board of Governors, the Fund may (so as is necessary) act on the basis of the opinion of the Executive Directors. 7 /1 /4 4 Art. XII, Sec. 1 (Additional Article) (P. 47) J oint Statement — No provisions The following material has been suggested as part of an addi tional Article (XII) on interpretation of the Agreement. Alternative A # Section 2. Definitions. (To be inserted later) Alternative B (To be inserted later) Alternative C (To be inserted later) 7 /1 /4 4 Art. XII, Sec. 2 (A dditional Article) (P. 48) J oint Statement — No provisions The following material has been suggested as part of an addi tional Article (XII) on interpretation of the Agreement. # Section 3. Alternative A Effect on other International Commitments. (To be inserted later) 7 /1 /4 4 Art. XII, Sec. 2 (A dditional Article) (p .49) J oint Statement — No Provisions The following material has been suggested as an additional Article (XIII) on putting the Fund into operation: MONETARY AND FINANCIAL CONFERENCE 60 Alternative A # Section 1. Entry into Effect. (To be inserted later) # Section 2. Effective Date of the Agreement. (To be inserted later) #Section 3. Calling the initial Meeting of the Fund. (To be inserted later) # Section 4. Agenda of the Initial Meeting. (To be inserted later) Section 5. Fixing Initial Par Values. (To be inserted later) Alternative B it I A. Entry into Effect. (To be inserted later) J.S. Art. X III, Sec. 1 7 /1 /4 4 (A d dition al Article) Document 34 UNITED NATIONS MONETARY AND FIN ANCIAL CONFERENCE Regulations Chapter I Representation Art. 1. Representation at the Conference shall be confined to the delegations accredited by the governments or authorities of the United Nations and the nations associated with them in the war, in response to the invitation extended by the President of the United States of America to participate in the United Nations Monetary and Financial Conference. Chapter II Personnel of the Conference S e c tio n I Temporary President Art. 2. The President of the United States of America shall designate the Temporary President of the Conference who shall preside at the opening session and shall continue to preside until the Conference elects a Permanent President. PROCEEDINGS AND DOCUMENTS 61 Art. 3. At the opening plenary session of the Conference, the Temporary President shall appoint the following committees: (a) Committee on Credentials, (b) Committee on Rules and Regulations, and (c) Committee on Nominations. SECTION I I Per man en t Presid en t Art. 4. The Permanent President of the Conference shall be elected by an absolute majority of the delegations of states rep resented at the Conference. Art. 5. The duties of the Permanent President shall be: First. To preside at the meetings of the Conference and to sub mit for consideration in their regular order the subjects contained in the order of the day. Second. To concede the floor to the delegates in the order in which they may have requested it. Third. To decide all questions of order raised during the debates of the Conference. Nevertheless, if any delegate shall so request, the ruling made by the chair shall be submitted to the Conference for decision by a majority vote of the delegations. (p. 2) Fourth. To call for votes and to announce the result of the vote to the Conference. F ifth. To transmit to the delegates in advance, through the Sec retary General, the order of business of each plenary session. Sixth. To prescribe all necessary measures for the maintenance of order and strict compliance with the regulations. S e c t io n I I I Vice Presidents Art. 6. Four Vice Presidents shall be elected by an absolute majority of the delegations of states represented at the Conference. In the absence of the Permanent President, a Vice President shall preside at the plenary sessions of the Conference. A Vice Presi dent, when acting as President, shall have the same powers and duties as the President. S e c t io n IV Secretary General Art. 7. The Secretary General of the Conference shall be ap pointed by the President of the United States of America. The duties of the Secretary General are: First. To organize, direct, and coordinate the work of the secretaries, assistant secretaries, secretaries of committees, in terpreters, clerks and other employees whom the Government of 62 MONETARY AND FINANCIAL CONFERENCE the United States of America may appoint for service with the secretariat of the Conference. He shall also assist with and coordinate the work of the several Technical Commissions of the Conference. Second. To serve as the principal adviser to the President of the Conference on parliamentary, procedural and protocol matters. Third. To receive, distribute, and answer the official corre spondence of the Conference in conformity with the resolutions of that body. Fourth. To prepare, or cause to be prepared under his super vision, the minutes of the meetings of the Conference, the Com mittees, and the Technical Commissions in conformity with the notes the secretaries shall furnish him. Fifth. To distribute among the Committees and Technical Com missions the matters on which they are required to present re ports, and place at the disposal of the Committees everything that may be necessary for the discharge of their duties. (p. 3) Sixth. To prepare the order of the day in conformity with the instructions of the President. Seventh. To be the intermediary between the delegations or their respective members in matters relating to the Conference, and be tween the delegates and the authorities of the Government of the United States of America. Eighth. To perform such other functions as may be assigned to him by the regulations, by the Conference, or by the President. S ection V Technical Secretary General Art. 8. The Technical Secretary General of the Conference shall be appointed with the approval of the President of the United States of America. The duties of the Technical Secretary General are: First. To coordinate the work of the Technical Commissions and their Committees. Second. To plan and supervise the work of the Secretaries of the Technical Commissions and their Committees. Third. To cooperate with the Secretary General by supervising the preparation of the reports and minutes of the Technical Com missions and their Committees. Fourth. To advise the delegations on questions pertaining to the technical work of the Conference. Fifth. To advise with the Secretary General on the preparation of the Final Act and the Proceedings of the Conference. PROCEEDINGS AND DOCUMENTS 63 S e c t io n VI Participants Art. 9. Participants in the Conference shall be limited to the following: (p. 4) (a) Delegates accredited by the governments and au thorities to which the invitations on behalf of the President of the United States of America have been extended. Delegates accredited by the invited governments and authorities shall have the privilege of attending all plenary sessions and all meetings of the Technical Commissions of the Conference; shall have the privilege of addressing the plenary sessions and meetings of the Technical Commissions and their Committees subject only to reg ulations hereafter described; shall have the privilege of voting at all plenary or general sessions and at all of the Technical Com mission and Committee meetings subject to restrictions hereafter specified concerning the casting of a delegation vote. (b) Technical advisers and other members of the delegations of the governments and authorities which have been invited to participate may attend with their delegates the plenary or com mittee sessions and meetings of the Technical Commissions but they shall not have the right to vote except as hereafter provided. (c) Such other persons may attend as the Steering Committee of the Conference may determine. Chapter III General Committees of the Conference The following General Committees shall be consti Art. 10. tuted : (a) Committee on Nominations, composed of five members appointed by the Temporary President. The Nominating Com mittee shall propose candidates for the following offices: four Vice Presidents of the Conference; Chairmen and Vice Chairmen and Reporting Delegates of the Commissions; Chairmen and Re porting Delegates of the Committees of Commissions I and I I ; and the members of the Steering Committee. (b) Steering Committee, composed of the President of the Conference as Chairman and ten other members elected by the Conference, following the receipt of the recommendations of the Committee on Nominations. (c) Committee on Credentials, composed of five members ap pointed by the Temporary President. (d) Committee on Rules and Regulations, composed of five members appointed by the Temporary President. 64 MONETARY ANI) FINANCIAL CONFERENCE (e) Coordinating Committee, composed of seven members, the Committee to be constituted by the Steering Committee. Art. 11. Prior to the first plenary session, a meeting of the Chairmen of the delegations shall be held at which the organiza tion of the Conference shall be considered and recommendations formulated for submission to the Conference at the first plenary session. (P. 5) Chapter IV Art. 12. The Conference shall be divided into the following three Technical Commissions and Committees and such other Committees as the respective Commissions shall determine. Commission I. International Monetary Fund Committee 1. Purposes, Policies and Obligations of the Fund. Committee 2. Operations of the Fund Committee 3. Organization and Management. Committee 4. Form and Status of the Fund. Commission II. Bank for Reconstruction and Development. Committee 1. Purposes, Policies, Capital and Subscription of the Bank. Committee 2. Operations of the Bank. Committee 3. Organization and Management. Committee 4. Form and Status of the Bank. Commission III. Other Means of International Financial Coop eration. Art. 13. The Reporting Delegate of each Commission shall present to a plenary session of the Conference the conclusions at which the Technical Commissions may arrive after they have been reviewed by the Coordinating Committee. Art. 14. The representative of the Delegation elected as Chairman or as Recording Secretary of a Committee of a Tech nical Commission, shall be the Chairman of the Delegation indi cated or such other member of that Delegation as the Chairman may designate. Art. 15. Each delegation shall be entitled to be represented by one or more of its members in each of the Technical Commis sions. The names of such members shall be transmitted by each delegation to the Secretary General as soon as possible and in any event before the first regular meeting of each Commission. PROCEEDINGS AMD DOCUMENTS 65 (P. 6) Chapter V Language of the Conference Art. 16. ence. English shall be the official language of the Confer Chapter VI The Delegations Art. 17. A delegation not present at the session at which a vote is taken may deposit or transmit its vote in writing to the Secretary, which shall be counted provided it has been trans mitted or deposited before the vote is declared closed. In this event, the delegation shall be considered as present and its vote counted. Art. 18. Each delegation shall be entitled to one vote, to be cast through the chairman or such member as may be designated to act for the delegation on questions considered at Technical Commission and Committee meetings or at the plenary sessions of the Conference. Delegations may arrange for the substitution of delegates at specified meetings in the manner provided in Article 26. Chapter VII Meetings of the Conference, Conference Committees , and Technical Commissions Art. 19. The first meeting of the Conference shall be held at the time and place designated by the Government of the United States of America and further sessions on such days as the Con ference may determine. Art. 20. Attendance by a majority of the nations participating in the Conference shall constitute a quorum at plenary sessions. Similarly, the presence of a majority of the delegations participat ing in the Technical Commissions shall constitute a quorum at the meetings of the respective Commissions and the presence of the same proportion of members of General Committees shall constitute a quorum. Art. 21. In the deliberations of the plenary sessions as well as in the Committees and Technical Commissions, the delegation of each state represented at the Conference shall have but one vote and the votes shall be taken separately in alphabetical order in the English language and recorded in the minutes of the re spective sessions. (p. 7) Art. 22. Votes as a general rule shall be taken orally, 66 MONETARY AND FINANCIAL CONFERENCE unless any delegate should request that they be taken in writing. In this case each delegate shall deposit in an urn a ballot contain ing the name of the nation which it represents and the sense in which the vote is cast. The secretary shall read aloud these ballots, count the votes, and record the results. Art. 23. The Conference shall not proceed to vote on any re port, project or proposal relating to any of the subjects included in the agenda unless at least two-thirds of the nations attending the Conference are represented by one or more delegates. The same proportion of the delegations participating in the Technical Commissions shall be present before a vote is undertaken at Com mission meetings. The General Committees likewise shall proceed to vote only with the attendance of at least two-thirds of their respective members. In the event of written voting at any ses sion or meeting, the count shall be taken of the votes deposited in writing as provided for in Articles 21 and 22, the absent dele gates being considered present, only for the purpose of the vote, when they have submitted their vote in the manner indicated. Art. 24. Except in cases expressly indicated in these Regula tions, proposals, reports and projects under consideration by the Conference or by any of the Committees or Technical Commissions shall be considered approved when they have obtained the affirm ative vote of an absolute majority of the delegations represented by one or more of their members at the meeting where the vote is taken. Any delegation which may have deposited its vote in the manner prescribed in Article 18 shall be considered as present at the meeting. Art. 25. The following may attend the sessions of the Con ference and the meetings of the Technical Commissions and of their committees: the delegates, their technical advisers and other members of their delegations; members of the Secretariat of the Conference; and any others to whom the Steering Committee of the Conference may extend this privilege. Art. 26. Should it be impossible for a delegate to attend a particular session, either a plenary session or a meeting of a Technical Commission or Committee, the delegation may desig nate a member to substitute for him. In such case the one so designated shall have the right to voice and vote on behalf of his delegation. Notification of such appointment shall be commu nicated in advance to the Secretary General, to the Secretary of the Committee, or to the Secretary of the Technical Commission, as the case may be. Art. 27. The opening and closing sessions of the Conference PROCEEDINGS AND DOCUMENTS 67 shall be public. Other public sessions may be held when previously agreed upon and so ordered by a majority vote of the Steering Committee. The meetings of (p. 8) the Technical Commissions and their Committees shall be private unless otherwise ordered by a majority vote of the delegations. The meetings of the General Committees shall be private. Art. 28. All new projects or proposals which a delegation may wish to present to the Conference shall be delivered to the Secretary General as soon as possible but not later than one week after the opening plenary session of the Conference. No project or proposal shall be considered until copies thereof shall have been distributed by the Secretary General among the participating delegations. No proposal of a topic which constitutes an addition to the agenda shall be included unless it has the consent of twothirds of the Steering Committee. Chapter VIII Minutes of the Sessions and Publications of the Meeting Art. 29. The Secretary General shall cause to be kept verbatim minutes of the public plenary sessions of the Conference. The Secretary General shall prepare a summarized record of the pro ceedings of private plenary sessions which shall bo preserved in the archives of the Conference. Art. 30. The Secretary of each Technical Commission and of each Committee shall prepare brief minutes of each session which shall be approved by the respective Chairmen before presentation to the Secretary General for distribution to the delegations. These minutes shall contain a record of the conclusions at which the Commission or Committee may arrive. Art. 3.1. The minutes of all private meetings, whether of the Conference, the Technical Commissions or Committees, shall be available to the participating governments and authorities but shall be regarded as confidential. Art. 32. The conclusions at which the Conference may arrive shall be incorporated in a Final Act which shall be signed by the delegates at the final session. Art. 33. The Government of the United States of America shall publish the minutes of the public plenary sessions and the Final Act and shall forthwith transmit certified copies to the governments participating in the Conference and to the delegates attending the sessions. Art. 34. The original minutes and the original copy of the Final Act shall be preserved in the archives of the Government 68 MONETARY AND FINANCIAL CONFERENCE of the United States of America to which they shall be sent by the Secretary General. (P. 9) Chapter IX Approval of and Amendments to the Regulations Art. 35 These regulations* after approval by an absolute majority of the delegations meeting in plenary session, shall be subject to subsequent modification only upon the recommendation, by a two-thirds vote, of the Steering Committee and by vote of two-thirds of the Conference meeting in plenary session. Document 36 C /N /2 UNITED NATIONS MONETARY AND FIN ANCIAL CONFERENCE Committee on Nominations Saturday, July 1, 1944 10:00 p.m. R oom B Chairman.......... Walter Nash, New Zealand, Secretary.......... Mr. Frank Coe. The meeting of the Committee on Nominations was called to gether by the Chairman, Mr. Walter Nash, the representative of New Zealand. The members present at the meeting were: Luxembourg...................... Hugues Le Gallais Honduras.......................... Julian R. Caceres Iceland................................ Magnus Sigurdsson Peru.................................... Pedro Beltran The Chairman, after convening the meeting, submitted the fol lowing suggestions for recommendation to the plenary session for appointment as committees to conduct the business of the conference. All the suggestions were unanimously approved. S u g g e s t e d N o m in a t io n s f o r V ic e P r e s id e n t s of t h e Co n fe r en c e Mr. M. S. Stepanov, the Chairman of the Delegation of the Union of Soviet Socialist Republics; Mr. Arthur de Souza Costa, the Chairman of the Delegation of Brazil; PROCEEDINGS AND DOCUMENTS 69 Mr. Camille Gutt, the Chairman of the Delegation of Belgium; and Mr. Leslie G. Melville, the Chairman of the Delegation of Australia. (P. 2 ) S u g g ested N o m in a t io n s for t h e S t e e r in g C o m m it t e e For Chairman of the Committee, the Representative of the United States. For Members of the Committee, the Representatives o f: Belgium Iran Brazil Mexico Canada Union of Soviet China Socialist Republics Colombia United Kingdom France S u g g ested N o m in a t io n s for C o m m issio n I— I n t e r n a t io n a l M onetary F und For Chairman, the Representative of the United States. For Vice Chairman, the Representative of Venezuela. For Reporting Delegate, the Representative of Canada. (p. 3) S u g g e s t e d N o m in a t i o n s f o r C o m m it t e e s o f C o m m issio n Committee No. Chairman: Reporter: Committee No. Chairman: Reporter: Committee No. Chairman: Reporter: Committee No. Chairman: Reporter: I 1—Purposes, Policies and Quotas of the Fund The Representative of China The Representative of Greece 2—Operations of the Fund The Representative of the Union of Soviet Socialist Republics The Representative of the French Committee 3—Organization and Management The Representative of Brazil The Representative of Czechoslovakia 4—Form and Status of the Fund The Representative of Peru The Representative of Norway S u g g e s t e d N o m i n a t io n s f o r C o m m issio n II— B a n k f o r R e c o n s tr u c tio n an d D e v e lo p m e n t For Chairman, the Representative of the United Kingdom. For Vice Chairman, the Representative of Chile. For Reporting Delegate, the Representative of Belgium. MONETARY AND FINANCIAL CONFERENCE 70 (P. 4) S u g g e s t e d N o m in a t io n s f o r C o m m it t e e s o f C o m m is s io n I I Committee No. Chairman: Reporter: Committee No. Chairman: Reporter: Committee No. Chairman: Reporter: 1—Purposes, Policies and Capital of the Bank The Representative of Netherlands The Representative of Costa Rica 2—Operations of the Bank The Representative of Cuba The Representative of Australia 3—Organization and Management The Representative of Colombia The Representative of the Union of South Africa Committee No. 4—Form and Status of the Bank Chairman: The Representative of India Reporter: The Representative of Poland. S u g g e s t e d N o m in a t io n s f o r C o m m is s io n I I I — O t h e r M e a n s o f I n t e r n a t i o n a l F in a n c i a l C o o p e r a t io n For Chairman, the Representative of Mexico. For Vice Chairman, the Representative of Egypt. For Reporting Delegate, the Representative of New Zealand. The Chairman moved at the conclusion of a short discussion that the suggestions be approved as recommendations to the plenary sessions, and this resolution was unanimously carried. Document 40 G D /7 UNITED NATIONS MONETARY AND FIN ANCIAL CONFERENCE Inaugural Plenary Session July 1, 1944 Assembly Hall, 3:00 p.m. D r . K e l c h n e r : The United Nations Monetary and Financial Conference is hereby convened. It is the generally accepted prac tice for the host government to designate the temporary president of an international conference held under its auspices. Accord ingly President Roosevelt has designated as temporary president of this Conference the Honorable Henry L. Morgenthau, Jr., Sec PROCEEDINGS AND DOCUMENTS 71 retary of the Treasury of the United States. Secretary Morgenthau: S e c r e t a r y M o r g e n t h a u : President Roosevelt has sent a mes sage to the Conference, and I can think of no more fitting way to welcome you than to have this message delivered to you at this time. I request the Secretary General to read President Roose velt’s message. M e m b e r s ok t h e C o n f e r e n c e : I welcome you to this quiet meeting’ place with confidence and with hope. I am grateful to you for making the long journey here, grateful to your gov ernments for their ready acceptance of my invitation to this meeting. It is fitting th a t even while the war for liberation is at its peak, the representatives of free men should gather to take counsel with one another respecting the shape of the future which we are to win. The war has prodded us into the healthy habit of coming together in con ference when we have common problems to discuss and solve. We have done this successfully with respect to various m ilitary and production phases of the war and also with respect to measures which must be taken immediately after the war is won, such as relief and rehabilitation and (p. 2) distribu tion of the world’s food supplies. These have been essentially emergency m at ters. At Bretton Woods, you who come from many lands are meeting for the first time to talk over proposals for an enduring program of future economic cooperation and peaceful progress. The program you are to discuss constitutes, of course, only one phase of the arrangem ents which must be made between nations to ensure an orderly, harmonious world. But it is a vital phase, affecting ordinary men and women everywhere. For it concerns the basis upon which they will be able to exchange with one another the natural riches of the earth and the products of their own industry and ingenuity. Commerce is the life blood of a free society. We must see to it th at the arteries which carry th a t blood stream are not clogged again, as they have been in the past, by artificial barriers created through senseless economic rivalries. Economic diseases are highly communicable. It follows, therefore, that the economic health of every country is a proper m atter of concern to all its neighbors, near and distant. Only through a dynamic and a soundly expand ing world economy can the living standards of individual nations be advanced to levels which will permit a full realization of our hopes for the future. The spirit in which you carry on these discussions will set a pattern for future friendly consultations among nations in their common interest. Further evidence will be furnished at Bretton Woods th a t men of different nationalities have learned how to adjust possible differences and how to work together as friends. The things th at we need to do, must be done—can only be done in concert. This conference will test our capacity to cooperate in peace as we have in war. I know th at you will all approach your task with a high sense of responsibility to those who have sacrificed so much in their hopes for a better world. (S ig n ed ) F r a n k l in D el a n o R oosevelt The Chair recognizes the Chairman of the Delegation from China. Secretary M o r g e n t h a u : 71901 ^ is • ; 72 MONETARY AND FINANCIAL CONFERENCE T h e H o n o r a b l e H s ia n g - H s i R u n g : Mr. President, Fellow Delegates, Ladies and Gentlemen: I deeply appreciate the honor conferred upon my country and myself by the Delegations attending this Conference who have asked me to respond on their behalf to the encouraging words of the President of the United States. We have just listened to a message of hope, (p. 3) realism and far-sighted statesmanship. We are grateful to the United States for the calling of this Con ference, which, we believe, marks a long step forward in laying the foundation for post-war economic collaboration in the interest of peace and prosperity among the nations. We thoroughly agree with President Roosevelt that the program we are to discuss here constitutes a vital phase of the arrange ments which-must be made among the nations to ensure an orderly and harmonious world. We have witnessed, especially in the ex perience of the last twenty odd years, the blighting affects of monetary instability and dislocation in trade. I am sure you agree with me that we cannot be said to have w7 the peace unless our on peace include international cooperation in monetary affairs as well as in the task of encouraging and facilitating international investment for economic reconstruction and development. It is clear that suitable machinery must be provided to give effect to these objectives. It will be, therefore, a main duty of this Conference to set up permanent organizations or agencies for the consideration of these problems and for making such adjustments as may from time to time be found desirable and necessary. World economic forces are so dynamic that we shall be faced with prob lems of adjustment and change that will continue to occur. Hence there is need for permanent agencies to deal with these problems in their international aspects. The questions we are here considering together, it is clear, are of vital concern to all of us—both to the countries that have long suffered through a bitter period of invasion and occupation, and to the more fortunate countries that have not felt so directly the blows of the enemy. The great need that will exist after the war in all parts of the world for all kinds of goods—to bring about, first, recovery and then progress to higher standards of living— will require the systematic restoration and improvement of the productive resources and facilities for trade in all countries. Our aim can be accomplished only through common action—so that countries will benefit from mutual accommodation of their policies and actions. The world is coming more and more to recognize the interde PROCEEDINGS AND DOCUMENTS 73 pendence of countries. We see that the action of one country in the field of currency and finance may have far-reaching effects upon the welfare of all. Only by working together can we estab lish a basis on which we can maintain a high level of prosperity and employment in our respective countries. (p. 4) Monetary and financial problems are admittedly com plicated. The task of the Conference is bound to be as arduous as it is important. We are gratified to find that the technical preparations of the Conference have been thorough and complete. I wish to take this opportunity to offer congratulations to the Technical Experts from all the nations who participated in the preliminary discussions for their splendid work which have so ably paved the way for this Conference. The quiet and pleasant atmosphere of Bretton Woods provides a most fitting physical setting for the discussions of the Con ference which, being a Conference of friendly powers united for a common purpose, will surely be dominated by a spirit of cordial ity and cooperation. I am sure we are all conscious of the fact that the outcome of the Conference will affect the shape of the peace and the welfare of generations to come. We have before us a rare opportunity to serve the common people everywhere. I feel confident that we will all do our best to make the Conference a success. Secretary Morgenthau : The Chair next recognizes the Chair man of the Delegation from Czechoslovakia. T he H onorable Ladislav F eierabend: Mr. Chairman, Hon ored colleagues: I am mindful of the honor bestowed on me, in that I am per mitted, as one of the humble servants of the people of Czecho slovakia, to greet the inspiring message of the President of the United States of America in which he so profoundly character ized this constructive undertaking of ours for the future peace whose horizons we can already envisage even though the guns are still thundering. This is no paradox, for war and peace have never been abrupt or instantaneous. Our country has a deep interest in international currency sta bility and in the creation of an International Stabilization Fund which would be instrumental in achieving this desired end. But it is not enough to assert our intentions nor to profess them. We must practice them. Assertion and profession indicate goals. We must progress from advocating to actually doing. We are gathered here to establish two institutions which will, in my opin ion, greatly enhance the peaceful co-existence of all nations and 74 MONETARY AND FINANCIAL CONFERENCE serve as a highway to the security and prosperity for which man kind has striven so long and for which it is even now paying so dearly. The basic principles upon which we found these institu tions must be stability and the opportunity for all to prosper, so that,—as (p. 5) President Roosevelt put it—we can truly add this to the spiral upon which our civilization is built. They should embody and foster the philosophy of man’s humanity and by virtue of this we may hope to come close enough to the City of God so that the Deity Himself in glancing at our structure will be inspired to say “Well Done.” International Monetary Stability can hardly be achieved with out an adequate solution of the problem of long term credits, the fluid and satisfactory evolution of which can in turn be assured only by a general stability of currencies. Because our country was entirely occupied before actual shooting began, the Germans suc ceeded in liquidating for their benefit nearly all our assets abroad emanating from our active trade balance. And because we had neither colonies, shipping nor investments outside of con tinental Europe there are practically no economic assets in friendly free countries. At home too; the Germans succeeded in robbing and destroying. Therefore, we will be obliged to begin to set our house in order with whatever assets we will be able to obtain from abroad in order to import raw materials, capital goods and other in struments without which we would be unable to offer employment to our citizens and assure them of a decent standard of living. In spite of our present deplorable economic status, we come to this Conference not to receive a “handout” or to attempt to make the more fortunate countries the Santa Claus for the rest of us. We come rather as industrious neighbors whose houses have been burned down by incendiaries to seek ways of rebuilding without encroaching upon the rights of those more fortunate whose struc tures remain to mark the familiar landscape. The existence of an International Reconstruction Bank and an International Stabiliza tion Fund would ease our task. Let me conclude with a humble tribute to the men and women in the great armies of the United States, Soviet Russia and Great Britain and China, and the other United Nations, and the people who stand behind them without whose strength and determination we could not have survived and whose deeds have kept alive the courage, faith and endurance of occupied lands. In the words of Walt Whitman, poet and prophet of the American people and their democratic way of life: PROCEEDINGS AND DOCUMENTS 75 For happy are all free peoples too strong to be dispossessed, But happiest are those among nations That dare to be strong for the rest. S e c r e t a r y M o r g e n t h a u : It is customary to appoint certain temporary committees for the purpose of effecting the organiza tion of the Conference. The draft (p. 6) regulations which were circulated provide for the appointment of a temporary Committee on Credentials, a Committee on Rules and Regulations, and a Com mittee on Nominations, all of which will report to the next plenary session. The Chair recognizes the Chairman of the Delegation of India. S ir A. J. R a is m a n : Mr. President, I move the adoption of the following resolutions: “Resolved that the Conference establish the following committess: Committee on Credentials, Committee on Rules and Regu lations, and Committee on Nominations. “Resolved that the Temporary President of the Conference be authorized to appoint the members of the foregoing committees.” (The motion was seconded and passed.) S e c r e t a r y M o r g e n t h a u : The Chairman appoints the follow ing members for the Committee on Credentials: The Chaii'men of the Delegations of Cuba, Netherlands, Union of South Africa, Libera and Norway. To the Committee on Rules and Regulations: The Chairmen of the Delegations of China, Nicaragua, Poland, Australia and Iraq. To the Committee on Nominations: The Chairmen of the Delegations of New Zealand, Luxembourg, Honduras, Iceland and Peru. Next the Chair recognizes the Chairman of the Delegation of Mexico: T h e H o n o r a b l e E duardo S u a r e z : Mr. Chairman, Ladies, and Gentlemen: (p. 7) It is my privilege to nominate for Permanent President of the International Monetary Conference, the Honorable Henry Morgenthau, Jr., Secretary of the Treasury of the United States of America. I do this not merely to follow customary procedure in gatherings of an international character. I submit his name to you in the light of his personal merits and his achievements as a statesman. There could hardly be a better occasion than this one to commend the courageous and far-sighted financial policy carried out under the Secretary’s immediate responsibility. That policy defied ortho 76 MONETARY AND FINANCIAL CONFERENCE dox thinking and set the course that led this great Nation to economic safety through seemingly unsurmountable difficulties. It was inspired in the principle that the national income should be kept at the highest possible level and distributed more equitably, by means of the full utilization of manpower and resources. One of the teachings derived from that wise policy is that ex ternal equilibrium and exchange stability should not be sought at the expense of internal equilibrium. Rather, they should be fundamentally the automatic consequence of an harmonious de velopment of the national economies of all countries. It is most fitting that this high Assembly by appointing Mr. Morgenthau as its Permanent President, should pay tribute to the unfailing devotion of his country to the cause of international monetary stability. Had it not been for the effective and timely action of the Treasury of the United States, the world would have remained for many more years in the throes of monetary chaos and competitive depreciation of currencies. It is because of the perseverance of the pursuit of that goal, that we now meet under the auspices of the Government of the United States to reach agreements embodying many of the same prin ciples which have proved so sound, that they may be applied with equal advantage throughout the world. We are confident that we shall attain full success in our en deavor to create a stable basis upon which nations can freely interchange their products, thereby raising the standard of living of humanity as a whole, which aim His Excellency the President of the United States of America has vigorously and properly set before us. Permit me again to ask the Delegates to this Conference to elect Mr. Morgenthau as our Permanent President. (p. 8) S e c r e t a r y M o r g e n t h a u : The Chair recognizes the Chairman of the Delegation of Brazil. T h e H o n o r a b l e A r t h u r d e S o u za C o st a : Mr. President, Fel low Delegates, Gentlemen: It is with the greatest pleasure that I beg to second the nomi nation of Mr. Morgenthau for the Presidency of this Conference. There are still in the memory of all of us the drama of monetary chaos, of restrictions of all sorts of international trade, of blocked currencies, of economic isolationism, of competition instead of cooperation among central banks, and of general unemployment. The civilized world must not permit a repetition of this tragic situation. PROCEEDINGS ANJ) DOCUMENTS 77 The lesson which grew out of this experience is that we all live in one'world and that the economic destinies of our respective peoples are mutually interdependent. We are here united with the objective of establishing the gen eral principles of economic understanding among nations which will assure that there will be no repetition of the tragic events of the inter-war period. The technical experts of our respective countries have formu lated the basis of a system of cooperation to guarantee a satisfac tory equilibrium in the balance of international payments. The general agreement among these experts is indicative of the substantial progress already made despite the criticism which al ways arises from resistance to innovation. In this Conference we shall endeavor to consolidate these ac complishments and to establish an interrelationship between the Monetary Fund and other agencies of international economic and financial cooperation. The preliminary work done by the Treasury Department of the United States constitutes a most appreciable constr-ibution to the achievement of these objectives. We are indebted to Mr. Morgen thau for his initiative and leadership in making this Conference possible and I am confident that these same qualities will con tribute greatly to the successful conclusion of our efforts. In closing, I wish to express the thought that it should be our united purpose to awaken our peoples to the fact that an interna tional monetary system is essential to the attainment of our com mon objective of (p. 9) increased productivity, elimination of unemployment and progressive improvement in living standards. S ecretary Morgenthau: The Chair recognizes the Chairman of the Delegation of Canada. T he H onorable J. L. I lsley : It is a privilege to support the nomination of the Secretary of the United States Treasury, Mr. Henry L. Morgenthau, Jr., to be Permanent President of this Conference. Since the beginning of the war there has been an ever closer collaboration between our two countries which has necessitated the closest association of the United States and Canadian Treas uries. In my contacts with Mr. Morgenthau I have developed for him a high degree of respect and regard. It is true the interests of his country, the United States of America, have always been his guiding consideration in any dealings with us. But his concern has been for the broad and long-run interests of his country. He has seen, as everyone must see that there are two objectives, 78 MONETARY AND FINANCIAL CONFERENCE the attainment of which is vital to every one of the United Na tions, (1) the winning of the war in the shortest possible time and (2) the perfecting and successful operation of certain plans of international cooperation after the war, in fields in which we cooperated ineffectively before the war, and in fields not previously entered. These I know to be the Secretary’s views. He is, in large measure, personally responsible for the very gratifying progress already made in discussions among officials toward “establishing monetary arrangements favorable to the expansion of trade and employ ment”. We would like to feel in Canada that the efforts of Canadian officials have contributed in some degree toward that progress. Neither the contribution nor the progress would have been possi ble without the initiative of the Secretary of the Treasury. In his letter of instruction, the President has defined the re sponsibility placed on the delegates of the United States: “The responsibility which you and the other delegates of the American delegation will undertake is the responsibility for demonstrating to the world that international post-war co operation is possible.” (p. 10) That is a responsibility in this Conference which all of us must share. Under no other leadership than Mr. Morgenthau’s would this responsibility be assumed with so great a chance of success. The importance of the deliberations we are about to begin extends far beyond the subject matter of the conference. The outcome will influence in large measure the successful reestablish ment of normal commercial pursuits after the war. But above and beyond this, it will demonstrate to- the world at large, and in particular to those unhappy people whom we are now begin ning to liberate from the enemy’s yoke, that the working partner ship of the United and Associated Nations means to remain in business after the war. All of us have a vital national interest in the promotion of conditions and the establishment of agencies through which world trade will expand and the world’s productive resources be used for the benefit of all. It is in this spirit that the technicians of various countries have brought forward the proposals that lie at the base of our delibera tions and it is in this spirit that we associate ourselves with the work of this Conference. S e c r e t a r y M o r g e n t h a u : The Chair recognizes the Chairman of the Delegation of the Union of Soviet Socialist Republics. PROCEEDINGS AND DOCUMENTS 79 T he H onorable M. S. S tepanov: Mr. Chairman, Ladies and Gentlemen: On behalf of the Delegation of the Soviet Union I have the pleasure to greet the Monetary and Financial Conference of the United and Associated Nations, which was initiated by the Gov ernment of the United States. The present Conference is taking place in time of great significance when the democratic peoples are fighting against aggressors and when the armed forces of the Allies are delivering crushing and powerful blows to Hitlerite Germany from the East and from the West. I would like to draw your attention to the great work which has been done by the Secretary of the United States Treasury, Mr. Morgenthau, his assistants and experts, the work which made this Conference possible. On behalf of the Delegation of the Soviet Union I second the motion of the Chairman of the Mexican Delegation to nominate Mr. Morgenthau, the Secretary of the United States Treasury, as the permanent chairman of the Monetary and Financial Con ference of the United and Associated Nations. (p. 11) (Secretary Morgenthau was thereupon elected Per manent President of the Conference.) S ecretary Morgenthau: Fellow delegates and members of the conference: You have given me an honor and an opportunity. I accept the presidency of this conference with gratitude for the confidence you have reposed in me. I accept it also with deep humility. For I know that what we do here will shape to a significant degree the nature of the world in which we are to live—and the nature of the world in which men and women younger than ourselves must round out their lives and seek the fulfillment of their hopes. All of you, I know, share this sense of responsibility. We are more likely to be successful in the work before us if we see it in perspective. Our agenda is concerned specifically with the monetary and investment field. It should be viewed, however, as part of a broader program of agreed action among nations to bring about the expansion of production, employment and trade contemplated in the Atlantic Charter and in Article VII of the mutual aid agreements concluded by the United States with many of the United Nations. Whatever we accomplish here must be supplemented and buttressed by other action having this end in view. President Roosevelt has made it clear that we are not asked to make definitive agreements binding on any nation, but that pro 80 MONETARY AND FINANCIAL CONFERENCE posals here formulated are to be referred to our respective govern ments for acceptance or rejection. Our task, then, is to confer, and to reach understanding and agreement, upon certain basic meas ures which must be recommended to our governments for the establishment of a sound and stable economic relationship among us. We can accomplish this task only if we approach it not as bargainers but as partners—not as rivals but as men who recog nize that their common welfare depends, in peace as in war, upon mutual trust and joint endeavor. It is not an easy task that is before u s; but I believe, if we devote ourselves to it in this spirit, earnestly and sincerely, that what we achieve here will have the greatest historical significance. Men and women everywhere will look to this meeting for a sign that the unity welded among us by war will endure in peace. Through cooperation we are now overcoming the most fearful and formidable threat ever to be raised against our security and freedom. In time, with God's grace, the scourge of war will be lifted from us. But we shall delude ourselves if we regard victory as synonymous with freedom and security. Victory in this war will give us simply the opportunity to mould, through our common effort, a world that is, in truth, secure and free. (p. 12) We are to concern ourselves here with essential steps in the creation of a dynamic world economy in which the people of every nation will be able to realize their potentialities in peace; will be able, through their industry, their inventiveness, their thrift, to raise their own standards of living and enjoy, increas ingly, the fruits of material progress on an earth infinitely blessed with natural riches. This is the indispensable cornerstone of freedom and security. All else must be built upon this. For freedom of opportunity is the foundation for all other freedoms. I hope that this conference will focus its attention upon two elementary economic axioms. The first of these is th is: that pros perity has no fixed limits. It is not a finite substance to be dimin ished by division. On the contrary, the more of it that other na tions enjoy, the more each nation will have for itself. There is a tragic fallacy in the notion that any country is liable to lose its customers by promoting greater production and higher living standards among them. Good customers are prosperous customers. The point can be illustrated very simply from the foreign trade experience of my own country. In the prewar decade, about 20 percent of our exports went to the 47 million people in the highly PROCEEDINGS AND DOCUMENTS 81 industrialized United Kingdom; less than three percent went to the 450 million people in China. The second axiom is a corollary of the first. Prosperity, like peace, is indivisible. We cannot afford to have it scattered here or there among the fortunate or to enjoy it at the expense of others. Poverty, wherever it exists, is menacing to us all and undermines the well-being of each of us. It can no more be localized than war, but spreads and saps the economic strength of all the more fav ored areas of the earth. We know now that the thread of economic life in every nation is inseparably woven into a fabric of world economy. Let any thread become frayed and the entire fabric is weakened. No nation, however great and strong, can remain im mune. All of us have seen the great economic tragedy of our time. We saw the world-wide depression of the 1930’s. We saw currency disorders develop and spread from land to land, destroying the basis for international trade and international investment and even international faith. In their wake, we saw unemployment and wretchedness—idle tools, wasted wealth. We saw their victims fall prey, in places, to demagogues and dictators. We saw be wilderment and bitterness become the breeders of fascism, and, finally, of war. (p. 13) In many countries controls and restrictions were set up without regard to their effect on other countries. Some coun tries, in a desperate attempt to grasp a share of the shrinking volume of world trade, aggravated the disorder by resorting to competitive depreciation of currency. Much of our economic in genuity was expended in the fashioning of devices to hamper and limit the free movement of goods. These devices became economic weapons with which the earliest phase of our pres ent war was fought by the Fascist dictators. There was an ironic inevitability in this process. Economic aggression can have no other offspi'ing than war. It is as dangerous as it is futile. We know now that economic conflict must develop when nations endeavor separately to deal with economic ills which are interna tional in scope. To deal with the problems of international ex change and of international investment is beyond the capacity of any one country, or of any two or three countries. These are multi lateral problems, to be solved only by multilateral cooperation. They are fixed and permanent problems, not merely transitional considerations of the postwar reconstruction. They are problems not limited in importance to foreign exchange traders and bankers but are vital factors in the flow of raw materials and finished 82 MONETARY AND FINANCIAL CONFERENCE goods, in the maintenance of high levels of production and con sumption, in the establishment of a satisfactory standard of living for all the people of all the countries on this earth. Throughout the past decade, the Government of the United States has sought in many directions to promote joint action among the nations of the world. In the realm of monetary and financial problems, this Government undertook, as far back as 1936, to facilitate the maintenance of orderly exchanges by en tering into the Tri-Partite Agreement with England and France, under which they, and subsequently Belgium, the Netherlands and Switzerland, agreed with us to consult on foreign exchange ques tions before important steps were taken. This policy of consultation was extended in the bi-lateral exchange arrangements which we set up, starting in 1937, with our neighbors on the American continents. In 1941, we began to study the possibility of international co operation on a multilateral basis as a means of establishing a stable and orderly system of international currency relationships and to revive international investment. Our technical staff—soon joined by the experts of other nations—undertook the preparation of practical proposals, designed to implement international mone tary and financial cooperation. The opinions of these technicians, as reported in the joint public statement which they have issued, reveal a common belief that the disruption of foreign exchanges can be prevented, and the collapse of monetary systems can be avoided, and a sound currency basis for the balanced growth of international trade can be provided, if we are forehanded enough to plan ahead of (p. 14) time—and to plan together. It is the consensus of these technical experts that the solution lies in a permanent institution for consultation and cooperation on inter national monetary, finance and economic problems. The formula tion of a definite proposal for a Stabilization Fund of the United and Associated Nations is one of the items on our agenda. But provision for monetary stabilization alone will not meet the need for the rehabilitation of war-wrecked economies. It is not, in fact, designed toward that end. It is proposed, rather, as a permanent mechanism to promote exchange stability. Even to discharge this function effectively, it must be supplemented by many other measures to remove impediments to world trade. For long-range reconstruction purposes, international loans on a broad scale will be imperative. We have in mind a need wholly apart from the problem of immediate aid wT hich is being under taken by the United Nations Relief and Rehabilitation Admin PROCEEDINGS AND DOCUMENTS 83 istration. The need which we seek to meet through the second proposal on our agenda is for loans to provide capital for economic reconstruction, loans for which adequate security may be avail able and which will provide the opportunity for investment, under proper safeguards, of capital from many lands. The technicians have prepared the outline of a plan for an International Bank for Postwar Reconstruction which will investigate the opportuni ties for loans of this character, will recommend and supervise them and, if advisable, furnish to investors guaranties of their repayment. I shall not attempt here to discuss these proposals in detail. That is the task of this conference. It is a task the performance of which calls for wisdom, for statesmanship, above all for good will. The transcendent fact of contemporary life is this—that the world is a community. On battlefronts the world over, the young men of all our united countries have been dying together—dying for a common purpose. It is not beyond our powers to enable the young men of all our countries to live together—to pour their energies, their skills, their aspirations into mutual enrichment and peaceful progress. Our final responsibility is to them. As they prosper or perish, the work which we do here will be judged. The opportunity before us has been bought with blood. Let us meet it with faith in one another, with faith in our common future, which these men fought to make free. (The inaugural plenary session was closed with the playing of the Star-Spangled Banner.) Document 43 (p. 9) J OURNAL UNITED N ATIONS No. 3 MONETARY AND FINANCIAL Bretton W o o d s, New Ham pshire ORDER OF THE DAY Meetings for Monday, July 3 Second Plenary Session Commission I Commission II Commission III 10 2 3:30 5 a.m. p.m. p.m. p.m. Auditorium Auditorium Auditorium Auditorium CONFERENCE July 3, 1944 84 MONETARY AND FINANCIAL CONFERENCE (p. 10) R e s u m e o f M e e t in g o f t h e C o m m it t e e o n C r e d e n t ia l s The Committee on Credentials met on Sunday, July 2, at 9 p.m., with Eduardo I. Montoulieu (Cuba) as Chairman. The Committee will report to the plenary session to be held today at 10 a.m. Document 47 ID / 2 Opening Remarks of Lord Keynes at the First Meeting of the Second Commission on the Bank for Reconstruction and Development It is our hope that the institution of the Bank for Reconstruction and Development, to which this Commission is to devote its work, will .serve the purpose of increasing the health, prosperity and friendship of the participating countries in two main respects. In the first place, it will be authorised in proper cases and with due prudence to make loans to the countries of the world which have suffered from the devastation of war, to enable them to restore their shattered economies and replace the instruments of production which have been lost or destroyed. It is no part of the purpose of UNRRA to provide funds for reconstruction as distin guished from the necessary relief and rehabilitation in the days immediately following liberation. There is, therefore, at present a gap in the proposals of the United and Associated Nations which is not yet filled, and to fill which there is no proposal in view except the institution of this Bank. Yet this is a matter of the utmost urgency and importance where we should, therefore, press forward to reach agreement on methods and on details. We do not know the date of the complete liberation of the occupied countries of Europe and Asia. But we are now entitled to hope that it will be not unduly delayed. We should be bitterly failing in duty if we were not ready prepared for the days of liberation. The countries chiefly concerned can scarcely begin to make their necessary plans until they know upon what resources they can rely. Any delay, any avoidable time lag will be disastrous to the establishment of good order and good government, and may also postpone the date PROCEEDINGS AND DOCUMENTS 85 at which the victorious armies of liberation can return to their homelands. (p. 2) I cannot, therefore, conceive a more urgent, necessary and important task for the Delegates of the forty-four nations here assembled. I am confident that the members of the Commis sion of which I have the honour to be the Chairman will devote themselves to their work in a spirit of full responsibility, well aware how much depends on their success. It is likely, in my judgment, that the field of reconstruction from the consequences of war will mainly occupy the proposed Bank in its early days. But as soon as possible, and with increasing emphasis as time goes on, there is a second primary duty laid upon it, namely, to develop the resources and productive capacity of the world, with special attention to the less developed countries, to raising the standard of life and the conditions of labour every where, to make the resources of the world more fully available to all mankind, and so to order its operations as to promote and maintain equilibrium in the international balances of payments of all member countries. These two purposes deserve particular emphasis, but are not exclusive or comprehensive. In general, it will be the duty of the Bank, by wise and prudent lending, to promote a policy of expan sion of the world's economy in the sense in which this term is the exact opposite of inflation. By “expansion” we should mean the increase of resources and production in real terms, in physical quantity, accompanied and facilitated by a corresponding increase of purchasing power. By “inflation” on the other hand, we should mean the increase of purchasing power corresponding to which there is no accompanying increase in the quantity of production. The Bank will promote expansion and avoid inflation. (p. 3) Under the proposals to be brought before you, the Bank will be free to operate along three different lines. A certain part of the Fund’s subscribed capital will be called up and will be available for direct lending by the Bank for approved purposes in the currencies of the contributing members. But the greater part of its subscribed capital will be held as a reserve fund with which to guarantee two other types of operations. The first type of loan eligible for such guarantee will be loans for suitable purposes and on suitable terms issued through the ordinary channels of the investment market where on account of the risks involved there would be difficulty otherwise in placing the loan on terms which the borrowing country could afford to pay. 86 MONETARY AND FINANCIAL CONFERENCE The second type of loan secured by the assets and subscribed capital of the Bank will also be placed through the ordinary channels of the investment market but will be offered on the Bank’s behalf in its own name. The proceeds of such loans will then be re-lent by the Bank to borrowing countries on terms and for purposes to be directly agreed with them. The proceeds of both these types of loan would be freely avail able for the borrower to make purchases in any member country, with due regard to economy and efficiency. Let me now explain the nature of the proposed guarantee, for this is of a novel character which may be regarded as marking in a particularly significant way the international character of the proposed institution. (p. 4) It is evident that only a few of the member countries will be in possession of an investable surplus available for over seas loans on a large scale, especially in the years immediately following the war. It is in the nature of the case that the bulk of the lending can only come from a small group of the member countries, and mainly from the United States. How then can the other member countries play their proper part and make their appropriate contribution to the common purpose ? Herein lies the novelty of the proposals which will be submitted to you. Only those countries which find themselves in a specially favoured position can provide the loanable funds. But this is no reason why these lending countries should also run the whole risk of the transaction. In the dangerous and precarious days which lie ahead, the risks of the lender will be inevitably large and most difficult to calculate. The risk premium reckoned on strict commercial principles may be beyond the capacity of an im poverished borrower to meet, and may itself contribute to the risks of ultimate default. Experience between the wars was not encouraging. Without some supporting guarantee, therefore, loans which are greatly in the interests of the whole world, and indeed essential for recovery, it may prove impossible to float. Yet, as I have said, there is no reason in a case like this, where the interests of all countries alike, whether lenders or borrowers, or exporters, are favourably affected, why the unavoidable risks should fall exclusively on the lenders, for example, the investors or the government of the United States, if it turns out that they are the chief source of available funds. (p. 5) The proposal is, therefore, that all the member coun tries should share the risk in proportions which correspond to their capacity. The guarantees will be joint and several, up to PROCEEDINGS AND DOCUMENTS 87 the limit of any member’s subscription, so that the failure of any member to implement his guarantee will not injuriously affect the lender, so long as the Bank has other assets and subscriptions to draw upon, resources which will, according to our proposals, be of considerable dimensions. Moreover, it is proposed that every member country should undertake to provide gold or free exchange up to the full amount of its subscription, in so far as it is called upon under its guarantee. Therefore the quality of the bonds thus guaranteed should be of the first order; at any rate they will be a great deal better than in the case of many borrowing countries there would be any hope of offering otherwise than under the auspices of the new institution. The bonds will be good for several different reasons. In the first place, they will have behind them the vast resources of the Bank available in gold or free exchange. In the second place, the proceeds will be expended only for proper purposes and in proper ways, after due enquiry by experts and technicians, so that there will be safeguards against squandering and waste and extrava gance, which were not present with many of the ill-fated loans made between the wars. In the third place, they will carry the guarantee of the borrowing country; and this borrower will be under an overwhelming motive to do its best and play fair, for the consequences of improper action and avoidable default to so great an institution will not be lightly incurred. (p. 6) But there is also a fourth safeguard of great impor tance to the guaranteeing countries as well as to the lenders. There are two reasons for hoping that the guarantors will not find themselves under any insupportable or burdensome liability. In the first place, a guarantee will relate to the annual servicing of the loan for interest and amortisation. Its implementation will, therefore, be spread over a period corresponding to the term of the loan and cannot fall due suddenly as a lump sum obligation. In the second place, there is an interesting and essential feature of the proposals in the shape of a commission payable by the borrower in return for its guarantee. It is suggested that for long-term loans of the normal character this commission should be at the rate of 1 per cent, per annum. This rate of commission should be the same for all members alike, for it would be a mis take, and worse than a mistake, to attempt the invidious task of discriminating between members and assessing their credit worthiness in what is really a mutual pool of credit insurance amongst a group acting in good faith—indeed in the old language 740013 - 48— 7 MONETARY AND FINANCIAL CONFERENCE 88 of insurers consecrated by tradition, in the spirit of uberrima fides, of good faith, complete, abundant and overflowing. This commission should not be an excessive burden on the bor rower. 1 per cent, added to the interest appropriate to a loan guar anteed by the Bank will not be onerous. On the other hand, the annual receipts from the commission will greatly augment the free reserves of the Bank available to meet its obligations before calling on the guarantors. The Bank should aim at so conducting its business that there would be a good hope of the pool of com missions being sufficient by itself to carry it most of the way. (p. 7) Here are the broad outlines of the proposals which you will be asked to consider. There are other aspects and much detail for you to work out. For the Bank has not enjoyed so much discussion as has the Fund prior to this Conference. But I believe that we have before us a proposal the origins of which we owe primarily to the initiative and ability of the United States Treasury, conceived on sound and fruitful lines. Indeed, I fancy that the underlying conception of a joint and several guarantee of all the member countries throughout the world, in virtue of which they share the risks of projects of common in terest and advantage even when they cannot themselves provide the lump sum loan originally required, thus separating the carry ing of risk from the provision of funds, may be a contribution of fundamental value and importance to those difficult, those al most overwhelming tasks which lie ahead of us, to rebuild the world when a final victory over the forces of evil opens the way to a new age of peace and progress after great afflictions. 3rd July 1944. Document 51 Commission I C o m m itte e A s s ig n m e n ts Committee 1. Purposes, Policies, and Quotas of the Fund Article I. Purposes and Policies of the Fund Article II. Subscription to the Fund Sec. 1. Countries eligible for membership Sec. 2. Quotas PROCEEDINGS AND DOCUMENTS 89 Sec. 3. Time and place of payment Sec. 4. Adjustment of quotas Sec. 5. Initial payments Sec. 6. Payments when quotas are changed Article IX. Obligations of Member Countries Sec. 1. Purpose and scope of additional undertakings Sec. 2. Gold purchases based on parity prices Sec. 3. Foreign exchange dealings based on par values Sec. 4. Exchange controls on current payments Committee II. Operations of the Fund Article III. Transactions with the Fund Sec. 1. Agencies dealing with the Fund Sec. 2. Conditions upon which any member may purchase cur rencies of other members Sec. 2 (a). Conditions governing purchases for capital transfers Sec. 3. Declaring members ineligible to use the resources of the Fund Sec. 4. Limitation on the operations of the Fund Sec. 5. Operations for the purpose of preventing currencies from becoming scarce Sec. 6. Multilateral international clearing Sec. 7. Acquisition by members of the currencies of other mem bers for gold Sec. 8. Other acquisitions of gold by the Fund (p. 2) Sec. 9. Transferability and guarantee of the assets of the Fund Sec. 10. Charges and commissions Sec. 11. Furnishing information Sec. 12. Consideration of representations of the Fund Article IV. Par Values of Member Currencies Sec. 1. Par values of the currencies of members Sec. 2-4. Changes in par values Sec. 5. Uniform changes in par values Sec. 6. Protection of the assets of the Fund Sec. 7. Separate currencies within a member’s jurisdiction Article V. Capital Transactions Sec. 1. Use of the resources of the Fund for transfers of capital Sec. 2. Limitation on controls of capital movements Article VI. Apportionment of Scarce Currencies Sec. 1. General scarcity 90 MONETARY AND FINANCIAL CONFERENCE Sec. 2. Scarcity of the Fund’s holdings Article X. Transitional arrangements Sec. 1. Exchange restrictions and currency arrangements and practices retained Sec. 2. Withdrawal of exchange restrictions Sec. 3. Policy of the Fund during the transition period Article XIII. Final Provisions Sec. 5. Fixing initial par values Committee III. Organization and Management of the Fund Article VII. Management of the Fund Sec. 1. Board of Governors Sec. 2. The Executive Directors Sec. 3. Voting (p. 3) Sec. 4. The General Manager Sec. 5. Publication of reports Sec. 6. Depositories Sec. 7. Form of holdings of currency Sec. 8. Relationship to other international organizations Sec. 9. Location of offices Sec. 10. Distribution of net income of the Fund Sec. 11. Miscellaneous powers Article VIII. Withdrawal from the Fund Sec. 1. Right of members to withdraw Sec. 2. Suspension of membership or compulsory withdrawal Sec. 3. Settlement of accounts with countries ceasing to be members Sec. 4. Liquidation of the Fund Committee IV. Form and Status of the Fund Article IX. Obligations of Member Countries Sec. 5. Immunity of assets of the Fund Sec. 6. Immunity from suit Sec. 7. Restrictions on taxation of Fund, its employees and obligations Article XI. Amendments Article XII. Interpretation of the Agreement Sec. 1. Interpretation Sec. 2. Definitions Sec. 3. Effect on other international commitments Article XIII. Final Provisions Sec. 1. Acceptance of membership in the Fund Sec. 2. Effective date of the Agreement PROCEEDINGS AND DOCUMENTS 91 Sec. 3. Calling the initial meeting of the Fund Sec. 4. Agenda of the initial meeting Article XIV. Execution of the Agreement Document 52 Report of the Committee on Rules and Regulations The Committee on Rules and Regulations met on Saturday, July 1 at 9 p.m. The Committee had before it the preliminary draft regulations which had been distributed to all delegations in advance of the Conference and the revision of these regulations (Conference Document SN/1) which had been distributed to the members of the Conference during the day. The Committee received from the Secretariat an explanation of the changes in drafting which had been made in the regulations since they were first distributed. In the interests of clarification the Committee adopted certain additional changes of phraseology and arrangement. The Committee unanimously approved the regulations as amended and submits them herewith to the Conference for adop tion. The only changes introduced by the Committee since the dis tribution of the draft to the Conference on July 1 are the follow ing: Article IX, Paragraph (b). The last sentence of this para graph is made a separate Paragraph (c). Article X (a). With reference to the functions of the Com mittee on Nominations, and having in mind the action of the Conference at its Inaugural Session in electing its Permanent President, the deletion of the reference to the Permanent Presi dent in this paragraph. Article XXVIII. Insert after the first word of the Article the word “new”. Submitted by: Leslie G. Melville, Australia Ibrahim Kama], Iraq Guillermo Sevilla Sacasa, Nicaragua Ludwig Grosfeld, Poland H. H. Kung, China, Chairman Philip C. Jessup, Secretary 92 MONETARY AND FINANCIAL CONFERENCE Document 53 C /R R /6 Minutes of the Committee on Rules and Regulations Saturday, July 1, 1944, 9 p.m. The Committee on Rules and Regulations met in Room A at 9 p.m. on Saturday, July 1. The Chairman, Dr. H. H. Kung (China) presided. The following members of the Committee were also present: . Leslie G. Melville, Australia Ibrahim Kamal, Iraq Guillermo Sevilla Sacasa, Nicaragua Ludwik Grosfeld, Poland Dr. Kelchner, the Secretary General, also attended. The Chairman called on the Secretary to make a report to the Committee concerning the drafts of the regulations which had already been distributed. The Secretary reminded the Committee that a preliminary draft of the regulations, prepared by the Secretary General in accord ance with international precedents, had been circulated to the delegations some days before the Conference opened. A revision of that preliminary draft had been distributed to the delegates during the day. The Secretary proceeded to call attention to the changes which had been made and to explain the reasons for them. In addition to the changes already incorporated in the draft regulations as circulated in Conference Document SN/1 (C/RR/1) the Secretary called attention to changes in drafting in the third paragraph of article 8 and in paragraph (a) of article 10. The Chairman then inquired whether there were any other sug gestions for changes in the draft regulations. Mr. Grosfeld suggested that the last sentence of paragraph (b) of article 9 be made paragraph (c) of that article. This sug gestion was accepted. (p. 2) Mr. Grosfeld also suggested a clarification of the phras ing of article 28 to make it clear that it did not refer to the ordinary exchange of views or amendments introduced in the course of Committee discussions. After discussion the suggestion was adopted. Mr. Melville inquired whether the provisions in chapter 7 of the regulations contemplated that formal ballots would need to be taken on each point as it arose. He felt that if this were the case PROCEEDINGS AND DOCUMENTS 93 it might unnecessarily prolong the proceedings. At the request of the Chairman, the Secretary General explained that what Mr. Melville feared was quite the opposite of what was contemplated under the regulations. He explained that in accordance with the customary practice of such international conferences the Com mittees and Commissions would proceed merely by taking the consensus of the group and that it was not contemplated that formal record votes by delegations would be taken on the various points as they arise in the course of the discussions. Mr. Melville felt that in the light of this explanation no change in the regula tions was necessary. There being no further suggestions the Chairman inquired whether it was the desire of the Committee that the draft regu lations as amended should be submitted to the Conference on Monday as the report of the Committee. The members of the Com mittee having unanimously indicated their approval of this course of action, the Chairman instructed the Secretary to prepare the report. The Committee then adjourned. H. H. Kung, Chairman Philip C. Jessup, Secretary Document 55 (p. 11) J OURNAL UNITED NATIONS MONETARY No. 4 AND FINANCIAL CONFERENCE Bretton W o o d s, New Ham pshire ORDER OF THE July 4, 1944 DAY Meetings for Tuesday, July 4 10 10 11:30 LI:30 4 4 5:30 a.m. a.m. a.m. a.m. p.m. p.m. p.m. p.m. Committee Committee Committee Committee Committee Committee Committee Committee 1 3 2 4 1 3 2 4 of of of of of of of of Commission Commission Commission Commission Commission Commission Commission Commission I I 1 I I I I I Auditorium The Hemicycle Auditorium The Hemicycle Auditorium The Hemicycle Auditorium The Hemicycle (f.1 2 ) R e s u m e o f t h e S e c o n d P l e n a r y S e s s io n (Auditorium, July 3, 10 a.m.) The Second Plenary Session of the Conference was held at 10 94 MONETARY AND FINANCIAL CONFERENCE a.m. on July 3. The reports of the Committee on Credentials, the Committee on Rules and Regulations, and the Committee on Nomi nations were received and approved. The Delegate of Peru proposed a resolution on the occasion of the Independence Day of the United States. Charles W. Tobey, Senator from New Hampshire and a member of the United States Delegation, responded with an inspired addfess. R e s u m e o f C o m m issio n M e e t in g s Commission I. International Monetary Fund (July 3, 2 p.m.) The first meeting of Commission I was held on July 3 at 2 p.m. The Chairman, Mr. White (U.S.A.), addressed the Commission, explaining the need for the Fund and the objectives of the Fund. After the conclusion of his remarks, the Chairman requested the delegations to submit the names of their members on the Com mission to the Secretary General or to the Secretary of the Com mission. It was announced that the basic documentation for the work of Commission I would consist of the Preliminary Draft of July 1, 1944, the first part of which had already been distributed, in addition to the P r e lim in a r y Draft Outline of July 10, 1943 and the Joint Statement of April 21, 1944. (Minutes of the meeting are being distributed separately as document ±t58.) Commission II, Bank for Reconstruction and Development (July 3, 3:30 p.m.) The organizational meeting of Commission II was held at 3:30 p.m. on Monday, July 3. The Chairman, Lord Keynes (United Kingdom), explained the purposes of the Commission, and, in accordance with his recommendation, an agenda committee was established preparatory to further meetings of the Commission and its member Committees. (Minutes of the meeting are being distributed separately as document #60.) (P. 13) Commission III. Other Means of International Financial Cooperation (July 3, 5 p.m.) The first meeting of Commission III was held at 5 p.m. on July 3. The Chairman, Mr. Suarez (Mexico), outlined the scope PROCEEDINGS AM) DOCUMENTS 95 and nature of the work of the Commission. An agenda committee consisting of live members was appointed for the purpose of receiving suggestions and making recommendations as to the specific problems which should be dealt with in Commission III. (Minutes of the meeting are being distributed separately as document #81.) T y p o g r a p h ic E r r o r in R e g u l a t io n s Attention is called to a typographic error in the Regulations as distributed (Conference Document 34, C/RR/4(C/RR/1)). In article 24, last sentence, the reference should be to article 17 instead of article 18. Documeni 56 DP/1 M ex/cjn Delegation Proposal on Voting Changes in Rates of Member Currencies W h e r e a s th e p rop osed d istr ib u tio n o f v o tin g p ow er in con n ec tion w ith a lte r in g th e r a te s o f ex ch a n g e o f a m em ber country p laces c o u n tr ie s w ith sm a ll q u otas in a n o to rio u sly d isa d v a n ta g e o u s p o sitio n as com p ared w ith th a t o f th e co u n tries w ith th e la r g e st q u o ta s ; W h er ea s under th e p rop osed v o tin g sy ste m a co a litio n o f a sm all n um b er o f m a jo r m em b er co u n tries c o n tr o llin g th e m a jo rity o f v o te s is in a p o sitio n to ap p ro v e ch a n g e s in the ra tes o f th eir ow n cu rren cies w h ile su ch a co a litio n eq u ally could p rev en t ch a n g e s in th e r a te s o f all o th er m em b er cu r re n cie s; W h e r e a s all th e co u n tries h a v in g th e sm a ller q u otas even if th ey ca st ail th e ir v o tes to g e th e r could n ev er a tta in such an o v er w h e lm in g p o s it io n ; W h e r e a s th e s ta b ility o f th e ex ch a n g e r a te s o f th e econ om ically w ea k er co u n tries is la rg ely d ep en d en t upon th e r esp o n sib ility o f th e eco n o m ica lly str o n g e r co u n tries fo r m a in ta in in g a h igh level o f em p lo y m en t and n a tio n a l in co m e; and W h e r e a s , th e r e fo r e , a ch a n g e in th e r a te s o f th e le ss im p o rta n t cu rren cies a ffects in te r n a tio n a l m o n eta ry eq u ilib riu m to an e x te n t v e r y m uch sm a ller th a n a ch a n g e in th e ra te s o f th e m a jo r c u r r e n c ie s ; 96 MONETARY AND FINANCIAL CONFERENCE The Mexican Delegation submits the following MODIFICATION of Article IV, Section 4, of the Joint Statement: After consulting the Fund, a member country may change the established parity of its currency, provided the proposed (p. 2) change, inclusive of any previous change since the establishment of the Fund, does not exceed 10 c for the country having a quota /c ten per cent or more of the aggregate quotas, and not to exceed 20 'r in the case of a country having less than ten per cent of the aggregate quotas. In the case of application for a further change not covered by the above and not exceeding 10 per cent for the country having a quota ten per cent or more of the aggregate quotas, and not to exceed 20 per cent in the case of a country having less than ten per cent of the aggregate quotas, the Fund shall give its decision within two days of receiving the application, if the applicant so requests. Document 58 C l/M /1 Minutes of Meeting of Commission I July 3, 1 9 4 4 , 2 p.m. The first meeting of Commission I was called to order by the Secretary General, who announced that in conformity with the rules and regulations adopted July 3, 1944, Harry D. White (U.S.A.) had been designated Chairman, Rodolfo Rojas (Vene zuela), Vice Chairman, and L. Rasminsky (Canada), Reporting Delegate. Mr. White took over the Chair and introduced the Secre tary of the Commission, Leroy D. Stinebower, and the Assistant Secretary, Mrs. Eleanor Lansing Dulles. (The Secretaries will be available in room 156 for assistance to the members of the Com mission.) Mr. White then addressed the Commission, explaining the ob jectives of the Fund and its importance for full production and employment, and for improvement of the standard of living in all peace-loving countries. He stressed the danger of economic warfare and the need for fostering multilateral trade. He said that the international monetary fund is designed to promote ex change stability, to assure multilateral payment facilities, and to lessen international disequilibrium. PROCEEDINGS AND DOCUMENTS 97 The Chairman asked the Delegations to submit the names of members on Commission I to the Secretary General (room 136) or to the office of Commission I (room 156). He said that it had been decided that the work of the Commission would be divided into four Committees according to the agenda already distributed, and that the Committees would usually report their conclusions to the Commission after each two meetings. It was announced that the basic documentation for the work of Commission I, in addition to the Preliminary Draft Outline and the Joint Statement, will include the Preliminary Draft of July 1, 1944 (SA /1). (This document is not yet complete but the first part has been distributed.) The Chairman announced that Committees 1 and 3 would meet at 10 a.m., July 4, 1944, and Committees 2 and 4 at 11:30, the placcs of meeting to be announced. The Committees will also meet in the afternoon. The Commission was thereupon adjourned, to meet again at the call of the Chairman. Document 59 C l/ R / 1 Opening Remarks of Mr. Harry D. White at the First Meeting of the Commission on the International Monetary Fund Each of the United and Associated Nations has as a fundamental objective the creation of as full production and employment as is possible in its own country. This is the only practical way to improve the standard of living in the peace-loving nations. But this objective is attainable only if there is the fullest trade among the nations based on the interests of all. It cannot be achieved if military warfare is followed by economic warfare—if each country, to the disregard of the interests of other countries, battles solely for its own short-range economic interests. The unrestrained economic fighting of the 1930\s points clearly to the conclusion that such economic warfare is neither in the best interests of the particular country nor in the general interest of all countries. Unrestrained economic warfare, if allowed to continue in the future, will again disrupt production and employ ment by destroying international trade and injuring national mar kets. It will undermine one of the foundation stones for a secure peace. 98 MONETARY AND FINANCIAL CONFERENCE Some examples from the United States may illustrate what I mean: The condition of American cotton, tobacco, and other agri cultural producers depends upon the ability of European and other countries to buy substantial portions of their crops. If Europe is not prosperous and the proper mechanisms of trade are not used, these American producers will not be able to export as much of their produce. At the same time the prosperity of other parts of the world and of the United States depends on the importation of raw materials from foreign countries. The higher the production levels in the United States and the more efficient the trade mechanisms, the more raw7 materials we import from (p. 2) abroad. Both the United States and other coun tries are thus benefited. A unilateral or bilateral approach to our trade problems cannot produce the highest benefits for the peaceloving nations. The approach must be multilateral. The proposal for an International Monetary Fund w7 hich we are to consider in this Commission is designed to promote the development of international markets by providing a permanent institution for international monetary cooperation. It would pro mote exchange stability, assure multilateral payment facilities, help lessen international disequilibrium, and give confidence to member countries. Only by developing the necessary machinery to maintain multilateral ron-discriminatory trading among na tions can we hope to avoid resort to exchange restrictions, quotas, and other devices which inevitably cause a contraction of trade and production. The proposed Fund, w7 hich is before you for consideration, would be an important influence toward stability in international monetary and economic relations. Clearly it is going to be a difficult task to get over all the ground that we hope to cover before the end of the Conference. We can be successful only if we concentrate on the job and cooperate to the fullest possible extent. That is the task of this Commission and its various Committees. Document 60 C l l/ M / 1 Minutes of Meeting of Commission II Ju ly 3, 1944, 3:30 p.m. The Secretary General called the meeting to order and an nounced the election by the Conference of representatives of the pr ()c k t:i) i n (;s a l\j) i ) o (:i m k j n t s 99 United Kingdom, Chile, and Belgium to the positions of Chairman, Vice Chairman, and Reporting Delegate, respectively. He also announced that the respective delegations had nominated Lord Keynes as Chairman, Luis Alamos Barros as Vice Chairman, and Georges Theunis as Reporting Delegate. Lord Keynes assumed the Chair and introduced the Secretaries of the Commission, Messrs. Upgren and Smithies, and the As sistant Secretary, Miss Russell, who will be available in room 147 for assistance to members of the Commission. The Chairman then delivered a brief address (copies of which have been separately distributed), on the purposes of the pro posed United Nations Bank for Reconstruction and Develop ment. The Chairman suggested that it would be advisable to appoint an agenda committee to assemble suggestions from the various delegations and prepare for the next meeting of the Commission. The Delegate of Ecuador thereupon moved that the Chairman’s suggestion be adopted and that the Chairman be empowered to appoint a committee. The motion was seconded by the Delegate of Haiti and carried unanimously. The Chairman announced that the members of the Committee would be representatives of the following delegations: United Kingdom, Chairman Brazil French Committee Canada India China Union of Soviet Socialist Cuba Republics Czechoslovakia United States of America The meeting was thereupon adjourned until further notice. Document 61 cm ;M'1 Minutes of Meeting of Commission III Ju ly 3, 1944, 5 p.m. The meeting was opened by the Secretary General who an nounced the election of officers of Commission III and intro duced the Chairman, Eduardo Suarez (Mexico), the Vice Chair man, Sany Lackany Bey (Egypt), and the Reporting Delegate, A. G. B. Fisher (New Zealand). 100 MONETARY AND FINANCIAL CONFERENCE The Chairman discussed the nature and scope of the work of the Commission. He pointed out that Commission III will not be deal ing with specific proposals that have been the subject of extended consultation and study by the technical representatives of various nations. A motion was passed authorizing the Chairman to appoint a committee to receive suggestions and make recommendations as to the problems which should be dealt with by the Commission. The Chairman appointed the following agenda committee: Representative of Poland, Chairman Representative of the Netherlands, Reporter Representatives of Chile, Ethiopia, and Uruguay, Members Delegates were requested to submit specific problems to the committee during the next three days through the Technical Secretary (office, room 151). The meeting was thereupon adjourned until further notice. Document 63 G D /1 2 Verbatim Minutes of the Second Plenary Session (July 3, 15)44, 10 a.m.) S e c r e t a r y M o r g e n t h a u : The Second Plenary Session of the United Nations Monetary and Financial Conference is hereby convened. I recognize the Chairman of the Delegation of Cuba, who will present the report of the Committee on Credentials. M r . M o n t o u l ie u : Report o f the Com m ittee on Credentials July 2, 19AA The Committee appointed by the Temporary President of the United Nations Monetary and Financial Conference to examine the credentials of its participants met under the chairmanship of the Honorable Eduardo I. Montoulieu, Chairman of the Delegation of Cuba, on July 2, 1944, at 9 p.m. The Committee consisted of representatives of Cuba, Liberia, Netherlands, Norway, and Union of South Africa. The credentials of the representatives of the following governments or authorities were examined and found PROCEEDINGS AND DOCUMENTS 101 to be in good order: Australia, Belgium, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Cuba, Czechoslovakia, Do minican Republic, Ecuador, Egypt, El Salvador, Ethiopia, French Delegation, Greece, Guatemala, Haiti, Honduras, Iceland, India, Iran, Iraq, Liberia, Luxembourg, Mexico, Netherlands, New Zealand, Nicaragua, Norway, Panama, Paraguay, Peru, Philip pine Commonwealth, Poland, Union of South Africa, Union of Soviet Socialist Republics,. United Kingdom, United States, Uru guay, Venezuela, and Yugoslavia. The Committee therefore rec ommends the approval of these credentials and the accordance of full right of participation in the Conference. The Committee on Credentials also had occasion to read a letter dated June 2, 1944, from the Honorable Cordell Hull, Sec retary of State of the United States, to the Honorable Henrik de Kauffmann, Minister of Denmark, inviting him to attend in his personal capacity the inaugural plenary meeting of the Confer ence. It also had before it the reply of the Danish Minister dated June 3, 1944, accepting this invitation and stating that he would be accompanied to Bretton Woods by an adviser. Inasmuch as no question of credentials was raised by these letters, the Com mittee agreed to refer their subject matter to the Conference and would be pleased if an invitation could be extended to the Danish Minister to attend further meetings of this Conference, without the privilege of a vote. (p. 2) The Committee on Credentials also had occasion to read letters dated. June 12, 1944 from the Honorable Dean Acheson, Assistant Secretary of State of the United States, to the appro priate officials of the following international organizations inviting each of these organizations to send an observer to the Confer ence: The International Labor Office, the United Nations Relief and Rehabilitation Administration, the Economic Section of the League of Nations, and the United Nations Interim Commission on Food and Agriculture, in response to which each of these organi zations had indicated its desire to send observers pursuant to such invitation. Inasmuch as no question of credentials was raised by this matter, the Committee merely reports it to the Conference with a request that the observers be invited to attend the sessions of the Conference, without the privilege of a vote. Eduardo I. Montoulieu, Chairman Edward G. Miller, Jr., Secretary M r . M o n t o u l ie u : The Committee also prepared a draft of a 102 MONETARY AND FINANCIAL CONFERENCE resolution which I move be adopted. The resolution reads as follows: A Resolution Approving and Adopting the Report of the Committee on Credentials W h er ea s, The Committee on Credentials appointed by the Temporary Chair man has convened, examined the credentials of the representatives of the participating governments or authorities, their technical ad visers and other assistants, and made its report, a copy of which is annexed hereto and made a part hereof, now therefore B e I t R eso lved , That the aforesaid Report be, and hereby is, in all respects ap proved and adopted; that the representatives of the participating governments or authorities, technical advisers, and other assist ants, be accredited in accordance therewith; that the Conference invite the Danish Minister, in his personal capacity, and an ad viser, to attend further meetings of the Conference without the privilege of a vote; and that the Conference invite the Interna tional Labor Office, the United Nations Relief and Rehabilitation Administration, the Economic Section of the League of Nations, and the United Nations Interim Commission on Food and Agri culture to send one observer from each organization to attend the sessions of the Conference without the privilege of a vote. (p . 3 ) S ecretary M o r g e n t h a u : G en tlem en , you h a v e h eard th e re so lu tio n . A n y d isc u ssio n ? (None.) All those in favor of the resolution please signify by saying “Aye”. (Aye.) S ecretary M o r g e n t h a u : C on tra ry m in d ed ? (None.) (The motion was duly seconded and passed.) I now recognize Dr. Kung, Chairman of the Committee on Rules and Regulations of the Conference, who will present the report of this committee. Dr. K u n g : Report o f the Com m ittee on R ules and R egulations The Committee on Rules and Regulations met on Saturday, July 1, at 9 p.m. The Committee had before it the preliminary draft regulations which had been distributed to all delegations in advance of the Conference and the revision of these regulations (Conference Doc PROCEEDINGS AND DOCUMENTS 103 ument SN/1) which had been distributed to the members of the Conference during the day. The Committee received from the Secretariat an explanation of the changes in drafting which had been made in the regulations since they were first distributed. In the interests of clarification the Committee adopted certain additional changes of phraseology and arrangement. The Committee unanimously approved the regulations as amended and submits them herewith to the Conference for adoption. The only changes introduced by the Committee since the dis tribution of the draft to the Conference on July 1 are the following: Article 9, paragraph (b ). The last sentence of this paragraph is made a separate paragraph (c). Article 10 (a ). With reference to the functions of the Com mittee on Nominations, and having in mind the action of the Conference at its Inaugural Session in electing its Permanent President, the deletion of the reference to the Permanent Presi dent in this paragraph. (p. 4) Article 28. Insert after the first word of the article the word “new”. Submitted by: Leslie G. Melville, Australia Ibrahim Kamal, Iraq Guillermo Sevilla Sacasa, Nicaragua Ludwik Grosfeld, Poland H. H. Kung, China, Chairman Philip C. Jessup, Secretary D r . K u n g : M r. President, may I move that this report be adopted by the Conference. S ecretary M o r g e n t h a u : With reference to that part of the report of the Committee on Rules and Regulations which makes a slight change in article 28 in the interest of clarity, the Chair understands that the Committee had in mind making it plain that article 28 refers to additional matters which it might be desirable to bring into the discussion. In regard to these new matters, article 28 requires delivery to the Secretary General and special advance distribution. Article 28 of the Regulations, in the under standing of the Chair, is not intended to apply to the ordinary ex change of views or amendments introduced in the normal course of committee discussions. The Chair understands, however, that any important amendments to any text changes under consideration by a committee or commission will not be submitted 7 4 9 0 1 3 — 48— 8 104 MONETARY AND FINANCIAL CONFERENCE to the committee or commission for any final expression of its views until after a lapse of time sufficient to enable the delega tions to give careful consideration to the proposed modification of the text. Of course, like all other rules of the Conference, this procedure might be varied by unanimous consent if considered desirable. I now recognize the Chairman of the Delegation of Poland. Mr. G r o s f ie l d : I second the motion of the Chairman of the Chinese Delegation. The regulations, or the proposed regula tions, give, I am sure, the full opportunity to every delegation to express their views and at the same time they guarantee an efficient functioning of the Conference. I, therefore, beg you to approve the proposed regulations. S ecretary M o r g e n t h a u : D o I h ea r a n y o b je ctio n s? (Pause.) I hear no objections. All those in favor say “Aye.” (Aye.) S ecretary M o r g e n t h a u : O pposed? (None.) (p. 5) (The regulations were duly approved.) I recognize the Chairman of the Delegation of New Zealand, Mr. Nash, who will present the report of the Committee on Nominations. Mr . N a s h : Report o f the Com m ittee on N om inations S a tu r d a y , Ju ly 1, 1044, 10 p.m. Chairman—Walter Nash, New Zealand Secretary—Frank Coe The meeting of the Committee on Nominations was called together by the Chairman, Mr. Walter Nash, the Representative of New Zealand. The members present at the meeting were: Luxembourg Iiugues Le Gallais Honduras Julian R. Caceres Iceland Magnus Sigurdsson Peru Pedro Beltran The Chairman, after convening the meeting, submitted the fol lowing suggestions for recommendation to the plenary session for appointment as committees to conduct the business of the Con ference. All the suggestions were unanimously approved. Suggested Nominations for Vice Presidents of the Conference Mr. M. S. Stepanov, the Chairman of the Delegation of the Union of Soviet Socialist Republics; PROCEEDINGS AND DOCUMENTS 105 Mr. Arthur de Souza Costa, the Chairman of the Delegation of Brazil; Mr. Camille Gutt, the Chairman of the Delegation of Belgium; and Mr. Leslie G. Melville, the Chairman of the Delegation of Australia. Suggested Nominations for the Steering Committee For Chairman of the Committee, the Representative of the United States. For Members of the Committee, the Representatives of: Belgium Iran Brazil Mexico Canada Union of Soviet Socialist China Republics Colombia United Kingdom French Delegation (p. 6) Suggested Nominations for Commission I— International Monetary Fund For Chairman, the Representative of the United States. For Vice Chairman, the Representative of Venezuela. For Reporting Delegate, the Representative of Canada. Suggested Nominations for Committees of Commission I Committee No. 1—Purposes, Policies, and Quotas of the Fund Chairman: The Representative of China Reporter: The Representative of Greece Committee No. 2—Operations of the Fund Chairman: The Representative of the Union of Soviet So cialist Republics Reporter: The Representative of the French Delegation Committee No. 3—Organization and Management Chairman: The Representative of Brazil Reporter: The Representative of Czechoslovakia Committee No. 4—Form and Status of the Fund Chairman: The Representative of Peru Reporter: The Representative of Norway Suggested Nominations for Commission II— Bank for Reconstruction and Development For Chairman, the Representative of the United Kingdom. For Vice Chairman, the Representative of Chile. For Reporting Delegate, the Representative of Belgium. 106 MONETARY AND FINANCIAL CONFERENCE Suggested Nominations for Committees of Commission II Committee No. 1—Purposes, Policies, and Capital of the Bank Chairman: The Representative of the Netherlands Reporter: The Representative of Costa Rica (p. 7) Committee No. 2—Operations of the Bank Chairman: The Representative of Cuba Reporter: The Representative of Australia Committee No. 3—Organization and Management Chairman: The Representative of Colombia Reporter: The Representative of the Union of South Africa Committee No. 4—Form and Status of the Bank Chairman: The Representative of India Reporter: The Representative of Poland Suggested Nominations for Commission III— Other Means of International Financial Cooperation For Chairman, the Representative of Mexico. For Vice Chairman, the Representative of Egypt. For Reporting Delegate, the Representative of New Zealand. The Chairman moved at the conclusion of a short discussion that the suggestions be approved as recommendations to the plenary sessions, and this resolution was unanimously carried. Mr. N a s h : Mr. President, may I suggest I move first that this report be received and then move separately the various nom inations for the respective bodies as set up by the Committee. I therefore move that this report be received. S ecretary M o r g e n t h a u : Gentlemen, you have heard the re port of the Committee on Nominations which the Chairman has moved to be received. Unless there is objection, the report will be received. Do I hear any objections? (None.) (The report was received favorably.) I recognize the Chairman of the Delegation of New Zealand, Mr. Nash. (Mr. Nash moved the election of the four Vice Presidents as given in the report of the Committee on Nominations.) S ecretary M o r g e n t h a u : I recognize the Chairman of the Delegation of Luxembourg. Mr. Le G a l l a i s : I second the motion presented by my distin guished colleague, the Chairman of the Delegation of New Zealand. (p . 8 ) S ecretary M o r g e n t h a u : You have heard the motion made and seconded. Do I hear any objections? (None.) PROCEEDINGS AND DOCUMENTS 107 I hear no objections. All those in favor say “Aye”. (Aye.) S ecretary M o r g e n t h a u : O pposed? (None.) The “Ayes” have it. (The four Vice Presidents were thereupon elected.) I again recognize the Chairman of the Delegation of New Zealand, Mr. Nash. (Mr. Nash moved the election of the members of the Steering Committee as given in the report of the Committee on Nomina tions.) S ecretary M o r g e n t h a u : I recognize the Chairman o f the Delegation of Peru. M r . B e l t r a n : I beg to second the motion of M r. Nash. S ecretary M o r g e n t h a u : You have heard the motion made and seconded. Do I hear any objections? (None.) I hear no objections. All those in favor please say “Aye”. (Aye.) S ecretary M o r g e n t h a u : Opposed? (None.) (The members of the Steering Committee were thereupon elected.) I again recognize the Chairman of the Delegation of New Zealand, Mr. Nash. (Mr. Nash moved the election of the officers of Commission I and of its relevant committees as given in the report of the Committee on Nominations.) S ecretary M o r g e n t h a u : I recognize the Chairman of the Delegation of Honduras. M r . Ca c e r e s : M r. Chairman, I have the honor to second the motion introduced by the Honorable Delegate of New Zealand proposing the acceptance of the nominations for officers of Com mission 1. The ability of the officers (p. !)) proposed is so well known that it is not necessary for me to stress their competence. The subject to be studied, the creation of an international stabili zation fund, is the backbone of this Conference. There is no doubt that the officers proposed will make every effort to carry the deliberations of Commission I to a successful conclusion. S ecretary M o r g e n t h a u : You have heard the motion made and seconded. Do I hear any objections? (None.) 108 MONETARY AND FINANCIAL CONFERENCE I hear no objections. All those in favor please say “Aye”. (Aye.) S ecretary M o r g e n t h a u : Opposed? (None.) The “Ayes” have it. (The officers of Commission I and of its relevant committees were thereupon elected.) I recognize the Chairman of the Delegation of New Zealand, Mr. Nash. (Mr. Nash moved the election of the officers of Commission II and of its relevant committees as given in the report of the Committee on Nominations.) S ecretary M o r g e n t h a u : I recognize the Chairman of the Delegation of Iceland. Mr. S ig u r d sso n : Mr. President, I hereby second the motion for the election of the proposed Chairman, Vice Chairman, and Re porting Delegate of Commission II, together with the officers of its respective committees. As everybody present knows, the problems to be dealt with at the conclusion of this war are numerous. Last, but not least, there are the commercial and financial problems which have grown out of the war. The proposals for an erection of a Bank for Reconstruction and Development of the United and Associated Nations, which this Commission will handle, are among the most important problems of this Conference and have been drafted by the most able men. I hope this Commission will succeed in reaching a final decision in these matters, so that the Bank may be established, for commercial and financial benefit, at the con clusion of the war. S ecretary M o r g e n t h a u : You have heard the motion made and seconded. Do I hear any objections? (None.) No objections. All those in favor please say “Aye”. (p.10) (Aye.) S ecretary M o r g e n t h a u : Contrary minded? (None.) (The officers of Commission II and of its relevant committees were thereupon elected.) I recognize the Chairman of the Delegation of New Zealand, Mr. Nash. (Mr. Nash moved the election of the officers of Commission III as given in the report of the Committee on Nominations.) PROCEEDINGS AND DOCUMENTS 109 S ecretary M o r g e n t h a u : I recognize the Chairman of the Delegation of Peru. M r . B e l t r a n : I beg to second the motion for the election of the officers of Commission III. S ecretary M o r g e n t h a u : Y ou have heard the motion made and seconded. Do I hear any objections? (None.) I hear no objections. All those in favor please say “Aye”. (Aye.) S ecretary M o r g e n t h a u : Opposed? (None.) The “Ayes” have it. (The officers of Commission III were thereupon elected.) I recognize the Chairman of the Delegation of Peru. M r . B e l t r a n : M r. President, fellow delegates to the Conference, Tomorrow we will celebrate the national day of this country to whose generous hospitality we all owe the opportunity of being here together in this Conference to study those problems which have worried the world in the past and the solution of which would be of untold benefit to mankind. On this occasion, on behalf of the Peruvian Delegation, I beg leave to move the following resolution: R esolved , “In celebration of the 168th anniversary of the Proclamation of Independence of the United States of America, the United Nations Monetary and Financial Conference sends its greetings to the American nation (p. 11) in the person of its illustrious President, Mr. Franklin D. Roosevelt, and expresses its admira tion of the heroic efforts which their fighting services, together with those of the other Allies, are making to achieve a quick victory which will make possible a new era of world cooperation for the good of all peoples.” S ecretary M o r g e n t h a u : I recognize Senator Tobey, a Mem ber of the United States Delegation, United States Senator from the State of New Hampshire. Senator Tobey will now address the meeting. S e n a t o r T o b e y : Mr. President and fellow delegates of the Conference, on behalf of the American Delegation and on behalf of the President of the United States, I express our deep apprecia tion to the Peruvian Delegation for its sincerely expressed resolu tion. One hundred and sixty-eight years ago in this country men of various creeds and from varied walks of life met together 110 MONETARY AND FINANCIAL CONFERENCE with a common objective to establish a free nation. Their high purpose impelled them to cooperate, and there resulted a per manent contribution to the welfare of generations then unborn. Today men and women of different races and creeds are here assembled together, determined to work out, by mutual coopera tion, a plan for a permanent contribution for the benefit of the people of the world. It is our common aspiration, I believe, that, assembled here among these eternal hills, we shall, under a deep conviction of the needs of humanity, discard trivia and refuse to be turned away from our great purpose to give to the people of the w7 orld new hope and courage through the constructive results which we pray may come from this historic Conference. The specific task assigned to us is to formulate a practical plan for the establishment of a world fund and for the stabilization of exchange. This is our immediate and essential objective. If we can be successful in achieving this end, we shall be paving the way for the accomplishment of the even more vital objective of a permanent world peace. For, by our successfully working out the immediate problem of the present Conference, we shall have proven to ourselves and to the world that international co operation is possible. Every great effort in human history has had its saboteurs, men who utter critic peep and cynic bark. There are some of these around the perimeter of this Conference. But, fellow members of the Conference, wr dare not, we cannot fail in the high purpose e which brought us together, for today men are dying and homes are saddened for the cause of world freedom. Their sacrifices are a challenge to us here assembled and should stand out in our consciousness as we strive together to work out a plan for world cooperation. (p. 12) The man in the foxhole has left all that he has loved and cherished behind him. As he faces the shock of enemy fire through long days and nights, he feels alone and apart from the rest of the world. For him, life may be a matter of days, hours, or minutes. He wonders what we who represent governments are doing. Are we conscious of his agonies and sufferings? On us is a grave responsibility. To us is given a high privilege. God, the Father of all, give us understanding and a vision of the needs of men today, of the fundamental truth that, whatever our na tionality or creed, we are brothers under the skin. As we confer together here today, amidst the eternal hills, in spired by the sublime beauty around us, and as the shadows of PROCEEDINGS AND DOCUMENTS 111 passing clouds above leave their impress for a moment on the slopes of yonder mountains, may the contemplation of the tragic sufferings and sacrifices of every nation bind us together in brotherly love and in a spirit of consecration to the great oppor tunity which is ours to displace doubt and cynicism with hope and confidence. Two thousand years ago Christ was hanged on a cross, a spear thrust in his side, nails driven through his hands, a crown of thorns pressed upon his brow, and a cup of vinegar placed to his lips. He died that men might be saved, and be, in truth, free. There are nations represented here today who, too, have had their sides pierced and a crown of thorns pressed upon them by the sufferings of war. They fight wT and for us and we with ith and for them. If cooperation can weld the United Nations together in solid phalanx against our enemies in war, surely we shall join together to achieve the vital objective of this Conference, meeting the world’s needs for the rehabilitation of a war-torn world. There came into the Senate last May a remarkable personality —Madame Chiang Kai-shek, wife of the Generalissimo of China. She made a ten-minute extemporaneous address. In closing, she eloquently and truthfully said: “Gentlemen, it is fine to have ideals and to give expression to them, but to make our ideals effective, we must implement them.” So may we, by constructive action here, implement our great objective of world cooperation. In the play “Valley Forge” by Maxwell Anderson, there appear these lines: “There are some men who lift the level of the age they inhabit, until all men stand on higher ground in that lifetime.” (p. 13) Fellow members of the Conference, may that be said in truth of us when we have concluded our labors. To that end I call upon each of you to place your hand with mine upon the lever of the spirit and aspirations that called this Conference into being, and by our united cooperation to lift the level of our age, that its blessings may be passed on to generations yet unborn. Gentlemen, we must not, we cannot, we dare not fail. The hopes and aspirations of the common people of each of our countries rest in us. S ecretary M o r g e n t h a u : You have heard the motion of the Chairman of the Peruvian Delegation and the very fine address of Senator Tobey. All those who are in sympathy with the motion 112 MONETARY AND FINANCIAL CONFERENCE and the very fine thoughts expressed by Senator Tobey please say “Aye.” (The motion was adopted by acclamation, whereupon the meet ing was adjourned.) Document 69 Report of the Committee on Credentials Jul y 2, 1944 The Committee appointed by the Temporary President of the United Nations Monetary and Financial Conference to examine the credentials of its participants met under the chairmanship of the Honorable Eduardo I. Montoulieu, Chairman of the Delega tion of Cuba, on July 2, 1944, at 9 p.m. The Committee consisted of representatives of Cuba, Liberia, Netherlands, Norway, and Union of South Africa. The credentials of the representatives of the following governments or authorities were examined and found to be in good order: Australia, Belgium, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Cuba, Czecho slovakia, Dominican Republic, Ecuador, Egypt, El Salvador, Ethi opia, French Delegation, Greece, Guatemala, Haiti, Honduras, Iceland, India, Iran, Iraq, Liberia, Luxembourg, Mexico, Nether lands, New Zealand, Nicaragua, Norway, Panama, Paraguay, Peru, Philippine Commonwealth, Poland, Union of South Africa, Union of Soviet Socialist Republics, United Kingdom, United States, Uruguay, Venezuela, and Yugoslavia. The Committee therefore recommends the approval of these credentials and the accordance of full right of participation in the Conference. The Committee on Credentials also had occasion to read a letter dated June 2, 1944, from the Honorable Cordell Hull, Secretary of State of the United States, to the Honorable Henrik de Kauffmann, Minister of Denmark, inviting him to attend in his personal capacity the inaugural plenary meeting of the Conference. It also had before it the reply of the Danish Minister dated June 3, 1944, accepting this invitation and stating that he would be ac companied to Bretton Woods by an adviser. Inasmuch as no ques tion of credentials was raised by these letters, the Committee agreed to refer their subject matter to the Conference and would be pleased if an invitation could be extended to the Danish Min ister to attend further meetings of this Conference, without the privilege of a vote. PROCEEDINGS AND DOCUMENTS 113 The Committee on Credentials also had occasion to read letters dated June 12, 1944 from the Honorable Dean Acheson, Assistant Secretary of State of the United States, to the appropriate officials of the following international organizations inviting each of these organizations to send an observer to the Conference: The Inter national Labor Office, the United Nations Relief and Rehabilita tion Administration, the Economic Section of the League of Na tions, and the United Nations Interim Commission on Food and Agriculture, in response to which each of these organizations had indicated its desire to send observers pursuant to such in vitation. Inasmuch as no question of credentials was raised by this matter, the Committee merely reports it to the Conference with a request that the observers be invited to attend the sessions of the Conference, without the privilege of a vote. Eduardo I. Montoulieu, Chairman Edward G. Miller, Jr. Secretary Document 101 (p . 1 4 ) J OURNAL UNITED NATIONS N o. 5 MONETARY AND FINANCIAL CONFERENCE Bretton W o cd s, Nr?w Ham pshire ORDER OF THE July 5, 1944 DAY Meetings for Wednesday. July 5 10:30 a.m. 4 p.m. 4 p.m. 5:30 p.m. 5:30 p.m. Commission I ............................................................Auditorium Committee 1 of Commission I.................................. Auditorium Committee 3 of Commission I ................................The Hemicycle Committee 2 of Commission I ................................Auditorium Committee 4 of Commission I ................................The Hemicycle (P . 1 5 ) R e s u m e s of C o m m it t e e M e e t in g s Committee 1 of Commission I Purposes. P o licies, anti Q uotas o f th e F uih ? (July 4. 10 a.m.) Committee 1 of Commission I held its first meeting at 10 a.m. 114 MONETARY AMI) FINANCIAL CONFERENCE on July 4 with Dr. Tsiang (China) in the Chair. The Committee agreed to postpone temporarily discussion of quotas and consid ered article 1 of the Proliminary Draft on purposes and policies of the Fund. Considerable discussion took place over section 2, Alternative C, which includes as a purpose “to assist in the fuller utilisation of the resources of economically underdeveloped countries”. The sponsors of this alternative explained that this purpose was implicit in the Joint Statement but should be ex plicitly stated. Other members believed that it was an expansion of the purpose and was more appropriate for the Bank. (The minutes of this meeting are being distributed separately as document #102.) (July 4, 4 p.m.) The second meeting of Committee 1, Commission I was de voted to a discussion of alternatives to sections 2-6 of article I, which deals with purposes and policies. The wording of Alterna tive A to section 5 was accepted. Alternatives A and B for sec tions 2 and 3 were referred to a drafting committee. Alternative D to section 4, which deals with exchange stability, was withdrawn by the member proposing it after discussion of Alternatives B and E. The Committee decided to refer the matter to the drafting committee with the understanding that it would make its report after the provisions regarding changes in par values had been agreed upon. The Committee agreed to postpone consideration of Alternative F, dealing with the correlation of the activities of the Fund with those of other international financial agencies, until the general relations of the Fund with other international organi zations had been considered. The sponsors of Alternative G, which deals with abnormal indebtedness arising out of war, emphasized the importance of this question to the countries concerned. The suggestion was made that the matter be referred by Commission I to Commission III. (The minutes of this meeting are being distributed separately as document #111.) (P. 16) Committee 2 of Commission I Operations of the Fund (July 4, 11:30 a.m.) The first meeting of Committee 2 of Commission I was held on July 4 at 11:30 a.m. The Chairman of Committee 2, N. A. Maletin (U.S.S.R.), was introduced by Mr. White (U.S.A.), Chairman of Commission I. The Chairman was authorized by the PROCEEDINGS A i I ) DOCUMENTS \ 115 Committee to appoint a Vice Chairman, \V. A. Mackintosh (Cana da), to assist him in presiding over the meetings of the Com mittee. The Committee then discussed the Alternatives suggested to article III, sections 1 and 2 of the Joint Statement, as pre sented on pages 5 and G oi‘ Document F -i. These sections deal with the agencies through which dealings between the members and the Fund shall take place and the conditions under which a member country is entitled to buy another member’s currency from the Fund. (The minutes of this meeting are being distributed separately as document it 104.) (July 4, 5:30 p.m.) The second meeting of Committee 2 of Commission I was held on July 4 at 5:80 p.m. The Chairman was authorized to ap point a small committee to consider questions of language. The Committee proceeded with a discussion of article III, sections 2, 3, and 4. These sections deal with the conditions under which a member country is entitled to buy another member’s currency from the Fund, the limitation on the operations of the Fund, and the power of the Fund to borrow a member’s currency or to offer gold to a member country in exchange for its currency. (The minutes of this meeting are being distributed separately as document #112.) Committee 3 of Commission I O rg anizatio n and M anagem ent of th e F und (July 4, 10 ct.})i.) The first meeting of Committee 3 of Commission I was held on July 4 at 10 a.m. with Dr. de Souza Costa (Brazil) as Chairman. The Committee considered article VII, section 1. Consideration was given to Alternatives A and B to VII-1 (c ), and the Committee approved the inclusion of Alternative B in the draft with the exception of the last sentence, which was deleted by general consent. (The minutes of this meeting are being distributed separately as document #103.) (P .17) ( July 4, 4 The Committee on Management accepted the provisions of VII-1 (d) with the understanding that they were supplementary to VII-1 (c). VII-1 (e) was accepted without discussion. The Com 116 MONETARY AND FINANCIAL CONFERENCE mittee gave extended consideration to Alternatives A and B of VII-2. Questions were raised about the proper functions of the managing director or chairman of the executive directorate. The question of frequency of meetings of the directorate and the allo cation of functions between the various boards of the Fund’s management were discussed. No action was taken and the entire question remains open for further consideration. (The minutes of this meeting are being distributed separately as document #113.) Committee 4 of Commission I Form and Status of the Fund ( July 4, 11:30 a.m.) The first meeting of Committee 4 of Commission I was held on July 4 at 11:30 a.m. The Chairman of Commission I, Mr. White (U.S.A.), introduced the Chairman of the Committee, Mr. Llosa of Peru. The scope of the work of the Committee was discussed. (The minutes of this meeting are being distributed separately as document #105.) (p. 18) L ist o f D o c u m e n t s I ssu e d as o f July 4, 1944 Subject Symbol No. Journal No. 1 ........................................................................................... J.'l Agenda .....................................................................................................A/1 Inaugural Plenary S e ssio n ................................................................... GD/1 Press Release No. 1 ............................................................................... PR/1 Press Release No. 2 ...............................................................................PR/2 Inaugural Plenary Session (Correction of GD/1) ...................... ....GD/2 Press Release No. 3 .......................................... ....................................PR/3 Regulations for UNMFC, D r a f t .................................................... ....C/RR/1 Address by Czechoslovakian Delegate—Press Release No. 4 . . . PR/4 Address by Chinese Delegate—Press Release No. 5 .................... ....PR/5 Address by Mexican Delegate—Press Release No. G .................. ....PR /6 Address by Brazilian Delegate—Press Release No. 7 ................ .... PR /7 Address by Canadian Delegate—Press Release No. 8 ................ ....PR/8 Rules and Regulations Committee, Notice of Meeting, July 1, 1944, 9 p.m............................................................................................C/RR/2 Nominating Committee, Notice of Meeting, July 3, 1944, 10 p.m. C /N /l Credentials Committee, Notice of Meeting, July 1, 1944, 9 p.m. C'C R/1 Address by Russian Delegate—Press Release No. 9 .................. .... PR, 9 Rules and Regulations Committee, Notice of Meeting. July 1, 1944, 9 p.m. (Correction of C /R R /2) ........................................ ....C/RR/3 Order of the Day, July 2, 1944 ........................................................ ....SN 2 Journal No. 2 .........................................................................................J/2 PROCEEDINGS AMD DOCUMENTS Subject 117 Symbol No. Press Release No. 1 0 ........................................................................ ....P R /10 Regulations for UNMFC (Revision of C, RR/1) (Final D raft) C/RR/4 Nominating Committee, Report of Meeting, July 1, 1944, 10 p.m. C /N '2 Press Release No. 11 ........................................................................ ....PR 11 Order of the Day, July 3, 1 0 4 4 ........................................................ ....GD. (5 Inaugural Plenary S e ssio n .............................................................. ....GD/7 Journal No. 3 ...................................................................................... ....J/3 Press Release No. 12 ........................................................................ ....PR 12 Special Note on Hotel Registration and Conference D irectory.. GI)/9 Opening Remarks of Lord Keynes at the F irst Meeting of the Second Commission........................................................................ ....FD/2 Press Release. No. 13 ........................................................................ ... PR/13 Press Release No. 1 4 ........................................................................ ... PR/14 Representation of Delegations on Commissions and Committees, Memorandum from Secretariat io Chairmen of D elegations.. SN/7 Commission I—Committee Assignments ...................................... ... CI/1 Rules and Regulations Committee, R e p o rt.................................... ... C/RR/5 Rules and Regulations Committee, Minutes of M eetin g .............. ... C/RR/6 Journal No. 4 ...................................................................................... ... J, 4 Proposal by Mexican D eleg atio n .................................................... ...DP/1 Order of the Day, July 4, 1 9 4 4 ........................................................ ... GD/1.1 Commission I, Minutes of Meeting, July 3, 2 p.m......................... ... CI/M /1 Remarks by Mr. H arry D. W h ite .................................................. ...CI/R/1 Commission II, Minutes of Meeting, July 3, 3:30 p.m................. ... CII/M /1 Commission III, Minutes of Meeting, July 3, 5 p.m..................... ...CIII/M /1 Second Plenary Session (July 3. 10 a.m.), M in u te s.................... ...GD/12 Press Release No. 1 5 ........................................................................ ...PR/15 Credentials Committee, Report ...................................................... ...C/C.R/2 Document 102 C l/ l/ M l Minutes of Meeting of Commission I, Committee 1 P u r p o s e s , P o l ic ie s , a n d Q uotas o f t h e F u n d (July 4, 10 ajiir) The Chairman of Commission I, Mr. White (U.S.A.), intro duced the Permanent Chairman of Committee 1, Dr. Tsiang (China). Dr. Tsiang introduced the Reporter, Mr. Varvaressos (Greece), and the Secretaries, Mr. Brown and Mr. Young. Dr. Tsiang said that the procedure would be that whenever there were several alternatives to be considered, those involving substantial changes would be considered first. It was agreed to postpone temporarily the discussion of quotas until a paper on this subject had been distributed. ns MONETARY AND FINANCIAL CONFERENCE The discussion then turned to article I. section 1. Alternative A, section 1, was rejected by the Committee. It was moved that in order to expedite matters, a drafting committee be appointed and that sections involving no substantial change be referred to such committee by the Chair with the ap proval in each case of the full Committee. This motion was carried. The Chair then brought up section 2, Alternative C, in which appear the following words: “to assist in the fuller utilisation of the resources of economically underdeveloped countries”. Consid erable discussion took place as to whether this purpose was an appropriate one for the Fund or whether it did not belong in the purposes of the Bank. The purpose of the alternative was explained to the Com mittee as making explicit an objective which was implicit in the references in the Joint Statement to the expansion of trade. The wording of the provision of the Joint Statement which speaks of the maintenance of high levels of employment and real income was thought by the proposers of Alternative C to stress unduly the position of highly industrialized countries. In discussion there developed a consensus that the attainment and promotion of high levels of real income and employment, as well as their mainte nance, once attained, was intended to be included among the purposes and that the addition of the appropriate words to that effect would be desirable. The main discussion of the amendment turned on the question of whether as worded it did not broaden the purposes of the Fund to include objectives which were appro priately those of the Bank. A number of suggestions for alterna tive language were suggested in the course of discussion. The Chairman, at the conclusion of the discussion, referred Alternative C to the drafting committee upon the understanding that the intent of the amendment was not to enlarge the meaning of the purposes as they are stated in the Joint Statement but merely to make the stated purposes more explicit. Document 103 C I/ 3 / M 1 Minutes of Meeting of Commission I, Committee 3 O r g a n iz a t io n a n d M a n a g e m e n t o f t h e F u n d (July 4, 10 a.m.) The Committee was organized with the introduction of the PROCEEDINGS AND DOCUMENTS 119 Chairman, Dr. de Souza Costa (Brazil), the Reporter, Dr. Hexner (Czechoslovakia), and the Secretaries, Messrs. Bryan and Bittermann. The text of VII-1 (a) (Alternative A) was accepted by the Committee with the suggestion that the words “all powers” be sub stituted for the word “administration” since the latter word has too restricted a meaning in Spanish. The Committee next considered VII-1 (b). After an exchange of views about the delegation of powers, the text of Alternative A met with general approval. Alternatives A and B of VII-1 (c) were discussed. The view was expressed that Alternative A did not give adequate opportunity to the small countries to protect their interests by asking for special meetings of the Board of Governors. After full considera tion, the Committee generally agreed to the incorporation into the draft of Alternative B with the exception of the last sentence. As agreed, VII-1 (c) therefore would provide that special meet ings of the Board of Governors could be called on the initiative of five countries or of countries having 25 percent of the quotas. Document 104 C l/2 /M l Minutes of Meeting of Commission I. Committee 2 O p e r a t io n o f t h e F u n d (July 4, 1944, 11:30 a.m.) The first meeting of Committee 2 of Commission I was called to order by Harry D. White (U.S.A.), wT introduced the Chair ho man of Committee 2, N. A. Maletin (U.S.S.R.). The Chairman of the Committee introduced the Reporter, Robert Mosse (French Delegation), the Secretary, Karl Bopp, and the Assistant Secre tary, Miss Alice Bourneuf. (The Secretaries will be available in room 158 for assistance to the members of the Committee.) The Chairman asked permission of the Committee to appoint a Vice Chairman to assist him in presiding over the Committee. This request was granted, and the Chairman appointed W. A. Mackintosh (Canada) as Vice Chairman, who presided during the remainder of the meeting. The Vice Chairman indicated that the Committee would begin with a discussion of matters relating to article III of the Joint Statement beginning on page 5 of Document F-l. 749013—48—9 120 MONETARY AND FINANCIAL CONFERENCE On article III-l, Alternative A was reserved for later discussion. On article III-2, paragraph (1> of Alternative A was passed over without discussion and paragraph (2) was reserved for later discussion. There was considerable discussion on III-2 (3) with respect to Alternatives A, B, and D. Some delegates felt that Alternative B would be most likely to meet the needs of those countries that have wide variations in their balance of payments positions. Others felt that the waiver provision in Alternative A would permit ade quate flexibility to handle the needs of such countries and would also more adequately protect the Fund. Those who supported Al ternative B held that the waiver provision was inadequate in view of the fact that the member countries would have no assurance that the waiver would be granted. There was discussion also as to the relative merits of the “carry over” provision suggested in Alternative D and section 2 (3) of Alternative A. Those who favored Alternative D felt that Alterna tive A might induce member countries to resort to the Fund when it was not necessary, while Alternative D would assure countries of more ample assistance from the Fund in times of need. Those who favored section 2 (3) of Alternative A felt that the Fund must have assurance that it will always be able to provide resources when needed and that if Alternative D were adopted it might be impossible to avoid continuous exercise of discretion by the Fund over the sale of exchange. Document 105 C I/ 4 / M 1 Minutes of Meeting of Commission I. Committee 4 F o r m a n d St a t u s o f t h e F u n d (July 4, 1944, 11:30 a.m.) The first meeting of Commission I, Committee 4 was held on July 4 at 11:30 a.m. The Chairman of Commission I, Mr. White (USA), introduced the Chairman of the Committee, Mr. Llosa (Peru), who in turn introduced the Committee Reporter, Mr. Keilhau (Norway) and the Secretaries of the Committee, Mr. Fuqua and Colonel Dyson. (The Secretaries will be available in room 162 for assistance to members of the Committee.) After expressing appreciation on behalf of his country, the PROCEEDINGS AND DOCUMENTS 121 Chairman explained that a document indicating the parts of the preliminary draft of the agreement within the scope of the Com mittee had just been distributed and suggested that it would be advisable to delay discussion until the next meeting. He also sug gested that the next meeting be held the following morning. There was no objection to these suggestions. The Chairman stated that it appeared that the following sections of the preliminary draft fall within the scope of the Committee’s activities: Article IX, sections 5, 6, and 7; article X I; article XII, sections 1, 2, and 3; article XIII, sections 1, 2, 3, and 4; and article XIV. Document 107 (p . 6d) S A /i/i A l t e r n a t iv e E 1 (Add as an additional section after Joint Statement III, 2) Apart from the facilities provided under Art. Ill Section 2 of the Joint Statement, a silver-hoarding member country shall be entitled to buy from the Fund another member’s currency in exchange for its own currency, in an amount not exceeding 80 percent of the gold value of that country's silver hoardings, which will be assigned to the Fund as collateral guaranty. 7 /4 /4 4 J.S. Art. Ill A d dition al Section Document 108 (p. 18a) s a / i /2 A l t e r n a t iv e B A uniform change in the gold value of member currencies may be made provided that a majority of countries, voting as countries, so decide, including in that majority those countries having 10 percent or more of the aggregate quotas. 7 /4 /4 4 J.S. Art. IV Sec. 5 ! For Prelim inary D raft of Suggested Articles of Agreement for the Estab lishment of an International M onetary Fund, to which this and following SA/1 alternative texts refer, see Doc. 32, p. 21.—Editor. 122 MONETARY AND FINANCIAL CONFERENCE Document 109 (p . Id) S A / 1/3 A l t e r n a t iv e H (Add as a new Subdivision) To promote the multilateral settlement of foreign credit bal ances accumulated during the war. 7 /4 /4 4 J.S. Art. I Document 110 (P. l i b ) S A /l/4 A l t e r n a t iv e E (Substitute for Joint Statem ent III, 7 ( b ) ) If, at the end of the Fund's financial year, a member’s holding of gold and gold convertible exchange exceeds its quota, the Fund shall require that half of the net increase of its holdings in that member’s currency during that year shall be repurchased by that membvjr with gold or gold convertible exchange, but only if and inasmuch as the Fund's holdings at that moment exceed the mem ber's quota. 7 /4 /4 4 J.S. Art. Ill Sec. 7 Document 111 C I/1 /M 2 Minutes of Meeting of Commission I, Committee 1 P u rp o s e s , P o lic ie s , a n d Q u o ta s o f t h e F u n d Jul y 4, 1944, 4 p.m. The second meeting of the Committee was devoted to a discus sion of the various alternatives proposed for sections 2-6 of article 1 of the preliminary Draft Articles of Agreement, and to additional alternatives suggested in the course of the discussion. The warding of Alternative A, section 5, was agreed to by the Committee. PROCEEDINGS AND DOCUMENTS 123 Alternatives A and B for sections 2 and 3 were referred to the drafting committee after brief discussion. The various alternatives to section 4 were discussed at length and the purposes of the sponsors of Alternatives B and E on this section were developed. In this discussion Alternative D was with drawn by the member proposing it. In view of the fundamental importance of the wording of the section dealing with exchange stability (section 4), the Committee agreed not to express a choice between these alternatives by a vote. It further agreed that the wording of this section of article I should be in harmony with the balance of the document and especially with the sections dealing with changes in par values. The alternatives on section 4, article I were therefore referred to the drafting committee on the understanding that it would take into account the various views expressed but would not make its report until a later stage when the provisions of the plan re garding par values were agreed upon. The Committee then considered the additional subdivision pro posed for correlation of the activities of the Fund with those of the Bank (Alternative F). It was stated that a proposal would be brought forward in another part of the plan dealing with the general relations of the Fund with other international organiza tions. The proposer of Alternative F agreed to postpone consid eration of that alternative until the new provisions were made available and agreed upon. The Committee then considered Alternative G which would include among the purposes of the Fund “to promote and facili tate settlement of abnormal indebtedness arising out of war”. The sponsors of this proposal noted that some provision for dealing with these balances had been included in an earlier version of the plan but had been omitted in subsequent drafts. They stressed the vital importance of the problem for the countries directly concerned, and indicated that it was difficult to justify the com plete exclusion of the subject from any scheme of post-war inter national monetary cooperation. The dangers and difficulties of burdening the Fund from the outset with the immense problem of settlement of balances accumu lated in war time was brought out in the discussion. The sug gestion was made that the Committee might refer the matter to Commission I with the suggestion that it might be referred by that Commission to Commission III, which deals with “Other Means of International Financial Cooperation” outside the Fund. The view was also expressed that the matter should be dealt with 124 MONETARY AND FINANCIAL CONFERENCE by negotiations between debtor and creditors and not by this Conference. (p. 2) The Chairman announced at the close of the meeting that the drafting committee of Committee 1 would be made up of delegates from Australia, Brazil, Czechoslovakia, the United Kingdom, and the United States, and that the Reporting Member and the Secretary should have the right to be present at its meet ings. He further stated that if any proposal referred to the draft ing committee was of especial interest to any delegation, that delegation should be represented when the proposal was being discussed. Document 112 C I/2 /M 2 Minutes of Meeting of Commission I, Committee 2 O p e ra tio n s o f t h e F u n d (J u l y 4, 1944, 5:30 p.m.) The second meeting of Committee 2 of Commission I was held on July 4 at 5:30 p.m. The Chairman announced that the Chair men of all the delegations had agreed that there would be no formal voting in the Committees. It was agreed that questions of wording and language would be referred to a small committee to be appointed by the Chairman, and that in the case of lack of agreement on important questions the lack of agreement would be reported to the Commission. The Committee continued its discussion of article III, Trans actions With the Fund. In answer to a question by one of the delegates, it was ex plained that the wording of section 2 (1) of Alternative A (page 6a of SA/1) is intended to indicate that the representation of a member country will be accepted bv the Fund except in cases of obviously false representation. Section 2 (4) of Alternative A (page 6a) was approved by the Committee and also the remaining sentences of section 2 (page 6a). The Committee approved section 2a of Alternative A (pages 6a and 6b), but it was suggested that this clause should be in serted in another part of the draft. Section 3 of Alternative A (page 6b) was approved by the PROCEEDINGS AND DOCUMENTS 125 Committee. It was suggested that the words “and policies” be deleted from the second line of section 3. The Committee accepted the withdrawal of Alternative C (page 6c). The Committee approved Alternative A (page 7). There was some discussion of Alternative A (page 8). It was pointed out that the language of Alternative A (1) was not clear, and the Committee agreed to refer this paragraph to the small committee to be appointed by the Chairman. The Committee dis cussed very briefly paragraph (2) of Alternative A (page 8) and also Alternative B (page 8). It was decided to continue the discussion of these provisions at the next meeting of the Com mittee. Document 113 C l / 3 / M2 Minutes of Meeting of Commission I, Committee 3 O rg a n iz a tio n a n d M a n a g e m e n t o f t h e F u n d (July 4, 1944, 4 p.m.) At its second meeting, held on July 4 at 4 p.m., the Committee continued discussion of article VII, Management of the Fund. It was agreed that the provisions of VII-1 (d) are supplemen tary to VII-1 (c), and, on this understanding, the provision was accepted. The meeting agreed to VII-1 (e) without discussion. Consideration was then given to VII-2 (a). Some members favored postponement of the discussion of this section until the quotas shall have been determined. Others suggested that the principles of the quotas were known so that discussion of this section could profitably be undertaken at once. Proposals were made to increase the Board of Governors from 12 to 15 and to refer the matter to a proper subcommittee. No action was taken on these proposals. Discussion of Alternatives A and B followed. It was stated that Alternative A proposed to vest the powers of the Fund on most matters except those specially reserved to a small body which could be in continuous session and so could transact business expeditiously as is required under other clauses of the draft. The voting method permitted the formation of groups for the election of members and so made possible repre sentation on a geographical basis or on the basis of similarity of .economic interests irrespective of areas. The proposal was con 126 MONETARY AND FINANCIAL CONFERENCE sistent with VII-2 of the Joint Statement, which provided that voting in the Board of Governors and in the Executive Directorate was to be roughly proportional to the quotas. On the other hand, in the opinion of some of the delegates pres ent, the importance of voting might be overemphasized, since the principal function of the Fund wT ould be consultative. For this purpose, periodic meetings would be sufficient, whereas continuous meeting might result in excessive activity on the part of the management of the Fund. In opposition to this view, it was stated that agreement and unanimity would be desirable but might not always be possible. The consultative function of the Fund was not to be minimized but, in the absence of complete agreement, voting might be necessary. It was also suggested that a monthly meeting of the Directors would not be adequate unless in practice many of the functions of the Executive Directorate were delegated to the managers. In the argument in favor of Alternative B, it was suggested that the routine powers of the Executive Directors would in many cases be delegated to a permanent official, who need not be a mem ber of the Board and so might be selected for reasons other than the considerations involved in selection by governments direct. Furthermore, the Chairman could call meetings of the Directors in advance of crises which could be anticipated. In general, the argument emphasized the consultative functions of the Executive Directors rather than their direct administrative responsibility. There was no consensus of views on this question at the meeting and discussion will be continued. Document 116 D P /2 Mexican Delegation Proposal on Silver in order to attain a large measure of international monetary cooperation, the Monetary Fund must take into account the monetary habits, needs and practices of all the member countries; W h e r e a s there are countries among the United and Associated Nations wr hich, besides keeping a gold reserve sufficient to guarantee the convertibility of their currencies, are compelled to invest heavily in silver stocks in order to provide their re W hereas PROCEEDINGS AND DOCUMENTS 127 spective populations with costly silver coins, thereby meeting traditional unavoidable hoarding requirements; W h e r e a s these hoardings actually constitute an additional and burdensome monetary reserve which operates in the same manner as gold and foreign exchange reserves for regulating the value of those countries’ respective currencies in terms of other currencies; W h e r e a s th e r e a re d efin ite in te r n a tio n a l m o n e ta r y con seq u en ces fr o m th e in c r e a se o f silv e r sto ck s o f th o se co u n tr ies in th e a sc e n d in g p h a se o f th e tra d e cycle, and th e ir d ecrease d u rin g p erio d s o f d e p r e ssio n ; W h e r e a s it is o b v io u sly u n fa ir th a t c o u n tries w ith le sse r econom ic str e n g th , a s a re a ll o f th e silv e r -h o a r d in g co u n tries, be fo rced to b ea r an e x c e ssiv e m o n e ta r y b urd en , in ord er to com ply fu lly w ith th e o b lig a tio n s d eriv ed fr o m th e ir p a rticip a tio n in th e F u n d ; W h e r e a s in ord er to se ttle th e ir u n fa v o r a b le b alan ces, silv e rh o a r d in g c o u n tr ie s fr o m tim e to tim e are com p elled to sell p a r t o f th e ir silv e r sto ck s in th e w o rld m a rk ets, th ereb y fo r c in g silv e r p r ic e s dow n to th e ir o w n d etrim en t and th a t o f th e o th er silv e r -h o a r d in g c o u n tr ie s; (p. 2 ) T h e M e x ic a n D eleg a tio n submits to this Monetary Conference that the following provision be added to Art. Ill of the final Draft Agreement relative to the Fund: Apart from the facilities provided under Art. Ill Section 2 of the Joint Statement, a silver-hoarding member country, shall be entitled to buy from the Fund another member’s currency in exchange for its own currency, in an amount not exceeding 80'! of the gold value of that country’s silver hoardings, which will be assigned to the Fund as collateral guaranty. Document 117 DP/3 Memorandum Submitted by the Egyptian Delegation Requesting Certain Additions to Joint Statement I “Purposes and Policies of the Fund” As a country owning large foreign exchange assets, Egypt is naturally concerned how best to achieve the ready transference of those assets into goods and services. MONETARY AND FINANCIAL CONFERENCE 128 This legitimate expectation was reflected in a resolution unani mously passed by the Middle East Financial Conference held in Cairo last April which read as follows:— “The conference shares in the hope that it will become possible for foreign credit to be readily transferable into goods from any source.” What is important from the standpoint of countries which have accumulated large foreign assets, is that such countries should be able to liquidate those assets fairly readily after the War at something like their present value. The Egyptian Delegation therefore proposes to move the in clusion under “purposes and policies of the Fund” of a clause to the following effect:— “To promote the multilateral settlement of foreign credit bal ances accumulated during the War.” Document 118 D P /4 Mexican Delegation Proposal on Voting a Uniform Change in the Gold Value of Member Currencies. a uniform change in the gold value of member cur rencies is one of the most important and far-reaching de cisions that the Fund will be authorized to take under the proposed provisions; W hereas W h e r e a s A r t. IV -5 o f th e d r a ft s ta te s th a t su ch a d ecisio n can be ta k en b y a m a jo r ity o f qu ota v o tes, p rovid ed e v e r y m em b er co u n tr y h a v in g 10 c r or m ore o f th e a g g r e g a te q u o ta s a p / p ro v es ; WHEREAS a m a jo r ity o f quota v o te s m ay be c o n stitu te d b y a v er y sm all n um b er o f m em b er co u n tries, an d th e r e fo r e th e w ill o f th e la r g e s t num ber o f c o u n tries m ig h t not ev en be in d i ca ted in th a t m a jo r ity ; W h e r e a s su ch proced u re is in eq u ita b le and u n w a r ra n te d and con stitu te s one o f th e p r o v isio n s o f th e d r a ft w h ich is m ost vu ln era b le to pu b lic c r itic ism , w h en th e final d o cu m en t is su b m itted for r a tifica tio n b y th e d iffe r e n t m em b er co u n trie s, T h e M e x ic a n D e leg a tio n su b m its to th e co n sid er a tio n o f th is Monetary Conference the following amended draft of Art. IV-5: A u n ifo r m ch a n g e in th e g o ld v a lu e o f m em b er c u rr en c ies m ay PROCKKDliNGS AND DOCUMENTS 129 be made provided that a majority of countries, voting as coun tries, so decide, including in that majority those countries having 10% or more of the aggregate quotas. Document 120 (P . 41) S A /l/5 J o i n t S t a t e m e n t —No Provisions The following material has been suggested as an addition to Article IX : M lrrnativo A & Section 5. Immunities of the Fund. (a) The Fund shall be immune from suit except when it consents to be sued. (b) The Fund and its assets of whatsoever nature shall, wheresoever located and by whomsoever held, be exempt and immune from search, seizure, attachment, execution, requisition, confiscation, moratorium and expropriation, whether under ju dicial process or otherwise, in the territory of any member. (c) All governors, executive directors, officers and employees of the Fund shall, with respect to their official acts, be exempt from suit except when the Fund consents. (d) The archives of the Fund shall be inviolable. There are certain other minor privileges or immunities which will a l s o be required such as courier facilities. A further document will be issued completing this section in this respect. N ote. 7/ 5/44 J.S. Art. IX Additional Sec. (5) Document 121 (p. 43) S A /1/6 J o i n t S t a t e m e n t — N o P rovision s The following material has been suggested as an addition to Article IX: Alternative A #■ Section 7. Restrictions on Taxation of Fund, its Employees and Obligations. (a) The Fund shall be exempt and immune from all taxation or liability for the collection or payment of any tax, including 130 MONETARY AND FINANCIAL CONFERENCE without limitation by reason of this enumeration, excises, du ties, and imposts, imposed by any member or any political sub division or taxing authority thereof, in respect of its assets, property, income, activities, operations and transactions of whatsoever nature. (b) No member, or any political subdivision or taxing author ity thereof shall impose or collect any tax on or measured by salaries paid by the Fund to its Executive Directors, officials and employees who are not citizens of such member. (c) No member, or any political subdivision or taxing author ity thereof, shall impose or collect any taxation on any obliga tion or security issued by the Fund or any dividend or interest thereon, by whomsoever held or received, which discriminates against such obligation, dividend, or interest, because of its origin, or which is applicable with respect to such obligation, security, dividend, or interest solely because of the place or currency in which it is issued, made payable or paid, or solely because of the location of any office or place of business main tained by the Fund. 7 /5 /4 4 J.S. Art. IX A d d itio n a l Sec. (7) Document 122 C I/ 1 / D C 1 Report of the Drafting Committee of Committee 1 of Commission I on Matters Referred to It at the Meeting of Committee 1 on July 4 The Drafting Subcommittee met on July 5 to consider the mat ters referred to it by the Full Committee. The following members were present: Mr. Goldenweiser Chair man, Dr. Tsiang, Dr. Gudin, Mr. Mladek, Mr. Melville, Professor Robbins and Mr. Varvaressos. The Committee considered Alternatives A, B and C relating to Section 2 of Article I in the Preliminary Draft Articles of Agreement (Document F -l) and also considered alternative lan guage submitted by the Colombian, New Zealand, and French delegations bearing on this Section. The drafting committee rec ommends for the consideration of the full committee the follow ing language: Article I, Section 2 “To facilitate the expansion and balanced growth of inter- PROCEEDINGS AND DOCUMENTS 131 national trade and to contribute thereby to the promotion and maintenance of high levels of employment and to the development of the sources of productive power in all mem ber countries as primary objectives of economic policy.” In recommending this new formulation the drafting committee wishes to report that the representatives of the Indian delegation who were present during the discussion expressed themselves as regarding the language as an improvement from their point of Aev? but as not completely meeting their wishes on the point. The representative of the Australian delegation also agreed that the new language was an improvement but stated that its suita bility from the point of view of his delegation was partly de pendent upon the language to be adopted under Article III, para graphs 2, sections (a) and (d) of the Joint Statement, which deal with the conditions under which a member is entitled to buy another member’s currency from the Fund in exchange for its cwn currency. The drafting committee therefore recommends that if the new wording it suggests is adopted by the Committee, the attention of Committee 2 shall be drawn to the position of the Australian delegation on this matter. The drafting committee wishes also to report that the sug gestion was made in its discussions that many of the difficulties encountered in the drafting of the language of Article I, Section 2 might be overcome if there were a suitable general preamble to the final document of the Conference, in which the basic economic objectives of all its work, both Fund and Bank, are clearly stated. (p. 2) Tho drafting committee recommends the following lan guage for Article I, Section 3: “To give confidence to member countries by making the Fund’s resources available to them under adequate safe guards, thus providing them with opportunity to correct mal adjustments in their balance of payments without resorting to measures destructive of national or international pros perity.” In accordance with its instructions, the drafting committee d'.'fonvd consideration of Article I, Section 4. The drafting committee considered Alternatives A and B of Article I, Section 6 and recommends to the Committee the fol lowing language: “In accordance with the above objectives, to shorten the periods and lessen the degree of disequilibrium in the inter national balances of payments of member countries.” 132 MONETARY AND FINANCIAL CONFERENCE The drafting committee calls the attention of the Committee to the words at the end of Article I, Alternative A, which read: “The Fund shall be guided in all its decisions by the purposes set forth above.” The drafting committee recommends that the whole Commit tee approve the inclusion of this language at the end of Article I. Document 124 (p. 36) S A /l/7 J o in t S t a t e m e n t V I I I , 2 & 3 2. The reciprocal obligations of the Fund and the country are to be liquidated within a reasonable time. 3. After a member country has given notice in writing of its withdrawal from the Fund, the Fund may not dispose of its hold ings of the country’s currency except in accordance with the ar rangements made under 2, above. After a country has given notice of withdrawal, its use of the resources of the Fund is subject to the approval of the Fund. Alternative A it Section 3. Settlement of Accounts with Governments Ceasing to be Members. (a) When a government ceases to be a member in any of the cases referred to in sections---------above, settlement of all ac counts between the Fund and such government shall be made with reasonable dispatch by agreement between the Fund and the government. The Fund shall not engage in any transac tions in the currency of such country except in accordance with this Section. (b) The Fund shall be obligated to pay to such government an amount equal to its quota, plus any other amounts due to it from the Fund, less any amounts due to the Fund from such government, including charges accruing after the government ceases to be a member; but no payment shall be made prior to six months from the date when such government ceases to be a member. Payments shall be made in the currency of that country. (c) If the Fund’s holdings of the currency of such country are not sufficient to pay the net amounts due from the Fund, the balance shall be paid in gold, or in a manner to be agreed between the Fund and such government. If the Fund and the PROCEEDINGS AND DOCUMENTS 133 government have not reached agreement within six months from the date of withdrawal, the currency of that country held by the Fund shall immediately be paid to the government. The balance shall be paid in 12 quarterly installments during the following 3 years. Each such installment shall be paid in the currency of the country acquired by the Fund since the date of withdrawal or by the delivery of gold. 7 '5 /4 4 J.S. Art. VIII Sec. 2 & 3 (p. 36a) (d) If the Fund fails to meet any payment due in accordance with the preceding paragraphs, the government shall be entitled to acquire from the Fund against the amount then due to it from the Fund the currency of any member held by the Fund, which has not been declared scarce under Article VI, Section 2 (J.S. VI, 2). (3) If the Fund’s holdings of the currency of such country exceed the amount due to such government, and the Fund and the government do not reach agreement on the method of settling their accounts within six months from the date of withdrawal, settlement shall be made as provided in this and the following paragraphs. The government shall be obligated to redeem such excess currency in gold or in the currencies of members which at the time- of actual redemption are convertible under Article III, Section 6 (J.S. Ill, 5) within three years from the date of withdrawal or such longer period as may be fixed by the Fund. Such redemption shall not be effected at a rate in any quarterly period greater than one-twelfth of the Fund’s excess holdings at the date of withdrawal of the currency to be redeemed plus current accruals of such currency during such quarterly period. If the Government fails to redeem such excess currency in this manner, the Fund may liquidate in any market that currency at the same rate in an orderly manner. The withdrawing government unconditionally guarantees at all times the un restricted use of such currency for the purchase of goods or for the payment of other sums duo to it or to its nationals. Further, the withdrawing government shall indemnify the Fund against any loss resulting from exchange depreciation until such cur rency has been used or redeemed. (f) Any member desiring to obtain the currency of a former member shall acquire the currency by purchase from the Fund, to the extent that such member has access to the resources of the Fund and such currency is available under the preceding paragraph, 134 MONETARY AND FINANCIAL CONFERENCE (g) In the event of the Fund going into liquidation under . . . within six months of the date upon which any government ceases to be a member, all rights and obligations of such gov ernment shall be determined in accordance with the provisions governing liquidation instead of the provisions of this section. 7 /5 /4 4 J.S. Art. V III Sec. 2 & 3 Document 125 C I/ 1 / R P / 1 Report of Committee 1 on Purposes, Policies, and Quotas of the Fund to Commission I (July 5, 1944, 10:30 a.m.) Mr . V a r v a r esso s: Mr. Chairman, -your Committee I on Purposes, Policies, and Quotas of the Fund held two meetings on July 4; the first at 10:00 A.M. and the second at 4:00 P.M. A document (Doc. #51) containing the Committee assignments had been distributed to the Members of the Committee at its first meeting. In determining the objects which should come within its jurisdiction the Committee had been guided by the suggestions contained in the document. With regard to the procedure to be followed, the Chairman proposed and the Committee accepted that whenever there were several alternatives to be considered, those involving substantial changes of the provisions of the Joint Statement would be con sidered first. On the other hand, it has been moved and accepted by the Com mittee that, in order to expedite matters, a small drafting sub committee be appointed and that alternatives involving no sub stantial changes of the Joint Statement provisions be referred to this Committee by the Chairman with the approval in each case r,f the Committee. A subcommittee has been accordingly constituted to that effect. At the beginning of the first meeting it was suggested that the principal question which comes within the jurisdiction of the Committee is the question of the determination of the quotas of member countries referred to in Article II, section 7, of the Joint Statement. It was argued that this question was of the highest im portance to the member countries and that a procedure ought to be established for determining such quotas. The Committee, being PROCEEDINGS AND DOCUMENTS 135 in the meantime informed that a paper referring to this subject was being prepared for distribution to its members, has decided to postpone temporarily the discussion of quotas until such paper has been distributed. During the further discussions of the specific subjects of the Committee, it was suggested that it would be desirable in so far as possible to eliminate voting and that, where a fundamental difference of opinion was evident and a rapprochement of the dif ferent views was unattainable, the Chairman, with the consent of the Committee, would refer the matter to your Commission with a record of the different opinions represented. (p. 2) The Committee then proceeded to the discussion of Article I of the Joint Statement referring to the purposes and policies of the Fund and of the numerous alternatives submitted by members. The Committee has not been able to make substantial progress in arriving at an agreement in the first day of its meetings. Three subjects involving questions of principle have been re viewed, which absorbed the time allowed for the two meetings. The first of these three subjects was Alternative C, section 2, of Article I. The purpose of this Alternative, which was explained to the Committee, was to state explicitly that one of the purposes of the Fund was “to assist in the fuller utilization of the resources of economically underdeveloped countries and to contribute there by to the maintenance in the world as a whole of a high level of employment and real income . . It was thought by the pro poser that the wording of section 2 as it stands now was stressing unduly the position of highly industrialized countries while it made no reference to underdeveloped agricultural countries. Al ternative C has been seconded by several members while others expressed very serious doubts on the advisability of adopting a wording which would be interpreted as enlarging the purposes of the Fund in a way which was out of proportion with the means at its disposal and attributing to it objectives which were appro priately those of the Bank for Reconstruction and Development. In discussion, however, there developed a consensus that the attainment of a high level of employment and real income as well as their maintenance was intended to be included among the purposes and that the addition of appropriate words to that effect would be desirable. At the conclusion of the discussion, the Chairman referred Alternative C to the drafting committee upon the understanding 7 4 9 0 1 3 — 4 8 — 10 136 MONETARY AND FINANCIAL CONFERENCE that the intent of the amendment was not to enlarge the purposes of the Fund but merely to make them more explicit. The second subject involving a question of principle was Al ternatives B, D and E of Article I, section 4, which relates to exchange stability. The discussion on these Alternatives revealed that the wording of this section of the purposes and policies of the Fund was closely connected with Article IV of the Joint State ment dealing with par values of member countries and providing for changes in these par values. (p. 3) It has been accordingly decided that the subject be referred to the drafting committee on the understanding that it would not make its report until a later stage when the provisions of Article IV of the plan have been agreed upon. The third subject was Alternative G, which should include among the purposes of the the Fund “to promote and facilitate the settlement of abnormal indebtedness arising out of war.” The sponsors of the proposal stressed the vital importance of the problem for the countries directly concerned, and indicated the necessity of including the subject in a scheme of postwar inter national monetary cooperation. In the discussion the dangers and difficulties of burdening the Fund with the immense problem of settlement of balances accumulated in wartime was emphasized. It has been suggested that the Committee should refer the matter to your Commission. Other Alternatives to the sections of Article I of the Joint Statement which do not involve substantial changes have been referred by the Committee to the drafting subcommittee which will report to the Committee in due time. Document 126 CI/3/RP1 Report of Committee 3 on Organization and Management of the Fund to Commission I Jul y 5, 1944, 10:30 a.m. Mr. H e x n e r : Committee 3 of Commission I on the Organiza tion and Management of the Fund held two meetings on July 4. Although no general discussion in the formal sense took place, there became crystalized one or two fundamental principles. The most important was that what may be called economic states manship should prevail in the management. Although it was clear PROCEEDINGS AND DOCUMENTS 137 that consultation will be the principal means of cooperation, the Committee realized that the management of the Fund has to be prepared to deal with possible or potential conflicts of interest which ultimately may have to be voted upon. There was no doubt that in the management of the Fund large countries should have stronger representation and certain privileges, and also no dis agreement was expressed about the implementing of the organi zation to give adequate protection to small countries. The discussion was based on the draft presented to the Com mittee as a part of Document F-l. The Committee discussed Article VII, 1 and 2 of the Joint Statement. It was envisaged that there will be an agency called “Board of Governors” consisting of the representatives of all of the member countries. These representa tives serve at the pleasure of their governments and can be recalled and replaced at the discretion of the member countries. The same relates to their alternates, who may participate in the meetings. All powers, in so far as they are not specifically assigned to other agencies, are concentrated in the Board of Governors. It was agreed that this agency may delegate its powers to other agencies within the Fund provided such delegation is not excluded expressly by the Statutes of the Fund. Meetings of this Board shall be convened whenever requested by members representing one quar ter of the aggregate votes or by five member countries. The Com mittee did not accept the provision of the draft that annual meetings shall not be held in the same country more than once in five years. Thus no limitation was placed in this regard on the management. The Board of Governors will have a chairman; however, no particular discussion took place about the powers of this presiding officer. It was assumed that the voting in the Board of Governors will be conducted according to quotas unless otherwise provided for. There was general agreement about those items which the Board of Governors cannot delegate to other agencies. The discussion concerning the jurisdiction and election of agencies other than the Board of Governors and its chairman was not finished. The opinions were not even crystalized on the the point whether a fruitful discussion on the structure of the Executive Committee may take place before the quotas are agreed upon. It may perhaps be wise to indicate some differences of opinion concerning the structure and jurisdiction of the Executive Com mittee as contained in Alternatives A and B to VII, 2. According to both Alternatives the Executive Committee has 138 MONETARY AND FINANCIAL CONFERENCE to consist of representatives of a certain number of major (p. 2) countries, which are individually represented in this body. An other group of members in the Executive Committee is repre sented by elected representatives. There is a difference of views whether the members of the Executive Committee have to be necessarily members of the Board of Governors or not. Further more, no clarity exists as to whether the members of the Executive Committee serve at the pleasure of their governments or not. No agreement was reached whether the members of the Executive Committee, who are elected, should be individual persons or coun tries. One of the main points at issue was whether the Executive Committee should be in permanent session during the first three years or whether it should operate according to expediency. No agreement was reached concerning the functions of the Executive Committee. One alternative focused the powers on the Commit tee as a corporate body, the other on its chairman. One alterna tive made the managing director the chairman of the Committee, the other provided for a specific chairman with extensive powers. The Committee will consider in its afternoon meeting whether a subcommittee should be established to discuss the procedure for the election of the Executive Committee. There was a visible trend in the discussion to create a framew7 ork which may make it possible to manage the Fund in the spirit of the ideas on which the Fund—according to the purposes expressed in the Joint Statement—ought to rest. Document 127 C I/4 /R P 1 Report of Committee 4 on Form and Status of the Fund to Commission I Jul y 5, 1944, 10:30 a.m. Mr. K e i l h a u : After the opening remarks of the Chairman at the fir&t meeting of Committee 4 of Commission I on July 4, he announced that the material to be used by the Committee would not be available for distribution until the afternoon. Because of this, discussion was postponed until the regular afternoon meeting scheduled for July 5. There is nothing further to report. PROCEEDINGS AND DOCUMENTS 139 Document 128 C I/2 /R P 1 Report of Committee 2 on Operations of the Fund to Commission I ■July 5, 194-1—10:‘i0 a. m. M r . M o s s e : I am reporting to you on the work of Committee No. 2 of Commission I, which deals with the Operations of the Fund. I shall cover both the morning and the afternoon meetings held on July 4. I shall keep the following order: 1. I shall offer some remarks on the procedure of our Committee, 2. I shall enumerate the items which have obtained a general agreement, 3. Finally I shall report to you more fully about one point on which wide differences of opinion have appeared. Concerning the procedure, it had been generally accepted that committees should not take a formal vote but that they should try to iron out differences of opinion. In order to do so, the committee authorized the Chairman to appoint a small asterisk committee—so called because it will study the texts which are marked with an asterisk in document F-l. This asterisk committee will be limited to questions which do not involve wide differences and are chiefly questions of language. Committee 2 also decided that the Chairman should invite objections; when no objection is made the Chairman shall declare that there is a general agreement and the reporting delegate shall so report to the committee. However, any delegate may go on record for any opinion, if it so desires, and this will be reported by the reporting delegate. When there are wide differences of opinion, the reporter will so report to the Commission. But the Chairman stated that it will always welcome suggestions from the floor designed to adjust differences. Any delegate may suggest devices which might serve to reconcile conflicting views—for instance, an ad hoc com mittee or unofficial conversations among delegates. So much for the question of procedure. (p. 2) I am now glad to report that Committee No. 2 has covered Article III, 1, 2, 3. If you refer to Document #51 on committee assignments, the Committee has covered section 1, section 2, section 2A, section 3, section 4 and, in part, section 5. With the exception of one question, there has been general agree ment on substance on ail questions. I shall name them in order. 140 MONETARY AND FINANCIAL CONFERENCE according to Document #32. May I invite you, gentlemen, to take document 32, or FI, page 5. On page 5, with reference to Joint Statement III, 1, there has been general agreement on alternative A wr ith, however, a sug gestion for the lawyers to insure harmony between this alterna tive A and alternative A, section 5, on page 8, concerning borrow ing by the Fund from any other source. The minutes of the meeting of Committee 2 of Commission I at 11:30 A.M. on July 4 (Document #104) should be corrected accordingly to include this suggestion. Section 2, page 6A, alternative A has been accepted by common agreement with the exception of paragraph 2, which was reserved for later discussion, and of paragraph 3, upon which I shall speak later. Now, although there was general agreement on the ward ing, I am not sure that there is agreement on the interpretation; some countries believe that buying is a right while others believe that a certain amount of elbow room is left to the Fund. There has been general agreement on section 2A, on Conditions Governing Purchases for Capital Transfers. But an important question was raised by the delegates of Greece and Czechoslovakia. They asked whether the country of which the currency is re quested for capital transfer is obliged to accept imports of capital. Let me take an illustration of this point. Under certain condi tions, which have been fully agreed and understood by the members of the Committee, Canada might purchase drachmas in order to make capital investments in Greece. Normally, Greece is required to accept drachmas for current payments, but is she obliged to accept them for capital investments in Greece by Cana dian interests? The delegates of Canada gave the answer that any country could refuse imports of capital. In other words, the consent of the nation of which the currency is purchased, will be required in practice. This answer was deemed satisfactory, and it is with this implication that the section has been generally accepted. Section 3, page 6b, concerning ineligibility of members to use the resources of the Fund has been generally accepted, but with the suppression of the words “and policies” at the end of the second line. The Committee recognized that alternative A is more mindful of the dignity of the country members; as Mr. Brown (U.S.A.) said “It is better to limit the use of the Fund or to declare a nation ineligible rather than to suspend it with a connotation of blame”. (p. 3) Section 4, alternative A, page 7. Elimination on the PROCEEDINGS AND DOCUMENTS 141 Operations of the Fund, has been generally approved without objection. Section 5, alternative A, page 8 on Operations for the Purpose of Preventing Currencies from Becoming Scarce has been gen erally agreed with the exception of paragraph (2), which has not yet been discussed. However, there are in paragraph (1) of this section some minor problems of drafting and this section has been turned over to the asterisk committee. To summarize, committee 1 has achieved a general agreement on Section 1, 2, 2A and 4, with exception of paragraphs 2 and 3, in section 2. I think that I am not going beyond the assignment of a report ing delegate in saying that Committee 2 recommends that this Commission approve these articles. Now I come to the only point upon which there were wide dif ferences of opinion, namely III, 2, c of the Joint Statement. Before doing so, I want to ask, What is your pleasure? If the Commission decides to put that question on its order of the day right away, it is appropriate that I should report to you the dis cussion which took place in Committee No. 2. If, on the other hand, you decide to postpone the discussion on this rather ticklish question, I respectfully submit that my report be postponed until such time as the C6mmission may select. Document 129 C /S P /1 Report of the Special Committee on Furnishing Informa tion of the Pre-Conference Agenda Committee, June 28, 1944 The Special Committee on Furnishing Information met on June 28 under the Chairmanship of Mr. Morozov of the U.S.S.R. The other members of the Committee were Sir Theodore Gregory of India, Mr. Deutsch of Canada, Mr. Polak of the Netherlands, and Mr. Maffry of the United States as Reporter. The Committee considered the advisability of a general pro vision which would require member countries to furnish informa tion needed for the operations of the Fund as against a listing of required information. Several members of the Committee 142 MONETARY AND FINANCIAL CONFERENCE would have been willing to accept a general provision on the assumptions that the Fund would be reasonable in its demands for information and that it would make allowances for the posi tion of countries the statistical services of which are less well de veloped than those of others. It was decided to attempt a listing of information essential for the operations of the Fund with an escape clause which would permit a country to plead inability to supply certain information but not unavailability of information in its possession. Such a clause was considered necessary because some countries cannot now furnish some of the information which would be considered essential to the operations of the Fund. It was recognized that a listing of required information would have the positive advantage of putting member countries on notice as to what was required and in this way of promoting the devel opment of new statistical and other information. The Committee did not reach full agreement on required items of information and has therefore submitted two lists as given below. It should be noted that items 3, 6 (b ), (c ), and (d ), and 10, which appeared in Alternative A submitted to the Committee for consideration were deleted and that the exact phrasing of items 1 and 2 on List I will depend upon the final definition of terms. The Committee discussed at some length the* question of requir ing information on gold production. It was pointed out that gold production may be inferred, although with some margin of error, from data on gold holdings and gold movements, and could not be shown to be required under any specific provision of the draft agreement. The opposing view was that it would be very useful and indeed essential for the Fund to know current additions to gold supply as a result of new production independently of factors such as movements into and out of private hoards. The longer list given below includes gold production as an item of required information. Section —. Furnishing Information The Fund may require member countries to furnish it with such information as it deems necessary for its operations. In requesting information the Fund shall, however, take into consid eration the ability of individual countries to furnish the data asked for. The minimum amount of information necessary for the due carrying out of the Fund’s duties includes the following: (P. 2) 1. Official holdings of (a) gold at home and abroad, (b) goldconvertible currencies distributed by currencies, and (c) PROCEEDINGS AND DOCUMENTS 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 143 other currencies distributed by currencies, as defined for pur poses of the Fund. Holdings by banking and financial agencies other than of ficial agencies of (a) gold at home and abroad, (b) goldconvertible currencies distributed by currencies, and (c) other currencies distributed by currencies, as defined for pur poses of the Fund. Production of gold. Gold exports and imports distributed by countries of destina tion and origin. Total exports and imports of merchandise, in terms of local currency values, distributed by countries of destination and origin. International balance of payments, including (a) trade in goods and services, (b) gold movements, and (c) capital transactions. International investment position, i.e., investments within the country owned abroad and investments abroad owned by residents of the country. National income. Price indexes. (Indexes of commodity prices in wholesale and retail markets and of export and import prices as avail able from official sources). Buying and selling rates for foreign currencies. Exchange controls. (Comprehensive statement of exchange controls in effect at the time of assuming membership in the Fund and changes thereafter as they occur.) (p. 3) 12. Where official exchange controls exist, arrearages for com mercial or financial remittances in terms both of the time lag in remittances and total amounts in arrears by types of arrearage. (List 2) 1. Gold holdings of the Central Bank and the Treasury and their changes. 2. Gold convertible exchange holdings of the Central Bank and the Treasury. 3. Movement of capital. 4. Foreign trade data. 5. Other items of the balance of payments. 6f Rates of exchange and their changes, 144 MONETARY AND FINANCIAL CONFERENCE Document 131(7) UNITED NATIONS MONETARY AND FIN ANCIAL CONFERENCE Agenda (Corrected Copy) I. International Monetary Fund 1. Purposes, Policies and Quotas of the Fund (Purposes and policies of the Fund, obligations of member countries, transitional arrangements for the period during which the Fund and member countries adopt the agreed policies, relationship of the Fund with the public and with non-member countries, and relationship of member countries with non-member countries, to consider the quota of member countries, the basis for future revision of quotas, and pay ment of subscriptions in gold and local currency.) 2. Operations of the Fund (Operations of the Fund including the sale of exchange, ac quisition of gold by the Fund, borrowing by the Fund, charges levied by the Fund, determination of parities and changes in parities, guarantee of the value of the assets of the Fund, regulation of capital transactions, apportionment of scarce currencies, and provision for reserves and distribution of profits.) 3. Organization and Management (Establishment of governing boards, basis for voting, selec tion of officers, appointment of committees, location of offices and depositories, provision for by-laws and regulations, pub lication of reports by the Fund, information to be reported to the Fund by member countries, and suspension from member ship, liquidation of reciprocal obligations on termination of membership, and general liquidation of the Fund.) 4. Form and Status of the Fund (Nature of the agreement establishing the Fund, the legal position of the Fund in member countries, immunities of the Fund and its assets, amendment of the Fund agreement and the regulationship of the Fund to other international or ganizations.) (P. 2) II. Bank fo r R econstruction and D evelopm ent 1. Purposes, Policies, Capital and Subscription of the Bank. (Purposes and policies of the Bank, relationship of the Bank with the public and with non-member countries, and relation PROCEEDINGS AND DOCUMENTS 145 ship of member countries with non-member countries, capital of the Bank, subscription of member countries, proportion of subscriptions to be paid in, payment in gold and local cur rencies, further calls for payment on subscriptions and the reservation of part of the unpaid capital as a surety fund.) 2. Operations of the Bank (Conditions under which the Bank may guarantee, participate in or make loans, the manner in which it will aid and en courage equity investment, provision for safeguarding funds lent by the Bank, guarantee of the value of the local currency assets of the Bank, provision for repayment of principal and interest, borrowing by the Bank, the limitation on direct and contingent liabilities of the Bank, the charges the Bank may levy, provision for reserves and distribution of profits, se curity and foreign exchange transactions the Bank may un dertake, and other operations of the Bank.) 3. Organization and Management (Establishment of governing boards, basis for voting, selec tion of officers, appointment of committees, location of offices and depositories, provision for by-laws and regulations, pub lication of reports by the Bank, withdrawal or suspension from membership, contingent liability of former members, and general liquidation of the Bank.) 4. Form, and Status of the Bank (Nature of the agreement establishing the Bank, the legal position of the Bank in member countries, immunities of the Bank and its assets, amendment of the Bank agreement and the relationship of the Bank to other international organiza tions.) III. Other M easures for International Financial Cooperation Document 132 C l/M /2 Minutes of Meeting of Commission I I n te r n a tio n a l M o n e ta ry F u n d ( July 5, 10:30 a.m.) The Chairman urged that the work should be speeded. The Reporters of the four Committees of Commission I (Mr. Varvaressos, Greece, for Committee 1; Mr. Mosse, French Com mittee of National Liberation, for Committee 2; Mr. Hexner, MONETARY AND FINANCIAL CONFERENCE 146 Czechoslovakia, for Committee 3; and Mr. Keilhau, Norway, for Committee 4) then reported on the progress made to date by their respective Committees. (These reports are being circulated sep arately.) The Commission discussed procedure to be followed with respect to these reports and its future activities and decided: (1) To postpone consideration of the reports until further progress has been made in the Committees; (2) To have the reports from the Committee circulated in advance so that the members would be better able to participate; (3) That the next meeting of the Commission should be left to further determination but in any event should not be held until reports covering several more meetings of the Committees are available; (4) To have the Committee sessions longer and less frequent, and (5) To have one meeting of each Committee on July 6 (two in the morning and two in the afternoon). Document 137 (P. 2 0) J OURNAL UNITED NATIONS N o. 6 MONETARY AND FIN ANCIAL Bretton W o o d s / N e w H am pshire CONFERENCE July 6, 1944 O R D E R OF T H E DAY Meetings for Thursday, July 6 10 10 2:30 2:30 4:45 a.m. a.m. p.m. p.m. p.m. Committee 1 of Commission I ..................................Auditorium Committee 3 of Commission I ................................The Hemicycle Committee 2 of Commission I ................................Auditorium Committee 4 of Commission I ............................... The Hemicycle Agenda Committee of Commission I I ................... Room 219 (p . 2 1 ) R e s u m e s o f C o m m is s io n a n d C o m m i t t e e M e e t in g s Commission I International Monetary Fund (July 5, 10:30 a.m.) The second meeting of Commission I was devoted to receiving progress reports from the four Committees of the Commission. (The reports of the Committee Reporters are being distributed PROCEEDINGS AND DOCUMENTS 147 separately as documents no. 125 (Committee 1), no. 126 (Com mittee 3), no. 127 (Committee 4), and no. 128 (Committee 2).) It was agreed that in the future the reports of Committee Re porters would be circulated in advance of Commission meetings. It was decided to hold only one meeting of each Committee on Thursday, July 6, and to leave to further arrangement the date of the next meeting of the Commission. (The minutes of this meeting are being distributed separately as document no. 132.) Committee 1 of Commission I P urposes, P o lic ies, and Q uotas o f th e F un d (July 5, 4 p.m,.) Committee 1 of Commission I met at 4 p.m., July 5 and con sidered Alternative A of article II, on page 2—“Subscription to the Fund”. After brief discussion, section 1 of Alternative A was referred to the drafting committee for a slight change in phraseology. Section 2 of Alternative A, which deals with quotas, was deferred until the document on this is available. Alternative A, section 3, which deals with time and place of payment, was also deferred since it is related to section 5 of an additional article XIII on page 49 which has not yet been considered. In considering Alternative B, a proposed addition to section 3 of Alternative A, it was agreed to recommend to.Commission I the appointment of an ad hoc committee to consider the problems of liberated coun tries with respect too their initial quota payments and other mat ters. In considering Alternative A, section 4, on page 3, which deals with adjustment of quotas, the consensus was that the Fund should be permitted to revise quotas whenever this was deemed appropriate, and it also should review the question every five years. The matter was referred to the drafting committee. The Committee agreed with the substance of Alternative A, section 5, to article II, section 3, on page 4, which deals with initial pay ments. and referred it to the drafting committee for language changes. (The minutes of this meeting are being distributed separately as document no. 138.) (P .22) Committee 2 of Commission I O p erations o f th e F u n d (July 5, 5:30 p.m.) The third meeting of Committee 2 of Commission I was held 148 MONETARY AND FINANCIAL CONFERENCE on July 5 at 5:30 p.m. The Committee continued its discussion of article III, Transactions with the Fund. The Committee agreed to refer the consideration of Alternative A, section 2 (3) (p. 6a of Document SA /1), Alternative B (p. 6b), and Alternative D (p. 6c) to an ad hoc committee to be appointed by the Chairman. The Committee continued its discussion of article III of the Joint Statement. The Committee postponed for later consideration Al ternative A, section 5 (2) (p.8) and Alternative B (p. 8 ); also Alternative A; section 6 (p. 9) and Alternatives B, C, D, and E to article III, section 7, of the Joint Statement (pp. 11, 11a, and lib ) . The Committee approved Alternative A, section 7 (p. 10) and referred parts of Alternative A, section 6 (p. 9) and Alterna tive A, section 9 (p. 12) to the language committee. (The minutes of this meeting are being distributed separately as document no. 140.) Committee 3 of Commission I Organization and Management of the Fund (Jul y 5, 4 p.m.) The third meeting of Committee 3 of Commission I deferred consideration of article VII, section 2, relating to the executive directors until new drafts were submitted by various interested groups of members. The Committee took up consideration of section 3 on voting in the board of governors. The principle of allotting each member a certain number of votes in addition to its votes determined by quotas was generally accepted. No action was taken on the precise number of votes so to be assigned to each member. There was no final agreement on the second paragraph, which proposed to increase the votes of members whose currencies are sold by the Fund. It was referred back to the Secretariat for redrafting so as to clarify the proposal insofar as it referred to “net transactions in gold” and for specification of the cases in which the paragraph is supposed to apply. The general objectives met with rather wide approval although there was some dissent. The third paragraph was approved. Alternative B was withdrawn. The Committee agreed to include in the draft a quorum provision whereby the quorum would consist of at least half of the mem bers and two thirds of the votes. (The minutes of this meeting are being distributed separately as document no. 141.) PROCEEDINGS AND DOCUMENTS 149 (p. 23) Committee 4 of Commission 1 F orm and Status o f th e F un d ( July 5, 5:30 p.m.) The second meeting of Committee 4 of Commission I was held on July 5 at 5:30 p.m. The Chairman was authorized to appoint a small “asterisk committee” to consider minor questions of word ing and coordination. The Committee proceeded with a discussion and approval of section 5 of article IX, dealing with immunity of assets of the Fund, as amended to include section 6. After an ex tended discussion of section 7 of article IX, pertaining to restric tions on taxation of the Fund, its employees and obligations, the Chairman appointed a subcommittee to consider the present Al ternative A contained in document no. 121. Delegates from Cuba, Norway, Union of Soviet Socialist Republics, United Kingdom, and the United States were appointed to the subcommittee, with the Delegate of the United States as Chairman. (The minutes of this meeting are being distributed separately as document no. 142.) N o t ic e In observance of the Eighth Year of Chinee Resistance to the forces of aggression, a meeting will be held in the Auditorium on Friday, July 7, at 9 p.m., at which the Honorable H. H. Kung will make a brief address and motion pictures of the war in China will be shown. The members of the Delegations, of the Secre tariat, and of the Press are cordially invited to attend. Warren Kelchner Secretary General (p .24) L is t o f D o c u m e n t s I ssu e d as o f J u l y 5, 1944 Subject Symbol No. Order of the Day, July 5, 1944 ........................................................ ....GD/13 Journal No. 5 ...................................................................................... ... J/5 Commission I, Committee 1, Minutes of Meeting, July 4 ..............CI/1/M1 Commission I, Committee 3, Minutes of Meeting, July 4 .......... ....CI/3/M1 Commission I, Committee 2, Minutes of Meeting, July 4 .......... ....CI/2/M1 Commission I, Committee 4, Minutes of Meeting, July 4 .......... ... CI/4/M1 Additional Page to S A / 1 .................................................................. ... SA/1/1 Additional Page to S A / 1 .................................................................. ... SA/1/2 Additional Page to S A / 1 .................................................................. ... SA/1/3 Additional Page to S A / 1 .................................................................. ... SA /1/4 Commission I, Committee 1, Minutes of Meeting, July 4 .......... ... CI/1/M2 150 MONETARY AND FINANCIAL CONFERENCE Subject Symbol No. Commission I, Committee 2, Minutes of Meeting, July 4 .......... ...CI/2/M 2 Commission I, Committee 3, Minutes of Meeting, July 4 .......... ...CI/3/M 2 Telephone D ire c to ry ..............................................................................GD/13 Mexican Delegation, Proposal on S ilv e r ...................................... ...D P/2 Egyptian Delegation, Memorandum on Purposes and Policies of the F u n d ........................................................................................ D P/3 Mexican Delegation Proposal on Voting a Uniform Change in Gold Value of Member C u rre n c ie s............................................ ...D P/4 Additional Page to S A / 1 ......................................................................SA /1/5 Additional Page to S A / 1 ......................................................................SA /1/6 Commission I, Committee 1, Report of D rafting Committee . . . . C I/l/D C /1 Additional Page to S A / 1 ......................................................................SA /1/7 Committee 1, Report to Commission I, July 5 .............................. ... CI/1/R P1 Committee 3, Report to Commission I, July 5 .............................. ... C I/3/R P1 Committee 4, Report to Commission I, July 5 .............................. ... C I/4/R P1 Committee 2, Report to Commission I, July 5 .............................. ... C I/2/R P1 Special Committee on Furnishing Information, R e p o r t............ ... C /SP/1 Agenda, Revision o f .............................................................................. A/1 Commission I, Minutes of Meeting, July 5, 1944, 10:30 a.m............ CI/M /2 Document 138 C I/ 1 / M 3 Minutes of Meeting of Committee 1 of Commission I P u rp o s e s , P o lic ie s , a n d Q u o ta s o f t h e (J ul y 5, 1944, 4 p.m.) Fund The third meeting of Committee 1 of Commission I was held on Wednesday, July 5, 1944, at 4 p.m. Copies of the first report of the drafting committee of Com mittee 1 were distributed. The Committee agreed to defer dis cussion of the report until the next meeting. The Chairman then took up the regular agenda, beginning with Alternative A of Article II—“Subscription to the Fund”— (Page 2 of document SA /1). Section 1 of this Alternative deals with “Countries Eligible for Membership”. A question was raised as to whether there was not a defect in the wording of this pro vision which might be remedied by reference to “original” mem bers or “founder” members, or some similar expression. The Chairman found that the consensus of the Committee was to agree with the sense of Alternative A and to refer the question to the drafting committee. PROCEEDINGS AND DOCUMENTS 151 Section 2 of Alternative A—“Quotas”—was passed over, as the Chairman indicated that the expected document on this sub ject was not yet ready. The Chairman then read Alternative A, section 3—“Time and Place of Payment”. In answer to inquiries from various members as to whether all the quotas had to be paid in before the fund could begin operations, it was explained that this problem would be dealt with in section 5 of an additional article XIII, referred to on page 49 of Document SA/1. The Committee then discussed Alternative B (p. 2a), proposed as an addition to section 3 of Alternative A. The proposer of this amendment explained its importance to liberated countries, in dicating the complete disorganization of their monetary systems. He also pointed out the safeguards for the Fund contained in Alternative B. It was brought out in discussion that other countries in the Middle East would be faced with similar difficulties and might require similar arrangements. This led to general discussion of the applicability of the Agree ment to liberated countries, and the Committee agreed to recom mend to Commission I that it appoint an ad hoc committee to consider the problems of liberated countries with respect to their initial quota payments and other matters dealt with in other pro visions of the Fund. (p. 2) The Chairman found that there was agreement with the substance of Alternative A, section 3, but that since it was related to provisions not yet before the Committee, final consid eration should be deferred. The discussion then turned to Alternative A, section 4 (p. 3), which deals with adjustment of quotas. Questions were raised regarding whether the Fund should be permitted to revise quotas in general at any time or only at five-year intervals, and also whether the Fund should be able to revise an individual quota at any time. The consensus of the meeting was that the Fund should be permitted to revise quotas whenever it was deemed appropriate, and that it should also review the question every five years. Various phrases were suggested to accomplish this purpose. The matter was referred to the drafting committee. The Committee then considered Alternative A, section 5, to article II, section 3 of the Joint Statement (p. 4), dealing with “Initial Payments”. The Committee concurred in the substance of this provision and referred the various suggested improve ments in language to the drafting committee. 7 4 9 0 1 3 — 48— 11 152 MONETARY AND FINANCIAL CONFERENCE Document 140 C I/ 2 / M 3 Minutes of Meeting of Committee 2 of Commission I O p e ra tio n s o f t h e F u n d (Jul y 5, 1944, 5:30 p.m.) The third meeting of Committee 2 of Commission I was held at 5:30 p.m. on July 5. The Chairman was authorized to appoint an ad hoc committee to consider the question recommitted to Committee 2 by Com mission I, that is, Alternative A, section 2 (3) (p. 6a of Docu ment SA /1), Alternative B (p. 6b), and Alternative D (p. 6c), all of which refer to the conditions under which a member country may purchase the currency of another member from the Fund. The Committee then continued its discussion of article III, “Transactions with the Fund”. The Committee agreed to defer discussion of Alternative A, section 5 (2) and Alternative B (p. 8) in order to allow time for informal discussion of these Alternatives. The Committee agreed to defer discussion of Alternative A, section 6 (p. 9) until article IX, sections 2 and 3 of the Joint Statement have been considered, since the meaning of section 6 (p. 9) depends on the provisions of article IX. In view of the close relation of article IX, sections 2 and 3, to the work of Committee 2, the possibility of a reassignment of work among the Committees of Commission I was suggested. The Committee also noted certain typographic errors in section 6. In the fifth line the word “currency” should be replaced by the word “current” and in the second line of paragraph (c) the word “above” should be replaced by the word “below”. The Committee agreed that, pending further discussion, paragraph (c) be referred to the language committee with the suggestion that the words “contrary to” be substituted for the words “as a result of dealings illegal under”. The Committee agreed to approve Alternative A, section 7 (p. 10). The Committee agreed to defer consideration of Alternatives B, C, D, and E to article III, section 7, of the Joint Statement (pp. 11, 11a, lib) until Alternative A has been presented to the Com mittee. The Committee agreed to refer Alternative A, section 9 (p. 12), to the language committee for rewording and clarification. PROCEEDINGS AND DOCUMENTS 153 The Committee was informally presented with a new Alternative F to article III-2 (3) of the Joint Statement which the Committee agreed to refer to the ad hoe committee mentioned above, which is to be appointed by the Chairman to consider the other Alterna tives to this same paragraph. The Committee discussed briefly Alternative E (p. 6d), pro posed as an addition to article III, section 2 of the Joint State ment. It will continue the discussion of this Alternative at its next meeting. Document 141 C l/ 3 / M3 Minutes of Meeting of Committee 3 of Commission I O rg a n iz a tio n a n d M a n a g e m e n t o f t h e F u n d (Jul y 5, 1944, 4 p.m.) At its third meeting, held on July 5 at 4 p.m., Committee 3 of Commission I decided to defer action and further consideration of article VII, section 2, Alternatives A and B, relating to the executive directors, until new drafts would be submitted by various members for the sections in controversy. The Committee pro ceeded to consider article VII, section 3, voting in the board of governors. After extended debate it was agreed to accept in prin ciple the first paragraph providing for a number of votes to be assigned to each country by virtue of its membership, in addition to the votes proportional to quotas. No decision was taken on the number of 250 votes per country until more information about the quotas becomes available. The Committee discussed, at considerable length, the implica tions of the second paragraph of article VII, section 3, providing for the reduction of votes of members purchasing currency from the Fund and increasing the votes of members whose currencies are sold by the Fund. In the discussion it was brought out that the precise limitations of the use of the proposed provision should be clarified by redrafting so as to make clear that the special voting provisions applied only to a few circumstances, e.g., the waiver by the Fund of the limitations on the annual purchase of currency by a member country and the prevention of the misuse of the Fund’s assets. While there was no general agreement, 154 MONETARY AND FINANCIAL CONFERENCE the weight of opinion seemed to approve of the terms of Alterna tive A, with perhaps some reduction in the penalty to be applied to the countries making large purchases of currency from the Fund. The third paragraph of the section was accepted. Alternative B was withdrawn by its supporters, except the portion relating to the quorum. It was agreed that the quorum should be constituted by at least half of the member countries and at least two thirds of the votes. The last word of the minutes of the meeting of Committee 3 of Com mission I held on July 4 a t 10:00 a.m. (Doc. 103) should read “votes” instead of “quotas”.) (n .b . Document 142 C I/4 /M 2 Minutes of Meeting of Committee 4 of Commission I F o rm a n d S ta tu s o f t h e F u n d (July 5, 1944, 5:30 p.m.) The second meeting of Committee 4 of Commission I was held on July 5 at 5:30 p.m. The Chairman announced that the Chair men of all of the delegations had agreed that there would be no formal voting in the Committees. The Chair was authorized to appoint a small “asterisk committee” to which minor questions of wording and coordination may be referred. In the case of a lack of agreement on important questions, the lack of agreement will be reported to the Commission. Approval was obtained permitting the technical personnel accompanying the delegations to be al lowed, at the request of the representatives, to express the point of view of their delegations without entering into debate. The Committee proceeded with the discussion of article IX, sec tions 5, 6, and 7, as amended. After considerable discussion and comments by various delegates, section 5 of article IX was ap proved as amended by document No. 120 to include the substance of section 6. There was considerable discussion of section 7, as amended by document No. 121. The Chairman appointed a sub committee to review this section further before final approval. The subcommittee appointed consists of one delegate from Cuba, Norway, Union of Soviet Socialist Republics, United Kingdom, PROCEEDINGS AND DOCUMENTS 155 and United States of America, with the delegate of the United States as Chairman. In addition to the articles and sections assigned to this Com mittee in document No. 51, the following matters previously as signed to Committee 3 of Commission I were also assigned for discussion at the next meeting of the Committee on July 6: Article VII—Management of the Fund Sec. 8—Relationship to other international organizations Article VIII—Withdrawal from the Fund Sec. 1—Right of members to withdraw Sec. 2—Suspension of membership or compulsory withdrawal Document 143 (p . 14) SA /1/8 J o i n t S t a t e m e n t —no provision The following material has been suggested as an addition to Alternative A, Article III. # Section 11. Furnishing Information. The Fund may require members to furnish it with such in formation as it deems necessary for its operations. In request ing information the Fund shall, however, take into considera tion the ability of individual members to furnish the data asked for. The minimum amount of information necessary for the due carrying out of the Fund’s duties includes the following: 1. Official holdings of (a) gold at home and abroad, (b) gold-convertible currencies distributed by currencies, and (c) other currencies distributed by currencies, as de fined for purposes of the Fund. 2. Holdings by banking and financial agencies other than official agencies of (a) gold at home and abroad, (b) gold-convertible currencies distributed by currencies, and (c) other currencies distributed by currencies, as de fined for purposes of the Fund. 3. Production of gold. 4. Gold exports and imports distributed by countries of destination and origin. 5. Total exports and imports of merchandise, in terms of local currency values, distributed by countries of destina tion and origin. 156 MONETARY AND FINANCIAL CONFERENCE (p.14a) 6. International balance of payments, including (a) trade in goods and services, (b) gold movements, and (c) capi tal transactions. 7. International investment position, i.e., investments with in the country owned abroad and investments abroad owned by residents of the country. 8. National income. 9. Price indexes. (Indexes of commodity prices in whole sale and retail markets and of export and import prices as available from official sources.) 10. Buying and selling rates for foreign currencies. 11. Exchange controls. (Comprehensive statement of ex change controls in effect at the time of assuming mem bership in the Fund and changes thereafter as they occur.) 12. Where official exchange controls exist, arrearages for commercial or financial remittances in terms both of the time lag in remittances and total amounts in arrears by types of arrearage. Alternative B (Substitute for list in A lternative A) 1. Gold holdings of the Central Bank and the Treasury and their changes. 2. Gold convertible exchange holdings of the Central Bank and the Treasury. (p.14b) 3. Movement of capital. 4. Foreign trade data. 5. Other items of the balance of payments. 6. Rates of exchange and their changes. 7 /6 /4 4 J.S. Art. Ill A d d itio n a l Section (11) Document 144 (p* 9a) s a / i /9 A l t e r n a t iv e B (Substitute for Joint Statem ent III, 5) So long as a member country is entitled to buy another mem PROCEEDINGS AND DOCUMENTS 157 ber’s currency from the Fund in exchange for its own currency it shall be prepared to buy its own currency from that member with that member's currency or with gold and silver. In the latter case the proportion of the silver shall not exceed a percentage corresponding to that in which silver was used by the member country in subscribing its quota. This shall not apply to currency subject to restrictions in conformity with IX, 3 below, or to hold ings of currency which have accumulated as a result of transac tions of a current account nature effected before the removal by the member country of restrictions on multilateral clearing main tained or imposed under X, 2 below. 7 /5 /4 4 J.S. Art. Ml Sec. 5 Document 145 (P- 2b) S A / i/ io A l t e r n a t iv e C (Substitute for Joint Statement II, 1) Member countries shall subscribe in gold and in their local currencies amounts (quotas) to be agreed, up to a total of $10 billions (for the world as a whole) or $8 billions (for all the United and Associated Nations). Member countries may subscribe part of their quotas, as per 3 below (Alternative D, page 4b)', in silver. 7 /5 /4 4 J.S. Ar*. II See. 1 Document 146 (p. 4b) S A / i/ ii A l t e r n a t iv e D (Substitute for Joint Statement II, 3) The obligatory gold subscription of a member country shall be fixed at 25 percent of its quota or 10 percent of its holdings of gold and gold convertible exchange, whichever is the smallest. The remaining 75 percent shall be subscribed in local currencies or, if a member nation so wishes, in silver and its local currency in a proportion to be agreed upon in each individual case. 7 /5 /4 4 J.S. Art. II Sec, 3 158 MONETARY AND FINANCIAL CONFERENCE Document 147 (P -6 c ) SA /1 /1 2 A lte rn a tiv e F (Substitute in A lternative A of A rt. Ill, Section 2 for paragraph (3)) (3) The total holdings of the Fund in the currency of the member initiating the purchase (after having been brought up, if below that figure, to the value of the quota of such member) have not increased during the previous twelve months by more than twenty-five percent of the quota of such member and do not exceed two hundred percent of the quota; and 7 /5 /4 4 J.S. Art. Ill Sec. 2 Document 148 (p .lie ) SA/1/13 A lte rn a tiv e F (Substitute for Joint Statement III, 7 (a ), (b), and ( c ) ) The Fund may also acquire gold and silver from member coun tries in accordance with the following provisions: (a) A member country may repurchase from the Fund for gold and silver, as per III, 5 (Alternative B, page 10a) above, any part of the latter’s holdings of its currency. (b) So long as a member's holding of gold, gold-convertible ex change and silver exceed its quota, the Fund in selling foreign exchange to that country shall require that one-half of the net sales of such exchange during the Fund's financial year be paid for with gold. (c) If at the end of the Fund’s financial year a member’s holdings of gold, gold-convertible exchange and silver have increased, the Fund may require up to one-half of the increase to be used to repurchase part of the Fund’s holdings of its currency so long as this does not reduce the Fund’s holdings of a coun try’s currency below 75 percent of its quota or the member’s holdings of gold, gold-convertible exchange and silver below its quota. 7/5/44 J.S. Art. Ill Sec. 7 PROCEEDINGS AND DOCUMENTS 159 Document 149 (p. 10a) sa/ 1/14 A l t e r n a t iv e B (Substitute for Joint Statement III, 6) A member country desiring to obtain, directly or indirectly, the currency of another member country for gold and silver is ex pected, provided that it can do so with equal advantage, to acquire the currency by the sale of gold and silver to the Fund. This shall not preclude the sale of newly mined gold and silver in any market. 7 /5 /4 4 J.S. Art. Ill Sec. 6 Document 150 ( p. 25g) SA/1/15 A l t e r n a t iv e D (Substitute for Joint Statem ent VII, 1) (b) There shall be 12 Executive Directors of whom 5 shall be appointed by the members having the five largest quotas, 3 by the members having the six next largest quotas, and 4 by the other members. In the balloting for the seats allowed to each of the last two categories, each member eligible to vote in that category shall cast for one director all the votes to which he is entitled and the directors receiving the greatest number of votes shall be Executive Directors. The members so chosen shall have the power of appointment of directors for two years; at the end of this period any of the members may be chosen again or other members may be chosen. The persons chosen as Executive Directors need not be Gov ernors. The Executive Directors shall meet not less than once every three months. 7 /5 /4 4 J.S. Art. V II Sec. 1 Document 151 (p. 25d) sa / i /1 6 A l t e r n a t iv e C (a) The Board of Governors shall appoint an Executive Committee. 160 MONETARY AND FINANCIAL CONFERENCE The Executive Committee shall conduct all of the business of the Fund delegated to them by the Board of Governors. (b) Formation of the Executive Committee. The Executive Committee shall consist of fourteen Executive Directors appointed as follows: 1. Five Directors representing each one of the five member countries having the largest quotas in the Fund. 2. Three Directors representing the member countries in the economic area of the British Empire. 3. Three Directors representing the member countries in the economic area of the American Republics. 4. Three Directors representing the member countries in all other economic areas. Each Director shall have an alternate appointed in the same manner. Executive Directors and their alternates need not be Governors and may be reappointed. (c) Method of Election of the Executive Committee. The five Executive Directors of the five member countries having the largest quotas in the Fund shall be appointed directly by each one of such member countries and shall continue to serve for an indefinite period, subject to the pleasure of their respective Gov ernments. The remaining nine Executive Directors shall be chosen by the Board of Governors every year at its Annual meeting by separate elections in which all the governors of the respective economic areas shall participate, except those governors repre senting member countries holding permanent seats in the Execu tive Committee. 7 /5 /4 4 J.S. Art. V II Sec. 1 (p. 25e) Each governor, in the respective economic area to which his member country belongs, shall be entitled to cast ex clusively for one Executive Director all of the votes to which his member country is entitled according to the rules of voting of Section 3 of this Article. The three persons receiving the highest number of votes shall be considered elected, provided, however, that no Executive Director shall be considered elected at the first ballot who has not received at least one-third of all the votes of the participating countries, of his respective economic area. If at the first balloting of the respective economic areas all three Directors should not have been elected according to the application of the preceding rules, then a second balloting shall be held at which only those governors who voted for a person not elected shall PROCEEDINGS AND DOCUMENTS 161 be entitled to participate in the second balloting. If at the second balloting the total number of Directors of the respective area shall not have been elected, further ballotings shall be taken applying the same rules until two Directors shall have been so elected. The third Director may then be elected by a simple majority vote. The above procedure shall be equally applicable to the election of alternate Executive Directors. (d) Meetings of the Executive Committee. The Executive Committee shall meet as often as the business of the Fund may require. The Executive Committee may also decide to hold regular meetings at stated periods to consider questions of general policy of the Fund and to prepare the agenda for the annual meeting of the Board of Governors. The General Manager of the Fund shall act as Chairman of the Executive Committee, but shall have no vote. 7 /5 /4 4 J,S. Art. V II Sec. 1 (p. 25f) In order to constitute a quorum for the meetings of the Executive Committee there must be present not less than seven Directors representing not less than one-half of the total voting power of the Executive Directors. Whenever a member country not having a national among the Executive Directors may have requested action or will be directly affected by a decision of the Executive Committee, such member country shall be entitled to have a representative present at the meeting when such request or decision is to be considered, but such representative shall not be entitled to vote. (e) Decisions of the Executive Committee. Resolutions of the Executive Committee shall be adopted by the favorable vote of the majority of Directors attending the meet ing, provided, however, that in the said voting there should also concur a majority of the voting power represented by each Director according to Section 3. For the purpose of computing their voting power under Section 3, the Director representing an economic area on the Executive Committee shall be entitled to represent and cast the accumulated number of votes of the member countries that voted for him in his area. (f) The Executive Committee shall appoint the General Man ager of the Fund, and shall determine his duties and powers. The Executive Committee may also appoint such committees as they deem advisable. Membership of such committees need not be limited to governors, directors and alternates. 162 MONETARY AND FINANCIAL CONFERENCE The General Manager and the Executive Directors shall be compensated by the Fund in an amount fixed by the Board of Governors. 7 /5 /4 4 J.S. Art. V II Sec. 1 Document 152 (p. 26) SA/1/17 C o m b in e d A l t e r n a t iv e s A a n d B f o r J o in t S t a t e m e n t V I I 1, 2 , a n d 3 , a n d A d d it io n a l M a t e r ia l o n P ag e 2 7 o f D o c u m e n t S A /1 1. The Executive Directors shall be responsible for the con duct of the general operations of the Fund, and for this purpose, shall exercise all the powers delegated to them by the board of Governors. 2. There shall be eleven Executive Directors, of whom five shall be appointed by the five members having the largest quotas and six shall be elected biennually, in accordance with the provisions of Schedule B, by all the Governors other than those appointed by the members having the five largest quotas. Persons chosen as Executive Directors need not be Governors. 3. Every Executive Director may appoint an alternate with full power to act for him when he is not present. When the Execu tive Directors appointing them are present, alternates may participate in meetings but shall not vote. 4. The Executive Directors shall be in continuous session at the principal office of the Fund. 5. In order to constitute a quorum for any meeting of the Ex ecutive Directors, there must be present a majority of the Directors representing not less than one-half of the Voting power of all the Executive Directors. 6. Each Executive Director appointed by one of the members with the five largest quotas shall be entitled to cast the num ber of (p. 26a) votes alloted under Section 3 of this Ar ticle (J.S. VII, 2) to the member appointing him. Each elected Executive Director shall be entitled to cast only the number of votes which actually count toward his election. When the provisions of the second paragraph of Section 2 of this Article are applicable, the votes to which an Executive PROCEEDINGS AND DOCUMENTS 163 Director would otherwise be entitled shall be increased or decreased proportionately. Each Executive Director shall cast all of the votes to which he is entitled as a single unit. 7. The Board of Governors shall make regulations containing provisions under which a member which is not entitled to appoint an Executive Director under 2 above shall be per mitted to send a representative to attend any meeting of the Executive Directors when a request made by, or a matter particularly affecting, that member is under consideration. 8. The Executive Directors shall appoint a Managing Director who shall not be a Governor or an Executive Director. The Managing Director shall be Chairman of the Executive Directors, but shall have no vote except a casting vote in case of an equal division. He may participate in meetings of the Board of Governors, but shall not vote at such meeting. He shall, however, be eligible for election as Chairman of the Board of Governors. The Managing Director shall hold office at the pleasure of the Executive Directors. (p.26b) 9. The Managing Director shall be chief of the operating staff of the Fund and shall conduct under the direction of the Executive Directors, the ordinary business of the Fund's work. Subject to the general control of the Executive Di rectors, he shall be responsible for the internal organization of the Fund's staff and the appointment and dismissal of its staff. The Managing Director shall be responsible to the Ex ecutive Directors for the accounts. 10. The Executive Directors may appoint such committees as they deem advisable. Members of such committees need not be lim ited to Governors or Executive Directors or their alternates. 11. The Board of Governors shall determine the remuneration to be paid to the Executive Directors and the salary and terms of service of the Managing Director. SCHEDULE B (a) In balloting for the elective Executive Directors, each governor eligible to vote shall cast for one person all of the votes to which he is entitled under the first paragraph of Section 3 of this article (J.S. VII, 2). The six persons receiving the greatest number of votes shall be Executive Directors, except that no person who receives less than sixteen percent of the aggregate eligible votes shall be considered elected. (p. 26c) (b) When six persons are not elected on the first bal lot, a second ballot shall be held in which the person receiving the 164 MONETARY AND FINANCIAL CONFERENCE lowest number of votes shall be ineligible for election and in which there shall vote only those governors who voted on the first ballot for a person not elected and those governors all or part of whose votes for a person elected are deemed to have raised the votes cast for that person above seventeen percent of the aggregate eligible votes. (c) In determining whether any part of the votes cast by a governor are to be deemed to have raised the total of any person above seventeen percent, there shall be considered as not forming part of the excess over seventeen percent the votes of the governor casting the largest number of votes for such person, then the votes of the governor casting the next largest number, and so on until the total reaches seventeen percent. (d) Any governor whose votes are partly not in excess and partly in excess shall be eligible to vote in the second balloting only to the extent of the votes in excess. (e) If on the second ballot, six persons have not been elected, further ballots shall be taken on the same principles until six persons have been elected, provided that after five persons are elected, the sixth may be elected by a simple majority of the re maining votes and shall be deemed to have been elected by all such votes. Document 153 D P /5 Egyptian Delegation Memorandum to be Submitted to Commission T (Committee 2) Paragraph IV, 1 of the Joint Statement lays down that “The par value of a member’s currency---- shall be expressed in terms of gold.” This statement lacks precision. It fails to indicate the date on which the expression is to take place, an important point, since the value of gold varies from day to day, and the place at which the gold is situated, in terms of which the currency is to be valued. This also is important, for a kilogram of gold in New York has not the same value as a kilogram of gold in London, in Pretoria, in Bombay or in Cairo. PROCEEDINGS AND DOCUMENTS 165 Difficulties are bound to arise, unless this ambiguity is removed, as it can be removed by setting up an international standard of value, which, it is suggested should be that of 10 (ten) grams of fine gold at the seat of the Fund as of a date to be agreed. It is suggested that this international unit of value be called the val, with subdivision decimally into millivals (thousandths) and multiples, kilovals (thousands) and megavals (millions). It is further suggested that the value be expressed in terms of gold, through the definition “The price of ten grams of fine gold at the central seat of the Fund, on (an agreed date) shall be one val.” The possibility of such changes as have been mentioned above seems to be envisaged in IV, 5 of the Joint Statement, which pro vides for a uniform change in the gold value of member currencies. In the suggested plan, such a change would be made by a modifica tion of the defined price of ten grams of gold, in terms of vals. It is submitted that the institution of some such international unit of value will be found ultimately to be necessary, in order to facilitate accounting, the expression of currencies in terms of gold, and the expression of currencies in terms of each other, to serve, in fact, as a common denominator of value. Its institution is in line with the adoption of international measures of length, weight, electrical units and so forth. The introduction of an international unit into both the plans associated with the names of Mr. White and Lord Keynes was based on sound principles, although exception may be taken to the particular units there devised, (p. 2) The amount, 10 grams, is suggested because it links the international currency decimally to the C.G.S. system already adopted for so many international purposes. Its magnitude gives a convenient size to the unit, namely, approximately $11,253 or 54.013 shillings, and the millival, about iy& cent, is not very different from the cent, which is roughly the lowest unit of value used in commercial accounting. (If lower submultiples should be required for special purposes, there is no difficulty in subdividing further decimally). The following resolution is therefore recommended: “An international unit of value shall be instituted. This inter national unit shall be denominated one VAL. The val shall be subdivided and multiplied decimally. The value of the val shall be expressed in terms of gold by the definition: ‘The price of ten grams of fine gold at the central seat of the Fund as of (a date to be agreed) shall be one VAL.’ ” 166 MONETARY AND FINANCIAL CONFERENCE Document 156 G D /1 9 Representation of Delegations on Commissions and Committees This prelim inary list is based on inform ation available to the Secre ta ria t at the time of typing. Please send corrections or additions to the Secretary General, Room 136, immediately.) (N o te: C o m m issio n I Chairman—Harry D. White (U.S.A.) Vice Chairman—Rodolfo Rojas (Venezuela) Reporting Delegate—L. Rasminsky (Canada) Secretary—Leroy D. Stinebower Assistant Secretary—Mrs. Eleanor Lansing Dulles AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Camille Gutt BOLOVIA No designation BRAZIL No designation CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre J. J. Deutsch D. C. Abbott J. A. Blanchette CHILE No designation CHINA Tingfu F. Tsiang COLOMBIA Carlos Lleras Restrepo COSTA RICA Luis D. Tinoco Castro Jose Rafael Oreamuno CUBA No designation CZECHOSLOVAKIA Ladislav Feierabend Jan Mladek Antonin Basch Josef Hanc Ervin Hexner DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR No designation EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Augustin Alfaro Moran ETH IO PIA B latta Ephrem T. Medhen FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye Robert Mosse GREECE Kyriakos Varvaressos , Alexander Argyropoulos GUATEMALA Manuel Noriega Morales (P. 2 ) HA ITI Pierre Chauvet HONDURAS Julian R. Caceres NORWAY Wilhelm Keilhau Ole Colbjornsen A*rne Skaug PROCEEDINGS AND DOCUMENTS ICELAND Magnus Sigurdsson INDIA Sir A. J. Raisman IRAN Abol H asan Ebtohaj Hosein Navab Taghi N assr IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Lumb LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO Eduardo Suarez Antonio Espinosa de los Monteros NETHERLANDS J. W. Beyen D. Crena de Iongh H. Riemens J. J. Polak C. H. Schoch A. Broches NEW ZEALAND W alter Nash B. C. Ashwin B. R. T urner A. G. B. Fisher E. C. Fussell NICARAGUA Guillermo Sevilla Sacasa J. Jesus Sanchez Roig Leon DeBayle PANAMA Guillermo Arango Narciso E. Garay PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Pedro G. Beltran Juvenal Monge Emilio Barreto PH IL IPP IN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael Mathay POLAND Leon Baranski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS No designation UNITED KINGDOM No designation UNITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m is s io n I Committee 1 Chairman—Dr. Tingfu F. Tsiang (China) Reporter—Kyriakos Varvaressos (Greece) Secretary—W. A. Brown Assistant Secretary—J. P. Young AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Baron Rene Boel 7 4 9 0 1 3 — 48— 12 167 EL SALVADOR Augustin Alfaro Moran Raul Gamero C. Victor Manuel Valdes ETHIOPIA B latta Ephrem Medhen 168 MONETARY AND FINANCIAL CONFERENCE BOLIVIA No designation BRAZIL Eugenio Gudin CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre CHILE Luis Alamos Barros CHINA Te-Liang Soong COLOMBIA No designation COSTA RICA No designation CUBA Ramiro Guerra y Sanchez Eduardo D urruthy CZECHOSLOVAKIA Ja n Mladek Antonin Basch E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. D uran Ballen EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim FREN CH DELEGATION A. Istel J. de Largentaye R. Mosse GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Pierre Chauvet HONDURAS Julian R. Caceres ICELAND A. Asgeirsson INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Deshmukh A. D. Shroff IRAN No designation IRAQ No designation LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO No designation (p. 2) NETHERLANDS J. W. Beyen D. Crena de Iongh H. Riemens NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. T urner NICARAGUA Leon DeBayle J. Jesus Sanchez Roig Guillermo Sevilla Sacasa NORWAY Wilhelm Keilhau Arne Skaug Kaare Petersen P H IL IP P IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND S. Kirkor UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS A. P. Morozov F. P. Bystrov P. Titov N. Ivanov UNITED KINGDOM Lionel Robbins A, W. Snelling PROCEEDINGS AND DOCUMENTS PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Juan Chavez Emilio Barreto UNITED STATES OF AMERIC No designation URUGUAY Mario La Gamma Acevedo VENEZUELA Rodolfo Rojas Cristobal L. Mendoza M. Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m is s io n I Committee 2 Chairman—N. A. Maletin (U.S.S.R.) Vice Chairman—W. -A. Mackintosh (Canada) Reporter—Robert Mosse (French Delegation) Secretary—Karl Bopp Assistant Secretary-— Miss Alice Bourneuf AUSTRALIA EL SALVADOR Leslie G. Melville Agustin Alfaro Moran James B. Brigden Raul Gamero C. Frederick H. Wheeler Victor Manuel Valdes A rthur H. Tange ETHIOPIA BELGIUM George A. Blowers Georges Theunis FRENCH DELEGATON BOLIVIA A. Istel No designation J. de Largentaye BRAZIL R. Mosse Francisco Alves dos Santos Filho GREECE CANADA Kyriakos Varvaressos L. Rasminsky GUATEMALA W. A. Mackintosh Manuel Noriega Morales HAITI J. J. Deutsch CHILE P ierre Chauvet German Riesco HONDURAS CHINA No designation Tsu-Yee Pei rCELAND COLOMBIA S. Frimannsson INDIA No designation COSTA RICA Sir A. J. Raisman No designation Sir Theodore E. Gregory CUBA Sir Shanmukham Chetty Sir Chintaman D. Beshmukh Garcia Montes A. D. Shroff Eduardo D urruthy IRAN CZECHOSLOVAKIA No designation Antonin Basch IRAQ Ja n Mladek No designation DOMINICAN REPUBLIC LIBERIA Anselmo Copello James F. Cooper J. R. Rodriguez 169 170 MONETARY AND FINANCIAL CONFERENCE LUXEMBOURG Hugues Le Gallais MEXICO No designation ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim (P . 2 ) NETHERLANDS D. Crena de Iongh A. Andriesse A. Bestebreurtje J. J. Polak NEW ZEALAND E. C. Fussell A. G. B. Fisher B. C. Ashwin B. R. Turner NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle NORWAY Ole Colbjornsen Arne Skaug Kaare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Juvenal Monge Emilio G. B arreto PH IL IPPIN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Zygmunt Karpinski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS N. Maletin A. Smirnov L. Andreev M. Chekmarev N. Kuznetzov UNITED KINGDOM D. H. Robertson G. F. Bolton H. E. Brooks UNITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo VENEZUELA Rodolfo Rojas J. J. Gonzalez Gorrondona M. Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m issio n I Committee 3 Chairman—Dr. de Souza Costa (Brazil) Reporter—Dr. Ervin Hexner (Czechoslovakia) Secretary—Malcolm Bryan Assistant Secretary—J. H. Bitterman AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange EL SALVADOR Augustin Alfaro Moran Raul Gamero C. Victor Manuel Valdes; PROCEEDINGS AND DOCUMENTS BELGIUM Camille Gutt BOLIVIA No designation BRAZIL . Valentim Boucas CANADA J. J. Deutsch J. A. Blanchette D. C. Abbott CHILE A rturo Maschke Tornero CHINA Te-Mou Hsi COLOMBIA No designation COSTA RICA No designation CUBA Luis Machado Manuel Menocal CZECHOSLOVAKIA Ervin Hexner Josef Hanc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR S. E. Duran Ballen E. F. Carbo EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim (p . 2 ) NETHERLANDS J. W. Beyen C. H. Schoch NEW ZEALAND A. G. B. Fisher E. C. Fussell B. C. Ashwin B. R. Turner NICARAGUA Guillermo Sevilla Sacasa Leon DeBayle J. Jesus Sanchez Roig NORWAY Arne Skaug Ole Colbjornsen K aare Petersen 171 ETH IO PIA George A. Blowers FRENCH DELEGATION J. de L argent aye R. Aglion GREECE Alexander Argyropoulos Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Pierre Chauvet HONDURAS No delegation ICELAND M. Sigurdsson INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Deshmukh A. D. Shroff IRAN No designation IRAQ No designation LIBERIA W alter F. Walker LUXEMBOURG Hugues Le Gallais MEXICO No designation POLAND Janusz Zoltowski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS I. Slobin M. Idashkin N. Cheklin UNITED KINGDOM Sir W ilfred Eady W. E. Beckett G. L. F. Bolton R. T. G. Miles 172 MONETARY AND FIN A N C IA L CO N FEREN CE PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Andres F. Dasso P H IL IP P IN E COMMONWEALTH Jaim e Hernandez Ismael M athay UNITED STATES OF AMERIC No designation URUGUAY Hugo Garcia VENEZUELA Rodolfo Rojas J. J. Gonzalez Gorrondona M. Perez Guerrero YUGOSLAVIA Vladimir Rybar I Committee 4 Chairman—Manuel B. Llosa, Peru Vice Chairman— Reporter—Wilhelm Keilhau, Norway Secretary—John Fuqua Assistant Secretary-—Colonel Charles M. Dyson C o m m is s io n AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Joseph Nisot BOLIVIA No designation BRAZIL Octavio Bulhoes CANADA D. C. Abbott A. F. W. Plum ptre J. A. Blanchette CHILE Fernando Mardones R estat CHINA Victor Hoo COLOMBIA No designation COSTA RICA No designation CUBA Felipe Pazos Miguel Perez CZECHOSLOVAKIA Josef Hanc Ervin Hexner DOMINICAN REPUBLIC Anselmo Copello J. R. Rodrigues EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin A lfaro Moran Raul Gamero C. Victor Manuel Valdes ETH IO PIA B latta Ephrem T. Medhen FREN CH DELEGATION Raoul Aglion Jean de Largentaye GREECE A thanase Sbarounis Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Pierre Chauvet HONDURAS No designation ICELAND Magnus Sigurdsson INDIA Sir Chintaman D. Deshmukh Sir Theodore E. Gregory IRAN No designation IRAQ No designation PROCEEDINGS AND DOCUMENTS ECUADOR Sixto E. Duran Ballen . Esteban F. Carbo (p . 2 ) LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS A. H. Philipse A. Broches NEW ZEALAND B. C. Ashwin E. C. Fussell A. G. B. Fisher B. R. Turner NICARAGUA Leon DeBayle J. Jesus Sanchez Roig Guillermo Sevilla Sacasa NORWAY Wilhelm Keilhau Ole Colbjornsen Kaare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Manuel B. Llosa Juvenal Monge Emilio B arreto Latzeh LIBERIA William E. Dennis P H IL IP PIN E COMMONWEALTH Jaim e Hernandez Ismael Mathay POLAND Leon Baranski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS A. A rutinian F. Bystrov N. Panchenko UNITED KINGDOM Nigel Bruce Ronald William E. Beckett UNITED STATES OF AMERICA No designation URUGUAY Hugo Garcia VENEZUELA Rodolfo Rojas Cristobal C. Mendoza Alfonso Espinoza Manuel Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m is s io n II Chairman—Lord Keynes (U.K.) Vice Chairman—Luis Alamos Barros (Chile) Reporting Delegate—Georges Theunis (Belgium) Secretary—A. Upgren Assistant Secretary—A. Smithies AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Camille Gutt BOLIVIA No designation 173 FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye Robert Mosse GREECE Kyriakos Varvaressos Athanase Sbarounis 174 MONETARY AND FINANCIAL CONFERENCE BRAZIL No designation CANADA L. Rasminsky W. A. Mackintosh A. F. W. Plum ptre J. J. Deutsch CHILE No designation CHINA Yee-Chung Koo COLOMBIA Miguel Lopez Pum areje COSTA RICA Francisco de P. Gutierrez Ross Jose Rafael Oreamuno CUBA No designation CZECHOSLOVAKIA Ladislav Feierabend Antonin Basch DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR No designation EGYPT No designation EL SALVADOR No designation ETH IO PIA George A. Blowers GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS Julian R. Caceres ICELAND Magnus Sigurdsson INDIA Sir A. J. Raisman IRAN Taghi N assr A. H. Ebtehaj A. A. D aftary IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Lumb LIBERIA Jam es E. Cooper LUXEMBOURG Hugues Le Gallais MEXICO Eduardo Suarez Daniel Cosio Villegas NETHERLANDS J. W. Beyen D. Crena de Iongh A. H. Philipse A. Andriesse A. Bestebreurtje (p. 2) NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. T urner NICARAGUA Leon DeBayle Guillermo Sevilla Sacasa J. Jesus Sanchez Roig NORWAY Ole Colbjernsen Wilhelm Keilhau Arne Skaug PANAMA Guillermo Arango Narciso E. Garay PH IL IPP IN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael M athay POLAND Ludwik Grosfeld UNION OF SOUTH AFRICA M. H. de Kock J. E. Holloway W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS No designation UNITED KINGDOM No designation U NITED STATES OF AMERICA No designation PROCEEDINGS AND DOCUMENTS PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Andres F. Dasso Juvenal Monge URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m is s io n II Committee 1 Chairman—Representative of Netherlands Reporter—Representative of Costa Rica AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Baron Rene Boel BOLIVIA No designation BRAZIL Eugenio Gudin CANADA No designation CHILE Luis Alamos CHINA Te-Mou Hsi COLOMBIA No designation COSTA RICA No designation CUBA Ramiro Guerra Eduardo D urruthy CZECHOSLOVAKIA Ervin Hexner Jan Mladek E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT No designation FRENCH DELEGATION A. Istel J. de Largentaye R. Mosse GREECE K. Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Andre Liautaud HONDURAS No designation ICELAND A. Asgeirsson INDIA Sir Chintaman D. Deshmukh IRAN No designation IRAQ No designation LIBERIA James E. Cooper LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS J. W. Beyen A. H. Philipsc J. J. Polak NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. Turner 175 176 MONETARY AND FINANCIAL CONFERENCE EL SALVADOR No designation ETH IO PIA B latta Ephrem T. Medhen NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle (P- 2) NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Andres F. Dasso Juvenal Monge Emilio G. Barreto P H IL IP P IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Leon Baranski UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS Morozov £ . Bystrov P. Titov U NITED KINGDOM No designation U N ITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo V ENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m is s io n II Committee 2 Chairman—Representative of Cuba Reporter—Representative of Australia AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Georges Theunis BOLIVIA No designation BRAZIL Francisco Alves dos Santos Filho CANADA No designation CHILE German Riesco CHINA Tsu-Yee Pei COLOMBIA No designation COSTA RICA No designation EL SALVADOR No designation ETH IO PIA George A. Blowers FREN CH DELEGATION Andre Istel Robert Mosse Jean de Largentaye GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Andre Liautaud HONDURAS No designation ICELAND Sveinbjorn Frimannsson INDIA No designation IRAN No designation PROCEEDINGS AND DOCUMENTS IRAQ No designation LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS D. Crena de Iongh A. Andriesse A. Bestebreurtje CUBA Garcia Montes Eduardo D urruthy CZECHOSLOVAKIA Ja n Mladek Antonin Basch DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT No designation (P. 2) NEW ZEALAND E. C. Fussell A. G. B. Fisher B. C. Ashwin B. R. Turner NICARAGUA Guillermo Sevilla Sacasa Leon DeBayle J. Jesus Sanchez Roig NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Alberto Alvarez Calderon Juvenal Monge PH IL IP PIN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Leon Baranski UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS N. Chechulin A. Smirnov A. Borisov Mrs. L. Gouseva U NITED KINGDOM No designation UNITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo VENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m is s io n II Committee 3 Chairman—Representative of Brazil Reporter—Representative of Peru AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange 177 ETH IO PIA George A. Blowers FRENCH DELEGATION J. de Largentaye R. Aglion 178 MONETARY AND FINANCIAL CONFERENCE GREECE BELGIUM Alexander Argyropoulos B. S. Chlepner Kyriakos Varvaressos BOLIVIA No designation GUATEMALA BRAZIL Manuel Noriega Morales Francisco Alves dos Santos Filho HAITI Andre Liautaud CANADA No designation HONDURAS No designation CHILE ICELAND A rturo Maschke Tornero CHINA M. Sigurdsson INDIA Ts-Liang Soong No designation COLOMBIA IRA N No designation No designation COSTA RICA IRAQ No designation No designation CUBA LIBERIA Luis Machado W alter E. Walker Manuel Menocal LUXEMBOURG CZECHOSLOVAKIA Hugues Le Gallais Antonin Basch MEXICO E rnest Sturc No designation DOMINICAN REPUBLIC NETHERLANDS Anselmo Copello J. W. Beyen J. R. Rodriguez ECUADOR H. Riemens NEW ZEALAND S. E. Duran Ballen A. G. B. Fisher E. F. Carbo EGYPT E. C. Fussell No designation C. B. Ashwin EL SALVADOR B. R. T urner No designation <p.2) NICARAGUA Leon DeBayle Guillermo Sevilla Sacasa J. Jesus Sanchez Roig NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Alberto Alvarez Calderon Ju an Chavez PH IL IPP IN E COMMONWEALTH Jaim e Hernandez Ismael M athay POLAND Janusz Zoltowski UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS I. Slobin M. Idashkin N. Cheklin UNITED KINGDOM No designation UNITED STATES OF AMERICA No designation URUGUAY Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar PROCEEDINGS AND DOCUMENTS C o m m issio n II Committee 4 Chairman—Representative of India Reporter—Representative of Poland AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Joseph Nisot BOLIVIA No designation BRAZIL Valentim Boucas CANADA No designation CHILE Fernando Mardones R estat CHINA Kuo-Ching Li COLOMBIA No designation COSTA RICA No designation CUBA Felipe Pazos Miguel Perez CZECHOSLOVAKIA Josef Hanc E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR Sixto E. Duran Ballen Esteban F. Carbo EGYPT No designation EL SALVADOR No designation ETH IO PIA B latta Ephrem T. Medhen (P. 2 ) NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay FRENCH DELEGATION Raoul Aglion Jean de Largentaye GREECE Athanase Sbarounis Kyriakos Varvaressos GUATEMALA Manual Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND Magnus Sigurdsson INDIA No designation IRAN No designation IRAQ No designation LIBERIA James F. Cooper LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS C. H. Schoch A. Broches NEW ZEALAND B. C. Ashwin E. C. Fussell A. G. B. Fisher B. R. Turner NICARAGUA J. Jesus Sanchez Roig Leon DeBayle Guillermo Sevilla Sacasa UNION OF SOVIET SOCIALIST REPUBLICS A. A rutinian F. Bystrov N. Panchenko 179 180 MONETARY AND FINANCIAL CONFERENCE PARAGUAY No designation PERU Manuel B. Llosa Alberto Alvarez Calderon PH IL IP P IN E COMMONWEALTH Jaim e Hernandez Ismael M athay POLAND Stanislaw Kirkor UNION OF SOUTH AFRICA No designation U N ITED KINGDOM No designation U N ITED STATES OF AMERICA No designation URUGUAY Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m ission IQ Chairman—Eduardo Suarez (Mexico) Vice Chairman—Mahmoud Saleh El Falaky (Egypt) Reporting Delegate—A. G. B. Fisher (New Zealand) Secretary—0. Schmidt Assistant Secretary—L. Casaday AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Baron de Gruben . BOLIVIA No designation BRAZIL Valentim Boucas Eugenio Gudin Octavio Bulhoes CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre J. J. Deutsch CHILE Luis Alamos German Riesco A rturo Maschke Tornero Fernando Mardones R estat CHINA Kuo-Ching Li COLOMBIA Sr, Victor Dugand ECUADOR No designation EGYPT No designation EL SALVADOR No designation ETH IO PIA B latta Ephrem T. Medhen FREN CH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye GREECE Kyriakos Varvaressos Alexander Argyropoulos A thanase Sbarounis GUATEMALA Manual Noriega Morales H A ITI Andre Liautaud Pierre Chauvet HONDURAS Julian R. Caceres ICELAND Asgeir Asgeirsson INDIA No designation PROCEEDINGS AND DOCUMENTS COSTA RICA Fernando Madrigal J. Rafael Oreamuno CUBA Manuel Menocal Garcia Montes CZECHOSLOVAKIA Ladislav Feierabend Ervin Hexner Antonin Basch Josef Hanc Ja n Mladek DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez (P. 2 ) MEXICO Eduardo Suarez Rodrigo Gomez Victor Urquidi NETHERLANDS J. W. Beyen D. Crena de Iongh NEW ZEALAND W alter Nash Bernard Carl Ashwin Edward C. Fussell Bruce R. Turner NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Pedro G. Beltran Andres F. Dasso Alberto Alvarez Calderon Juvenal Monge 181 IRAN A. A. D aftary Hosein Navab IRAQ Senator Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir Claude E. Lumb LIBERIA W alter F. Walker LUXEMBOURG Hughes Le Gallais P H IL IPPIN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael Mathay POLAND Leon Baranski UNION OF SOUTH AFRICA S. F. N. Gie J. E. Holloway . M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS I. D. Slobin M. M. Idashkin N. I. Cheklin UNITED KINGDOM No designation UNITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar 182 MONETARY AND FINANCIAL CONFERENCE Document 157 D P /6 Address Delivered Before Committee 2 of Commission I, by Antonio Espinosa de los Monteros, Mexican Delegate, in Support of Mexico’s Proposal on Silver, on July 5, at 6:30 p.m. M ist e r C h a ir m a n , F ello w D eleg a tes : On behalf of the Mexican Delegation I want to explain why we are making this proposal. It is easy to misunderstand our position. Mexico produces 40% of all the silver. Therefore, one could think, Mexico is interested, above all, in furthering the interests of her mining industry. However, we do not come before this High Assembly of Nations as the largest producers of silver. Certainly nobody could believe that the gold-producing nations are represented here to further their own interests. Rather, we are all here to present our com mon monetary problems, and to seek an agreement on how to meet them in the brotherly spirit of cooperation. We wish to emphasize, then, that Mexico wants to present to your consideration a strictly monetary problem. We believe that this problem has international implications, undoubtedly small in economic significance for the world as a whole, but certainly large and vital for some members of the community of nations. Further more, we are certain that this problem has never received the un prejudiced consideration it deserves by the nations which do not have to face the same difficulties. Mexico’s problem derives from the fact that her people con tinue to hoard large amounts of silver coins. They, of course, have been doing that for centuries. They know not as yet any of the great advantages of savings banks and fiduciary currencies. Nor do they seem to be very anxious to learn about them. When they can they hoard silver and nothing else, probably because all their ancestors have always done so, and certainly because their personal income does not permit them to hoard gold. Because of this fact, Mexicans absorb large quantities of silver coins when their income is increasing, and return them to the Central Bank when they have to draw on their savings. This simply means that our Central Bank has to invest heavily in silver, during the upward swing of the trade cycle when the price of silver is naturally higher. On the other hand, the Bank is com pelled to cash it in foreign markets, during the downward swing, PROCEEDINGS AND DOCUMENTS 183 exactly when silver is cheaper. Thus, our Central Bank loses not only the difference between the buying and selling prices, but also the recurrent minting and melting costs. Therefore, it is evident that because of the hoarding require ments of our people, Mexico has to invest in silver a large part of her international balances of gold and gold-convertible currencies when her balance of payments is favorable. But when the situation is (p. 2 ) reversed, she has to sell that silver in order to support the parity of the peso, in the bargain she is always the loser, since there is no manner in which she can hedge against the fluctua tions of silver. This is the essence of Mexico’s problem. Is it not true that many other Nations partake of this same risk? Is it too much to expect that the Fund extend credit facilities specially adopted to meet this special need ? It might be said that the Fund, under the pro posed provisions, is already authorized to waive all specific con ditions set forth under Article III, Section 2 of the Draft, precisely in order to meet exceptional cases. But Mexico's case is not ex ceptional. Her problem is, we believe, common to several coun tries, and it is besides recurrent in character. Should not the Fund, which is essentially an instrument for international coopera tion, be authorized specifically to extend credit to the silverhoarding countries of the world? Specifically, then, Mexico is proposing that the Fund shall extend credits to the silver-hoarding Nations over and above the normal credits extended by the Fund to all countries. Mexico, further more, proposes the silver hoarding of her nationals as an adequate collateral security. Should the Conference adopt this proposal, henceforth Mexico and the countries which have the same problem will not have recurrently to buy and coin silver only to melt and sell it again. Instead of that wasteful and unnecessary process, whenever a silver-hoarding country is running short of foreign exchange with which to maintain the parity of its monetary unit, the Fund would provide that exchange as a credit, with the understanding that all the risks due to fluctuation in the price of silver will remain with the borrowing country. The Mexican Delegation feels certain that this proposal will be supported by all the Delegates, inasmuch as the amounts of the Fund’s resources needed for the purpose will be relatively small, and adequately safe-guarded, and above all because the approval of Mexico’s proposal would be an act of elementary international justice. 749013— 48— 13 184 MONETARY AND FINANCIAL CONFERENCE Document 161 SA /1/18 Alternative I (Substitute for Joint Statement I, subdivision 2) (Proposed as substitute for Alternative C, p. lb) 2. To facilitate the expansion and balanced growth of interna tional trade and to contribute thereby to the promotion and main tenance of high levels of employment and to the development of the resources and productive power of all member countries, with due regard to the needs of economically backward countries. 7 /6 /4 4 J.s. Art. I Document 162 D P /7 Indian Delegation The following revised amendment to the J o in t S t a t e m e n t I, Subdivision 2 is proposed by the Indian Delegation:— A l t e r n a t iv e I To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion and maintenance of high levels of employment and to the development of the re sources and productive power of all member countries, with due regard to the needs of economically backward countries. Document 164 (P. 18(b)) SA/1/19 A l t e r n a t iv e C * Section 5. Uniform Changes in Par Values. Notwithstanding the provisions of Section 2 of this Article, the Fund may make uniform proportionate changes in the par values of the currencies of all the members, provided each such change is approved (a) by a majority vote and (b) by at least one-third of the members, and (c) by every member which has 10% or more of the aggregate votes. Such uniform changes shall be excluded from consideration in applying the provisions of Sections 4(3) and (A) of this Article. (J.S. IV, 4 ). PROCEEDINGS AND DOCUMENTS 185 Document 166 (p. 16) S A /l/2 0 J o in t S t a t e m e n t IV , 1. IV. Par Values of Member Currencies. 1 . The par value of a member’s currency shall be agreed with the Fund when it is admitted to membership, and shall be ex pressed in terms of gold. All transactions between the Fund and members shall be at par, subject to a fixed charge payable by the member making application to the Fund, and all transactions in member currencies shall be at rates within an agreed percentage of parity. A lte rn a tiv e A & Section 1. Par Values of the Currencies of Members. The par value of the currency of each member shall be ex pressed in terms of gold, as a common denominator, or in terms of a gold-convertible currency unit of the weight and fineness in effect on July 1,19kh- All computations relating to currencies of members for the purpose of applying the provisions of this Agreement shall be on the basis of their par values. The provisions of this Section shall apply to the case in which a uniform proportionate change is made in the par values of the currencies of all members, unless at the time when such a change is proposed to be made the Fund shall declare them to be inapplicable. 7 /1 /4 4 J.S.Art. IV Sec. 1 Document 167 D P /8 Statement by Mahmoud Saleh el Falaki, Delegate for Egypt in Support of Alternative H, Article I, “Purposes and Policies of the Fund” Made Before the Meeting of Committee 1 of Commission I on July 6, 19kU I venture to say a few words about the question of indebtedness that has arisen during the war. 186 MONETARY AND FINANCIAL CONFERENCE Some countries have accumulated large balances in foreign cur rencies. Owing to the magnitude of those balances, the problem of realizing them becomes quite difficult. The repayment of those balances after the war by the debtor country can be effected only in three ways (1) Either by exporting more than is imported, when the sur plus will go to repayment, (2) Or by allowing the conversion of those balances into other currencies, (3) Or by gold or by some combination of these. As to (1) exports exceeding imports: Here we must allow for some appreciable time to elapse for the war machine of the debtor country to be transformed into a “peace machine” before any appreciable production can be made available, and then presumably some sort of priorities would have to be adopted to meet the most urgent needs first. As to the conversion of the balances into other currencies— to my mind, the ease of this transfer will to some extent depend upon what success is achieved in the elaboration of a truly Inter national Exchange and Trading regime. As to gold, this will depend upon the stocks available. What I have been driving at at this stage is to show that there are great difficulties, we realise those difficulties and we realise them fully and in the most friendly manner. However, I beg to differ from the opinion expressed that these matters should best be the subject of bilateral negotiations. I also differ from the opinion that some provision for the settle ment of those debts within the Fund must necessarily bear unduly upon the Fund. Perhaps the existence, outside the scope of the Fund of a difficult financial problem unsolved, may react upon the efficiency of the Fund itself. In fact the Unitas scheme provided for the liquidation of such assets. The British scheme also made some sort of indirect provision. The American proposal was that the Fund should be free to buy a part of those balances from the creditor country, and (p. 2 ) pay for them in currencies of other countries to the extent that the creditor country needs them immediately to meet an ad verse balance of payments. But if the creditor country is running a surplus on income account, the scheme would then not apply, in other words, creditor countries would be entitled to draw upon its credit balances only in case of an adverse balance of payments. Repayment by the debtor to the Fund might be postponed for three years to allow a breathing space. PROCEEDINGS AND DOCUMENTS 187 After the 3 years the debtor country might repurchase the bal ances from the Fund, for gold or free currencies, at the rate of 2 per cent per annum over 20 years. The debtor country was to be re quired to pay off 80 per cent of the balances in free currency over 20 years. The 20 per cent that would remain after 23 years would then be the subject of Consultation between the debtor country and the Fund. If I understand rightly, the British scheme in proposing to allow countries to open their account in the Union with an overdraft, seemed to face the possibility of transferring those credit balances into other currencies. The Joint Statement of experts, however, avoided the question completely, the only explanation given being that it would bear unduly on the new institution. I firmly believe that if the problem of indebtedness arising out of the war were completely left out— it would not only not relieve the Fund, but might possibly weaken the whole mechanism of the Fund. I would, therefore, put forward that some sort of provision be made in the Fund for some sort of arrangement, due account being taken of the difficulties that are involved and are inherent in the matter. The whole thing is important because in Egypt some credit balances represent depreciation on capital equipment that must necessarily be replaced after the war—which depreciation would prevent us from playing our full part in the development and expansion of both domestic and foreign trade. The expansion of the latter being the objective of the Fund. One or two instances may illustrate appropriately our concern: The productivity of our agricultural land in Egypt has deteriorated substantially. The yield per acre has fallen and is falling. This is due partly to lack of imported fertilizers through shipping space difficulties, and partly also through an unsuitable rotation of crops dictated and forced upon us by the circumstances of the war. Our State Railways have suffered from heavy wear and tear and the impossibility of replacing worn out or damaged stock. Our industrial plant is suffering from lack of renewals or even sufficient maintenance. Our auxiliary transport can be said to be literally running on the rim. This is really why we feel that we ought to take up the question. Our productive capacity must therefore be fully restored, if we are to contribute towards an expansion of international trade and with it a rise in the level of employment and real incomes which is the main objective of economic policy as set down by the Fund. 188 MONETARY AND FINANCIAL CONFERENCE Document 168 (P. 26) J OURNAL UNITED N ATIONS No. 7 MONETARY AND FINANCIAL CONFERENCE Bretton W o o d s, N e w Ham pshire ORDER OF THE July 7 ,1 9 4 4 DAY Meetings for Friday, July 7 9:30 a.m. 10 a.m. 2:30 p.m. 2:30 p.m. Committee 3 of Commission I Drafting Committee of Committee 1 of Com mission I Committee 2 of Commission I Committee 4 of Commission I The Hemicycle Room A Auditorium The Hemicycle (p .27) R e s u m e s o f C o m m it t e e M e e t in g s Steering Committee (J u ly 6, 2 p.m. and 9 p.m .) The Steering Committee met at 2 p.m. and 9 p.m. on July 6 to discuss the progress of the work of the Conference. The decisions reached by the Committee are being circulated separately as docu ment no. 175. The Steering Committee also set up a subcommittee composed of members of the Union of Soviet Socialist Republics, United Kingdom, and the United States, with full powers to discharge the duties of the Committee under article 9 (c) of the Regula tions of the Conference concerning the attendance of other persons at sessions of the Conference, its Commissions and Committees. Committee 1 of Commission I Purposes, Policies, and Quotas of the Fund (Ju ly 6, 10 a.m.) Committee 1 of Commission I discussed and accepted the report of the drafting committee, although with reservations on the part of certain delegations regarding the revised language of article I, section 2 . Alternative H to article I, which adds as a purpose of the Fund the liquidation of war balances, was discussed and referred to Commission I. Alternative A, section 6 (p. 4), dealing with payments when quotas are changed, was approved. Alterna tives B and C (p. 4a), relating to gold payments by countries PROCEEDINGS AND DOCUMENTS 189 suffering from enemy occupation, was referred to the ad hoc committee of Commission I dealing with problems of liberated countries. Article IX, section 2 (p. 38), and section 3 (a) and (b) (p. 39) were referred to the drafting committee. Section 3. (c) (p. 39) was referred to the drafting committee. Alternative A, section 4 (p. 40), was referred to Commission I for clarification. (The minutes of this meeting are being distributed separately as document no. 172.) Committee 2 of Commission I Operations of the Fund (J u ly 6, Z:S0 p.m .) The fourth meeting of Committee 2 of Commission I was held on July 6 at 2:30 p.m. The Committee continued its discussion of article III, Transactions with the Fund. The Chairman an nounced the names of the delegations asked to designate members of the language committee and of the ad hoc committee to con sider Alternative A, section 2 (3) (p. 6 a of Document SA/1), Alternative B (p. 6 b), Alternative D (p. 6 c), and Alternative F (p. 6 e). The Committee agreed to defer action on Alternative E (p. 6 d ), and (p. 28) Alternatives A and B (p. 13). The Com mittee referred Alternatives A and B (p. 15) to the language committee. The Committee approved Alternative A (p. 16). The Committee agreed to revise Alternative A, section 5 ( 2 ) (p. 8 ), to read “Buy that currency from that member with gold”. Alternative B (p. 8 ) was withdrawn. (The minutes of this meeting are being distributed separately as document no. 171.) Committee 3 of Commission I Organization and Management of the Fund (Ju ly 6, 10 a.m.) The Committee accepted without change article VII, section 5 (p. 28); article VII, section 6 , paragraph (a) (p. 29); and article VII, section 1 1 (5). The Committee referred article VII, sec tion 6 (b) (p. 29), to Commission I for decision. Alternative C, article VII, section 6 (p. 29a), was dropped by general consent. The Committee did not reach agreement on Alternatives of article VII, section 2 —The Executive Directors. The three Alternatives before the Committee were referred to a special subcommittee for 190 MONETARY AND FINANCIAL CONFERENCE report. The Committee took no action on article VII, section 8 (p. 30) ; article VII, section 11 (1), (2), and (3) (p. 33) ; and article VIII, section 1 (p. 34), pending clarification of their pos sible assignment to Committee 4. (The minutes of this meeting are being distributed separately as document no. 173.) Committee 4 of Commission I Form and Status of the Fund (Ju ly 6, 2:30 p.m .) The third meeting of Committee 4 of Commission I was held on July 6 at 2:30 p.m. Members of the “asterisk committee” were appointed. The subcommittee to review article XI, section 7, re ported substantial agreement. Article VII, section 8 , was recom mended for approval. In the case of article VII, section 11, items 1, 2 , and 3, a modification in wording was approved by the Com mittee. Article VIII, section 1, Alternative A, was approved after considerable discussion. By agreement between the Chairmen of Committees 3 and 4, article VIII, section 2, will be discussed by Committee 3 instead of Committee 4. Article XI and Article XII, section 1 , were referred to the “asterisk committee” for further consideration. (The minutes of this meeting are being distributed separately as document no. 174.) (p. 29) Agenda Committee of Commission II Bank for Reconstruction and Development (Ju ly 6, 4:45 p.m .) The Agenda Committee of Commission II met at 4:45 p.m. on July 6 and agreed to a procedure by which it is hoped there soon may be distributed to all delegations copies of a preliminary draft “Agreement to Establish a Bank for Reconstruction and De velopment”—a revised combination of the preliminary draft out line of a proposal for “A Bank for Reconstruction of the United and Associated Nations” of November 1943 (United States) and the revision of June 29, 1944 (United Kingdom). N o tice C o n c e r n i n g P r in t e d L ist o f D e l e g a t io n s Preparation of material for the definitive printed list of delega tions is now under way. Corrections and revisions which have PROCEEDINGS AND DOCUMENTS 191 been requested by the delegations through the Office of the Secre tary General and the. Registration and Information Desk have been entered. In order that the appropriate officer of each dele gation may inspect the information concerning his delegation as it will appear in the final list and also in order that he may have an opportunity to make any additional revisions, a member of the editorial staff of the Journal will call at the office of each dele gation today. Any further changes may be made at the Journal office (room 69) before 6 p.m. on Saturday, July 8 . Document 169 SA /2 Proposal for a Bank for Reconstruction and Development The Agenda Committee of Commission II propose that the at tached draft should be taken as the initial basis for discussion and amendment. It is not to be regarded as the proposal of any Delegation, nor is any Delegation committed to it. Delegations are invited to send to the Secretariat (Mr. Upgren, Room 147) by 7 o’clock on Saturday, 8 th July, any amendments, suggestions or proposals which they may have ready by that time for incorporation in the first edition of a text incorporating al ternatives to be circulated for discussion. This will not preclude any Delegation from submitting further proposals at a later time. Papers received by the time named above will be assembled by the Secretariat and considered by a meeting of the Agenda Committee at 5 p.m. on Sunday, 9th July. It will be much appreciated if, where this can be done without inconvenience, Delegations will supply the Secretariat with 25 copies of any papers they send in. The Agenda Committee suggests, having regard to the shortness of time available, that Delegations need not be at the trouble of attempting to draft their proposals in legal form. It will be sufficient if the substantial intention of any addition or amend ment which they wish to have discussed is communicated to the Agenda Committee at this stage. There will be a later opportunity of casting them into proper form. 7 /6 /4 4 192 MONETARY AND FINANCIAL CONFERENCE ( P - 1) A g r e e m e n t to E st a b l is h a B a n k f o r R e c o n s t r u c t io n an d D evelopm ent Article I. See note below Purposes of the Bank The bank shall be guided in all its decisions by the following purposes: siightiy 1- To assist in the reconstruction and development (U edi i-5) K member countries by facilitating provision of long term investment capital for productive purposes through private financial agencies, by means of guaranteeing and participating in the loans made by private investors; 2 . To supplement private financial agencies by pro viding capital for productive purposes out of its own resources, on conditions that amply safeguard its fund, when private capital is not available on reasonable terms; 3. To promote the long-range balanced growth of in ternational trade by encouraging international invest ment for the development of the productive resources of member countries; 4. To coordinate loans made or guaranteed by it with revised) international loans through other channels so that the more useful and urgent projects will be dealt with first. 5. To conduct its operations w ith due regard to the effect of international investment on business conditions in member countries and, in the immediate post-war years, to assist in bringing about a smooth transition from a wartime to a peacetime economy. i.m .f . 1 : Symbols used in marginal notes. U.S.—Printed plan of November 24, 1943. U.K.— Mimeographed draft outline of June 25, 1944. I.M.F.—Latest mimeographed version of Agreement for Fund using Alternative A in all cases. N ote 7 /6 /4 4 A rt. , (p. 2 ) Article II. Membership in and Capital of the Bank i .m . f . ii, i Section 1 . Countries Eligible for Membership The members of the Bank shall be those members of the International Monetary Fund which accept mem bership in the Bank. PROCEEDINGS AND DOCUMENTS U.S. II, 1 slightly re vised New U .S. II, 3 revised Cf. U.K. II, 193 Section 2. Authorized Capital. The authorized capital stock of the Bank shall be $ 1 0 ,0 0 0 ,0 0 0 ,0 0 0 , in terms of United States dollars of the weight and fineness in effect on------------------. The capi tal stock shall be divided into 1 0 0 , 0 0 0 shares having a par value of $1 0 0 , 0 0 0 each, which shall be available for subscription only by members. The capital stock may be increased when the Bank deems it advisable by four-fifths of the aggregate votes. Section 3. Subscription for Stock. Each member shall subscribe for shares of stock. The minimum numbers of shares to be subscribed by coun tries represented at the United Nations Monetary and Financial Conference shall be those set forth in Sched ule A. (Schedule A to be added later). The minimum number of shares for other countries which become members of the Bank shall be determined by the Bank. Any member may subscribe for additional shares of stock in accordance with rules to be established by the Bank, except that a part of the authorized capital shall be reserved by the Bank for minimum subscriptions of countries not represented at the United Nations Mone tary and Financial Conference. Section 4. Availability of Subscribed Capital. The subscription of each member country shall be divided into two parts as follows: (a) Twenty percent shall be callable by the Bank as needed for any of its operations. (b) The remaining 80 percent shall be callable by the Bank only when required to implement obligations of the Bank created under IV (1) (b) and (c) below. Calls on unpaid subscriptions shall be uniform on all shares. Art. II 7/6/44 (P. 3) U.K. n , 4 Section 5. Payment of Subscription. (a) Payments under Section 5 (a) shall be partly in gold and partly in local currency. The proportions to be paid in gold and local currency shall be gradu ated according to an agreed upon schedule which shall take into account the adequacy of the gold and free foreign exchange holdings of each mem- 194 MONETARY AND FINANCIAL CONFERENCE ber country. The portion to be paid in gold shall not in any event exceed 2 0 percent of the total payment. (Schedule to be inserted) m enthi curl (b) Payments under Section 5 (b) shall at the option renC converty 0f the member be made either in gold or in the curlble under 1-m.f.) rency required to implement the obligations with respect to which a call is made. N ew (c) The initial payment on each share issued shall be such as to equal the total amount per share already called on outstanding shares adjusted for the amount by which the issue price of the share differs from par value. U.K. Section 5 eliminated on ground it is covered by IV, 4 and 5 and VII, 2, below). (N o te: N ew u.s. ii, 2 u.s. i i , 2 u.s. i i , 6 Section 6 . Issue Price of Shares. Shares of stock included in the initial subscription of a member represented at the United Nations Mone tary and Financial Conference shall be issued at par if the subscription is received not later than one year after the date set for operations of the Bank to begin. Other shares shall be issued at par or such other price as may be fixed by three-fourths vote of the Bank. Section 7. Limitation on Liability. Liability on shares shall be limited to the unpaid por tion of the issue price of the shares. Section 8 . Disposal of Shares Limited. Shares shall not be pledged or encumbered in any manner whatever and they shall be transferable only to the Bank. Section 9. Return of Subscriptions. When the liquid resources of the Bank are substan tially in excess of prospective needs, the Bank may re turn, subject to call, uniform amounts on all shares of stock outstanding. 7 /6 /4 4 (P. Art. H 4) Article III. (T itle derived from U .K .) u.s. i i , 9 General Provisions Relating to Loans ® Section 1. Use of Resources Restricted. The resources and the facilities of the Bank shall be used exclusively for the benefit of members. PROCEEDINGS AND DOCUMENTS 195 Section 2. Agencies Dealing with the Bank. Except as otherwise indicated in this Agreement, the Bank shall conduct its business only with or through the governments of the members, their central banks, stabilization funds and other similar fiscal agencies, the International Monetary Fund, and other international agencies participated in primarily by governments of members. Section 3. Limitation on Loans and Guarantees. N ew The total amount of guarantees, participations in loans, and loans and other investments made by the Bank shall not exceed at any one time------------percent of the subscribed capital and surplus of the Bank. Section 4. Conditions on which Bank may Guarantee or Make Loans. us* The Bank may guarantee, participate in, or make in_i ’ loans to the government of any member, political sub divisions thereof, and business and industrial enter prises therein, subject to the following conditions: ( u .k . confines (i) The government of the member in which the to n a tio n ^ p r o j e c £ j s iocated, the central bank of such member, or som£ comparable agency fully guarantees the payment of interest on the loan and repayment of the principal. (2) The borrower is unable to secure the funds from other sources under conditions which, in the opinion of the Bank, are reasonable. (O its “d m i( 3 ) a competent committee, after a careful study of d lrectiy^ ’Tromthe merits of the project, has submitted a written reUK > < port concluding that the project would serve to increase 4 orabieS pros-^ the productivity of the member country in which it is pects” from located. U S) (4) In the opinion of the Bank, the rate of interest is reasonable and such rate and the schedule for re payment of the principal are appropriate to the project and to the balance of payments prospects of the mem ber country in which the project is located. (5) In guaranteeing a loan made by other investors, the Bank receives compensation for its risk. u.s. iv, 17 7 /6 /4 4 Art. Ill ALTERNATIVE A ^ PART (1 ) u .k . h i, 6 newm er a in general, loans made or guaranteed by the Bank, ^ £or pUrp0Se 0f specific projects of reconstruc- 196 MONETARY AND FINANCIAL CONFERENCE tion and development, and except as otherwise provided in this plan, the proceeds of loans shall only be made available to meet specific purposes. In exceptional cir cumstances, however, the Bank, acting in agreement with the International Monetary Fund, may make or guarantee a loan which provides the borrowing coun try with gold or foreign exchange for the purpose of establishing its exchanges and and allowing a breathing space for the recovery of its economy and the balancing of its international payments. P art (2 ) U.K . I ll, 7 (n ew m atter) In making or guaranteeing a loan the Bank shall pay due regard to the prospects of the borrowing country being in a position to service the loan; and in determin ing the destination, the character and the volume of its loans it shall act prudently in the interests both of the borrowing member country and also of the guaranteeing members. At the same time it shall not seek to avoid the incurring of some measure of reasonable risk (tak ing account of the commission chargeable—see below) where the loan is in the general interests of reconstruct ing or developing the world’s resources or expanding international trade along mutually advantageous lines; and shall seek to conduct its operations taken as a whole in such manner as to avoid, so far as possible, the calling up of the capital reserved for guarantees, rather than seek full security from risk in each transaction taken separately. These considerations shall govern the lending policy of the Bank especially in approving reconstruc tion loans to countries which have suffered from the war. — U.K. I ll, 2 , taken directly from P.P. IV, 6 has been omitted as essentially duplicative of A rt. Ill, Sec. 4, subdiv. (2) above. N ote U .S . IV , 8, revised; (C f. U .K . H I, 4) Section 5. Provision of currencies for loans. When the Bank makes loans it shall: (a) Furnish the borrower with the currencies of members other than that of the member in which the project is located which are needed by the borrower in connection with the loan; (b) Finance the expenditures of the borrower in the member in which the project is located only as PROCEEDINGS AND DOCUMENTS 197 follows, (1) under exceptional circumstances when the local currency required cannot be raised on reasonable terms in the country where the project is located, the Bank may provide an appropriate part of the loan in that currency, or (2) if the development program or project gives rise to an increased need for foreign exchange, the Bank may make available to the borrower an appropriate amount of gold or foreign exchange not to exceed the borrower's expenditure in the member in which the project is located; Art. Ill 7 /6 /4 4 (p . 6 ) U .S. I ll, 5 revised Cf. U .K . I ll, 1(d ) (c) Make available at the request of a member in which a portion of a loan is spent an amount of gold or foreign exchange not to exceed the amount by which the expenditure of the loan in that member gives rise to an increased need for foreign exchange. Section 6. Use of loans guaranteed, participated in or made by the bank. (a) The Bank shall impose no conditions as to the particular member in which the proceeds of a loan shall be spent. (b) The Bank shall make arrangements to assure that the proceeds of any loan are used only for the pur poses for which the loan was granted, with due atten tion to considerations of economy and efficiency regard less of political or other non-economic influences or considerations. (c) In addition to any other action which the Bank may take to implement the provisions of subsection (b) above with respect to loans it makes, it shall credit the account of the borrower with the amount of the loan and shall make payment from the account only to meet expenses as they are actually incurred. 7 /6 /4 4 Art. Ill (P. 7 ) IV. U.K. IV, 1 Operations Section 1. Methods of facilitating provision of loans. The Bank may facilitate the provision of loans which satisfy the general conditions of Article III in any of the following w ays: (a) By direct loans out of the Bank's own capital subscribed under Article II, Section 4(a). 198 New MONETARY AND FINANCIAL CONFERENCE (b) By direct loans out of funds raised by the Bank in the market of a member. (c) By guaranteeing in whole or in part loans made by private investors through the usual investment channels. Section 2. Loans from subscribed capital. The Bank shall make loans from currency subscribed under Article II, Section 4(a), only with the approval in each case of the member whose currency is to be loaned. If the currency required by the borrowing coun try is not available in whole or in part out of capital so subscribed, the Bank may supply such currency from its holdings derived from other sources or may supply gold, subject to Article III, Section 5, and Section 8 of this Article. ALTERNATIVE A U.K. IV , 4 In the case of loans under Section 1 (a) of this Article, the borrower shall notify the Bank in which members it desires to incur expenditure to be met out of the loan, and the Bank shall make the required currencies avail able out of its subscribed capital, provided that the country whose currency is to be supplied has agreed in each case. If local currency subscribed under II (4) (a) is not available in whole or in part, the Bank shall make it available out of its holdings of gold or other free resources, if it possesses an adequate amount of such resources and is satisfied that, without this pro vision, the country in which the borrowing country de sires to place the order, would have difficulty in main taining the equilibrium of its international balance of payments. Otherwise it shall request the borrowing country to transfer its proposed expenditure to another member country. Furthermore, at the request of the countries in which portions of the loan are spent, the Bank will repurchase for gold or needed foreign exchange a part of the sum expended in the currencies of those countries made by the borrower from the pro ceeds of the loan. Art. IV 7 /6 /4 4 (P . 8 ) U.K. IV, 5 Section 3. Loans from borroived funds and guarantees. The Bank shall borrow funds under Section 1 (b) of this Article or guarantee loans under Section 1 (c) only PROCEEDINGS AND DOCUMENTS 199 with the approval of the member in the market of which the funds are raised and only if that member agrees that the proceeds may be expended in any member with out restriction. Section 4. Payment Provisions for Direct Loans. Loans made directly by the Bank under Section 1(a) or (b) of this Article shall contain the following pay ment provisions (a) The annual service of the loan shall be made up of three parts, namely: U.K. IV , 6 (i) a standard rate of interest fixed by the Bank and the same to all borrowers but modifiable from time to time for new loans; (ii) an annual commission at a flat rate fixed at one percent in the first instance but alterable by the Bank from time to time at its discretion for new loans in the light of experience, the same to all borrowers, to cover the general expenses of the Bank, and as a provision against risk, but the particular expenses of investigation, etc., attaching to the individual loan, may be charged separately against the borrowers. (iii) an annual contribution to amortization either at a flat, or at a progressive rate sufficient to repay the capital within a determined number of years, the length of which shall be fixed with regard not only to the character and purpose of the loan, but also, especially in the case of reconstruction loans, to the conditions in the country of the borrower which may delay the time within which the borrower can repay the loan. The time normally shall not exceed thirty years but may be extended to fifty years in particular cases. (Could items (i) and (ii) be combined?) (b) The loan and its annual service shall be fixed in whatever currency may be stipulated by the Bank when making the loan, and may be paid, at the option of the borrower, in gold, or at the discretion of the Bank, in any other currency of a member. (Om its con vertible I.M .F. currency) 7 /6 /4 4 Art. IV (P. 9) (c) In the event of the country of the borrower suf749013- - 4 8 — 14 200 ( Should this sentence be included?) U .S.IV 1 0 (d ) U .S. IV , 3 revised (rew ritten from U .K . IV , 7) MONETARY AND FINANCIAL CONFERENCE fering from an acute exchange stringency, so that the service of the loan cannot be provided in the stipulated manner, the country may appeal to the Bank for a re laxation of the conditions of payment. If the Bank is satisfied that some relaxation is in the interests of the country of the borrower and of the operations of the Bank and the other members as a whole it may take action under either, or both, of the following headings in respect of the whole, or part, of the annual service (i) The Bank may in its judgment accept payments in respect of the service of the loan for periods not exceeding three years at a time in local currency. The Bank shall arrange with the bor rowing country for the repurchase of such local currency over a period of years on appropriate terms that safeguard the Bank’s holdings of such currency. The Bank may also require that the whole, or part of such currency, may be transferred to another member in whose hands it shall be freely available to make payments or to purchase exports in the borrowing country, (ii) The Bank may re-arrange the instalments of amortization so as to increase the amount due in later years or to prolong the life-time of the loan. (d) Payments of interest, commissions, and principal, whether made in currency or in gold, must be equivalent to the gold value of the loan and of the contractual in terest and commissions thereon. Section 5. Participations. The Bank may participate in loans with any of its resources except those subscribed under Article II, Sec tion 4(a). Loans participated in by the Bank shall be placed through the usual investment channels. Section 6. Guarantees. In guaranteeing a loan placed through the usual in vestment channels, the Bank shall charge a commission on the entire original amount of the loan at a flat rate fixed at one percent per annum in the first instance but alterable by the Bank from time to time at its discretion for new guarantees in the light of experience. Commis sions shall be paid direct to the Bank by the borrower. 7 /6 /4 4 Art. IV PROCEEDINGS AND DOCUMENTS 201 ( p .10) Section 7. Order of Meeting Obligations. The obligation of the Bank on borrowings or guar antees under Section 1 (b) and (c) of this Article shall be met first from its receipts from commissions and other profits, then from a call on unpaid subscrip tions, and finally from paid-in capital. When there is any interruption in the service of a loan guaranteed by the Bank, it shall assume the service. If losses of the Bank are recovered the funds received shall be returned pro rata to members responding to any calls by which the obligations of the Bank were met. With the approval of the Bank, a member subjected to a call, may, in lieu ‘of paying the call, purchase from the Bank currency of the country the default of which or of a borrower in which has necessitated the call but in such case the amount returnable to the member if the loss is re covered shall be appropriately reduced. Section 8. Miscellaneous Operations. (U .S. IV , In addition to the operations specified elsewhere in 15 (a) this Agreement, the Bank shall have the power: Revised) (U .K . V , 1) (1) To issue, buy and sell (i) its own securities including securities collateralized by loans or in vestments it has made, (ii) securities it has guar anteed and, (iii) securities in which it has in vested, but the Bank shall obtain the approval of the member in which securities are to be is sued, bought or sold, and when the Bank buys securities it has issued, it shall also obtain the approval of the member whose currency will be paid for such securities. (U .S. IV , 5) (2) To guarantee securities in which it has invested for the purpose of facilitating the sale of such securities; (U .S . IV , 15 (3) To borrow the currency of any member with the ( c ) , R evised) approval of such country; and (U .K . IV , 7 & 8 re w ritten and combined) 7 /6 /4 4 Art. IV ( p . 11) (U .S. IV , 15 ( c ) , Revised) (4) After consultation with the International Mone tary Fund, to buy and sell gold and the currencies of members tohenever such transactions are nec essary in connection with the operations of the Bank but with respect to each transaction other 202 MONETARY AND FINANCIAL CONFERENCE than any undertaken to pay creditors, the Bank shall obtain the approval of the member in which the transaction takes place and the member cur rency of which is disposed of by the Bank. In exercising the powers conferred by this Section, the Bank may deal with any person, partnership, asso ciation, corporation or other legal entity in any member country. (N ote: U.K. V, 2; taken from U.S. IV, 18 has been omitted) Section 10. Warning to be Placed on Securities. Every security guaranteed or issued by the Bank shall bear on its face a conspicuous statement that it is not an obligation of the government of any country other than any expressly stated to be obligated on the security. Section 11. Political A ctivity Prohibited. (u.s. iv, 19) The Bank and its officers shall scrupulously avoid in terference in the political affairs of any member. This provision shall not limit the right of an officer of the Bank to participate in the political life of his own country. The Bank shall not be influenced in its decisions with respect to applications for loans by the political char acter of the government of the member concerned with the loan. Only economic considerations shall be relevant to the Bank’s decisions. The Bank, acting with the strictest impartiality, shall U .K . V , 5 pay particular regard, both in selecting the‘place of its borrowing and of its lending to maintaining the equi librium of the international balance of payments of members. N ew 7 /6 /4 4 Art. IV (P. 12) Article V Management U .S. V , 1 Section 1. Board of Governors. (a) The administration of the Bank shall be vested in a Board of Governors consisting of one governor and one alternate ^appointed by each member country in such manner as it may determine. Governors and al ternates shall serve for five years, subject to the pleasure of their respective governments, and may be reap- PROCEEDINGS AND DOCUMENTS U.S. V, 2 revised 203 pointed. No alternate may vote except in the absence of his governor. The Board shall select a chairman from its members. (b) The Board of Governors may delegate to the Executive Directors authority to exercise any powers of the Board, except: (1) Determining what new members may be ad mitted and the conditions of their admission; (2) Increasing the capital stock; (3) Requiring a member to withdraw; (4) Deciding appeals against interpretations of the Agreement by the Executive Directors given on application by a member; (5) Making agreements to cooperate with other in ternational organizations; (6) Deciding to liquidate the Bank. (c) The Board of Governors shall hold an annual meeting and such other meetings as may be provided for by the Board or convened by the Executive Directors whenever requested by five members or by one quarter of the aggregate votes. (d) The Board may by regulation establish a pro cedure whereby the Executive Director, when they deem such action to be in the best interest of the Bank may obtain vot£s of the governor on a specific question in lieu of calling a meeting of the Board. (e) Governors and alternates shall serve as such without compensation from the Bank, but the Bank shall pay such reasonable expenses as are incurred by the Governors and alternates in attending any meetings. Section 2. Voting Each member shall have ------------ votes plus one additional vote for each share of stock held. Except as otherwise specifically provided, all matters before the Bank shall be decided by a majority of the aggregate votes. Art. v 7 /6 /4 4 (p. 12a) International Monetary Fund, V II, 2 Section 3. The Executive Directors (a) The Executive Directors shall be responsible for the conduct of the general operations of the Bank, and for this purpose, shall exercise all the powers delegated to them by the board of governors. 204 MONETARY AND FINANCIAL CONFERENCE (b) There shall be eleven Executive Directors, of whom five shall be appointed by the five members holding the largest number of shares and six shall be elected biennially, in accordance with the pro visions of Schedule B, by all the Governors other than those appointed by the members having the five largest number of shares. Persons chosen as Executive Directors need not be Governors. (c) Every Executive Director may appoint an alternate with full power to act for him when he is not pres ent. When the Executive Directors appointing them are present, alternates may participate in meetings but shall not vote. (d) The Executive Directors shall be in continuous session at the principal office of the Bank. (e) In order to constitute a quorum for any meeting of the Executive Directors, there must be present a majority of the Directors representing not less than one-half of the voting power of all the Execu tive Directors. (f) Each Executive Director appointed by one of the members with the five largest quotas shall be en titled to cast the number of votes alloted under Sec tion 2 of this Article to the member appointing him. Each elected Executive Director shall be entitled to cast only the number of votes which actually count toward his election. Each Executive Director shall cast all of the votes to which he is entitled as a single unit. (g) The Board of Governors shall make regulations con taining provisions under which a member which is not entitled to appoint an Executive Director under (b) above shall be permitted to send a representa tive to attend any meeting of the Executive Direc tors when a request made by, or a matter particu larly affecting, that member is under consideration. (h) The Executive Directors shall appoint a President 7/6/44 Art. V who shall not be a Governor or an (p. 12b) Exective Director. The President shall be Chairman of the Executive Directors, but shall have no vote except a casting vote in case of an equal division. He may participate in meetings of the Board of PROCEEDINGS AND DOCUMENTS 205 Governors, but shall not vote at such meetings. He shall, however, be eligible for election as Chairman of the Board of Governors. The President shall hold office at the pleasure of the Executive Directors, (i) The President shall be chief of the operating staff of the Bank and shall conduct under the direction of the Executive Directors, the ordinary business of the Bank’s work: Subject to the general control of the Executive Directors, he shall be responsible for the internal organization of the Bank’s staff and the appointment and dismissal of its staff. The Managing Director shall be responsible to the Ex ecutive Directors for the accounts. (j) The Executive Directors may appoint such committees as they deem advisable. Members of such committees need not be limited to Governors or Executive Directors or their alternates. (k) The Board of Governors shall determine the re muneration to be paid to the Executive Directors and the salary and terms of service of the Presi dent. SCHEDULE B 7 /6 /4 4 (a) In balloting for the elective Executive Directors, each governor eligible to vote shall cast for one person all of the votes to which he is entitled under Section 2 of this article. The six persons receiving the greatest number of votes shall be Executive Directors, except that no person who receives less than sixteen percent of the aggregate eligible votes shall be considered elected. (b) When six persons are not elected on the first ballot, a second ballot shall be held in which the person receiving the lowest number of votes shall be ineligible for election and in which there shall vote only those governors who voted on the first ballot for a person not elected and those governors all or part of whose votes for a person elected are deemed to have raised the votes cast for that person above seventeen percent of the aggregate eligible votes. Art. v (p. 12c) (c) In determining whether any part of the votes cast by a governor are to be deemed to have raised the total of any person above seventeen percent, there shall 206 7 /6 /4 4 MONETARY AND FINANCIAL CONFERENCE be considered as not forming part of the excess over seventeen percent the votes of the governor casting the largest number of votes for such person, then the votes of the governor casting the next largest number, and so on until the total reaches seventeen percent. (d) Any governor whose votes are partly not in ex cess and partly in excess shall be eligible to vote in the second balloting only to the extent of the votes in excess. (e) If on the second ballot, six persons have not been elected, further ballots shall be taken on the same prin ciples until six persons have been elected, provided that after five persons are elected, the sixth may be elected by a simple majority of the remaining votes and shall be deemed to have been elected by all such votes. Art. v (P. 13) U.S. V , 5 New U .S. IV , (c) 1 [.M.F. V III, C f.U .S.V ,10 Section 3. Advisory Council. There shall be an Advisory Council of seven persons, elected by the Fund from outstanding representatives of banking, business, labor and agricultural interests, who are citizens of members, but only one citizen of any member shall serve on the Council at any one time. The Council shall advise with the Bank on matters of general policy. The Council shall meet annually and on such other occasions as the Bank may request. Councillors shall serve for two years, and may be reelected. They shall be paid their reasonable expenses incurred in behalf of the Bank. Section 4. Loan Committees. The committees required to report on loans under Article I, Section 5, shall be appointed by the Bank, except that such committee shall include an expert se lected by the Governor representing the member in which the project is located, who may or may not be from the technical staff of the Bank. The majority of each committee shall be from the technical staff. Section 5. Relationship to Other International Organi zations. 8 The Bank, within the terms of this Agreement, shall cooperate with any general international organization and with public international organizations having spe cialized responsibilities in related fields. Any arrange PROCEEDINGS AND DOCUMENTS I.M.F. IV, 1 I.M.F. VII, 5 7 /6 /4 4 207 ments for such cooperation which would involve a modification of any of the provisions of this Agreement may be effected only after amendment to this Agreement in conformity with the procedure set forth in Article IX. Section 6. Location of Offices The principal office of the Bank shall be located in the member holding the greatest number of shares and agencies or branch offices may be established in any member or members. Section 7. Depositories. (a) Each member shall designate its central bank as a depository for all the Bank's holdings of its currency or, if it has no central bank, it shall designate such other institution as may be acceptable to the Bank. Art. v (p. 14) I.M.F. V II, 6 I.M .F. IV , G (b) The Bank may hold other assets, including gold, in designated depositories in the four members holding the greatest number of shares and in such other deposi tories as the Bank may select. At least one-half of the holdings of gold of the Bank shall be held in the desig nated depository in the member in which the Bank has its principal office. In an emergency, the Executive Di rectors may transfer all or any part of the Bank's holdings of gold to any place where it can be adequately protected. Section 8. Form of Holdings of Currency. The Bank shall accept from any member in lieu of any part of the currency of that member not needed by the Bank in its operations, notes or similar obligations issued by the Government of the member or the deposi tory designated by such member, which shall be nonnegotiable, non-interest bearing and payable at their par value on demand by a credit to the currency account of the Fund in that member. Section 9. Protection of the Assets of the Bank. No change in the foreign exchange value of the cur rency of any member shall alter the gold value of the assets of the Bank. Whenever (i) the par value of a currency of a member is reduced, or (ii) the foreign exchange value of the currency of any member has de preciated within the jurisdiction to a significant extent in the opinion of the Bank, the member shall compensate MONETARY AND FINANCIAL CONFERENCE the Bank by paying to the Bank within a reasonable time an amount of its own currency equal to the reduction the gold value of the currency of such member held by the Bank. Whenever the par value of the currency of any member has been increased the Bank shall com pensate such member by returning, within a reasonable time, an amount in the currency of such member equal to the increase in gold value of the currency of such member held by the Bank. Section 10. Publication of Reports. The Bank shall publish an annual report containing an audited statement of its accounts and shall issue at intervals of three months or less a summary statement of its financial position and a profit and loss statement showing the results of its operations. The Bank may publish such other reports as it deems desirable for carrying out its purposes and policies. Art. V Section 11. Allocation of Income. The Bank shall determine annually what part of its net income shall be placed to reserve and what part, if any, shall be distributed. Section 12. Distribution of Income. If any part is distributed, two per cent non-cumulative shall be paid, as a first charge against the distribution of any year, to each member on the average amount during the year by which 75 per cent of its quota ex ceeds the holdings by the Fund of its currency; and the balance to the members in proportion to their quotas. Payments to each member shall be made in its own currency. Section 13. Miscellaneous Powers. In order to carry out its purposes, the Bank may: (1) Make contracts; (2) Acquire and dispose of real and personal prop erty; (3) Institute legal proceedings in any court of com petent jurisdiction; (4) Enter into such compromises or settlements of obligations due to or by the Bank as in the judg ment of the Board are to the best interests of the Bank; PROCEEDINGS AND DOCUMENTS 209 (5) Employ such staff as shall be necessary to con duct the business of the Bank; and (6) Adopt such rules or regulations as may be neces sary or appropriate to conduct the business of the Bank. Art. V 7 /6 /4 4 (P. 16) Article VI Withdrawal and Suspension of Membership and Liquidation Section 1. Right of Members to Withdraw. Any member may withdraw from the Bank at any time by serving written notice on the Bank at its prinl m . v . v i i i , i c i p a i office. Withdrawal shall become effective on the date such notice is received. Section 2. Suspension of Membership. U.S. V, 8, A member country failing to meet any of its obliga revised. tions to the Bank may be suspended from membership (F urther revision by decision of a majority of the member countries, each may be rec of which for this purpose shall have one vote, to be cast ommended) by its director or alternate. At the end of one year from the date of suspensions, the country shall automatically cease to be a member of the Bank unless a majority of the member countries, voting in the same manner as for suspension, restores the country to good standing. While under suspension, a country shall be denied all of the privileges of membership except the right of withdrawal, but shall be subject to all of its obligations. Section 3. Financial Assistance to be Withheld. U .S. IV, 18 If any country is suspended from membership, the slightly re members agree that they and their agencies will not ex vised U.K . V , 4 tend financial assistance to that country during the ( should period of suspension without approval of the Bank. this be in cluded) Section 4. Cessation of Membership in International Monetary Fund. N ew Any member which ceases to be a member of the In ternational Monetary Fund shall immediately cease to be a member of the Bank. ALTERNATIVE A U.K . IV , 10 taken liter ally from U .S . V , 8 Any member country that withdraws or is dropped from the International Monetary Fund, shall relinquish its membership in the Bank unless three-fourths of the member votes favor its remaining as a member. 210 MONETARY AND FINANCIAL CONFERENCE Section 5. U .S. V , 8 greatly ex panded subject to further revision. Settlement of Accounts w ith Countries Ceasing to be Members. (a) When a country ceases to be a member, the Bank shall arrange to repurchase its shares as a part of the settlement of accounts with such country. The repurchase price of the shares shall be the amount Art. VI 7 /6 /4 4 (P-17) (U .K . IV , 11, follows U .S. V, 8 literally) U .S . V , 8 greatly expanded at which such shares are carried on the books of the Bank on the day the country ceases to be a a member of the Bank plus a pro rata share of any surplus existing on that date. (b) The payment for shares repurchased by the Bank under this section shall be governed by the fol lowing conditions: (1) No amount shall be paid for shares prior to six months from the date upon which the coun try ceases to be a member nor thereafter so long as the country, its central bank or any of its agencies remain liable, directly, or con tingently, to the Bank, except as to liability of the country resulting from its subscription for shares, and any amount so withheld may, at the option of the Bank, be applied on any matured obligation. Payments for shares shall be made from time to time to the extent by which the amount due as the repurchase price exceeds the aggregate of such liabilities until the former member has received the full re purchase price. (2) Payments shall be made in the currency of the country receiving payment and any deficiency shall be paid in gold or gold-convertible ex change at the option of the Bank. (c) In the event the Bank goes into liquidation within six months of the date upon which any country ceases to be a member of the Bank, all rights of such country shall be determined by the provisions governing liquidation. Section 6. Assessments to Meet Losses (a) In the event any loss is sustained by the Bank on any guarantee, participation in a loan, or loan which was outstanding on the date the country PROCEEDINGS AND DOCUMENTS 211 ceased to be a member of the Bank, and the amount of such loss exceeds the amount of the reserve existing on the date the country ceased to be a member, such country shall be obligated to repay upon demand that amount by which the repur chase price of its shares would have been reduced if the loss had been taken into account when the repurchase price was determined. In addition, the 7 /6 /4 4 Art. V I <P*18) N ew former member country shall remain liable on any call for unpaid subscriptions to the extent that it would have been required to respond if the im pairment of capital had occurred and the call had been made at the time the repurchase price of its shares was determined. (b) Repayment to the Bank under this section shall be in currency and gold or gold-convertible exchange in the same proportion as the payments by the Bank for the repurchase of the shares. Section 7. Liquidation In an emergency, the Executive Committee by a ma jority vote, temporarily may suspend the operations of the Bank, pending an opportunity for further con sideration and action by the Board. The Bank may be voted into liquidation by a majority of the aggregate votes. Upon being voted into liquidation, the Bank shall forthwith cease engaging in any activities except those incident to the orderly liquidation, conservation and preservation of its assets and the settlement of its obligations. The liability of all member countries for uncalled subscriptions to the capital stock of the Bank and their guarantees with respect to the depreciations of their own currencies shall continue until all claims of credi tors including all contingent claims shall have been discharged. Upon liquidation of all creditors holding direct claims shall be paid immediately if the Bank has sufficient assets, and if the assets are not sufficient, the Execu tive Committee shall pay such creditors as soon as pos sible out of payments to the Bank or calls on subscrip MONETARY AND FINANCIAL CONFERENCE 212 tions, but before making any payments to holders of direct claims, the Committee shall make such arrange ments as are necessary, in its judgment, to insure a distribution to holders of contingent claims ratably with creditors holding direct claims. No distribution shall be made to a member country on account of its capital subscription until all claims of creditors, including all contingent claims, have been discharged or have been provided for by the Executive Committee having made arrangements sufficient, in its judgment, to accomplish that purpose. (Detailed provisions relating to method of distri bution to shareholders will be supplied later on basis of principles provided for liquidating the International Monetary Fund.) 7/6/44 Art. VI (P. 19) Article VII Additional Undertakings on the part of Member Countries N ew i.m .f. ix , 5 revised Section 1. Purposes and Scope of Undertakings. In order to support the activities of the Bank and to foster the accomplishment of its purposes and policies, each member country, in addition to commit ments appearing elsewhere in this Agreement, under takes the performance of and agrees to the stipulations set forth herein, all of which shall remain binding during suspension or after termination of membership. Section 2. Immunities of the Bank. (a) The Bank and its assets of whatsoever nature t shall, wheresoever located and by whomsoever held, be exempt and immune in the territory of any member from: (i) search, seizure, attachment, execution, requisi tion, confiscation, moratorium and expropriation, except as provided in 3, below; and (ii) any exchange, debt, or export controls, except such as are consented to by the Bank. (b) All governors, executive directors, officers and employees of the Bank- shall, with respect to their of ficial acts, be exempt from suit except when the Bank consents. (c) The archives of the Bank shall be inviolable. PROCEEDINGS AND DOCUMENTS 213 N ote. There are certain other minor privileges or immunities which will also be required such as courier facilities. F u rth er m aterial will be supplied completing this section in this respect. N ew I.M.K. IX, 7, (subject to revision) Section 3. Suits against the Bank. Suits may be brought against the Bank only in a court of competent jurisdiction in a member in which the Bank has an office, and only by litigants other than members and those acting for or deriving claims from members. The Bank and its assets of whatsoever nature shall, wheresoever located and by whomsoever held, be exempt and immune from seizure, attachment and exe cution in advance of final judgment. Section 4. Restrictions on Taxation of Bank, its Em ployees and Obligations. (a) The Bank, its assets, property, income, activities, operations and transactions of whatsoever nature shall be exempt and immune from all taxation or liability for the collection or payment of any tax, including without limitation by reason of this enumeration, ex cises, duties, and imposts, imposed by any member or any political subdivision or taxing authority thereof. Art. VII 7 /6 /4 4 (p .20) (b) No member, or any political subdivision or tax ing authority thereof, shall impose or collect any tax on or measured by salaries or remunerations for per sonal services paid by the Bank to persons who are not citizens of such member. (c) No member, or any political subdivision or taxing authority thereof, shall impose or collect any taxation on any obligation or security issued by the Bank or any dividend or interest thereon, by whomsoever held or received, which discriminates against such obli gation, dividend, or interest, because of its origin, or which is applicable with respect to such obligation, security, dividend, or interest because of the place or currency in which it is issued, made payable or paid, or because of the location of any office or place of busi ness maintained by the Bank. 7/6/44 Art. VII 214 MONETARY AND FINANCIAL CONFERENCE (p. 21) Article IX— Amendments I.M.F. XI Any governor or executive director desiring to intro duce modifications in this Agreement shall communi cate his proposal to the Chairman of the Board of Governors who shall bring the proposal before the Board of Governors. If the proposed amendment is approved by the Board of Governors by a majority of the aggregate votes, the Fund shall prepare a protocol, by dated circular letters, to the governments of all the members asking whether they accept the proposed modifications. When the governments of members hav ing four-fifths of the aggregate votes, have accepted the proposed amendment, or, in the case of modifica tions of the right to withdraw from the Fund when the governments of all of the members have accepted, the Fund shall certify the fact by means of a proces verbal, which it shall communicate to the governments of all members. The protocol will enter into force between all members three months from the date of the proces verbal unless a shorter period is specified in the protocol. 7 /6 /4 4 Art. IX (P. 22) Article X I.M .F. X II, 1 Section 1. Interpretation. All questions of the interpretation of the provisions of this Agreement between two or more member coun tries shall be resolved by the Bank. Whenever a disagree ment arises between the Bank and a country which has ceased to be a member, or between the Bank and any member after liquidation of the Bank, such disagree ment shall be submitted to arbitration. Section 2. Definitions. (To be supplied later) (N ew ) Section 3. Approval Deemed Given. Whenever the approval of any member is required before any act may be done by the Bank approval shall be deemed to have been given unless the member pre sents an objection within such reasonable period as the Bank may fix in notifying the member of the proposed act. 7/6/44 Art.X 215 PROCEEDINGS AND DOCUMENTS (P. 23) Article XI (Final Provisions) (To be supplied later) 7 /6 /4 4 Art. X I Document 171 CI/2/M4 Minutes of Meeting of Committee 2 of Commission I O p e ra tio n s o f t h e F u n d (Ju ly 6, 19uu, 2:30 p.m .) The Chairman asked the delegations of the following countries to name a member to serve on the language committee: United States, Chairman; China, Ecuador, French Delegation, Union of South Africa, and Union of Soviet Socialist Republics. The Chair man asked the delegations of the following countries to name a member to serve on the ad hoc committee to consider article III, section 2 (3), Alternatives A, B, D, and F (Document SA/1, pp. 6a, 6b, 6c, and 6e) : French Delegation Chairman; Australia, Brazil, Canada, China, Mexico, Netherlands, Union of Soviet So cialist Republics, United Kingdom, and United States. The Committee continued its discussion of article III, Transac tions with the Fund. On Alternative E (p. 6d), it was decided to defer action pend ing informal discussions among certain members of the Com mittee looking toward the submission of a compromise proposal. On Alternative A, section 5 (2) (p. 8), and Alternative B (p. 8) the Committee agreed to revise Alternative A, section 5 (2) to read “Buy that currency from that member with gold”. Alterna tive B was withdrawn. (p. 2) On Alternatives A and B (p. 13) the Committee agreed to defer discussion until the material to be inserted in Alterna tive A is available. The Committee deferred discussion of Alternatives A and B (pp. 14, 14a, and 14b) until all members have had a chance to study them. The Committee agreed to refer Alternatives A and B (p. 15) to the language committee. The Committee agreed to approve Alternative A (p. 16). The Committee discussed Alternatives A and B (pp. 18 and 18a) at some length. A third Alternative was presented infor749013^—48—15 216 MONETARY AND FINANCIAL CONFERENCE mally and will be circulated. The .Committee will continue its discussion of these Alternatives at its next meeting. Document 172 CI/1/M 4 Minutes of Meeting of Committee 1 of Commission I P u rp o s e s , P o lic ie s , a n d Q u o ta s o f t h e F u n d J u ly 6, 19 H — 10 a.m. The Committee began its fourth meeting by discussing the re port of the drafting committee. The Committee discussed the re vised language for article I, section 2, dealing with the purposes of the Fund. It was agreed to accept this wording with the reserva tion that delegations not completely satisfied might raise the ques tion later if their viewpoint did not find adequate expression in a general preamble covering the whole work of the Conference. The Committee approved the revised wording of article I, sec tions 3 and 6, and also accepted the recommendation of the drafting committee to accept the wording of Alternative A following sec tion 6, which reads, “The Fund shall be guided in all its decisions by the purposes set forth above”. Alternative H to article I (p. Id ), which adds to the purposes of the Fund the liquidation of war balances, was discussed in con junction with Alternative G (p. lc ), dealing with the same sub ject. The importance attached by a number of delegations to the inclusion in the Agreement of some means of facilitating the set tlement of this problem was fully developed. The considerations which led to the omission of references to this problem from the Joint Statement were once more brought out and the view that the matter was one for (p. 2) direct settlement between creditors and debtors was debated. Some delegations advanced the view that balances of members now in enemy hands had as good a claim to the assistance of the Fund in their liquidation as the balances of one member held by another member. Following its procedure of the previous day with regard to Al ternative G, the Committee agreed to refer Alternative H to Com mission I with a report of the nature of its discussions. The Committee approved Alternative A, section 6 (p. 4 of Document SA /1), which deals with payments when quotas are changed. The Committee also discussed Alternatives B and C relating to the reduction in initial gold payments by countries PROCEEDINGS AND DOCUMENTS 217 suffering as a result of enemy occupation (p. 4a), and agreed to refer these proposals to the ad hoc committee of Commission I which is to deal with questions of special interest to liberated countries. The Committee passed over article IX, section 1 (p. 38), since the necessary material was not available. The suggestion was made that in view of the interest of Committee 2 in the whole of article IX a joint session of the two Committees on this article would be desirable. The Chairman announced that, pending decision on this suggestion, Committee 1 would continue with its original assignment, which includes this article. (p. 3) The Committee discussed section 2 of article IX (p. 38), dealing with gold purchases based on parity prices, and referred it to its drafting committee for clarification of statement. The same action was taken with regard to paragraph (a) of the proposed section 3 under article IX, concerning foreign-exchange dealings based on par values. This appears as part of Alternative A on p. 39, Document SA/1. Paragraph (b) of this Alternative was agreed upon in substance but was referred to the drafting committee for language clarification. With regard to paragraph (c) of this Alternative, discussion disclosed various difficulties of a legal nature. Emphasis was also given to the close relation ship of this section to the work of Committee 2. The paragraph was therefore referred to the drafting committee with instruc tions to defer its report. The Committee then considered Alternative A to section 4 of ar ticle IX (p. 40). The discussion developed a substantial degree of uncertainty as to the precise character of the exchange con trol which member countries obligate themselves to eliminate under this section. The Committee decided to request Commission I to clarify the meaning of this provision, and to postpone further consideration of it until Committee 2 had discussed the problem. Document 173 CI/3/M4 Minutes of Meeting of Committee 3 of Commission I O rg a n iz a tio n a n d M a n a g e m e n t o f t h e F u n d (J u ly 6, 1944, 10 a.m.) At the fourth meeting of the Committee, held on July 6 at 10 218 MONETARY AND FINANCIAL CONFERENCE a.m., the text of article VII, section 5 (p. 28), was accepted with out change. Article VII, section 6 (p. 29) on depositories was then given extended consideration. Paragraph (a) in Alternative A was agreed to without change. Agreement was not reached on paragraph (b), Alternatives A and B (pp. 29 and 29a), and the question was referred to Commission I for decision. Alternative C (p. 29a) was dropped by general consent. Section 7 was agreed upon as proposed in Alternative A (p. 29). The Committee resumed consideration of the question of man agement of the Fund, article VII, section 2. New drafts for the relevant sections were submitted. The original Alternatives A and B were combined into a new draft (SA/1/17, Document 152). Alternative C (SA/1/16, Document 151) and Alternative D (SA/1/15, Document 150) were introduced at this meeting. After discussion, it was apparent that no complete agreement was pos sible in view of the differences of these drafts. Additional amend ments to these drafts are to be submitted by several of the mem bers. The Chairman was authorized to appoint a special com mittee to consider the reconciliation of these drafts and to present a new document to the Committee as soon as possible. The fol lowing countries were named to this committee: Belgium, Cuba, Netherlands, United Kingdom, and United States. Article VII, section 8 (p. 30), and article VIII, section 1 (p. 34), were not discussed, pending clarification of their possible assign ment to Committee 4. The Committee recommended that the first three clauses of article VII, section 11 (p. 33), be referred to Committee 4. Since an amendment is proposed to the fourth clause, action was postponed on this clause, while the fifth clause was adopted as presented. (N.B. In the Minutes of Meeting of July 4, 4 p.m., (document no. 113) in lines 6 and 7 of the third paragraph, the words “Board of Governors” should read “Executive Directors”.) Document 174 CI/4/M 3 Minutes of Meeting of Committee 4 of Commission I F o rm a n d S ta tu s o f t h e F u n d (J u ly 6, 1944, 2:30 p.m .) The third meeting of Committee 4 of Commission I was held on July 6, at 2 :30 p.m. The Chair appointed the Delegates from China, Cuba, Ecuador, Poland, Union of Soviet Socialist Re PROCEEDINGS AND DOCUMENTS 219 publics, United Kingdom, and the United States as members of the “asterisk committee”, with the Delegate from Cuba serving as Chairman. Also serving as ex officio members of this Committee are the Chairman, Reporter, and Secretary of Committee 4. The Chairman of the subcommittee to review article XI, section 7, reported that the members, at the meeting held today, were substantially in agreement. It was indicated by the Chairman that the revised article XI, section 7, would be submitted to the full Committee at the next scheduled meeting. Article VII, section 8 (p. 30), was discussed extensively and recommended for approval without change. At the suggestion of one of the delegates, the Committee approved the discussion at this meeting of article VII, section 11, “Miscellaneous Powers”, items 1, 2, and 3 (p. 33), which had been previously assigned to Committee 3. After considerable discussion of the interpretation of the proposed wording of the first phrase under the heading, it was agreed that the present wording would be revised and stated as follows: “In order to carry out its purposes, the Fund shall have full legal personality and, in particular, t o . . . ” With this amendment in wording the Committee approved article VII, section 11, (1), (2), and (3). Following an extended discussion of article VIII, section 1, Al ternative A, the Chair stated that a consensus of the delegates indicated approval. During this discussion the delegate of the country proposing Alternative B stated his reasons for recom mending changes in Alternative B. (p. 2) Article VIII, section 2 (p. 35), was not available for discussion. At a joint meeting of the Chairmen of Committees 3 and 4, it was agreed that article VIII, section 2, would be discussed upon its completion in Committee 3 instead of Committee 4, as pre viously announced in the minutes of July 5, 1944. In the case of article XI, “Amendments” (p. 45), there was a consensus of the Committee that certain modifications be made to cover the proposals made by the delegates of two of the countries. This article was referred to the “asterisk committee” for its consideration. Article XII, section 1 (p. 46), was discussed at length. At the conclusion of the discussion the Chairman stated that the con sensus approved Alternative A but, because Alternative B was an explanation of a part of Alternative A, recommended that the “asterisk committee” meet and prepare one document for pres entation to the Committee. 220 MONETARY AND FINANCIAL CONFERENCE Document 175 C/S/M l Procedural Decisions of the Steering Committee (July 6, 19U) The Steering Committee has determined upon the following procedures in order to expedite the work of Commission I and its Committees on the International Monetary Fund. It requests that the officers and members of the Commission and its Committees follow these procedures: 1. Commission I should meet next at 9:30 a.m. on July 10. In accordance with the prior decisions of Commission I, the reports of the Reporting Delegates of Committees should be circulated long enough in advance of this meeting to permit full consideration. 2. The Committees of Commission I will want to conclude their consideration of all matters on which the texts of provisions have been laid before them in time to allow the Reporting Delegates opportunity to prepare their reports. 3. No matter should be referred to the Commission unless it has been considered first by the Committees or their sub committees. 4. The Chairman of Commission I is empowered, in advance of the meeting of July 10, to appoint such ad hoc commit tees as may be conducive to the securing of agreement on particular questions which have not been resolved by the Committees. Document 177 (p. 16a) sa/ 1/21 A l t e r n a t iv e B (F or the first sentence of Joint Statem ent IV, I, substitute:) The Government of the United States and the Government of the United Kingdom will communicate to the Monetary Fund at its inauguration the initial par value of their respective cur rencies, expressed in terms of gold. Within one month, the other member countries wishing to adhere to the Fund, will make corresponding communications. Notwithstanding this rule, mem ber countries that have been occupied by the enemy need not PROCEEDINGS AND DOCUMENTS 221 make a definitive communication in the above sense until the re construction of their monetary system has been completed, and the initial communication may be limited to giving a provisional par value. If the Board of Governors (Directors) of the Fund finds a communicated initial (or pvosisional) par value reason able, such par value shall come into force immediately for the purpose of the Fund. If, however, the Board of Governors (Di rectors) should deem the communicated par value to be open to criticism, the question shall be the subject of further considera tion with the member country in question, and the facilities of the Fund shall not be available to the member until agreement has been reached. 7 /6 /4 4 J.S. Art. IV Sec. Document 178 (p . 26d) SA/1/22 A l t e r n a t iv e C (For Combined Alternatives A and B for Joint Statement VII, 1, 2 and 3, and additional m aterial on page 27 of Document SA/1/17) Substitute for 3: B For every Executive Director there shall be elected at the same e time and according to the same rules an alternate with full power to act for him when he is not present. An Executive Di rector and his alternate need not represent the same country. Substitute for 4: 4. The Executive Directors shall be continuously in function at the principal office of the Fund. Substitute for 8: 8. The Executive Directors shall co-opt a Managing Director who shall not be a Governor or an Executive Director. The Man aging Director shall be Chairman of the Executive Directors, but shall have no vote except a casting vote in case of an equal division. He may participate in meetings of the Board of Governors, but shall not vote at such meeting. He shall, how ever, be eligible for election as Chairman of the Board of Governors. The Managing Director shall cease to hold office when the Executive Directors will so decide. He will not take the chair in the meeting taking such decision. 7/ 6/44 J.S. Art. VII Sections 1, 2 and 3 222 MONETARY AND FINANCIAL CONFERENCE Document 179 (p. 26e)- S A /l/2 3 A lte rn a tiv e D (For Combined A lternatives A and B for Joint Statem ents VII, 1, 2 and 3, and additional m aterial on page 27 of Document SA/1/17) Substitute for 2: 2. There shall be 12 Executive Directors, of whom 6 shall be appointed by the six members having the largest quotas and 6 shall be elected biennially in accordance with the provisions of Schedule B, by all the Governors other than those appointed by the members having the 6 largest quotas. Persons chosen as Executive Directors need not be Governors. Substitute for 4: 4. Employ such staff as shall be necessary to conduct the business of the Fund, provided that, in employing staff due regard shall be paid to the fair representation of the nationals of member countries. 7 /6 /4 4 J.S. Art. V II Sections 1, 2 and 3 Document 180 (p. 36b) S A /1/24 A lte rn a tiv e B # Section 3. (a) When a government ceases to be a member in any of the cases referred to in sections---------above, settle ment of all accounts between the Fund and such governments shall, with reasonable dispatch, be made in accordance with b) and c) below. (b) The Fund shall be obligated to pay to such government an amount equal to its quota, plus any other amounts due to it from the Fund, less any amounts due to the Fund from such government, including charges accruing after the government ceases to be a member; but no payment shall be made prior to six months from the date when such government ceases to be a member. (c) Payments shall be made in the member’s currency and if the Fund’s holdings in that currency are not sufficient, in gold and in the other currencies held by the Fund, in accordance with the principles governing liquidation of the Fund (section 4 PROCEEDINGS AND DOCUMENTS 223 below) and as if liquidation took place at the day of the mem ber's withdrawal. (d) If the Fund's holdings of the currency of such country exceed the amount due to such government, that government shall be obligated to redeem such excess currency in gold or in the currencies of members which at the time of actual redemp tion are convertible under Article III, Section 6 (J.S. Ill, 5) within three years from the date of withdrawal, or such longer period as may (p. 36c) be fixed by the Fund. Such redemption shall not be effected at a rate in any quarterly period greater than one-twelfth of the Fund's excess holdings at the date of withdrawal of the currency to be redeemed plus current ac cruals of such currency during such quarterly period. If the Government fails to redeem such excess currency in this man ner, the Fund may liquidate in any market that currency at the same rate in an orderly manner. The withdrawing govern ment unconditionally guarantees at all times the unrestricted use of such currency for the purchase of goods or for the pay ment of other sums due to it or to its nationals. Further, the withdrawing government shall indemnify the Fund against any loss resulting from exchange depreciation until such currency has been used or redeemed. (e) Any member desiring to obtain the currency of a former member shall acquire the currency by purchase from the Fund, to the extent that such member has access to the resources of the Fund and such currency is available under the preceding para graph. 7 /6 /4 4 J.s. Art. V III Sec. 2 and 3 Document 181 (p . 29b) S A /l/2 5 A l t e r n a t iv e D (Supplement to A lternative A, section 6-b) "At least one half of the holdings of gold of the Fund shall be held in the designated depository in the member in which the Fund has its principal office, and U % of the holdings of gold of the O Fund shall be held in the designated depositories in the remaining three members having the largest quotas. 7 /6 /4 4 J.S. Art. VII Additional Sections (6 & 7) 224 MONETARY AND FINANCIAL CONFERENCE Document 182 (p . 14c) SA /1/26 A l t e r n a t iv e C (The following m aterial has been suggested as an addition to Article III) Section 11. Furnishing Information. The Fund may require members to furnish it with such infor mation as it deems necessary for its operations. In requesting information the Fund shall, however, take into consideration the varying ability of members to furnish the data asked for, and members shall be under no obligation to furnish information in such detail that the affairs of individuals or corporations are disclosed. Subject to this proviso members undertake to furnish the desired information in as detailed and accurate a manner as is practicable, and to avoid mere estimates so far as possible. The minimum amount of information necessary for the effective dis charge of the Fund’s duties includes the following. 1. Official holdings at home and abroad, of (a) gold, (b) foreign exchange. 2. Holdings at home and abroad by banking and financial agencies other than official agencies of (a) gold, (b) foreign exchange. 3. Production of gold. 4. Gold exports and imports according to countries of destina tion and origin. 5. Total exports and imports of merchandise, in terms of local currency values, according to countries of destination and origin. 7 /7 /4 4 (p. 14d) 6. International balance of payments, including (a) trade in goods and services, (b) gold transactions (c) known capital transactions, and (d) other items. 7. International investment position, i.e., investments within the country owned abroad and investments abroad owned by residents of the country so far as it is possible to furnish this information. 8. National income. 9. Price indices. (Indices of commodity prices in wholesale and retail markets and of export and import prices.) 10. Buying and selling rates for foreign currencies. 11. Exchange controls. (Comprehensive statement of exchange PROCEEDINGS AND DOCUMENTS 225 controls in effect at the time of assuming membership in the Fund and changes thereafter as they occur.) 12. Where official clearing arrangements exist, details of amounts awaiting clearance in respect of commercial and financial transactions, and of the time lag for each group. 7/7/44 J.S. Art. ill Additional Section (11) Document 183 (p. 17b) S A / 1/2 7 A l t e r n a t iv e B (F o r A rticle IV, Section 4, of the Joint Statement) After consulting the Fund, a member country may change the established parity of its currency, provided the proposed change, inclusive of any.previous change since the establishment of the Fund, does not exceed 10% for the country having a quota ten per cent or more of the aggregate quotas, and not to exceed 20% in the case of a country having less than ten per cent of the aggre gate quotas. In the case of application for a further change not covered by the above and not exceeding 10 per cent for the coun try having a quota ten per cent or more of the aggregate quotas, and not to exceed 20 per cent in the case of a country having less than ten per cent of the aggregate quotas, the Fund shall give its decision within two days of receiving the application, if the ap plicant so requests. 7 /7 /4 4 J.S. Art. IV Section 4 Document 186 C II/ 3 / B 1 As of Adjournment 10:20 a.m., July 7, 1944 Status of Business Before Committee 3 of Commission I. Article VII— Management of the Fund. Sec. 1. Board of Governors. Disposed of (see Minutes, Doc. 103). 226 Sec. 2. Sec. 3. Sec. 4. Sec. 5. Sec. 6. Sec. 7. Sec. 8. Sec. 9. Sec. 10. Sec. 11. MONETARY AND FINANCIAL CONFERENCE The Executive Directors. Pending (referred to sub committee) . Voting. Disposed of with reference to Board of Gov ernors; pending with reference to Executive Direc tors. Sent to sub-committee with reference to Execu tive Directors (see Minutes, Doc. 147, paragraphs 1 and 2). The General Manager. Pending (referred to sub committee) . Publication of Reports. Disposed of (see Minutes, Doc. 173, lines 1-3). Depositories. Disposed of (see Minutes, Doc. 173, lines 3-8). Form of Holdings of Currency. Disposed of (see Min utes, Doc. 173, line 10). Relationship to Other International Organizations. Disposed of (referred to Committee 4 by agreement between the Chairmen of Committee 4 and Commit tee 3). Location of Offices. Pending. Distribution of the Net Income of the Fund. Disposed of (see Minutes to be published). Miscellaneous Powers. Pending, sub-section 4, (see Minutes, Doc. 173, page 2, lines 5-6). Disposed of sub section 5 (see Minutes, Doc. 173, line 7). Disposed of sub-sections 1, 2 and 3 (referred to Committee 4 by agreement between the Chairmen of Committee 3 and Committee 4). 7 /7 /4 4 (p. 2) Article VIII— Withdrawal From, the Fund. Sec. 1. Right of Members to Withdraw. Disposed of (referred to Committee 4 by agreement between the Chairmen of Committee 3 and Committee 4). Sec. 2. Suspension of Membership or Compulsory With drawal. Pending (no material available). Sec. 3. Settlement of Accounts with Countries Ceasing to be Members. Pending (additional alternative to be fur nished). Sec. 4. Liquidation of the Fund. Pending (no material avail able) . PROCEEDINGS AND DOCUMENTS 227 Article III— Transactions with the Fund. Sec. 11. Furnishing Information. Pending (referred to Com mittee 3 by agreement between the Chairmen of Committee 3 and Committee 2). 7 /7 /4 4 Document 187 DP/9 Mexican Delegation Submitted for Consideration by Commission H I Agreement on Earmarked Gold. the practices for earmarking gold might not coincide in all particulars in different countries; W h e r e a s earmarked gold is part of the monetary reserve of such countries and therefore should be free from all restrictions as to its use, transfer, and transportation; and W h e r e a s , in order to avoid unnecessary movements of gold and thereby reduce to a minimum the cost and risks involved, it would be convenient to adopt a common international policy with respect to such gold; T h e M e x i c a n D e l e g a t io n submits the following proposal for the consideration of Commission III: 1. The countries represented at this Conference agree to extend to earmarked gold the same treatment and immunities they may agree to give to the gold and other assets of the Inter national Monetary Fund. W hereas Document 189 DP/10 Mex/con Delegation Mexico’s Proposal on Silver Submitted for consideration by Commission III W hereas it is undeniable that about half of the world’s population prefers silver coins to any other kind of currency for every day use and trade, as well as for hoarding; 228 MONETARY AND FINANCIAL CONFERENCE W hereas the economically weaker silver-using nations of the world, upon becoming members of the proposed International Monetary Fund, would in fact agree, among other things, to collaborate with the stronger nations in the establishment of a world-wide free market for gold, and in the maintenance of a stable and fair price for that metal; W hereas it is just and fair that, in due correspondence, the economically stronger countries should agree to extend their cooperation to the economically weaker ones, in order that silver may also have an ample market and a relatively stable and fair international price; W hereas , to comply fully with the proposed agreement, the silverusing peoples would need proportionately larger, and there fore more burdensome, monetary reserves, since besides their normally heavy investments in silver coins, they would also have to maintain a gold reserve proportionately as large as that of any gold-using nation; W hereas it is not fair that the economically weaker peoples should carry the whole weight of their silver stocks, as well as the heavy losses caused by the wide fluctuations of their inter national value, and carry besides their proportionate share of gold stocks; (p. 2) W hereas it has been fully demonstrated by the far-sighted policy of the United States during the past decade, that it is not only possible but equally feasible, without the slightest danger to the monetary equilibrium even of a single nation, to maintain stable the relative international prices of gold and silver, and to stabilize both prices in terms of a single cur rency ; W hereas it should be relatively easier and less costly for the United and Associated Nations to establish a fair and reason able international price for silver than to fix one for gold, in asmuch as the present value of the visible stocks of gold is around thirty billion dollars, while that of silver is only a fifth or a sixth of that amount; W hereas one of the main purposes of this Conference should evidently be, not to select gold or anything else as a metallic standard which should lead the world back into the rigidity of an arbitrary yardstick for national and international values, but rather to lay the foundations of a well-integrated world monetary system, wherein certain important currencies generally accepted in international trade, as well as gold and PROCEEDINGS AND DOCUMENTS 229 silver itself, can and should be used to great advantage, each to fulfill a different international function; W h e r e a s in the proposed agreement it is foreseen that the Monetary Fund may be forced to change the price of gold in terms of all the member countries’ currencies, in order to provide additional means of international payments; Wh e r e a s silver, because of its traditional monetary use by approximately half of the inhabitants of the world, can and should be used as a collateral monetary metal for (p. 3) meeting such increases in credit requirements of member countries; W h e r e a s in principle there can be no better grounds for pegging the price of gold in terms of the United Nations’ currencies, than those for preventing the wide fluctuations of the inter national price of silver, in relation to the same currencies; W h e r e a s the wide fluctuations in the international value of silver, besides placing a heavy risk on the shoulders of those countries least able to carry it, are the direct source of recur rent dislocation of the monetary system of the silver-using countries; and W h e r e a s it is technically possible to achieve a minimum price for gold and a maximum price for silver in terms of all the cur rencies of member countries; The Mexican Delegation presents for the consideration of this Conference the following tentative plan to link silver with gold for international monetary purposes: I. That the Monetary Fund should buy and sell from and to member countries gold and silver together and jointly, at the fixed rate in terms of member currencies and in a ratio of, say, one ounce of pure gold to ten ounces of fine silver. II. That member countries would agree to buy and sell from and to the Fund, and from and to one another, gold and silver together and jointly, at the same rate and in the same ratio as above. III. That the Fund should have power: a. To alter permanently, by a four-fifths majority vote, the proportions of gold and silver set forth above in I and II, only when a permanent and fundamental change in the average yearly rate of (p. 4) production and con sumption of both metals has taken place; and b. To eliminate silver entirely but temporarily from its joint purchases and sales of gold and silver, and to permit member countries to do likewise, only when and 230 MONETARY AND FINANCIAL CONFERENCE just as long as, due to an increase in the price of silver, over and above an agreed ceiling, the price of one ounce of pure gold in the basic composite unit as defined under I and II above, should be less than the agreed minimum price of thirty-five U. S. dollars per ounce. T he Mexican Delegation submits to this Conference the fol lowing RESOLUTION A.-That the Fund shall determine the feasibility of linking silver with gold for international monetary purposes, in accordance with the formula pre-inserted or any other formula; B.-That the Fund shall be authorized to carry out whatever policy it deems appropriate as regards the proper role and function of silver within the international monetary structure. Document 191 ( p . 43b) SA /1/29 A l t e r n a t iv e A (Suggested as additional section of A rt. IX) S ection 8. To cooperate with other member countries in order to enable them to render really effective such controls and restric tions as these countries might adopt or continue, with the approval of the Fund, for the purpose of regulating international move ments of capital. 7 /7 /4 4 J.s. Art. IX Additional Section (8) Document 192 Second Report of the Drafting Committee of Committee 1 of Commission I J u ly 7, 19U The Drafting Committee met on July 7, 1944 to consider the matters referred to it by the Full Committee on July 5 and 6,1944. PROCEEDINGS AND DOCUMENTS 231 The following members were present: Mr. Goldenweiser, Chair man, Dr. Taiang, Dr. Gudin, Mr. Mladek, Mr. Melville, Professor Robbins, Mr. Morozov, and Mr. Varvaressos, and Mr. Brown and Mr. Young from the Secretariat. The Drafting Committee recommends the following language for Article II, Section 1—Countries Eligible for Membership: Article II, Section 1 “At the outset the members of the Fund shall be those of the countries represented at the United Nations Monetary and Financial Conference whose governments accept mem bership in the Fund. “Subsequently membership in the Fund shall be open to other countries at such times and in accordance with such terms as may be prescribed by the Fund.” The Drafting Committee recommends the following language for Article II, Section 4 — Adjustment of Quotas (page 3): “The Fund shall at intervals of five years review and, if it deems it appropriate, adjust the quotas of the members. It may also, if it thinks fit, consider at any other time the adjustment of any particular quota at the request of the mem ber concerned. A four fifths majority vote shall be required for any change in quotas and no quota shall be changed with out the consent of the member concerned.” The Drafting Committee recommends the following language for Article II, Section 5—Initial Payments (page 4) : “Each member shall pay in gold as a minimum either (a) twenty-five percent of its quota, or (b) ten percent of its official holdings of gold and gold convertible exchange,1 whichever is smaller o n ------------. In the case of any member occupied by the enemy whose holdings are not ascertainable as o f ------------, the Fund shall fix an appropriate alternative date. The data necessary to determine official holdings of gold July 7, 1944 and gold convertible exchange shall be (p. 2) furnished by the members as provided in this Agreement. Each member shall pay the balance of its quota in its own currency.” The Drafting Committee recommends the following language aThe phrase “gold and gold convertible exchange” is subject to definition and to such change in terminology as may be agreed upon. 749013 — 48— 16 232 MONETARY AND FINANCIAL CONFERENCE for Article IX, Section 2—Gold Purchases Based on Parity Prices (page 38) : “Monetary authorities or agents of member countries shall not buy or sell gold at prices* which vary from the agreed parity of their currencies by more than a prescribed margin/’ The Drafting Committee wishes to report that if any revisions are later included under Article IX, Section 1—Purpose and Scope of Additional Undertakings (p. 38 of Document SA /1), which affect Section 2 of this Article, the Committee wishes to recon sider its recommendation. The Drafting Committee recommends the following language for Article IX, Section 3, Paragraph (a )—Foreign Exchange Dealings Based on Par Values (p. 39 of Document SA/1) : “The Fund shall prescribe the margin by which the maximum and minimun rates for exchange transactions in member currencies may differ from parity. This margin, however, shall not exceed---------percent of the parity.” This recommendation is made by the Drafting Committee in order to make clear that the purpose of the paragraph is to pre scribe the spread within which transactions may be carried out and not to fix the level or parity of exchange rates which is dealt with in other provisions of the agreement. The discussions of the Drafting Committee, however, developed a difference of view as to whether it is intended that the buying and selling rates falling within the permissible spread should be agreed upon by the Fund and each member, or whether the member country should have full freedom in this respect. The Drafting Committee considered this to be a matter of substance and not falling within its competence, and referred the question to the Full Committee. The Drafting Committee recommends the following language for Article IX, Section 3, Paragraph (b) : “Each member undertakes, through appropriate measures authorized under this agreement, not to permit within its jurisdiction an appreciation or depreciation of (p. 3) the exchange value of its own currency in terms of gold beyond the range prescribed under (a) above. In particular, a mem ber whose monetary authorities in fact freely buy and sell gold or gold convertible exchange within the prescribed range, to settle international transactions, shall be deemed to be fulfilling this undertaking.” Some members of the Drafting Committee felt that it would PROCEEDINGS AND DOCUMENTS 233 be necessary to obtain clarification of the precise meaning of the word “freely” as used in this provision. The Drafting Committee deferred consideration of Article IX, Section 3, Paragraph (c), in accordance with its instructions from the Full Committee. The Drafting Committee considered again Article I, Section 4 of the agreement which deals with the promotion of exchange stability as one of the purposes of the Fund. The Drafting Com mittee wishes to inquire of the Full Committee whether the pro cedure for changing exchange rates has been agreed upon since it can not make a recommendation on this section until that is done. The Drafting Committee also considered Article II, Section 3— Time and Place of Payment (p. 2 of Document SA /1), which was referred to it by the Committee on July 4, 1944. After con sidering the possibility that the language in this clause might enable a country to be a member of the Fund for a considerable time without furnishing its quota, the Drafting Committee decided that the language of the clause was not susceptible of such interpretation and was, therefore, satisfactory. The delegate from Czechoslovakia wishes the Drafting Committee to report that his agreement with the wording of this section is contingent upon the manner in which the Conference finally decides to deal with Alternative B to this provision, which provides for special arrangements for the payment of quotas by countries whose cur rency systems have been disorganized as a result of the war. Document 194 (p. 43a) s a / i /2 8 A l t e r n a t iv e B (Suggested as Article IX, Section 7) Restrictions on Taxation of the Fund, Its Employees, and Obligations (a) The Fund, its assets, property, income and its operations, and transactions authorized by these articles of Agreement shall be exempt and immune from all taxation and from all customs duties. The Fund shall also be exempt and immune from liability for the collection or payment of any tax or duty. (b) No member, or any political subdivision or any taxing authority thereof, shall impose or collect any tax on or measured 234 MONETARY AND FINANCIAL CONFERENCE by salaries paid by the Fund to its executive directors, officials and employees who are not citizens of such member. (c) No member, or any political subdivision or taxing authority thereof, shall impose or collect any taxation on any obligation or security issued by the Fund, or any dividend or any interest thereon, by whomsoever held or received: (i) which discriminates against such obligation, dividend, or interest, because of its origin; or (ii) which is applied solely on the basis of the place or'cur rency in which it is issued, made payable or paid, or solely on the basis of the location of any office or place of busi ness maintained by the Fund. (d) Each member shall inform the Fund of the detailed action it has taken to grant the exemptions and immunities provided for in this section and in section 5 respectively. Differences which may arise between such member and the Fund as to the sufficiency of propriety of any action shall be resolved in accordance with the provisions of Article XII, Section 1. 7 /7 /4 4 J.S. Art. IX A d d itio n a l Sec. (7) Document 195 (p . i f ) S A /1 /3 0 A lte rn a tiv e J (Substitute for Joint Statem ent I, subdivision 2) To facilitate the expansion and balanced growth of interna tional trade, the fuller utilization of the resources of economically under-developed countries, and the promotion and maintenance in the world of a high level of employment and real income, which must be primary objectives of economic parley. 7 /7 /4 4 J.S. Art. I Document 196 (p. 40a) S A /l/3 1 A lte rn a tiv e C The following has been suggested as an addition to Article IX, Subdivision 4, Alternative A :— PROCEEDINGS AND DOCUMENTS 235 Nothing in this section shall prevent a member from determin ing the extent to which it will be prepared to incur any financial commitment to any other member. 7 /7 /4 4 J.S. Art. IX Section 3 Document 198 CI/4/S1 Committee 4 of Commission I Report of the Subcommittee to Consider Article IX, Section 7— and of the Asterisk Committee J u ly 7,1944 At the fourth meeting of Committee 4 the Chairman of the subcommittee to consider article IX, section 7 read the document approved by his Committee. Following the regular meeting of Committee 4 the Asterisk Committee met to consider articles XI and XII. Copies of the articles referred to above as approved by their respective committees are enclosed. M a n u e l B. L l o sa Chairman of Committee 4 Col. C h a r les D y so n Secretary, Committee 4 7 /7 /4 4 (p.33a) J o in t S t a t e m e n t —No Provisions The following material has been suggested as an addition to Article VII. Alternative B # Section 11. Miscellaneous Powers. In order to carry out its purposes, the Fund shall have full legal personality and, in particular, may: (1) Make contracts; (2) Acquire and dispose of movable and immovable property; and: (3) Institute legal proceedings in any court of competent jurisdiction; 236 MONETARY AND FINANCIAL CONFERENCE (4) Employ such staff as shall be necessary to conduct the business of the Fund; and (5) Adopt such rules or regulations as may be necessary or . appropriate to conduct the business of the Fund. 7 /7 /4 4 J . S .A r t .V II A d d itio n a l Section (p. 45a) J o in t S ta te m e n t— N o Provisions Alternative C Substitute for Article XI—Amendment A ny proposal to introduce modifications in the agreement, whether emanating from a member a Governor or an Executive Di rector, shall be communicated to the Chairman of the Board of Governors who shall bring the proposal before the Board. If the proposed amendment is approved by the Board by a majority of the aggregate votes, the Fund shall, by circular letter, ask the governments of all the members whether they accept the pro posed amendment. When three-fifths of the members, having fourfifths of the aggregate votes, have accepted the proposed amend ment, the Fund shall certify the fact by means of a proces verbal, which it shall communicate to the governments of all members. However, the acceptance of the amendment by the governments of all members is required in the case of modifications of (1) the right to withdraw from the Fund; (2) the provision that no change in a member’s quota shall be made without its consent; (3) the provision that no change may be made in the par value of a member’s currency except on the initiative of that member. The amendment will enter into force for all members three months after the date of the proces verbal unless a shorter period is specified in the circular letter. 7 /7 /4 4 J.S. Art. XI (A d dition al Article) (p. 46a) J o in t S t a t e m e n t — No Provisions The following material has been suggested as part of an addi tional Article (XII) on interpretation of the Agreement. Alternative C Article XII— Interpretation of the Agreement Section 1. Interpretation. (a) All questions of interpretation of the provisions of this PROCEEDINGS AND DOCUMENTS 237 agreement arising between any member and the Fund or between any members of the Fund shall be submitted to the Executive Di rectors of the Fund for their decision. If the question is one which involves a dispute affecting particularly one (or more) member (s) and that (or those) member (s) are not represented among the Executive Directors by a Director appointed by it (or them) then the provisions of Article VII, section 7, document 152, apply. (b) In any case where the Executive Directors have given a decision under paragraph (a) above, any member may require that the question be submitted to the Board, and the decision of the Board shall be final. Pending the result of the reference to the Board of Governors, the Fund may (so far as is necessary) act on the basis of the decision of the Executive Directors. (c) Whenever a disagreement arises between the Fund and a country which has ceased to be a member, or between the Fund and any member country after liquidation of the Fund, such dis agreement shall be submitted to arbitration by a tribunal of three arbitrators, one appointed by the Fund, another by the country involved and an umpire who, unless the parties otherwise agree, shall be appointed by the President of the Permanent Court of International Justice. The umpire shall have full power to settle all questions of procedure in any case where the parties are in disagreement with respect thereto. 7 /7 /4 4 Art. XII, Sec. 1 (A d dition al Article) Document 199 (P.31) J OU R N A L UNITED NATIONS No. 8 MONETARY AND FINANCIAL Bretton W o o d s, N ew Ham pshire ORDER OF THE CONFERENCE July 8, 1944 DAY Meetings for Saturday, July 8 9:30 9:30 11:30 11:30 2:30 a.m. a.m. a.m. a.m. p.m. Committee 1 of C o m m i s s io n I Committee 3 of Commission I Committee 2 of Commission I Committee 4 of Commission I Agenda Committee of Commission III Auditorium The Hemicycle Auditorium The Hemicycle Room B 238 MONETARY AND FINANCIAL CONFERENCE R e s u m e s o f C o m m it t e e M e e t in g s Committee 2 of Commission I Operations of the Fund (July 7, 2:30 p.m.) The fifth meeting of Committee 2 of Commission I was held on July 7 at 2 :30 p.m. The Chairman read Document 175, “Procedural Decisions of the Steering Committee”, and asked the Committee members to cooperate with the Chairman to expedite the work of the Committee. It was pointed out that the last paragraph of Document 166 should be read as an addendum to Alternative A (p. 19, Docu ment SA /1). The Committee continued its discussion of article IV, Par Values of Member Currencies. The Committee agreed to report to Commission I a difference of opinion on section 5. The Com mittee approved Alternative A (p. 19) and the addendum referred to above (erroneously circulated as p. 16). The Committee ap proved Alternative A (p. 20). The Committee then began its discussion of article V, Capital Transactions, sections 1 and 2, and approved Alternative A (p. 21) and Alternative A (p. 22) with minor amendments. The Com mittee agreed to defer discussion of article VI, Apportionment of Scarce Currencies, Alternative A (p. 23a). (The minutes of this meeting are being distributed separately as document no. 205.) Committee 3 of Commission I Organization and Management of the Fund (July 7, 9:30 a.m.) The Committee amended article VII, additional section 10 (p. 32), by substituting “The Board of Governors” for “The Fund”. With this amendment, the section was adopted. Article III, section 11 (p. 14), was explained, but discussion was deferred on the request of some of the members. Alternative C to article VII, sections 1, 2, and 3 (Document 178, p. 26d), was presented to the Committee and was referred to the subcommittee already dealing with the question of the executive directors and methods of election. The Committee took no action on article VII, sections 1, 2, and 3, pending a report of its special subcommittee. Discussion of article VIII, section 3 (p. 36), was postponed until the next PROCEEDINGS AND DOCUMENTS 239 meeting to allow time for the consideration of a proposed Alterna tive B (p. 36b). (The minutes of this meeting are being distributed separately as document no. 200.) (P. 33) Committee 4 of Commission I Form and Status of the Fund (J u ly 7, 2 :30 p.m.) The fourth meeting of Committee 4 of Commission I was held on July 7 at 2:30 p.m. The Chairman of the subcommittee to review article IX, section 7, read the document agreed upon by the members of the Committee, with the observation that one of the delegates reserved decision on a part of the document read to the full Committee. (The minutes of this meeting are being distributed separately as document no. 204.) N o tice All delegations are reminded that corrections or additions to be included in the definitive printed list of delegations will be re ceived until 6 p.m. today at the Journal office (room 69). The manuscript for the list is now being prepared in final form for delivery to the printer. Corrections and revisions which have been requested through the Office of the Secretary General and the Reg istration and Information Desk have been entered, as well as changes requested by delegations, whose offices were open when members of the Journal staff called yesterday afternoon. If no changes are requested, it will be presumed that the list as printed is correct. B o n d W a g o n T our New Hampshire's Invasion Bond Wagon, which has been tour ing the State selling Fifth War Loan bonds, will arrive at the United Nations Monetary and Financial Conference at about 9 a.m. today. The caravan of Army vehicles carrying war-front exhibits is in the Bretton Woods area, and New Hampshire War Finance Com mittee officials thought that delegates to the Conference would be interested in a demonstration of one of the methods being used in the United States to raise funds to finance the prosecution of the war. There will be no solicitation of subscriptions at the Conference. (p. 34) Navy Chief Petty Officer William Leary is in charge 240 MONETARY AND FINANCIAL CONFERENCE of the Bond Wagon. Sgt. Armand Deaudoin, injured veteran of the North African campaign, has been the principal bond salesman of the tour and has spoken at numerous bond rallies throughout the State. He has been decorated by the United States and by the Free French for heroic rescue work in an ammunition-explosion disaster in which he received severe injuries. Among the exihibits accompanying the Bond Wagon is a float from a Japanese Zero shot down in the Pacific area. New Hampshire has as its goal sale of enough “E” bonds to finance construction of a destroyer to be named the U.S.S. Frank Knox, after the late Secretary of the Navy, whose home was in Manchester. (p .35) L ist o f D o c u m e n t s I ssu e d a s o f J u l y 7, 1944 Subject Statem ent by Mexican Delegation Statem ent by U ruguayan Delegation Journal No. 6 Minutes of Commission I, Committee 1, July 5, 4 p.m. Order of the Day Minutes of Commission I, Committee 2, July 5, 5:30 p.m. Minutes of Commission I, Committee 3, July 5, 4 p.m. Minutes of Commission I, Committee 4, July 5, 5:30 p.m. Additional Pages to SA/1 n ii n ii ii ii ii ii ii a ii ii ii ii ii ii ii ii ii ii ii a ii ii ii ii ii a ii ii ii ii ii ii ii ii Memorandum to be Submitted to Commission I, Committee 2, by Egyptian Delegation News Bulletin No. 4 Representation of Delegations on Commissions and Committees Mexican Delegation Proposal on Silver— Address Delivered Before Committee 2, Commission I, July 5, 1944 Symbol No. Doc. No. PR/16 PR/17 J /6 135 136 137 CI/1/M 3 GD/17 138 139 CI/2/M 3 140 CI/3/M 3 141 CI/4/M 2 SA /1/8 SA /1/9 SA /1/10 SA/1/11 SA/1/12 SA/1/13 SA /1/14 SA/1/15 SA/1/16 SA/1/17 142 143 144 145 146 147 148 149 150 151 152 DP/5 153 154 GD/19 156 D P/6 157 PROCEEDINGS AND DOCUMENTS Subject Spanish Translation, Joint Statem ent by Experts on Establishm ent of International M onetary Fund, April 21, 1944 Symbol No. 241 Doc. No. PC/6 158 SA/1/18 D P/7 161 162 SA/1/19 SA/1/20 164 165 166 DP/8 J /7 167 168 SA/2 GD/22 169 170 CI/2/M 4 171 CI/1/M 4 172 CI/3/M 4 173 CI/4/M3 174 C /S /M l SA/1/21 SA/1/22 SA/1/23 SA/1/24 SA/1/25 SA/1/26 SA/1/27 PR/18 175 176 177 178 179 180 181 182 183 184 PR/19 CII/3/B1 DP/9 185 186 187 PR/20 DP/10 PR/18 SA/1/29 188 189 190 191 CI/1/DC2 192 (P. 36) Additional Page to SA/1 Indian Delegation Proposal Additional Page to SA/1—Uniform Changes in P a r Values News Bulletin No. 5 Additional Page to SA/1 Statement Made by Mahmoud Saleb El Falaky, Delegate for Egypt, in Support of A lternative H, Article I, Before the Meeting of Committee 1 of Commission I on July 6, 1944 Journal No. 7 Agenda of Commission II—Agreement to Establish a Bank for Reconstruction and Development Order of the Day Minutes of Committee 2, Commission I, July 6, 2 :30 p.m. Minutes of Committee 1, Commission I, July 6, 10 a.m, Minutes of Committee 3, Commission I, July 6, 10 a.m. Minutes of Committee 4, Commission I, July 6, 2 :30 p.m. Procedural Decisions of Steering Committee, July 6 News Bulletin No. 6 Additional Pages to SA/1 y y y y y y y y y y y y y y y y y y y y y y y y » y y y y y y y y y y » fy it y > u j j Press Release No. 18, Address by Dr. K’ung (P. 37) Press Release No. 19 (Invasion Bond Wagon) Status of Business Before Committee 3, Commission II Agreement on Earm arked Gold—Mexican Delegation Press Release No. 20, Statem ent by Delegate of Union of South A frica Mexico’s Proposal on Silver Address by Dr. K’ung (Rerun of Doc. 184) Additional Page of SA/1 Second Report of the D rafting Committee of Commit tee 1 of Commission I, July 7 242 MONETARY AND FINANCIAL CONFERENCE Document 200 C I/3 /M 5 Minutes of Meeting of Committee 3 of Commission I O r g a n iz a tio n a n d M a n a g e m e n t o f t h e F u n d (July 7, 1944, 9:30 a.m.) The Committee amended article VII (additional section 10) (p. 32), by substituting “The Board of Governors” for “The Fund”. With this amendment, the section was adopted. Article III, section 11 (p. 14), was explained, but discussion was deferred on the re quest of some of the members. Alternative C to article VII, sec tions 1, 2, and 3 (Document 178, p. 26d), was presented to the Committee and was referred to the subcommittee already dealing with the question of the executive directors and methods of elec tion. The Committee took no action on article VII, sections 1, 2, and 3, pending a report of its special subcommittee. Discussion of article VIII, section 3 (p. 36), was postponed until the next meeting to allow time for the consideration of a proposed Alterna tive B (p. 36b). Document 201 (156) G D /2 3 Representation of Delegations on Commissions and Committees C o m m is s io n I Chairman—Harry D. White (U.S.A.) Vice Chairman—Rodolfo Rojas (Venezuela) Reporting Delegate—L. Rasminsky (Canada) Secretary—Leroy D. Stinebower Assistant Secretary—Eleanor Dulles AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Camille Gutt BOLIVIA No designation BRAZIL No designation CZECHOSLOVAKIA Ladislav Feierabend Ja n Mladek Antonin Basch Josef Hanc Ervin Hexner DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo PROCEEDINGS AND DOCUMENTS CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre J. J. Deutsch D. C. Abbott J. A. Blanchette CHILE Luis Alamos German Riesco A rturo Maschke Fernando Mardones CHINA Tingfu F. Tsiang COLOMBIA Carlos Lleras Restrepo COSTA RICA Luis D. Tinoco Castro Jose Raquel Oreamuno CUBA Ing. E. I. Montoulieu Oscar Garcia Montes Ramiro Guerra Luis Machado J. M. Menocal Miguel A. Pirez Eduardo D urruthy Felipe Pazos (P. 2 ) HAITI Pierre Chauvet HONDURAS Julian R. Caceres ICELAND Magnus Sigurdsson INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Deshmukh A. D. Shroff IRAN Abol H asan Ebtehaj Hosein Navab Taghi N assr IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombo 243 EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin Alfaro Moran ETH IO PIA B latta Ephrem T. Medhen FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye Robert Mosse GREECE Kyriakos Varvaressos Alexander Argyropoulos GUATEMALA Manuel Noriega Morales NICARAGUA Guillermo Sevilla Sacasa* J. Jesus Sanchez Roig Leon DeBayle NORWAY Wilhelm Keilhau Ole Colbjornsen Arne Skaug PANAMA Guillermo Arango Narciso E. Garay PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Pedro G. Beltran Juvenal Monge Emilio Barreto Latzeb P H IL IPP IN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael Mathay 244 MONETARY AND FINANCIAL CONFERENCE LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO Eduardo Suarez Antonio Espinosa de los Monteros NETHERLANDS J. W. Beyen D. Crena de Iongh H. Riemens J. J. Polak C. H. Schoch A. Broches NEW ZEALAND W alter Nash B. C. Ashwin B. R. Turner A. G. B. Fisher E. C. Fussell POLAND Leon Baranski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS No designation U N ITED KINGDOM Lord Keynes R. H. Brand Sir W. Eady R. Opie U N ITED STATES OF AMERICA F. M. Vinson URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No. designation YUGOSLAVIA Vladimir Rybar C o m m is s io n I Committee 1 Chairman—Dr. Tingfu F. Tsiang (China) Reporter—Kyriakos Varvaressos (Greece) Secretary—W. A. Brown AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Baron Rene Boel BOLIVIA No designation BRAZIL Eugenio Gudin CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre CHILE Luis Alamos CHINA Te-Liang Soong COLOMBIA No designation EL SALVADOR Agustin Alfaro Moran Victor Manuel Valdes Raul Gamero ETH IO PIA B latta Ephrem Medhen FREN CH DELEGATION A. Istel J. de Largentaye R. Mosse GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Pierre Chauvet HONDURAS Julian R. Caceres ICELAND A. Asgeirsson PROCEEDINGS AND DOCUMENTS COSTA RICA No designation CUBA Ramiro Guerra Garcia Montes Eduardo D urruthy CZECHOSLOVAKIA Jan Mladek Antonin Basch E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim 245 INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Doshmukh A. D. Shroff IRAN No designation IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO No designation (p. 2) NETHERLANDS J. W. Beyen D. Crena de Iongh H. Riemens NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. Turner NICARAGUA Leon DeBayle J. Jesus Sanchez Roig Guillermo Sevilla Sacasa NORWAY Wilhelm Keilhau Arne Skaug K aaro Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Ju an Chavez Emilio Barreto P H IL IPP IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND S. Kirkor UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS A. P. Morozov F. P. Bystrov P. Titov N. Ivanov UNITED KINGDOM Lionel Robbins A. W. Snelling UNITED STATES OF AMERICA Mable Newcomer F. M. Vinson E. A. Goldenweiser E. A. Collado H. Edmiston URUGUAY Mario La Gamma Acevedo VENEZUELA Rodolfo Rojas Cristobal L. Mendoza M. Perez Guerrero YUGOSLAVIA Vladimir Rybar 246 MONETARY AND FINANCIAL CONFERENCE C o m m issio n I Committee 2 Chairman—N. A. Maletin (U.S.S.R.) Vice Chairman—W. A. Mackintosh (Canada) Reporter—Robert Mosse (French Delegation) Secretary—Karl Bopp Assistant Secretary—Alice Bourneuf AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Georges Theunis BOLIVIA No designation BRAZIL Francisco Alves dos Santos Filho CANADA L. Rasminsky W. A. Mackintosh J. J. Deutsch CHILE German Riesco CHINA Tsu-Yee Pei COLOMBIA No designation COSTA RICA No designation CUBA Garcia Montes Eduardo D urruthy Felipe Pazos CZECHOSLOVAKIA Antonin Basch Ja n Mladek DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. D uran Ballen EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes ETH IO PIA George A. Blowers FRENCH DELEGATION A. Istel J. de Largentaye R. Mosse GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Pierre Chauvet HONDURAS No designation ICELAND S. Frim annsson INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Deshmukh A. D. Shroff IRAN No designation IRAQ Ibrahim Kamel L. M. Swan Ibrahim Al-Kabir C. E. Loombe LUXEMBOURG Hugues Le Gallais MEXICO No designation PROCEEDINGS AND DOCUMENTS (P. 2 ) NETHERLANDS D. Crena de Iongh A. Andriesse A. Bestebreurtje J. J. Polak NEW ZEALAND E. C. Fussell A. G. B. Fisher B. C. Ashwin B. R. T urner NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle NORWAY Ole Colbjornsen Arne Skaug Kaare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Juvenal Monge Emilio G. Barreto PH IL IPP IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Zygmunt Karpinski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS N. Maletin A. Smirnov L. Andreev M. Chekmarev N. Kuznetzov UNITED KINGDOM D. H. Robertson G. L. F. Bolton H. E. Brooks UNITED STATES OF AMERICA E. E. Brown M. S. Eccles J. P. Wolcott E. M. Bernstein J. W. Angell W. Gardnei A. H. Hansen E. G. Collado URUGUAY Mario La Gamma Acevedo VENEZUELA Rodolfo Rojas J. J. Gonzalez Gorrondona M. Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m issio n I Committee 3 Chairman—Arthur de Souza Costa (Brazil) Reporter—Ervin Hexner (Czechoslovakia) Secretary—Malcolm Bryan Assistant Secretary—J. H. Bitterman AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Camille Gutt BOLIVIA No designation BRAZIL Valentim Boucas 749013— 48— 17 247 EL SALVADOR Agustin Alfaro Moran Victor Manuel Valdes Raul Gamero ETHIOPIA George A. Blowers FRENCH DELEGATION J. de Largentaye R. Aglion 248 MONETARY AND FINANCIAL CONFERENCE CANADA J. J. Deutsch J. A. Blanchette D. C. Abbott CHILE A rturo Maschke CHINA Te-Mou Hsi COLOMBIA No designation COSTA RICA No designation CUBA Luis Machado J. M. Menocal Miguel Pirez CZECHOSLOVAKIA Ervin Hexner Josef Hanc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR S. E. Duran Ballen E. F. Carbo EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim GREECE Alexander Argyropoulos Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Pierre Chauvet HONDURAS No delegation ICELAND M. Sigurdsson INDIA Chintaman Deshmukh Theodore Gregory IRAN No designation IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA W alter F. W alker LUXEMBOURG Hugues Le Gallais MEXICO No designation (P. 2) NETHERLANDS J. W. Beyen C. H. Schoch NEW ZEALAND A. G. B. Fisher E. C. Fussell B. C. Ashwin B. R. Turner NICARAGUA Guillermo Sevilla Sacasa Leon DeBayle J. Jesus Sanchez Roig NORWAY A rne Skaug Ole Colbjornsen K aare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS I. Slobin M. Idashkin N. Cheklin UN ITED KINGDOM Sir Eady W. E. Beckett G. L. F. Bolton R. T. G. Miles U NITED STATES OF AMERICA R. F. W agner C. W. Tobey A. F. Luxford B. Cohen E. M. Bernstein 0. Cox PROCEEDINGS AND DOCUMENTS PERU Andres F. Dasso PH IL IP PIN E COMMONWEALTH Jaim e Hernandez Ismael M athay POLAND Janusz Zoltowski URUGUAY Hugo Garcia VENEZUELA Rodolfo Rojas J. J. Gonzalez Gorrondona M. Perez Guerrero YUGOSLAVIA Vladimir Rybar I Committee 4 Chairman—Manuel B. Llosa, Peru Reporter—Wilhelm Keilhau, Norway Secretary—Colonel Charles M. Dyson Assistant Secretary—Lauren Casaday C o m m is s io n AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Joseph Nisot BOLIVIA No designation BRAZIL Octavio Bulhoes CANADA D. C. Abbott A. F. W. Plum ptre J. A. Blanchette CHILE Fernando Mardones CHINA Victor Hoo COLOMBIA No designation COSTA RICA No designation CUBA Luis Machado Miguel Pirez J. M. Menocal CZECHOSLOVAKIA Josef Hanc Ervin Hexner DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR Sixto E. Duran Ballen Esteban F. Carbo EGYPT Sany Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes ETHIOPIA B latta Ephrem T. Medhen FRENCH DELEGATION Raoul Aglion Jean de Largentaye GREECE Athanase Sbarounis Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Pierre Chauvet HONDURAS No designation ICELAND Magnus Sigurdsson INDIA Sir Chintaman D. Deshmukh Sir Theodore E. Gregory IRAN No designation IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. L. Loombe LIBERIA William E. Dennis 249 250 MONETARY AND FINANCIAL CONFERENCE (p . 2 ) LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS A. H. Philipse A. Broches NEW ZEALAND B. C. Ashwin E. C. Fussell A. G. B. Fisher B. R. Turner NICARAGUA Leon DeBayle J. Jesus Sanchez Roig Guillermo Sevilla Sacasa NORWAY Wilhelm Keilhau Ole Colbjornsen K aare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Manuel B. Llosa Juvenal Monge Emilio Barreto Latzeh P H IL IP P IN E COMMONWEALTH Jaim e Hernandez Ismael M athay POLAND Leon Baranski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS A. A rutinian F. Bystrov N. Panchenko UNITED KINGDOM N. B. Ronald W. E. Beckett J. W. Russell UN ITED STATES OF AMERICA D. Acheson B. Spence L. T. Crowley 0 . Cox L. S. Pasvolsky R. B. Brenner URUGUAY Hugo Garcia VENEZUELA Rodolfo Rojas Cristobal L. Mendoza Alfonso Espinoza Manuel Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m is s io n I I Chairman—Lord Keynes (U. K.) Vice Chairman—Luis Alamos Barros (Chile) Reporting Delegate—Georges Theunis (Belgium) Secretary—A. Upgren Assistant Secretary—A. Smithies AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Camille Gutt BOLIVIA No designation FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye Robert Mosse GREECE Kyriakos Varvaressos Athanase Sbarounis PROCEEDINGS AND DOCUMENTS BRAZIL No designation CANADA L. Rasminsky W. A. Mackintosh A. F. W. Plum ptre J. J. Deutsch CHILE No designation CHINA Yee-Chung Koo COLOMBIA Miguel Lopez Pum arejo COSTA RICA Francisco de P. Gutierrez Ross Jose Rafael Oreamuno CUBA No designation CZECHOSLOVAKIA Ladislav Feierabend Antonin Basch DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR No designation EGYPT No designation EL SALVADOR No designation ETHIOPIA George A. Blowers (P. 2 ) NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. T urner NICARAGUA Leon DeBayle Guillermo Sevilla Sacasa J. Jesus Sanchez Roig NORWAY Ole Colbjernsen Wilhelm Keilhau Arne Skaug PANAMA Guillermo Arango Narciso E. Garay 251 GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud •HONDURAS Julian R. Caceres ICELAND Magnus Sigurdsson INDIA Sir A. J. Raisman IRAN Taghi N assr A. H. Ebtehaj A. A. D aftary IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Lumb LIBERIA James E. Cooper LUXEMBOURG Hugues Le Gallais MEXICO Eduardo Suarez Daniel Cosio Villegas NETHERLANDS J. W. Beyen D. Crena de Iongh A. H. Philipse A. Andriesse A. Bestebreurtje PH IL IP PIN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael Mathay POLAND Ludwik Grosfeld UNION OF SOUTH AFRICA M. H. de Kock J. E. Holloway W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS No designation UNITED KINGDOM No designation UNITED STATES OF AMERICA No designation 252 MONETARY AND FINANCIAL CONFERENCE PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Andres F. Dasso Juvenal Monge URUGUAY Mario La Gamma Acevedo Hugo Garcia V ENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m is s io n II Committee 1 Chairman—Representative of Netherlands Reporter—Representative of Costa Rica AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Baron Rene Boel BOLIVIA No designation BRAZIL Eugenio Gudin CANADA No designation CHILE Luis Alamos CHINA Te-Mou Hsi COLOMBIA No designation COSTA RICA No designation CUBA Ramiro Guerra Eduardo D urruthy CZECHOSLOVAKIA E rvin Hexner Ja n Mladek E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT No designation FRENCH DELEGATION A. Istel J. de Largentaye R. Mosse GREJECE K. Varvaressos GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND A. Asgeirsson INDIA Sir Chintaman D. Deshmukh IRAN No designation IRAQ No designation LIBERIA Jam es E. Cooper LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS J. W. Beyen A. H. Philipse J. J. Polak NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. Turner PROCEEDINGS AND DOCUMENTS 253 EL SALVADOR No designation ETH IO PIA B latta Ephrem T. Medhen NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle (P. 2 ) NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Andres F. Dasso Juvenal Monge Emilio G. Barreto PH IL IP PIN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Leon Baranski UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS A. Morozov E. Bystrov P. Titov UNITED KINGDOM No designation U NITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo VENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m issio n II Committee 2 Chairman—Representative of Cuba Reporter—Representative of Australia AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Georges Theunis BOLIVIA No designation BRAZIL Francisco Alves dos Santos Filho CANADA No designation CHILE German Riesco CHINA Tsu-Yee Pei COLOMBIA No designation COSTA RICA No designation EL SALVADOR No designation ETHIOPIA George A. Blowers FRENCH DELEGATION Andre Istel Robert Mosse Jean de Largentaye GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND Sveinbjorn Frimannsson INDIA No designation IRAN No designation 254 MONETARY AND FINANCIAL CONFERENCE IRAQ No designation LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO No designation N ETHERLANDS D. Crena de Iongh A. Andriesse A. B estebreurtje CUBA Garcia Montes Eduardo D urruthy CZECHOSLOVAKIA Ja n Mladek Antonin Basch DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT No designation (P. 2 ) NEW ZEALAND E. C. Fussell A. G. B. Fisher B. C. Ashwin B. R. Turner NICARAGUA Guillermo Sevilla Sacasa Leon DeBayle J. Jesus Sanchez Roig NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Alberto Alvarez Calderon Juvenal Monge P H IL IP P IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Leon Baranski UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS N. Chechulin A. Smirnov A. Borisov Mrs. L. Gouseva U NITED KINGDOM No designation U NITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo VENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m issio n I I Committee 3 Chairman—Representative of Brazil Reporter—Representative of Peru AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange ETH IO PIA George A. Blowers FRENCH DELEGATION j # < Largentaye je R. Aglion PROCEEDINGS AND DOCUMENTS BELGIUM B. S. Chlepner BOLIVIA No designation BRAZIL Francisco Alves dos Santos Filho CANADA No designation CHILE A rturo Maschke Tornero CHINA Ts-Liang Soong COLOMBIA No designation COSTA RICA No designation CUBA Luis Machado Manuel Menocal CZECHOSLOVAKIA Antonin Basch E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR S. E. Duran Ballen E. F. Carbo EGYPT No designation EL SALVADOR No designation (P. 2 ) NICARAGUA Leon DeBayle Guillermo Sevilla Sacasa J. Jesus Sanchez Roig NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Alberto Alvarez Calderon Juan Chavez 255 GREECE Alexander Argyropoulos Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND M. Sigurdsson INDIA No designation IRAN No designation IRAQ No designation LIBERIA W alter E. W alker LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS J. W. Beyen H. Riemens NEW ZEALAND A. G. B. Fisher E. C. Fussell C. B. Ashwin B. R. T urner UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS I. Slobin M. Idashkin N. Cheklin U NITED KINGDOM No designation UN ITED STATES OF AMERICA No designation URUGUAY Hugo Garcia 256 MONETARY AND FINANCIAL CONFERENCE P H IL IP P IN E COMMONWEALTH Jaim e Hernandez Ismael M athay POLAND Janusz Zoltowski VENEZUELA No designation YUGOSLAVIA Vladimir Rybar II Committee 4 Chairman—Representative of India Reporter—Representative of Poland C o m m is s io n AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Joseph Nisot BOLIVIA No designation BRAZIL Valentim Bougas CANADA No designation CHILE Fernando Mardones Restat CHINA Kuo-Ching Li COLOMBIA No designation COSTA RICA No designation CUBA Felipe Pazos Miguel Perez CZECHOSLOVAKIA Josef Hanc E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR Sixto E. Duran Ballen Esteban F. Carbo EGYPT No designation EL SALVADOR No designation ETHIOPIA B latta Ephrem T. Medhen FRENCH DELEGATION Raoul Aglion Jean de Largentaye GREECE Athanase Sbarounis Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND Magnus Sigurdsson INDIA No designation IRAN No designation IRAQ No designation LIBERIA James F. Cooper LUXEMBOURG Hugues Le Gallais MEXICO No designation NETHERLANDS C. H. Schoch A. Broches NEW ZEALAND B. C. Ashwin E. C. Fussell A. G. B. Fishe B. R. Turner NICARAGUA J. Jesus Sanchez Roig Leon DeBayle Guillermo Sevilla Sacasa PROCEEDINGS AND DOCUMENTS (P. 2 ) NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Manuel B. Llosa Alberto Alvarez Calderon PH IL IPP IN E COMMONWEALTH Jaime Hernandez Ismael M athay POLAND Stanislaw Kirkor UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS A. A rutinian F. Bystrov N. Panchenko UNITED KINGDOM No designation UNITED STATES OF AMERICA No designation URUGUAY Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar III Chairman—Eduardo Suarez (Mexico) Vice Chairman—Mahmoud Saleh El Falaky (Egypt) Reporting Delegate—A. G. B. Fisher (New Zealand) Secretary—0 . Schmidt Assistant Secretary—L. Casaday C o m m issio n AUSTRALIA Leslie G! Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Baron de Gruben BOLIVIA No designation BRAZIL Valentim Bou^as Eugenio Gudin Octavio Bulhoes CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre J. J. Deutsch CHILE Luis Alamos German Riesco A rturo Maschke Tornero Fernando Mardones Restat 257 ECUADOR No designation EGYPT No designation EL SALVADOR No designation ETHIOPIA B latta Ephrem T. Medhen FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye GREECE Kyriakos Varvaressos Alexander Argyropoulos Athanase Sbarounis GUATEMALA Manuel Moriega Morales HAITI Andre Liautaud Pierre Chauvet HONDURAS Julian R. Caceres 253 MONETARY AND FINANCIAL CONFERENCE CHINA Kuo-Ching Li COLOMBIA Sr. Victor Dugand COSTA RICA Fernando Madrigal J. Rafael Oreamuno CUBA Manuel Menocal Garcia Montes CZECHOSLOVAKIA Ladislav Feierabend E rvin Hexner Antonin Basch Josef Hanc Ja n Mladek DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez (P -2) MEXICO Eduardo Suarez Rodrigo Gomez Victor Urquidi NETHERLANDS J. W. Beyen D. Crena de Iongh NEW ZEALAND W alter Nash Bernard Carl Ashwin Edward C. Fussell Bruce R. T urner NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Pedro G. Beltran Andres F. Dasso Alberto Alvarez Calderon Juvenal Monge ICELAND Asgeir Asgeirsson INDIA No designation IRAN A. A. D aftary Hosein Navab IRAQ Senator Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir Claude E. Lumb LIBERIA W alter F. W alker LUXEMBOURG Hughes Le Gallais P H IL IP P IN E COMMONWEALTH Anclres Soriano Jaim e Hernandez Joseph H. Foley Ismael M athay POLAND Leon Baranski UNION OF SOUTH AFRICA S. F. N. Gie J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS I. D. Slobin M. M. Idashkin N. I. Cheklin U NITED KINGDOM No designation U NITED STATES OF AMERICA No designation URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar PROCEEDINGS AND DOCUMENTS 259 Document 202 Cl/2 Commission I: Status of Committee Assignments A s of 6:00 p.m., July 7, 19bA Com m ittee 1 — Purposes , Policies, and Quotas of the Fund Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I Without Decision No Actionor Decision Deferred Article I —Purposes and Policies of the Fund Sec. 1 Joint S ta te ment Sec. 2 Drafting Committee’s revision Sec. 3 Drafting Committee's revision Sec. 4 XX Sec. 5 Alt. A Sec. 6 Drafting Committee’s revision Additional paragraph (Alt. A, p. la) Alt. A Alt. F, XX Alt. G XX Alt. H XX Article I I —Subscription to the Fund Sec. 1—Countries Eli gible for Membership Sec. 2—Quotas XX XX 260 MONETARY AND FINANCIAL CONFERENCE Article and Section Language Accepted Referred to Drafting or Other Sub com m ittee Referred to Commission I Without Decision Sec. 3—Time and Place of Payment No Action or Decision Deferred XX Alt. B (p.2a) and Alt. B & C (p.4a) XX Alt. C (p. 2b) and D (p. 4b) XX (p . 2 ) (Article 11) Sec. 4 —A djustm ent of Quotas XX Sec. 5— I n i t i a l Payments XX S ec. 6— P a y m e n ts w hen Q u o ta s are Changed Alt. A Article I X —Obligations of Member Countries Sec. 1—Purpose and scope of additional undertaking XX S ec. 2 — G o ld p u r c h a s e s b a s e d on parity prices XX Sec. 3—Foreign Ex c h a n g e d e a lin g s based on par values XX S ec. 4 — E x c h a n g e controls on Current Payments C larifica t i o n of la n g u a g e req u ested from Com mission I XX PROCEEDINGS AND DOCUMENTS 261 (p. 3) Com m ittee 2 — Operations of the Fund Article and Section Language Accepted No Action or Decision Deferred Referred to Commission I W ithout f Decision Referred to Drafting or Other Sub- f Committee Article I I I — T ransac tions with the Fund S e c . 1 — A g e n c ie s D ealing w ith th e Fund Sec. 2 — C on d itio n s u p o n w h ic h a n y Member May Pur chase C u rre n c ie s of Other Members par. (1) XX Alt. A par. (2) XX par. (3) XX par. (4) Alt. A Final Sentence Alt. A Sec. 2(a) — Conditions G o v e r n in g P u r chases for C apital Transfers Alt. A Sec. 3 — D e c la r in g Members Ineligible to use R esources of the Fund Alt. A Alt. E (p.6d) Sec. 4 — Limitations on O p e ra tio n s of Fund XX Alt. A Sec. 5 — O p eratio n s for Purpose of Pre venting Currencies Becoming Scarce par. (1) par. (2) XX A l t . A as amended 1 1 1 1 262 MONETARY AND F I NA NC IA L CONFERENCE (P- 4 ) Article and Section Language Accepted (.Article I I I ) Sec. 6—M ultilateral International Clearing Sec. 7—A cquisition b y M e m b e r s of Currencies of Other Members for Gold Referred to Drafting or .Other SubCommittee Referred to Commission I Without Decision par. (d) re ferred to drafting Committee No Action or Decision Deferred XX Alt. A Sec. 8—Other Acqui sitions of Gold by the Fund XX Sec. 9—Transferabil ity and G uarantee of A s s e ts of th e Fund XX Sec. 10—Charges and Commissions XX Sec. 12—C onsidera tion of Representa tio n s of th e Fund XX Article I V —Par Values of Member Currencies Sec. 1—Par Values of th e C urren cies of Members Alt. A £ec. 2 XX Sec. 3 XX Sec. 4 XX Sec. 5— U n i f o r m Changes in Par Value Sec. 6—Protection of th e A ssets of th e Fund XX Revised Alt. A PROCEEDINGS AND DOCUMENTS Article and Section Referred to Drafting or Other SubCommittee Language Accepted Referred to Commission I Without Decision 263 No Action or Decision Deferred Sec. 7—Separate cur re n c ie s w ith in a M ember’s Jurisdic tion Alt. A (P . 5 ) A rticle V — Ca pi t a l Transactions Sec. 1—Use of R e sources of the Fund for T ra n s fe rs of Capital Sec. 2—Limitations on C o n t r o l s of Capital Movements Alt. A, as amended Alt. A, amended as Article V I —Apportion ment of Scarce Curren cies Sec . 1— G e n e r a l Scarcity XX Sec. 2—Scarcity of the Fund’s holding XX Article X —T ransition al Arrangements Sec. 1—Exchange re strictions and cur rency arrangements and p ra c tic e s r e tained XX Sec. 2—Withdrawal of exchange r e s tr ic tions XX Sec. 3—Policy of the F u n d d u r i n g t he transition period XX Sec. 4 XX 749013—48—JB 264 MONETARY AND FINANCIAL CONFERENCE Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I Without Decision No Action or Decision Deferred A r tic le X I I I —Fi nal Provisions Sec. 5—F ix in g in i tial par values XX (P. 6) Com m ittee 3 — Organisation and Management of the Fund Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I Without Decision No Action or Decision Deferred A r t i c l e I I I —Transac tions with the Fund Sec. 11—Furnishing Information XX Article V I I —M anage ment of the Fund Sec. 1—Board of Gov ernors Combination of Al t . A & A l t . B , as amended Sec. 2— E x e c u t i v e Directors XX Sec. 3—Voting XX Sec. 4—The General Manager XX Sec. 5—Publication of Reports Alt. A Sec. 6—Depositories par. (a) Alt. A par. (b) A lts. A & B referred to Commis sion I PROCEEDINGS AND DOCUMENTS Article and Section Language Accepted Se c . 7 — F o r m a n d H oldings of C u r rency Referred to Drafting or Other SubCommittee 265 No Action or Decision Deferred Referred to Commission I Without Decision Alt. A Sec. 9—Location of Office XX Sec. 10—Distribution of Net income of the Fund Alt. A, amended Sec. 11—M is c e lla neous Powers item (4) item (5) XX Alt. A (P. 7 ) A r t i c l e V I I I — Wi t h drawal from the Fund Sec. 2—Suspension of Membership or Com pulsory Withdrawal XX Sec. 3—Settlement of accounts with coun tries ceasing to be members XX Sec. 4—Liquidation of Fund XX Com m ittee 4 — Forms and Status of the Fund i Article and Section i ! 1 1 Language Accepted Referred to Commission I Without Decision Referred to Drafting or Other SubCommittee No Action or Decision Deferred Article V I I —M anage ment of the Fund Bee. 8—R elationship to other international organizations i ! t j Alt. A i 266 MONETARY AND FINANCIAL CONFERENCE Article and Section Sec. 11—Miscellaneous powers. Introduc tion and items (1), (2), and (3). Language Accepted Referred to Drafting or Other SubCommittee No Action or Decision Deferred Referred to Commission I W ithout Decision A l t . A , as amended Article V I I I —Withdraw al from the Fund Sec. 1—Right of Mem bers to Withdraw Alt. A Article I X —Obligations of Member Countries Sec. 5—Immunity of Assets of the Fund Alt. A Sec. 6—Immunity from Suit In c lu d e d in new Sec. 5 Sec. 7—Restrictions on taxation of Fund, its employees and obli gations XX (p . 8 ) A r t i c l e X I —A m e n d ments XX Article X I I —Interp re tation of the Agreement Sec. 1—I n te r p r e ta tion XX Sec. 2—D efin itio n s XX S ec . 3 — E f f e c t on Other International Commitments XX A r t i c l e X I I I — Fi na l Provisions Sec. 1—E n try In to Effect XX I PROCEEDINGS AND DOCUMENTS Article and Section Language Accepted Referred to Drafting or Other SubCommittee 267 Referred to Commission I W ithout Decision No Action or Decision Deferred Sec . 2 — E f f e c t i v e date of Agreement XX Sec. 3— C alling th e In itia l M eeting of the Fund XX Sec. 4—Ag e n d a of Initial Meeting XX Article X I V —Execution of the Agreement XX Document 203 ( p . 14 e) SA/1/32 A lte r n a t iv e D (Suggested as an alternative to Joint Statement, A rt. I ll) The member countries shall furnish the Fund with the informa tion on the following data: 1. Gold holdings of the Central Bank and Treasury and their changes. 2. Gold convertible exchange holdings of the Central Bank and Treasury. 3. Movement of capital. 4. Foreign trade data. 5. Other items of the balance of payments. 6. Rates of exchange and their changes. The Fund may arrange to obtain additional information by agreement with the member country. 7/ 7/ 44 J.S. Art. Ill Additional Section (11) 268 MONETARY AND FINANCIAL CONFERENCE Document 204 CI/4/M4 Minutes of Meeting of Committee 4 of Commission I F o rm a n d S ta tu s o f t h e F u n d {July 7, 1944, 2:30 p.m.) The fourth meeting of Committee 4 of Commission I was held on July 7 at 2:30 p. m. The Chairman of the subcommittee to review article IX, section 7, read the document agreed upon by the members of the Committee. He stated that one of the dele gates reserved decision on a part of the document read to the full Committee. As the remaining material assigned to this Committee had been referred to subcommittees or was not available for distribution, the meeting was thereupon adjourned. Document 205 CI/2/M5 Minutes of Meeting of Committee 2 of Commission I O p e r a t io n s o f t h e F u n d (July 7, 1944, 2:30 p.m.) The Chairman read the “Procedural Decisions of the Steering Committee” (Document 175) and urged the necessity of handling all items with dispatch. The Committee continued its discussion of article IV, Par Values of Member Currencies. On section 5, it was decided to report to the Commission the differences of view indicated in Alternatives A (p. 18, Document SA/1), B (p. 18a), and C (p. 18b). On section 6 (p. 19), the Chairman announced that the last paragraph of Document 166 had been misplaced and was intended to be an addition to section 6. The Committee approved section 6 as thus amended. Section 7, Alternative A (p. 20) was approved with the sug gestion that the word “however” in line 5 be deleted. The Committee discussed article V, Capital Transactions. Section 1, Alternative A (p. 21) was approved with the amend PROCEEDINGS AND DOCUMENTS 269 ment that the words “make net” be inserted between the words “not” and “use” in line 1 and that the word “of” be inserted be tween the words “use” and “the” in line 1. Section 2, Alternative A (p. 22) was approved with the amendment that the words underscored in line 1 be replaced by the following: “Members may exercise such controls as are necessary to regulate interna tional capital movements”. The Committee deferred discussion of article VI, Apportion ment of Scarce Currencies (p. 23). At its next meeting the Committee will receive reports from the ad hoc and the “asterisk” subcommittees and will reconsider items that were deferred at earlier meetings. Document 207 (p . 23b) SA/1/33 S u b s t it u t e A l t e r n a t iv e A General Scarcity If the Fund finds that a general scarcity of a particular cur rency is developing, the Fund may so inform members and may issue a report setting forth the causes of the scarcity and con taining recommendations designed to bring it to an end. In the preparation of such report there shall participate a representa tive of the member the currency of which is involved. S e c t i o n 2 . Scarcity of the Fund’s Holdings. If it becomes evident to the Fund that the demand for a member’s currency seriously threatens the Fund’s ability to supply that currency, the Fund whether or not it has acted under Section 1 above, shall formally declare such currency scarce and shall thenceforth apportion the existing and accruing supply of the scarce currency with due regard to the relative needs of members and the general international economic situ ation and any other pertinent considerations. The Fund shall also issue a report concerning its action. The formal declaration shall operate as an authorization to a member, after consulta tion between such member and the Fund, temporarily to limit the freedom of exchange operations in the affected currency. Subject to the provisions of Article IX, Section 2 (J.S.), the # S e c t io n 1. # 270 MONETARY AND FINANCIAL CONFERENCE member shall have complete jurisdiction in determining the nature of such limitations, but they shall be no more restrictive than is necessary to limit the demand for the scarce currency to the supply of it held by, or accruing to, the member in ques tion; and they shall be relaxed and removed as rapidly as con ditions permit. This authorization shall cease to be in effect whenever the Fund formally declares the currency in question no longer scarce. 7/7/44 J.S. Art. VI Secs. 1 & 2 (p . 2 3 c ) # S e c t i o n 3. SA/1/33 Administration of Restrictions on Scarce Curren cies. Any member imposing restrictions in respect of the currency of any other member pursuant to the provisions of this Article shall give sympathetic consideration to any repre sentations which may be made by such other member regard ing the administration of such restrictions. # S e c t i o n 4. Effect of Other International Agreements on Re strictions on Scarce Currencies. Members agree not to invoke the obligations of any engagements entered into with other members prior to this Agreement in such a manner as will prevent the operation of the provisions of this Article. 7/7/44 J.S. Art. VI Secs. 3 & 4 Document 208 (p.l7a) SA/1/34 A l te r n a t iv e A The members agree that they will collaborate with the Fund to promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competi tive exchange alterations. S e c t i o n 3. A member shall not propose a change in the par value of the currency except to correct a fundamental disequi librium. S e c t i o n 4. An alteration in the par value of a member’s cur rency may be made only on the proposal of the member and, only after consultation with the Fund. When a proposal for * S e c t i o n 2. * * PROCEEDINGS AND DOCUMENTS 271 alteration is made, the Fund shall first take into account the changes, if any, which have already taken place in the par value of the member’s currency as agreed initially with the Fund. If the proposed change, together with all previous changes, whether increases, or decreases, * (a) does not exceed 10 percent of the initial par value, the Fund shall raise no objection * (b) does not exceed a further 10 percent of the initial par value, the Fund may either concur in or object to such a proposal, but shall declare its attitude within 72 hours if the member so requests. * (c) is not within (a) or (b) above, the Fund may either concur in or object to such a proposal, but shall be en titled to a larger period than 72 hours in which to declare its attitude. 7 /7 /4 4 J.S, Art. IV Secs. 2 -4 (p. 17aa) * S ection 4a. In examining any proposed change the Fund shall take into consideration the extreme uncertainties prevail ing when the par values of the currencies of members were initially determined. Moreover, the Fund shall not object to a proposed change necessary to restore equilibrium because of domestic social or political policies of the member or because of its economic policies insofar as these contribute to the mainte nance of a high level of employment and real income. * S ection 4b. The Fund shall concur in a proposed change under Section 3(b) or (c) if it is satisfied that the change is required to correct a fundamental disequilibrium or that it will not affect the international transactions of the member in volved. If the Fund is not so satisfied and deems the proposal un justified, having regard to the proper working of the Fund, the Fund shall object to the proposed change. * S ection 4 c . If a member alters the par value of its currency despite the objection of the Fund, in cases where the Fund is en titled to object the member shall be ineligible to use the re sources of the Fund unless the Fund othemvise determines and if, after the expiration of a reasonable period of time, the dif ference between the member and the Fund continues, the matter shall be subjcct to the provisions of Article VIII, Section---------. 7 /7 /4 4 J.S. Art. IV Secs. 2 -4 272 MONETARY AND FINANCIAL CONFERENCE Document 209 (P . 48) SA /1 /3 5 J o in t S t a te m e n t— No provisions The following material has been suggested as part of an addi tional Article (XII) on interpretation of the agreement. A l t e r n a t iv e A Effect on Other International Commitments. Where under this Agreement a member is authorized in the special or temporary circumstances specified in the Agreement to maintain or establish restrictions on exchange transactions, and there are other engagements between members entered into prior to this Agreement which conflict with the application of such restrictions, the parties to such engagements will con sult with one another with a view to making such mutually ac ceptable adjustments as may be necessary. The provisions of this Article shall be without prejudice to the operation of Article VI, Section 4. # S e c t io n 3. 7 /1 /4 4 Art. X II, Sec. 2 (A d dition al Article) Document 210 (P. 3 5 ) SA /1 /3 6 J o in t S t a te m e n t— No Provision The following material has been suggested as an addition to Article VIII. A lte rn a tiv e A If a member fails to fulfill any of its obligations under Article IX [other appropriate Articles, if any, may be mentioned here] or acts otherwise in a manner which is con trary to the purposes of the Fund, the Fund may declare the member ineligible to use the resources of the Fund. # S e c t io n 2a. If, after the expiration of a reasonable period the member persists in its failure to fulfill any of its obligations under Article IX, or continues to act in a manner which is con trary to the purposes of the Fund, or a difference between a member and the Fund under Article IV, Section 6, continues, that member may be required to withdraw from membership in the Fund by a decision of the Board of Governors carried by a majority of the governors representing a majority of the aggregate voting power. # S e c t io n 2. PROCEEDINGS AND DOCUMENTS 273 2b. The Board of Governors shall make regulations securing that before action is taken against any member under Section 3, above, the member shall be informed in reasonable time and given a proper opportunity for stating its case. # S e c t io n 7/7/44 J.S. Art. VIII A d d ition a l Sections Document 211 (p. 37) SA /1 /3 7 J o i n t S t a t e m e n t —No provision The following material has been suggested as an addition to Article VIII. A lte rn a tiv e A. Liquidation of the Fund (a) The Fund may not be liquidated except after a decision taken by a majority of the aggregate votes in the Board of Governors. In an emergency, if the Executive Directors decide that liquidation of the Fund may be necessary, they may by a majority vote temporarily suspend all transactions of the Fund, pending an opportunity for further consideration and action by the Board of Governors. (b) If a decision to liquidate the Fund is carried, the Fund shall forthwith cease to engage in any activities except those incident to an orderly liquidation of its assets and the settle ment of its liabilities. (c) The liabilities of the Fund, other than the repayment of quotas, shall have priority in the distribution of the assets of the Fund. In meeting each such liability the Fund shall use its holdings of the currency in which the liability is due. If these holdings are insufficient, it shall use its gold. If this is insuffi cient to complete the payment, it shall draw on the currencies held by the Fund as far as possible in proportion to the quotas of the members. (d) The net assets of the Fund available after the discharge of the above liabilities shall be distributed as follows: (i) The Fund shall divide its holdings of the currency of each member by the quota of such member and thus ascertain the percentages resulting from this division. ■^Se c t io n 4. 7 /7 /4 4 J.S. Art. V III A d d ition a l Section 274 MONETARY AND FINANCIAL CONFERENCE (p. 37a) The members with regard to whose currency this divi sion produces the lowest and second lowest percentages are hereafter referred to as the members having the lowest and second lowest percentages respectively. (ii) All members shall have returned to them in their own currencies a proportion of their quotas equal to the low est percentage ascertained under (i). (iii) There shall then be returned to the member having the second lowest percentage the remainder of its currency held by the Fund. The member having the lowr per est centage whose currency held by the Fund has been ex hausted under (ii) above shall have returned to it in gold a percentage of its quota equal to the percentage of quota returned to the member having the second lowest percent age. Alternatively, if there is not sufficient gold, then the currency of the member having the second lowest percentage shall be divided between it and the member having the lowest percentage in such manner that each will have been repaid the same proportion of its quota. All other members shall have returned to them amounts in their respective currencies which represent a like pro portion of their quotas. (d) Distribution of the available assets shall be continued on the principles established above until all available currencies 7 /7 /4 4 J.S. Art. V III A d d itio n a l Section (p. 37b) have been exhausted. (e) Each member shall redeem its own currency held by an other member as a result of the liquidation of the Fund. Re demption shall be made in gold or in such other manner as may be agreed by the members. Unless the members involved other wise agree, redemption shall be made within three years but shall not be effected at a rate in any quarterly period greater than one-twelfth of the amount distributed to any other mem ber. If the member fails to redeem its currency in this manner, the currency may be disposed of in any market at the same rate in an orderly manner. Each member who is under an obligation to redeem its currency under this paragraph, unconditionally guarantees at all times the unrestricted use of such currency for the purchase of goods or for the payment of other sums due to it or to its nationals. Further, each member agrees to make PROCEEDINGS AND DOCUMENTS 275 good any loss resulting from the exchange depreciation of its currency until it has been used or redeemed. 7 /7 /4 4 J.S. Art. V III A d d ition a l Section Document 212 C I/ 3 / S 1 Final Alternative Submitted by the Special Subcommittee Appointed to Consider All Proposals Relative to the Executive Directors Duties and Powers of the Executive Directors 1. The Executive Directors shall be responsible for the con duct of the general operations of the Fund and for this purpose shall exercise all the powers delegated to them by the Board of Governors. Formation of the Executive Directors 2. There shall b e _____ Executive Directors, of w hom _____ shall be appointed by the _____ members having the largest quotas and______ shall be elected biennially, in accordance with the provisions of Schedule B, by all the Governors other than those appointed by the members having th e _____ largest quotas. Persons chosen as Executive Directors need not be Governors. Alternate Directors 3. Every Executive Director may appoint an alternate with full power to act for him when he is not present. When the Executive Directors appointing them are present alternates may participate in meetings but shall not vote. Meetings of Executive Directors 4. The Executive Directors shall function in continuous ses sion at the principal office of the Fund and shall meet as often as the business of the Fund may require. 5. In order to constitute a quorem for any meeting of the Execu tive Directors, there must be present a majority of the Directors representing not less than one-half of the voting power of all the Executive Directors. (p. 2) 6. Each Executive Director appointed by one of the members with th e _____ largest quotas shall be entitled to cast the number of votes allotted under Section 3 of this Article (J. S. VII, 2) to the member appointing him. Each elected Executive Di 276 MONETARY AND FINANCIAL CONFERENCE rector shall be entitled to cast only the number of votes which actually counted toward his election. When the provisions of the second paragraph of Section 2 of this Article are applicable, the votes to which an Executive Director would otherwise be entitled shall be increased or decreased proportionately. Each Executive Director shall cast all of the votes to which he is entitled as a single unit. 6a. Except as otherwise specifically provided, all matters be fore the Executive Directors shall be decided by a majority of the aggregate votes cast. 7. The Board of Governors shall make regulations containing provisions under which a member which is not entitled to appoint an Executive Director under 2 above shall be permitted to send a representative to attend any meeting of the Executive Directors when a request made by, or a matter particularly affecting, that member is under consideration. Managing Director 8. The Executive Directors shall select a Managing Director who shall not be a Governor or an Executive Director. The Man aging Director shall be Chairman of the Executive Directors, but shall have no vote except a deciding vote in case of an equal division. He may participate in meetings of the Board of Gover nors but shall not vote at such meetings, (p. 3) He shall, how ever, be eligible for election as Chairman of the Board of Gover nors. The Managing Director shall cease to hold office when the Executive Directors shall so decide. 9. The Managing Director shall be chief of the operating staff of the Fund and shall conduct under the direction of the Executive Directors, the ordinary business of the Fund’s work. Subject to the general control of the Executive Directors, he shall be respon sible for the internal organization of the Fund’s staff and the appointment and dismissal of its staff. 10. The Managing Director and the staff of the Fund, in the discharge of their offices owe their duty entirely to the Fund and to no other authority. Each member of the Fund shall respect the international char acter of this duty and shall refrain from all attempts to influence any member of the staff in the discharge of his duty. 11. In appointing the staff the Managing Director shall subject to the paramount importance of securing the highest standards of efficiency and of technical competence, pay due regard to the im portance of selecting personnel recruited on as wide a geographi cal basis as is possible. P R O C E E D I N G S AND D O C U M E N T S 277 Appointm ent of Committees 12. The Executive Directors may appoint such committees as they deem advisable. Members of such committees need not be limited to Governors or Executive Directors or their alternates. Remuneration 13. The Board of Governors shall determine the remuneration to be paid to the Executive Directors and the salary and terms of the contract of service of the Managing Director. Document 214 (,p. 26f) SA /1 /3 8 A l t e r n a t iv e E (For Combined Alternatives A and B for Joint Statement VII, 1, 2 and 3, and additional m aterial on Page 27 of Document SA/1) Substitute for 2: 2. There shall be eleven Executive Directors of whom five shall be appointed by the five members having the largest quotas and six shall be elected biennially, in accordance with the provisions set forth in Schedule B by all the Governors other than those ap pointed by members having the five largest quotas. Persons chosen as Executive Directors need not be Governors. The Board of Governors at the next election after the establish ment of the Fund or at any time thereafter, may by a vote of the majority of the member countries and a majority of the quota votes increase the number of elective seats from a total of six to a total of nine. A l t e r n a t iv e F It is suggested that the following paragraph precede Schedule B on Page 26b: Exclusively for the purpose of choosing the Elective Directors, each governor representing a member country other than those having permanent seats on the Executive Directorate shall be entitled to cast all the quota votes which he represents according to the first paragraph of Section 3 of this Article plus one thousand additional votes. 7/8/44 J.S. Art. V II Sections 1, 2 and 3 278 MONETARY AND FINANCIAL CONFERENCE Document 215 DP/11 Colombian Delegation Proposed Amendment to Article IX, Section 2, Gold Purchases Based on Parity Prices The following amendment is submitted to the language recom mended by the Drafting Committee of Committee 1 of Commission I for Article IX, Section 2, Gold Purchases Based on Parity Prices (page 2 of Doc. No. 192): “It is understood, however, that this provision does not affect bonuses paid by a producing country to promote gold produc tion within its territory, or taxes collected on domestic gold production or domestic gold transactions.” Document 216 (p. lg ) S A /l/39 A lte r n a tiv e K (Add as a new subdivision) To facilitate the multilateral settlement of a reasonable portion of the foreign credit balances accumulated amongst the member countries during the war so as to promote the purposes referred to in Subdivision 2, without placing undue strain on the resources of the Fund. 7 /8 /4 4 J.S. Art.l Document 217 ( P .1 7 c ) S A / 1 /4 0 A l t e r n a t iv e C (Suggested as an alternative to Section 4a of A lternative A of Joint Statement, Article IV, p. 17aa) S e c t io n 4a. In examining any proposed change the Fund shall take into consideration the extreme uncertainties prevailing when the par values of the currencies of members were initially de termined. Moreover, the Fund shall not object to a proposed change necessary to restore equilibrium because of domestic social or political policies of the member nor one designed to meet a 279 P R O C E E D I N G S AND D O C U M E N T S serious and persistent deficit in the balance of payments on cur rent account accompanied by a substantially adverse change in the terms of trade. 7 /8 /4 4 J.S. Art. IV Sec. 4 Document 218 D P /1 2 Draft Resolution Submitted by Australian Representatives to United Nations Monetary and Financial Conference. the raising of standards of living throughout the world must be the primary aim of economic policy and the most essential conditions for this and for the achievement of the objectives set out in Article I of the International Monetary Fund are the promotion and maintenance of high levels of employment; and W h e r e a s the operations of the International Monetary Fund and other forms of international economic cooperation will have the best prospects of success if member countries by domestic measures maintain high levels of employment and consump tion and by so doing enable the accumulation of persistent credit (and debit) balances on international account to be avoided; This Conference r e s o l v e s that Governments which are to be in vited to accept an International Monetary Agreement should be invited to accept con-currently an international agreement in which the signatories will pledge themselves to their own people and to one another to maintain high levels of em ployment in their respective countries, and to exchange in formation on measures necessary to prevent the growth of un employment and its spread to other countries. W hereas Document 219 (p. 40b) sa / i /41 A l t e r n a t iv e D (The following has been suggested as an addition to Article IX, Subdivision 4, Alternative A, p. 40) While imposing no restrictions on current international pay749018 — 48— 19 MONETARY AND FINANCIAL CONFERENCE 28 0 ments, a member country may take the necessary measures to ensure that (a) Its foreign exchange holdings and its quota are used to pay for imports which are essential to its national economy. (b) The proceeds of exports from the member country are placed at the disposal of its foreign exchange authorities to be used for its essential requirements thereby preventing what may, otherwise, constitute capital transfers. 7 /8 /4 4 J.S. Art. IX Section 3 Document 220 (p. 37c) S A / l/4 2 A l t e r n a t iv e C (The following has been suggested as an alternative for Section 4, paragraph (d) of Alternative A, page 37) S e c t io n 4. (d) The net assets of the Fund remaining shall be distributed as follows: (i) Each country shall have a prior claim up to its quota on its own currency held by the Fund. (ii) Each of the remaining assets of the Fund (gold and cur rencies) shall be divided proportionately amongst all coun tries whose quotas have not been reimbursed as per (i) in relation to the amounts still due to them on their quotas. 7 /8 /4 4 J.S. Art. V III A d d itio n a l Section Document 221 C I/ 3 / S 2 Report Submitted to Committee 3 of Commission I by the Special Subcommittee Appointed to Consider the Various Proposals Relative to the Organization, Election and Powers of the Executive Directors. Bretton Woods, July 7,19U U Mr . C h a ir m a n : The Special Subcommittee appointed to consider and report on PROCEEDINGS AND DOCUMENTS 281 the various proposals submitted to Committee 3 of Commission I, relative to the organization, election and powers of the Executive Directors, has held several meetings at which the representatives of the United States, United Kingdom, Belgium, Netherlands and Cuba were present. The Subcommittee has given careful consideration to the fol lowing propositions: 1. Alternatives A and B to Article VII, 1-2, submitted jointly by the United States of America and United Kingdom. 2. Alternative C submitted by the Delegation of Cuba. 3. Alternative D submitted by the Delegation of Belgium. 4. Alternative submitted by the Delegation of Norway. 5. Alternative submitted by the Delegation of Netherlands. 6. Alternative submitted by the Delegation of Canada. 7. Alternative submitted by the Delegation of India. The Subcommittee endeavored to consolidate into one single alternative the various proposals submitted accepting those views and suggestions which in their opinion were acceptable. The Subcommittee failed to reach an agreement on the total number of Executive Directors. The Subcommittee succeeded, however, in reaching an agree ment on a number of other important points, and we beg to sub mit a draft of the alternative in which the number of Directors has been left in blank, referring (p. 2) this matter back to your Committee for further discussion and consideration.* Respectfully yours, (Signed) Luis M achado (C u b a) L u is M a c h a d o (C u b a ), Chairman (Signed) J. W. B e y e n W il f r e d E a d y , United Kingdom J. W . B eyen (Netherlands) (S ig n e d ) G u t t Ca m il l e G u t t (Belgium) A n sel F. L uxford (United States) To th e H on o ra b le A r t h u r de S o u sa C osta , Chairman of Committee 3, Commission I. * The text of this alternative entitled Final A lternative Sub m itted by the Special Subcommittee A ppointed to Consider A ll Proposals Relative to the E xecutive Directors has been previously circulated. 282 MONETARY AND FINANCIAL CONFERENCE Document 223 (P. 38) JOURNAL UNITED NATIONS No. 9 MONETARY AND FINANCIAL CONFERENCE Bretton W o o d s, N ew H am pshire ORDER OF THE July 9 t 1944 DAY Meetings for Sunday, July 9 10 4 5 6 a.m. p.m. p.m. p.m. Subcommittee of Committee 3 of Commission I Committee on Special Problems of Liberated Areas Agenda Committee of Commission II Committee on Relations with Non-Member Countries Room B Room 219 Room B (p. 39) 9 9 R e s u m e s o f C o m m it t e e M e e t i n g s Committee 1 of Commission I Purposes, Policies, and Quotas of the Fund (July 8, 9:30 a.m.) At its fifth meeting Committee 1 of Commission I discussed the second report of the drafting committee and accepted the pro posed revision of article II, section 1 (p. 2), dealing with coun tries eligible for membership; section 3 (p. 2) dealing with time and place of payment; section 4 (p. 3) dealing with adjustment of quotas; and section 5 (p. 4) dealing with initial payments. The Committee debated the proposed revision of article IX, section 2 (p. 38), dealing with gold purchases based on parity prices. In view of the relationship of this section to the work of Committee 2, the matter was referred back to the drafting committee with instructions to consult with Committee 2 and report again. Simi lar instructions were given the drafting committee regarding its revision of article IX, section 3, paragraph (a) (p. 39), dealing with foreign-exchange transactions based on par values. The pro posed revision of article IX, section 3, paragraph (b) (p. 39), which provides that a member freely buying and selling gold is fulfilling its obligations under this section, was referred back to the drafting committee to consider the meaning of the word “freely”. An alternative to article IX, section 3, paragraph (c) (p. 39), dealing with exchange transactions in violation of regu lations of another member, was referred to the drafting commit tee. The Committee left for later consideration article II, Alterna tives C and D (pp. 2b and 4b), providing for the inclusion of sil ver in the subscriptions, and article IX, section 8, Alternative A P R O C E E D I N G S AND D O C U M E N T S 283 (p. 43b)dealing with obligations of members to cooperate with other members on approved exchange restrictions. (The minutes of this meeting are being distributed separately as document no. 224.) Committee 2 of Commission I Operations of the Fund (July 8, 11:30 a.m.) The sixth meeting of Committee 2 of Commission I was held on July 8 at 11:30 a.m. and was resumed at 3 p.m. The Committee reconsidered material on which actions had been deferred. On article III, Transactions with the Fund, the Committee accepted the reports of the language committee with respect to Alterna tive A, section 1 (p. 5), and Alternative A, section 5 (p. 8). The Committee deferred consideration of Alternative B, section 6 (p. 9a), Alternative B, section 7 (p. 10a), and Alternative F, section 8 (p. 11c), pending the report of Committee 1 of Com mission I on a related proposal before that Committee. The Com mittee approved Alternative A, section 9, subsections (a) and (c), and the United States Delegation agreed to distribute a mem orandum on subsection (b) and an appropriate rephrasing of that subsection. On article IV, Par Values of Member Currencies, Alternative B, section 1 (p. 40) (p. 16a), was transferred to article XIII, section 5 (p. 49). On Alternative A, sections 2, 3, 4, 4a, 4b, 4c (pp. 17a and 17aa), the Committee was near agreement but it was understood that specific reservations should be re ported to the Commission and that final approval should be de ferred until other Alternatives could be distributed. The Com mittee approved article VI, Apportionment of Scarce Currencies, sections 1, 2, 3, and 4 (pp. 23b and 23c). (The minutes of this meeting are being distributed separately as document no. 225.) Committee 3 of Commission I Organization and Management of tlie Fund (July 8, 9:30 a.m.) Alternative D to article VII, section 6(b) (p. 29b), was re ferred to Commission I. The Committee also referred to the Commission article III, section 11, Alternative C (p. 14c), and Alternative D (Document 203, p. 14e). The question of with drawal and liquidation, article VIII, section 3 (p. 36), and section 4, was referred to a subcommittee composed of representatives of Australia, Belgium, Mexico, United Kingdom, and United 284 MONETARY AND FINANCIAL CONFERENCE States. The Committee discussed a “Final Alternative Submitted by the Special Subcommittee Appointed to Consider All Proposals Relative to the Executive Directors”. It approved paragraphs 1, 4, 5, 6, 6 (a ), 7, 8, 9, 10, 11, 12, and 13. Paragraph 3 was referred to Commission I after consideration of the amendment, Document 178 (p. 26d) paragraph 3. Paragraph 2 is still under discussion. (The minutes of this meeting are being distributed separately as document no. 226.) Committee 4' of Commission I Form and Status of the Fund (July 8, 11:30 a.m.) The fifth meeting of Committee 4 of Commission I was held on July 8 at 11:30 a.m. The Committee accepted the texts presented by appropriate subcommittees assigned to deal with article IX, section 7, Alternative B; article VII, section 11, Alternative B; article XI, Alternative C (as amended) ; article XII, section 1, Alternative C ; Article XII, section 3, Alternative A. The text for article VII, section 11, Alternative B, paragraphs 1, 2, and 3, was accepted as presented. Article XI, Alternative C, was amended by the insertion in the second line of the first paragraph of the words “the Government of” between the words “from” and “a” and in the ninth line between the words “three-fifths” and “of” the words “of the Governments”. The Committee was advised that article XII, (p. 41) section 2, and article XIII, sections 1, 2, 3, and 4, were not yet ready for presentation to the Committee or its subcommittees. With this exception the Committee has com pleted the work assigned to it by Commission I. (The minutes of this meeting are being distributed separately as document no. 227.) Agenda Committee of Commission III Other Means of International Financial Cooperation (J u ly 8, 2:30 p.m.) A meeting of the Agenda Committee of Commission III was held to consider the subjects that had been submitted. The Committee agreed that the proposals be reported to Commission III at its next meeting with the recommendation that three ad hoc committees be appointed to deal with them. A d H o c C o m m i t t e e s o f C o m m is s io n I In conformity with the decision of the Steering Committee at its meeting of July 6, the Chairman of Commission I has appointed the following ad hoc Committees of Commission I : 285 P R O C E E D I N G S AND D O C U M E N T S A d Hoc Committee of Commission 1 on Special Problems of Liberated Countries Luxembourg Norway Philippine Commonwealth Poland Union of Soviet Socialist Republics United Kingdom United States Yugoslavia Se c r e ta r y : J. P. Young Netherlands, Chairman Belgium China Colombia Czechoslovakia Ethiopia French Delegation Greece Honduras Ad Hoc Committee of Commission I on Relations with Non-Member Countries Netherlands Union of Soviet Socialist Republics United Kingdom United States S e c r e ta r y : Mrs. Eleanor L. Dulles Norway, Chairman China Cuba Czechoslovakia Iran (p. 42 ) Ad Hoc Committee of Commission I on Voting Arrangements and Executive Directors Brazil, Chairman Belgium China Cuba Czechoslovakia French Delegation Netherlands Union of Soviet Socialist Republics United Kingdom United States S e c re ta ry : Malcom Bryan (p. 43 ) L ist o f D o c u m e n t s I ssu e d as o f J u l y 8 , 1 9 4 4 1 Subject News Bulletin No. 7 Additional Page to SA/1 Additional Page to SA/1 Additional Page to SA/1 Translation of Preliminary Draft Outline of a Proposal for a Bank Report of Subcommittee of Committee 4, Commission I, July 7 Journal No. 8 Minutes of Commission I, Committee 3, July 7, 9:30 a.m. Representation of Delegations on Commissions and Com mittees—Changes and Corrections Committee Assignments, Commission I Additional Page to SA/1 Minutes of Commission I, Committee 4, July 7, 2:30 p.m. Minutes of Commission I, Committee 2, July 7, 2:30 p.m. Symbol No. Doc. Nc SA/1; 28 SA/1/30 SA/1/31 193 194 195 196 197 C I/4/S1 198 J/8 CI/3/M 5 199 200 GD/23 CI/2 SA /1/32 CI/4/M 4 CI/2/M 5 201 202 203 204 205 286 MONETARY AND FINANCIAL CONFERENCE Subject Symbol No. Order of the Day Additional Pages to SA/1 Additional Pages to SA/1 Additional Pages to SA/1 Additional Pages to SA/1 Additional Pages to SA/1 Final Alternative Relative to the Executive Directors News Bulletin No. 8 Additional Page to SA/1 Proposal by Colombian Delegation—Amendment to Report of Drafting Committee Additional Page to SA/1 Additional Page to SA/1 T rac Resolution Submitted by Australian Representatives t Additional Page to SA/1 Additional Page to SA/1 Report Submitted to Committee 3 of Commission I by Special Subcommittee on Organization, Election, and Powers of the Executive Directors, July 7 News Bulletin No. 9 GD/24 SA/1/33 SA/1/34 SA/1/35 SA/1/36 SA/1/37 CI/3/S1 Doo. No. SA/1/38 206 207 208 260 210 211 212 213 214 DP/11 SA/1/39 SA /1/40 DP/12 SA/1/41 SA /1/42 215 216 217 218 219 220 CT/3/S2 221 222 , Document 224 C I/ 1 / M 5 Minutes of Meeting of Committee 1 of Commission I P u rp o s e s , P o lic ie s , a n d Q u o ta s o f t h e (July 8, 1944, 9:30 a.m.) Fund The Chairman announced that the procedures of the Committee would be governed by the document on procedures issued by the Steering Committee. Document No. 202, “Status of Committee Assignments”, was circulated and the Chairman requested members to note what action was taken on the various items to be considered so as to keep their records up to date. The second report of the drafting committee was presented by its Chairman, Dr. Goldenweiser. The Committee accepted the language of the drafting committee for article II, section 1 (p. 2) - Countries Eligible for Membership - and for article II, section 4 (p. 3) - Adjustment of Quotas with a slight change in wording. The Committee also accepted the P R O C E E D I N G S AND D O C U M E N T S 287 recommendation of the drafting committee to retain the language of article II, section 3, Alternative A (p. 2) - Time and Place of Payment. * The Committee approved the language of the drafting commit tee for article II, section 5 (p. 4) - Initial Payments - with a mino^ change. The Committee debated the language of the drafting committee on article IX, section 2 - Gold Purchases Based on Parity Prices fp. 38). Various members felt that the language was too rigid since it excluded certain gold purchases at prices beyond the pre scribed margin which might be perfectly consistent with the purposes of the Fund. A request was made not to exclude payments involving no international transactions made as bonuses to the gold-mining industry in gold-producing countries, and other legiti mate variations, such as sales to meet a hoarding demand, were also suggested. The close relationship of this clause to the work of Committee 2 was emphasized and the provision was referred back to the drafting committee with instructions to consult with Committee 2 and report again on the matter. The Committee considered the language of the drafting com mittee for article IX, section 3, paragraph (a) - Foreign Exchange Dealings Based on Par Values (p. 39). The discussion of the Committee revealed two questions of substance: (1) whether the margin to be prescribed should be for spot and for futures and other types of contract, or whether there should be only one maxi mum range for spot transactions, and (2) whether it was in tended that there should be only a general maximum range applica ble to all countries, or whether the Fund should prescribe, within this over-all maximum, a range for each member country. This section was referred again to the drafting committee with the same instructions as were given with respect to section 2. The Committee considered the language recommended by the drafting committee for article IX, section 3, paragraph (b) (p. 39). The Committee discussed the necessity and exact force (p. 2) of the last sentence, which states that a member freely buying gold and gold-convertible exchange has fulfilled its obligation under this paragraph. The Chairman referred this section back to the drafting committee. The Chairman read to the Committee an Alternative to article IX, section 3, paragraph (c) (p. 39), which deals with illegal exchange transactions carried on in a member country in the cur rencies of other members. Since this provision is still in the 288 MONETARY AND FINANCIAL CONFERENCE drafting committee, the amendment was referred to the drafting committee. The Committee left for later consideration the following pro posals which have been circulated as Alternatives to the articles assigned to it: Alternatives C and D under article II, which pro vide for the inclusion of silver in the subscriptions of the member countries and which appear on pages 2b and 4b of S A /1 ; and article IX, section 8, Alternative A (p. 43b), which adds to the obliga tions assumed by members that of cooperating with other mem bers in rendering permissible and approved exchange restrictions effective. Document 225 C I/2 /M 6 Minutes of Meeting of Committee 2 of Commission I O p e ra tio n s o f t h e F u n d (J u ly 8, 1944, 11:30 a.m.) The sixth meeting of Committee 2 of Commission I was held on duly 8 at 11:30 a.m. and was resumed at 3 p.m. The Committee agreed to reconsider all material submitted to it on which action was pending in the order of its appearance in the basic document, SA/1. The Committee accepted the report of the language committee that article III, section 1, Alternative A (p. 5), be approved with the addition of the words “with or” after “only” in the third line. The Committee accepted the report of the language committee that on section 5, Alternative A (p. 8), paragraph (1) be amended as follows: “Propose to the member that, on terms and conditions agreed between them, it lend such currency to the Fund or, with the approval of the member, that the Fund borrow such currency from some other source either within or outside the territory of the member; but no member shall be under any obligation to make such loans to the Fund or to approve the Fund’s bor rowing its currency from any other source.” With respect to article III, section 6, Multilateral International Clearing, section 7, Acquisition by Members of the Currencies of Other Members for Gold, and section 8, Other Acquisitions of P R O C E E D I N G S AND D O C U M E N T S 289 Gold by the Fund, the Committee agreed that Alternative B (p. 9a), Alternative B (p. 10a), and Alternative F (p. 11c) be de ferred for later consideration pending the report of Committee 1 cf Commission I on a proposal to which these Alternatives are consequential. Article III, section 9, Alternative A (p. 12), subsections (a) and (c) were approved. The United States Delegation agreed to dis tribute a memorandum explaining the purposes to be achieved in subsection (b) and an appropriate phrasing of that subsection. The Committee discussed article IV, Par Values of Member Currencies. With respect to section 1, Par Values of the Currencies of Members, it was decided that Alternative B (p. 16a) should be transferred to article XIII, section 5 (p. 49). On Alternative A, sections 2, 3, 4, 4a, 4b, and 4c (pp. 17a and" 17aa), the Chairman noted that the Committee was near agreement but that specific reservations should be reported to the Com mission if delegations so indicate and that final approval should be deferred until Alternatives that have not yet been circulated can be considered. The Committee discussed article VI, Apportionment of Scarce Currencies. The Committee approved substitute Alternative A, sections 1 and 2 (p. 23b), and sections 3 and 4 (p. 23c). Document 226 C I/ 3 / M 6 Minutes of Meeting of Committee 3 of Commission I O rg a n iz a tio n a n d M a n a g e m e n t o f t h e F u n d (July 8, 1944, 9:30 a.m.) The Committee considered Alternative D to article VII, sec tion 6(b), (p. 29b), relating to the depositories for the Fund’s gold holdings. After discussion this was referred to Commission I to be considered along with the other Alternatives to this section. The Committee then considered article III, section 11, Alternative C (p. 14c), relating to information to be supplied to the Fund by the member countries, which replaced Alternative A. A new Al ternative D, Document 203 (p. 14e), was also discussed. Alterna tives C and D were referred to Commission I. 290 MONETARY AND FINANCIAL CONFERENCE The Committee discussed article VIII, section 3 (p. 36), Settle ment of Accounts with Governments Ceasing to be Members. A new Alternative was submitted and will be circulated. An amend ment to article VIII, section 4, Liquidation of the Fund, was sub mitted and will be circulated. After discussion it was decided to refer these matters to a special subcommittee consisting of repre sentatives of Australia, Belgium, Mexico, United Kingdom, and United States. The subcommittee on the Executive Directors reported a “Final Alternative Submitted by the Special Subcommittee Appointed to Consider All Proposals Relative to the Executive Directors” to replace the combined Alternatives A and B, C, and D with the amendments submitted by various countries. The subcommittee reported that it had been able to reach agreement on all questions ’before it except the total number of Executive Directors. After discussion the whole Committee approved paragraphs 1, 4, 5, 6, 6(a), 7, 8, 9, 10, 11,12, and 13. Paragraph 3 was referred to Com mission I after consideration of an amendment Document 178, paragraph 3 (p. 26d). Paragraph 2 was discussed but no agree ment had been reached at the time of adjournment. An Alterna tive to paragraph 2 and an amendment to Schedule B of the combined Alternatives A and B has been submitted and will be circulated. Document 227 C I/ 4 / M 5 Minutes of Meeting of Committee 4 of Commission I F o rm a n d S ta tu s o f t h e F u n d {July 8, 1944, 11:30 a.m.) The fifth meeting of Committee 4 of Commission I was held on July 8 at 11:30 a.m. Article IX, section 7, Alternative B, Document 194 (p. 43a), was adopted in the form as presented by the subcommittee. Considerable discussion was held upon the document presented by the subcommittee relating to article VII, section 11, Alterna tive B, Document 198 (p. 33a). The first three numbered subparagraphs were accepted as presented, subparagraphs 4 and 5 having been previously referred to another Committee. 291 P R O C E E D I N G S AND D O C U M E N T S With respect to article XI, Alternative C, Document 198 (p. 45a), it was decided after considerable discussion to insert in the second line between the words “from” and “a” the words “the Government of” and in the ninth line between the words “three. fifths” and “of” the words “of the Governments” to make the meaning consistent with that indicated in the seventh line and the last line of the first paragraph. Discussion on article XII, section 1, Alternative C, Document 198 (p. 46a), was prolonged. It was finally decided to accept the text as presented in Alternative C. After the Delegate from the United States explained the pur pose of the wording which was presented, the text of article XII, section 3, Alternative A, Document 209 (p. 48), was adopted without change. The Committee was advised that article XII, section 2, and article XIII, sections 1, 2, 3, and 4 were not yet ready for presen tation to the Committee or its subcommittees. With this excep tion the Committee has completed the work assigned to it by Commission I. Document 231 UNITED N ATIONS MONETARY AND FINANCIAL CONFERENCE Bretton W o o d s Officers of the Conference^ Members of the Delegations, and Officers of the Secretariat O f f ic e r s o f t h e C o n f e r e n c e President of the Conference Henry Morgenthau, Jr., Secretary of the Treasury; Chairman of the Delegation of the United States of America Vice Presidents of the Conference M. S. Stepanov, Deputy People's Commissar of Foreign Trade; Chairman of the Delegation of the Unio% of Soviet Socialist Republics Arthur de Souza Costa, Minister of Finance; Chairman of the Delegation of Brazil Camille Gutt, Minister of Finance and Economic Affairs; Chair man of the Delegation of Belgium 292 MONETARY AND FINANCIAL CONFERENCE Leslie G. Melville, Economic Adviser to the Commonwealth Bank of Australia; Chairman of the Delegation of Australia Secretary General Warren Kelchner, Chief, Division of International Conferences, Department of State Technical Secretary General Frank Coe, Assistant Administrator, Foreign Economic Adminis tration Assistant Secretary General Philip C. Jessup, Professor of International Law, Columbia Uni versity (p. 2) Technical Commissions and Committees Commission I International Monetary Fund Chairman: Harry D. White, United States of America Vice Chairman: Rodolfo Rojas, Venezuela Reporting Delegate: L. Rasminsky, Canada Secretary: Leroy Stinebower Assistant Secretary: Eleanor Lansing Dulles C o m m it t e e 1 Purposes, Policies, and Quotas of the Fund Chairman: Tingfu F. Tsiang, China Reporter: Kyriakos Varvaressos, Greece Secretary: W. A. Brown C o m m it t e e 2 Operations of the Fund Chairman: P. A. Maletin, Union of Soviet Socialist Republics Vice Chairman: W. A. Mackintosh, Canada Reporter: Robert Mosse, French Delegation Secretary: Karl Bopp Assistant Secretary: Alice Bourneuf C o m m it t e e 3 Organization and Management Chairman: Arthur de Souza Costa, Brazil Reporter: Ervin Hexner, Czechoslovakia Secretary: Malcolm Bryan Assistant Secretary: H. J. Bittermann PROCEEDINGS AND DOCUMENTS I P - 3) Co m m it t e e 4 Form and Status of the Fund Chairman: Manuel B. Llosa, Peru Reporter: Wilhelm Keilhau, Norway Secretary: Colonel Charles H. Dyson Assistant Secretary: Lauren Casaday C o m m issio n II Bank for Reconstruction and Development Chairman: Lord Keynes, United Kingdom Vice Chairman: Luis Alamos Barros, Chile Reporting Delegate: Georges Theunis, Belgium Secretary: Arthur Upgren Assistant Secretary: Arthur Smithies C o m m it t e e 1 Purposes, Policies, and Capital of the Bank Chairman: J. W. Beyen, Netherlands Reporter: J. Rafael Oreamuno, Costa Rica Secretary: J. P. Young Assistant Secretary: Janet Sundelson C o m m it t e e 2 Operations of the Bank Chairman: E. I. Montoulieu, Cuba Reporter: James B. Brigden, Australia Secretary: H. J. Bittermann Assistant Secretary: Ruth Russell ;p- 4) Co m m it t e e 3 Organization and Management Chairman: Miguel L6pez Pumarejo, Colombia Reporter: M. H. De Kock, Union of South Africa Secretary: Mordecai Ezekiel Assistant Secretary: Captain William L. Ullmann C o m m it t e e 4 Form and Status of the Bank Chairman: Sir Chintaman D. Deshmukh, India Reporter: Leon Baranski, Poland Secretary: Henry Edmiston Assistant Secretary: Colonel Charles H. Dyson 294 MONETARY AND FINANCIAL CONFERENCE C om m ission III Other Means of International Financial Cooperation Chairman: Eduardo Suarez, Mexico Vice Chairman: Mahmoud Saleh El Falaky, Egypt Reporting Delegate: Alan G. B. Fisher, New Zealand Secretary: Orvis Schmidt M e m b e r s o f t h e D e l e g a t io n s (P. 5 ) AUSTRALIA Delegates Leslie G. Melville, Economic Adviser to the Commonwealth Bank of A ustralia; Chairm an James B. Brigden, Financial Counselor, A ustralian Legation, W ashington Frederick H. Wheeler, Commonwealth D epartment of the Treasury A rthur H. Tange, Commonwealth Department of E xternal Affairs Secretary Morris A. Greene, A ustralian Legation, Washington BELGIUM Delegates Camille Gutt, Minister of Finance and Economic Affairs; Chairman Georges Theunis, M inister of State; Ambassador a t Large on special mission in the United States; Governor of the N ational Bank of Belgium Baron Herve de Gruben, Counselor, Belgian Embassy, W ashington Baron Rene Boel, Counselor of the Belgian Government (P . 6) Advisers Joseph Nisot, Legal Adviser, Belgian Embassy, New York; Legal Adviser B. S. Chlepner, Professor of Brussels U niversity; Financial Adviser Secretary E rnest de Selliers, Financial Attache, Belgian Embassy, W ashington BOLIVIA Delegate Rene Ballivian, Financial Counselor, Bolivian Embassy, W ashington; Chairman BRAZIL Delegates A rthur de Souza Costa, Minister of Finance; Chairman Francisco Alves dos Santos-Filho, Director of Foreign Exchange of the Bank of Brazil Valentim Bou^as, Commission of Control of the W ashington Agreements and Economic and Financial Council Eugenio Gudin, Economic and Financial Council and Economic Planning Committee Octavio Bulhoes, Chief, Division of Economic and Financial Studies, Ministry of Finance Victor Azevedo Bastian, Director, Banco da Provincia do Rio Grande do Sul Secretary General Aguinaldo Boulitreau Fragoso, A ssistant to the Minister of Foreign Affairs PROCEEDINGS AND DOCUMENTS (P . 295 7) Secretaries Roberto de Oliveira Campos, Second Secretary, Brazilian Embassy, W ashington Zeuxis F erreira Neves, Technical A ssistant to the Commercial Counselor, Brazilian Embassy, Washington Charles Freligh, Brazilian Embassy, W ashington Santiago Fernandes, Banco do Brasil R. R. Vieira, Brazilian Treasury Delegation, New York Daniel Maximo M artins CANADA Delegates The Honorable J. L. Ilsley, Minister of Finance; Chairman The Honorable L. S. St. Laurent, Minister of Justice D. C. Abbott, Parliam entary A ssistant to the M inister of Finance Lionel Chevrier, Parliam entary A ssistant to the Minister of Munitions and Supply J. A. Blanchette, Member of Parliam ent W. A. Tucker, Member of Parliam ent W. C. Clark, Deputy M inister of Finance G. F. Towers, Governor, Bank of Canada W. A. Mackintosh, Special A ssistant to the Deputy Minister of Finance ‘L. Rasminsky, Chairman (alternate), Foreign Exchange Control Board A. F. W. Plumptre, Financial Attache, Canadian Embassy, W ashington (P . 8 ) J. J. Deutsch, Special Assistant to the Under Secretary of State of External Affairs Secretary Paul Tremblay, Third Secretary, Canadian Embassy, Washington CHILE Delegates Luis Alamos Barros, Director, Central Bank of Chile; Chairman German Riesco, General Representative of the Chilean Line, New York A rturo Maschke Tornero, General Manager, Central Bank of Chile Fernando Mardones Restat, A ssistant General Manager, Chilean N itrate and Iodine Sales Corporation Secretary Carmen Senoret, Consul of Chile, Boston Assist ant Secretaries Frank Ledesma, Secretary to the Chairman of the Delegation Luis Aguirre CHINA Chairman of the Delegation Hsiang-Hsi K’ung, Vice President of Executive Yuan and concurrently M inister of Finance; Governor of the Central Bank of China Advisers Hu Shih, former Chinese Ambassador to the United States (p. 9) Kia-Ngau Chang, High Adviser to Executive Yuan Ming Li, Chairman, Chekiang Industrial Bank, China Ting-Sen Wei, Member, Legislative Yuan 749013— 48— 20 296 MONETARY AND FINANCIAL CONFERENCE Delegates Tingfu F. Tsiang, Chief Political Secretary of Executive Y uan; former Chinese Ambassador to the Union of Soviet Socialist Republics Ping-Wen Kuo, Vice M inister of Finance Victor Hoo, Administrative Vice Minister of Foreign Affairs Yee-Chun Koo, Vice Minister of Finance Kuo-Ching Li, Adviser to the M inistry of Finance Te-Mou Hsi, Representative of the M inistry of Finance in W ashington; Director, the Central Bank of China and Bank of China Tsu-Yee Pei, Director, Bank of China Ts-Liang Soong, General Manager, M anufacturers Bank of China; Director, the Central Bank of China, Bank of China, and Bank of Communications S ecretary General Chao-Ting Chi, Secretary General, Foreign Exchange Control Commission, M inistry of Finance; Research Director, Economic.Research Department, the Central Bank of China Technical E xp e rts Chi-Ling Tung, Vice Chairman, Foreign Trade Commission Y. C. Wang, Secretary, the Central Bank of China Cho-Ming Li, Professor of Economics, Southwestern Associated Universities, Kunming ( p . 10) Chih Tsang, Director, Shanghai Commercial and Savings Bank Tsung-Fei Koh, Secretary, International Department, Directorate General of Posts Vung-Yuen Woo, Chief of Monetary Section, Currency Department, Ministry of Finance C. T. Yen, Director of Department, the Central Bank of China Technical Consultants A rthur N. Young, Financial Adviser to the Chinese Government Carl Neprud, Commissioner of Customs, the M inistry of Finance Secretaries Yen-Tsu Chen, Secretary, the Central Bank of China Daniel S. K. Chang, Secretary, the Central Bank of China Ping-Yeh Tcheng, Secretary, Central T rust of China Bing-Shuey Lee, F irst Secretary, Chinese Embassy, W ashington Kien-Wen Yu, Second Secretary, Chinese Embassy, W ashington I. C. Sung, A ssistant Treasurer, Universal Trading Corporation Wan-Sen Lo, Secretary to the Representative of the M inistry of Finance in W ashington Ta-Chung Liu, Secretary, Office of Commercial Counselor, Chinese Embassy, Washington Yu-Chung Hsi, Secretary to the Representative of the M inistry of Finance in W ashington ( P. i d COLOMBIA D elegates Carlos Lleras Restrepo, form er Minister of Finance and Comptroller G eneral; Chairm an Miguel Lopez Pumarejo, form er Ambassador to the United States, Manager, Caja de Credito Agrario, Industrial y Minero PROCEEDINGS AND DOCUMENTS 297 Victor Dugand, Banker Technical Advisers Antonio Puerto, Banker Salvador Camacho Roldan, Banker; Vice President, Bogota Stock Exchange COSTA RICA Delegates Francisco de P. Gutierrez Ross, Ambassador to the United States; former M inister of Finance and Commerce; Chairman Luis Demetrio Tinoco Castro, Dean, Faculty of Economic Sciences, University of Costa Rica; form er M inister of Finance and Commerce; former Minister of Public Education Fernando M adrigal A., Member of Board of Directors, Chamber of Commerce of Costa Rica Counselor 3. Rafael Oreamuno, Vice Chairman, Inter-American Development Com mission; Member, Inter-American Financial and Economic Advisory Committee; Member, Inter-American Coffee Board; former Minister to the United States (P. 12) CUBA Delegate E. I. Montoulieu, Minister of Finance; Chairman Technical Advisers Oscar Garcia Montes, former M inister of Finance; Professor of Political Economy. U niversity of Habana Ramiro Guerra y Sanchez, Delegate to the Inter-American Economic and Financial Committee; Technical Adviser of the Ministry of Finance Miguel A. Pirez, A ssistant to the Minister of Finance Juan M. Menocal, Professor of Taxation, University of H abana; Adviser to the Office of the Prime M inister Felipe Pazos, Commercial Attache, Cuban Embassy, Washington Luis Machado, Lawyer and Economist Eduardo D urruthy, Director General of Statistics of the M inistry of Finance Secretary Calixto Montoulieu, M inistry of Finance Technical Secretary Irving Gordon CZECHOSLOVAKIA Delegates Ladislav Feierabend, Minister of Finance; Chairman Jan Mladek, M inistry of Finance; Deputy Chairman Antonin Basch, Department of Economics, Columbia University (p. 13) Josef Hanc, Director of the Czechoslovak Economic Service in the United States of America Ervin Hexner, Professor of Economics and Political Science, University of North Carolina Technical Adviser and Secretary E rnest Sturc, Czechoslovak Economic Service in the United States 298 MONETARY AND FINANCIAL CONFERENCE DOMINICAN REPUBLIC Delegates Anselmo Copello, Ambassador to the United S tates; C hairm an J. R. Rodriguez, Minister Counselor, Embassy of the Dominican Republic, W ashington Secretary J. M. Sanz L ajara, F irst Secretary, Embassy of the Dominican Republic, W ashington ECUADOR D elegates Esteban F. Carbo, Financial Counselor, Ecuadoran Embassy, W ashington; C hairm an Sixto E. Duran Ballen, M inister Counselor, Ecuadoran Embassy, Washington EGYPT Delegates Sany Lackany Bey; C hairm an Mahmoud Saleh El Falaky Ahmed Selim (P . 1 4 ) A d viser J. I. Craig Technical Secretary Leon Dichy Secretary Mrs. F. C arritt EL SALVADOR D elegates Agustin Alfaro M oran; Chairm an Raul Gamero Victor Manuel Valdes ETHIOPIA Delegates Blatta Ephrem Tewelde Medhen, M inister to the United States; C hairm an George A. Blowers, Governor, State Bank of Ethiopia Secretary Miss Helen W illard FRENCH DELEGATION Delegates Pierre Mendes-France, Commissioner of Finance; Chairm an Andre Istel, Technical Counselor to the Department of Finance (P * 1 5 ) A ssista n t D elegates Jean de Largentaye, Finance Inspector Robert Mosse, Professor of Economics Raoul Aglion, Legal Counselor; General Secretary Secretaries Jean Lam bert Gaston Mallet Georges Roncales PROCEEDINGS AND DOCUMENTS 299 GREECE Delegates Kyriakos Varvaressos, Governor of the Bank of Greece; Ambassador E xtraor dinary for Economic and Financial M atters; Chairman Alexander Argyropoulos, Minister Resident; Director, Economic and Com mercial Division, M inistry of Foreign Affairs Athanase Sbarounis, Director General, M inistry of Finance Technical Advisers Alexander Loverdos, National Bank of Greece; now a t the M inistry of Finance Andre Papandreou Secretary Mrs. Kaity Argyropoulos GUATEMALA Delegate Manuel Noriega Morales, postgraduate student in economic sciences, Harvard U niversity; Chairman (P. 16) HAITI Delegates Andre Liautaud, Ambassador to the United States; Chairman Pierre Chauvet, Under Secretary of State for Finance HONDURAS Delegate Julian R. Caceres, Ambassador to the United States; Chairman ICELAND Delegates Magnus Sigurdsson, Manager, National Bank of Iceland; Chairman Asgeir Asgeirsson, Manager, Fishery Bank of Iceland Svanbjorn Frlm annsson, Chairman, State Commerce Board Secretary Miss M artha Thors INDIA Delegates Sir Jerem y Raisman, Member for Finance, Government of India; Chairman Sir Theodore Gregory, Economic Adviser to the Government of India Sir Shanmukham Chetty Sir Chintaman D. Deshmukh, Governor, Reserve Bank of India A. D. Shroff ( p .17) Adviser Sir David Meek, Trade Commissioner, London Assistant Adv iser Mrs. A. A. Henderson Secretary B. K. Madan IRAN Delegates Abol Hassan Ebtehaj, Governor of National Bank of Iran ; Chairman Dr. A. A. D aftary, Counselor, Iranian Legation, W aslr'ngton 300 MONETARY AND FINANCIAL CONFERENCE Hossein Navab, Consul General, New York Dr. Taghi N assr, Iranian Trade and Economic Commissioner, New York IRAQ Delegates Ibrahim Kamal, Senator and form er M inister of Finance; C hairm an Lionel M. Swan, Adviser to the M inistry of Finance Ibrahim Al-Kabir, Accountant General, M inistry of Finance Claude E. Loombe, Comptroller of Exchange and Currency Officer (p. 18) LIBERIA D elegates William E. Dennis, Secretary of the T reasury; C hairm an James F. Cooper, former Secretary of the T reasury W alter F. Walker, Consul General, New York Secretary K. Jefferies Adorkor, Jr. LUXEMBOURG Delegate Hugues Le Gallais, M inister to the United States; Chairm an MEXICO Delegates Eduardo Suarez, M inister of Finance; Chairm an Antonio Espinosa de los Monteros, Executive President of Nacional Financiera; Director of Banco de Mexico Rodrigo Gomez, M anager of Banco de Mexico Daniel Coslo Villegas, Chief of the D epartment of Economic Studies, Banco de Mexico General Secretaries Salvador D uhart, F irst Secretary, Mexican Embassy, W ashington Julian Saenz, Mexican Consul, New York Technical Secretary Victor Urquidi, Economist, Department of Economic Studies, Banco de Mexico (p. 19) NETHERLANDS D elegates J. W. Beyen, Financial Adviser to the Netherlands Government; Chairm an D. Crena de Iongh, President of the Board for the Netherlands Indies, Surinam, and Curasao in the United States H. Riemens, Financial Attache, Netherlands Embassy, W ashington; Financial Member of the Netherlands Economic, Financial and Shipping Mission in the United States A. H. Philipse, Member of the Netherlands Economic, Financial, and Ship ping Mission in the United States E xp erts A. Andriesse, P rivate Banker A. Bestebreurtje, President, Netherlands Chamber of Commerce in New York, Inc. J. J. Polak, Economist attached to the Netherlands Economic, Financial, and Shipping Mission m the United States PROCEEDINGS AND DOCUMENTS 301 C. H. Schoch, Representative, Netherlands Indies Exchange Control Advisers to the Chairman J. Jerome Williams, Netherlands Embassy, Washington L H. Capriles W. J. A. de Heer Secretary A. Broches (P. 2 0 ) NEW ZEALAND Delegates Walter Nash, M inister of Finance; M inister to the United States; Chairman Bernard Carl Ashwin, Secretary to the Treasury Edward C. Fussell, Deputy Governor, Reserve Bank of New Zealand Alan G. B. Fisher, Counselor, New Zealand Legation, Washington Adviser and Secretary Bruce R. Turner, Second Secretary, New Zealand Legation, Washington NICARAGUA Delegates Guillermo Sevilla Sacasa, Ambassador to the United States; Chairman Leon DeBayle, form er Ambassador to the United States J. Jesus Sanchez Roig, Secretary, Board of Directors, National Bank of N icaragua NORWAY Delegates Wilhelm Keilhau, Director, Bank of Norway, p.t., London; Chairman Ole Colbjornsen, Financial Counselor, Norwegian Embassy, W ashington Arne Skaug, Commercial Counselor, Norwegian Embassy, Washington (p . 2 1 ) Technical Adviser Kaare Petersen, Norwegian Shipping and Trade Mission, New York Secretary Torfinn Oftedal, F irst Secretary, Norwegian Embassy, Washington PANAMA Delegates Guillermo Arango, President, Investors Service Corporation of P anam a; Chairman Narciso E. Garay, F irs t Secretary, Panam anian Embassy, Washington PARAGUAY Delegates Celso R. Velazquez, Ambassador to the United States; Chairman Nestor M. Campos Ros, F irst Secretary, Paraguayan Embassy, Washington PERU Delegates Pedro Beltran, Ambassador-designate to the United States; Chairman Manuel B. Llosa, Second Vice President of the Chamber of Deputies; Deputy from Cerro de Pasco Andres F. Dasso, Senator from Lima Alberto Alvarez Calderon, Senator from Lima Juvenal Monge, Deputy from Cuzco Juan Chavez, Minister, Commercial Counselor, Peruvian Embassy, Washington 302 MONETARY AND FINANCIAL CONFERENCE (P. 2 2 ) Technical Adviser Emilio G. Barreto Secretary Alvaro Rey de Castro, Third Secretary, Peruvian Embassy, Washington P H IL IP P IN E COMMONWEALTH Delegates Col. Andres Soriano, Secretary of Finance of the Philippine Commonwealth; Chairman Jaim e Hernandez, Auditor General of the Philippine Commonwealth Joseph H. Foley, M anager, Philippine National Bank, New York Agency, Philippine Commonwealth Technical Adviser and Secretary Ismael Mathay, Technical A ssistant to the Auditor General of the Philippine Commonwealth POLAND Delegates Ludwik Grosfeld, Minister of Finance; Chairman Leon Baranski, Director General, Bank of Poland Zygmunt Karpiriski, Director, Bank of Poland Stanislaw Kirkor, Director, M inistry of Finance Janusz Zoltowski, Financial Counselor, Polish Embassy, Washington (P. 2 3 ) Experts Michal A. Heilperin, Associate Professor of Economics, Hamilton College Wladyslaw Malinowski, A ssistant Financial Counselor, Polish Embassy, Washington Secretary Gustaw Gottesman, Secretary to the Minister of Finance UNION OF SOUTH AFRICA Delegates S. F. N. Gie, Minister to the United States; Chairman J. E. Holloway, Secretary for Finance; Co-delegate M. H. de Kock, Deputy Governor of South African Bank; Co-delegate Adviser W. C. Naude, Attache, South African Legation, W ashington UNION OF SOVIET SOCIALIST REPUBLICS Delegates M. S. Stepanov, Deputy People’s Commissar of Foreign Trade; Chairman P. A. Maletin, Deputy People’s Commissar of Finance N. F. Chechulin, A ssistant Chairman of the State Bank I. D. Zlobin, Chief, Monetary Division of the People’s Commissariat of Finance (P. 2 4 ) A. A. A rutiunian, Professor; Doctor of Economics; Expert-Consultant of the People’s Commissariat for Foreign Affairs A. P. Morozov, Member of the Collegium; Chief, Monetary Division of the People’s Commissariat for Foreign Trade Experts A. M. Smirnov, Professor; Adviser of the People’s Commissariat for Foreign Trade PROCEEDINGS AND DOCUMENTS 303 M. M. Idashkin, Financial Adviser of the People’s Commissariat for Foreign Trade F. P. Bystrov, Professor of Finance; Doctor of Economics Secretaries M. I. Chibisov, A ssistant to the Chairman N. I. Kuzminsky, Private Secretary to the Chairman UNITED KINGDOM Delegates Lord Keynes; C hairm an The Hon. Robert H. Brand, United Kingdom Treasury Representative in Washington Sir W ilfrid Eady, United Kingdom Treasury Nigel Bruce Ronald, Foreign Office Dennis H. Robertson, United Kingdom Treasury Lionel Robbins, W ar Cabinet Offices Redvers Opie, Counselor, British Embassy, Washington (P. 2 5 ) A dvisers William E. Beckett, Foreign Office G. L. F. Bolton, Bank of England Charles H. Campbell, F irst Secretary, British Embassy, Washington John W. Russell, Second Secretary, British Embassy, Washington Ralph H. Thomas, Second Secretary, British Embassy, Washington Secretaries H. E. Brooks, United Kingdom Treasury A. W. Snelling, Dominions Office Richard T. G. Miles, Third Secretary, British Embassy, Washington UNITED STATES OF AMERICA Delegates Henry Morgenthau, Jr., Secretary of the Treasury; Chairm an Fred M. Vinson, Director, Office of Economic Stabilization; Vice Chairman Dean Acheson, A ssistant Secretary of State Edward E. Brown, President, F irst National Bank of Chicago Leo T. Crowley, Adm inistrator, Foreign Economic Administration M arriner S. Eccles, Chairman, Board of Governors of the Federal Reserve System Mabel Newcomer, Professor of Economics, Vassar College (P. 2 6 ) Brent Spence, House of Representatives; Chairman, Committee on Banking and Currency Charles W. Tobey, United Slates S:-nate; Member, Committee on Banking and Currency Robert F. Wagner, United States Senate; Chairman, Committee on Banking and Currency H arry D. White, Assistant to the Secretary of the Treasury Jesse P. Wolcott, House of Representatives; Member, Committee on Banking and Currency Tech v ica I A d v isc)'S James W. Angell, Foreign Economic Administration E. M. Bernstein, Treasury Departm ent; E xecutive Secretary of the Delegation 304 MONETARY AND FINANCIAL CONFERENCE Malcolm Bryan, F irst Vice President, Federal Reserve Bank of A tlanta E. G. Collado, D epartm ent of State Henry Edmiston, Vice President, Federal Rerserve Bank of St. Louis W alter Gardner, Board of Governors, Federal Reserve System E. A. Goldenweiser, Board of Governors, Federal Reserve System A. H. Hansen, Board of Governors, Federal Reserve System Frederick Livesey, Departm ent of State W alter Louchheim, Jr., Securities and Exchange Commission August Maffry, D epartment of Commerce Norman T. Ness, Treasury Department (P . 27) Leo S. Pasvolsky, D epartm ent of State W arren Pierson, Export-Im port Bank Chauncey W. Reed, House of Representatives; Member, Committee on Coin age, Weights and Measures Andrew L. Somers, House of Representatives; Chairman, Committee on Coin age, Weights and Measures M. S. Szymczak, Board of Governors, Federal Reserve System Legal A dvisers Ansel F. Luxford, Treasury Departm ent; C hief L egal A d viser Ben Cohen, Stabilization Board Oscar Cox, Foreign Economic Adm inistration E. B. Stroud, Vice President, Federal Reserve Bank of Dallas Secretary General of the D elegation Charles S. Bell, Treasury D epartm ent A ssista n ts to the Chairm an H enrietta S. Klotz, Treasury Department M argaret McHugh, Treasury Department Frederik Smith, T reasury Department A rthur Sweetser, Office of W ar Information Technical S ecretari.es Elting Arnold, Treasury Department R. B. Brenner, T reasury Department I. Lubin, Department of Labor George Luthringer, Departm ent of State E. E. Minskoff, T reasury D epartm ent Dorothy F. Richardson, Treasury Department G. Silvermaster, D epartment of A griculture (P . 28) URUGUAY Delegates Mario La Gamma Acevedo, Expert, M inistry of Finance; Chairman Hugo Garcia, Financial Attache, U ruguayan Embassy, Washington VENEZUELA Delegates Rodolfo Rojas, M inister of the T reasury; Chairmayi Alfonso Espinosa, President, Perm anent Committee of Finance, Chamber of Deputies Cristobal L. Mendoza, former M inister of the T reasury; Legal Adviser to the Central Bank of Venezuela PROCEEDINGS AND DOCUMENTS 305 Jose Joaquin Gonzalez Gorrondona, President, Office of Import Control; Director, Central Bank of Venezuela S ecretary Manuel Perez Guerrero, Chief, Office of the Committee for the Study of PostW ar Questions, M inistry of Foreign Affairs YUGOSLAVIA Delegate Vladimir Rybar, Counselor of the Yugoslav Embassy, W ashington; Chairman (P. 2 9 ) T h e D a n is h M in is t e r Henrik de Kauffmann, Minister to the United States A dviser Count Benedict Ahlefeldt-Laurvig, Financial Counselor, Danish Legation, Washington O b s e r v e r s f r o m P u b l ic I n t e r n a t io n a l O r g a n iz a t io n s Economic , F inancial, and T ransit D epartm ent of the League o f N ations Alexander Loveday, Director Ragnar Nurkse; A lte rn a te International Labor Office Edward J. Phelan, Acting Director C. Wilfred Jenks, Legal Adviser; A ltern a te United N ations In te rim Commission on Food and A g ricu ltu re Edward Twentyman, Delegate from the United Kingdom United N ations R elief and Rehabilitation A dm inistration A. H. Feller, General Counsel; or Mieczyslaw Sokolowski. Financial Adviser (p. 3 0 ) O f f ic e r s o f t h e S e c r e t a r ia t S ecretary General of the Conference W arren Kelchner, Chief, Division of International Conferences, Department of State Technical Secretary General F rank Coe, A ssistant Adm inistrator, Foreign Economic Administration A ssista n t S ecretary General Philip C. Jessup, Professor of International Law, Columbia University Secretaries and A ssista n t Secretaries of Technical Commissions and Com m ittees H. J. Bitterm ann, T reasury Department Karl Bopp, Federal Reserve Board Alice Bourneuf, Federal Reserve Board W. A. Brown, D epartment of State Lauren Casaday, Treasury Department Eleanor Lansing Dulles, D epartm ent of State Charles H. Dyson, Colonel, United States Army, W ar Department Mordecai Ezekiel, D epartment of Agriculture John Fuqua, Departm ent of State Raymond Mikesell. Treasury Department 306 MONETARY AND FINANCIAL CONFERENCE ( p . 31) Ruth Russell, Department of State • Orvis Schmidt, Treasury Department A rthur Smithies, Bureau of the Budget Leroy Stinebower, Department of State Janet Sundelson, Treasury Department William L. Ullmann, Captain, U n'ted States Army, W ar Department A rthur Upgren, Federal Reserve Bank J. P. Young, Department of State Chief Press Relations Officer Michael J. McDermott, Special Assistant to the Secretary of State Assistant Press Relations Officers Harold R. Beckley, Superintendent, Senate Press Gallery George H. Coffelt, T reasury Department John C. Pool, Department of State Executive Secretary Clarke L. Willard, A ssistant Chief, Division of International Conferences, Department of State Liaison Secretaries Elbridge Durbrow, Foreign Service Officer, D epartment of State James H. W right, Foreign Service Officer, D epartm ent of State ( P.32) Special Assistants to the Secretary General Edward G. Miller, Jr., Adviser, Liberated Areas Division, Department of State Ivan White, Foreign Service Officer, D epartment of State A dm inis trativ e Secretary Lyle L. Schmitter, D epartm ent of State Assistant Administrative Secretary P. Henry Mueller, Departm ent of State Chief of the Interpreting and Translating Bureau Guillermo Suro, Acting Chief, Central T ranslating Division, Department of State Secretary for Transportation and Special Services M. Hamilton Osborne, Department of State Editor of the “Journal” Frances A rm bruster, Department of State Document 233 C I/ 4 / R P 2 Second Report of Committee 4 of Commission I Dr. W iliielm Keilhau, Reporter The second meeting of Committee 4 was held on July 5. The Committee adopted the same rules of procedure as had already been introduced for the other committees. PROCEEDINGS AND DOCUMENTS 307 The Committee discussed the articles dealing with immunity and taxation exemptions of the Fund, its Governors and staff. One of the delegations suggested that the Governors and staff of the Fund should enjoy “diplomatic status,” but it was pointed out that if the Governors and functionaries of the Fund were given diplomatic status, they would, in reality, be placed in a better position than persons belonging to any country's diplomatic service. The fact is that the diplomats and the diplomatic staffs are responsible to their governments which have every power to act against them if they commit any trespasses, whilst the Gov ernors and the staff of the Fund will be responsible to an inter national body with no power of jurisdiction. The suggestion was withdrawn. The discussions revealed that a number of complicated legal questions were connected with the substance of Article IX, Sec tion 7 (page 43a), and it was resolved to refer these questions to a special subcommittee to be appointed by the Chair. As members of that subcommittee were chosen the delegates from Cuba, Nor way, Union of Soviet Socialist Republics, United Kingdom and the United States of America, with the delegate of the United States as Chairman. As members of the “asterisk” committee were chosen the same delegates with the addition of the delegates from China, Ecuador and Poland. Consequently, these two com mittees were able to join in a final meeting. The work of the subcommittees as well as that of the whole Committee encountered one difficulty of a particularly theoretical character, as it proved to be rather difficult to find legal expres sions which meant quite the same thing in the legal systems of the Anglo-Saxon powers as they mean in the legal systems of most other countries. Accordingly, the discussions, and, in par ticular, those of the subcommittee on Article IX, Section 7, had to concentrate on a number of legal points, but I daresay that we at last succeeded in finding formulations which were deemed satisfactory by the representatives of all nations participating. The final drafts of the two subcommittees were placed before the fifth meeting of the Committee, held on Saturday, the 8th of July, and adopted. At the end of that meeting the Committee had dealt with all provisos contained in the material which, until then, had been made available. The Committee has even done more. The fact is that most questions concerning form and status of the Fund will be identical with the same questions in relation to the Bank, and I should think that the solutions found and elaborated 308 MONETARY AND FINANCIAL CONFERENCE by the Committee for the Fund may be applied to the Bank with very slight and unimportant alterations. If I am not mistaken, I have to report only one disagreement on substance. It refers to Article VIII, Section 1. The Australian delegation will bring before the Commission Alternative B (Docu ment 32, page 34), to the effect that “a member country may with draw from the (p. 2) Fund by giving notice in writing, and the right of withdrawal shall not be prejudiced by membership of the Fund being made a condition of membership of any other inter national body.” The other delegates who partook in the discussion, declared that the proposal could not be accepted, because the Fund was not in a position to dictate to other international bodies what policy such bodies might find it appropriate to adopt. Against this observation, the Australian delegation remarked that their propo sal would act as a recommendation from the Fund to other interna tional bodies, and that it would be up to these bodies to attach the right importance to such recommendation. The Australian dele gation firmly wish the inclusion of the proviso because the whole system of the Fund was such that an immediate and unconditional withdrawal was left as the only means of securing the sovereignty rights of member countries in case of serious conflicts with the Fund. As the various proposals of Committee 4 have been distributed to all members of Commission I, I do not find it appropriate in this short report to comment upon them in any detail. I should only like to draw the attention of the members to the nature of the problem which we have tried to solve by the provisos in Arti cle XII, Section 1, (a), (b), and (c) (Document #198, to substi tute for Page 46a). This problem consisted in keeping disputes concerning the interpretation of the Agreement between the Fund and any member country, within the setup of the Fund itself, but, at the same time, to secure for the member in question privileges of fair treatment. I think that members, when they read our pro posals, will acknowledge that we have succeeded in finding a work able solution. If a conflict should end in the withdrawal of the member country, or disputes between member countries and the Fund should arise after its possible liquidation, we have drafted rules of arbitration. We have found it necessary that the Conven tion itself prescribe the composition of the tribunal of arbitration. We propose that each party should appoint one member and that the umpire, unless the parties otherwise agree, shall be appointed by the President of the Permanent Court of International Justice. PROCEEDINGS AND DOCUMENTS 309 Document 234 CI/2/RP2 Second Report of Committee 2 on Operations of the Fund to Commission I Ju ly 9, 1944 P rofessor R obert M o s s e : Revision of First Report Upon request by Mr. Rasminsky (Canada), I want to revise one of my statements on Page 2 of my report of July 5, 10:30 a. m., to Commission I (Doc. #128). I substitute the word “will ingness” for the word “consent.” I did not imply that a specific consent in the legal sense of the word was required from the capi tal importing country; I merely meant that capital transfers in the case of Section 2a (page 6a) will practically be impossible if the prospective capital importing country should be unwilling to accept these imports of capital. I was thinking in terms of ac tuality and not in terms of legality. In its meetings Wednesday through Saturday, Committee 2 made considerable progress, covering Article III, sections 5 to 12, Article IV, Article V and Article VI. Unfortunately, it ducked around a few hurdles; with, however, the firm intention to come back and take them later. Article III. Transactions with the Fund (The references are always to Doc. SA/1. The numbers of the sections are those appearing in Alternative A.) S ec t io n 2. Conditions upon Which any Member may Purchase Currencies of other Members, (3) (page 6a) — Carry-over Provisions You remember, Gentlemen, that this Commission sent back to Committee 2, Article III, 2 (3), which can be referred to as the carry-over question. Committee 2 in turn sent this problem to an ad hoc Subcommittee, composed of Australian, Brazilian, Canadi an, Chinese, French, Mexican, Dutch, British, Soviet and United States representatives. I am advised that this ad hoc Subcommittee has made good progress but its report has not yet been placed before Committee 2. Silver (page 6d) The Committee has received an Alternative E to be inserted 310 MONETARY AND FINANCIAL CONFERENCE as an additional section after Article III, section 2 (page 6d). This alternative deals with the rights of silver hoarding countries to obtain from the Fund additional foreign currency. This sugges tion obtained support from a number of countries. There was also a strong statement in opposition. Further discussion was deferred when it was suggested that some modification of the waiver pro vision might afford a satisfactory compromise. 7 /9 /4 4 (p. 2) 2 (a )—Conditions Governing Purchases For Capital Transfers (pages 6a and 6b) Please refer to Report No. 1, Document CI/2/RP1. S e c tio n S e c tio n 3 — Declaring Members Ineligible to Use the Resources of the Fund (page 6b) Please see Report No. 1, Document CI/2/RP1. S e c t io n 4 —Limitation on the Operations of the Fund (p a g e 7) As I already said in Report No. 1, Alternative A (page 7) was approved. I want, however, to elaborate somewhat on my remarks, from an operative standpoint. A member country is expected to call upon the resources of the Fund when its balance % payments of with one particular country becomes unfavorable. In the case of two countries having free exchange markets, the signal will be a weakening of the currency of the country which has an unfavor able balance. With the old-fashioned system, the weakening would be stopped by gold exports when the gold point is reach'ed. With our machinery, the interested country will draw foreign currency from a pool of reserves and there appears to be a kind of inter national Fund point. However, I don’t think that there is any obligation for a member country to wait until the Fund point is reached to draw from the Fund. In the case of countries with ex change controls, the situation of the balance of payments will appear directly in the books of the central agency dealing with exchange. There are, however, two limitations on that mechanism. On the one hand, a country can buy only the currency of another country and can not obtain an international medium of payment, therefore, some degree of supervision of the bi-lateral balances of payments is entrusted to the'Fund. On the other hand, a country can only buy foreign currency from the Fund without being able to sell foreign currency to the Fund. This section on limitations PROCEEDINGS AND DOCUMENTS 311 was well christened indeed. If I am mistaken in this interpreta tion, I will be glad to be corrected. S e c t i o n 5 —Operations for the Purpose of Preventing Currencies from Becoming Scarce (page 8) On section 5, page 8, general agreement was reached on Alter native A as amended. According to paragraph (1), the Fund may borrow the cur rency of a country either from the Government of that country, or from a private source or from a third country, but in the last two cases, the Government whose currency is being borrowed must approve of the transaction. Paragraph 2 should now read: “Buy that currency from that member with gold.” The meaning implied is that a country is required to sell its currency for gold. It is also meant that the Fund may buy with gold the currency of one member only from that particular member. 7 /9 /4 4 (P. 3) S ec t io n 6. —Multilateral International Clearing. (pages 9a and 9b) There was some discussion of this matter but it was agreed to defer further discussion pending clarification. S e c t i o n 7. —Acquisition by Members of the Currencies of Other Members for Gold, (page 10) The Committee endorses without objection section 7, Alterna tive A, page 10. According to this section any member desiring to obtain the currency of another member for gold shall make the purchase from the Fund provided it can do so with equal advan tage. Apparently this Article gives to the Fund almost a privi lege; the idea is to channel gold to the Fund instead of allowing member countries to use ther gold outside the Fund. Under this rule the Fund will be able, to a certain extent, to dispose of its holdings of national currencies and to acquire gold instead. The only difficulty is that the phrase “provided that it can do so with equal advantage” offers a rather easy possibility of circumvention. S e c t i o n 8. —Other Acquisitions of Gold by the Fund, (page 11) The discussion of this question was deferred because Alterna tive A has not yet been submitted to the Committee. S e c t i o n 9 .— Transferability and Guarantee of the Assets of the Fund, (page 12) Section 9 was referred to the Asterisk Committee. After hear749013— 48—21 312 MONETARY AND FINANCIAL CONFERENCE ing the report of that Committee, Committee 2 agreed to accept paragraph (a) and paragraph (c) as they stand. But the Asterisk Committee reported that it had not been possible to agree on para graph (b). After a long discussion, the Committee requested the American delegation to submit a memorandum explaining the implications of this paragraph in economic terms; the memoran dum should also recommend technical measures to protect the Fund’s interests. May I suggest that the Commission not under take any discussion until Committee 2 has further considered the question. S e c t io n 10. —Charges and Commissions, (p a g e 13) Deferred because material lacking. S ec t io n 11. — Furnishing Information, (p a g e 1 4 ) Transferred to Committee 3 of Commission I. S e c t io n 12. —Consideration of Representations of the Fund, (p a g e 1 5 ) This section is still being considered by the Asterisk Committee of Committee 2. 7 /9 /4 4 (P. 4 ) Article IV. Par Values of Member Countries On Article IV in general very good progress was made. S e c t i o n 1. Par Values of the Currencies of Members (Page 1 6 ) This section has been approved as per Alternative A. It states that the par values of the currency of each member shall be ex pressed in terms of gold as a common denominator or in terms of gold convertible currency unit. S e c t i o n s 2 to 4. Changes in Par Value of Currencies (Page 17a) There was a long controversy on the very familiar topic Rigid ity vs. Stability about which we all have heard for nearly 20 years. Probably neither the adherents of flexibility, nor the adherents of stability have changed their minds during our discussion. But, most of them are almost willing to end this twenty-year war by a compromise. I was instructed to report to you that the Commit tee made substantial progress but it was decided to defer drawing the discussion to a conclusion until all delegates have had time to examine the proposal more carefully. In the course of the discus sion strong views were expressed together with some reservations; but since the discussion has not been concluded, I thought it ad P R O C E E D I N G S AND D O C U M E N T S 313 visable to postpone reporting reservations and recorded views until final action is taken by the Committee. S e c t i o n 5. Uniform Changes in Par Values (p a g e s 18, 18a, 18b) Committee 2 has reached no agreement and has instructed me to report that there is wide diversity of opinion. The issue concerned the majority which would be required in order to decide on a uniform change in the gold value of member currencies. Some committee members wanted the decision to re quire the approval of each country having 10% or more of the quotas. Others insisted that the question should be decided by a majority vote based on voting power as determined by quotas. And many others would like to see the question decided by a ma jority of the countries, each country casting one vote. As a matter of fact these different ideas are diversely combined in the various alternatives. One obvious underlying fact is that countries with a small quota favor having one vote by country. But there is also another underlying issue, namely that the rules on voting determine the degree of flexibility. The more stringent the rule of the majority, the less the possibility of changes in the gold value. 7 /9 /4 4 (p. 5) The question is a very intricate one and the only thing I can do is to offer, in a personal capacity, the suggestion that the question be dealt with by Committee 3 as a part of the general problem of voting. As a further suggestion, your reporter feels that there should be one or two general rules concerning the voting and these rules should be applied in all cases instead of having to decide for each problem what kind of majority is required. S ec t io n 6. Protection of the Assets of the Fund, (p a g e 19.) This Section 6 was generally agreed upon with a slight change in the wording (see minutes of meeting, July 7th, 2:30). This Section states that the Fund may have neither losses nor profits out of its holding foreign currencies, in case of change in the value of the currency. This principle is usually referred to as a “gold clause”. S ec t io n 7. Separate Currencies Within a Member’s Jurisdiction. (page 20.) Alternative A, page 20, was accepted, with the suggestion to our legal friends to consider the word “however”. Section 7 merely states that in case of various currencies in the different territories of one member, this member has the option to decide 314 MONETARY AND FINANCIAL CONFERENCE whether the change relates to the metropolitan currency alone or to one or more specified subordinate currencies. With this Section, we close Article IV. Capital Transactions 1. Use of Resources of the Fund for Transfer of Capital. Article V. S e c t io n (page 21.) After a very informative discussion, there was a general agree ment on this Section (see Minutes of meeting, July 7th, 2:30). According to this Section, as amended, a member may not make net use of the resources of the Fund to meet a large out-flow of capital. But the use of the Fund is permitted for capital transac tions of a reasonable amount required for the ordinary course of business. A point well made by the Delegate from India and supported by the Delegate from the United Kingdom was that the movement of capital goods is not restricted in any way by this Article. Limitation on Controls of Capital Movements. (page 22.) Committee 2 agreed upon the following new draft: “Members . may exercise such controls as are necessary to regulate inter national capital movements, but no member may exercise S e c t io n 2. 7 /9 /4 4 (p. 6) such controls in a manner which will restrict payments for current transactions or which will unduly delay the transfer of funds.........” and so on, as per Alternative A. This Article is certainly a very important one because it rec ognizes the right of any member country to organize or to main tain an exchange control for capital movements. Furthermore, as per Section 1, page 21, the Fund is authorized to request a mem ber to set up such controls. Although the general purpose of the Fund is to foster free exchanges, it is remarkable that the experts have found it advisable not only to make provisions allowing ex change control for capital movements, but also recommending it in some cases. It will certainly be difficult to draw a line between controlling movements of capital and controlling transactions for trade purposes. Article VI. Apportionment of Scarce Currencies, (p age 2 3 b .) There was general agreement on Section 1, Section 2, Section 3 and Section 4 of this Article. According to these sections, when a currency becomes scarce, the Fund shall formally declare the scarcity of that currency and shall henceforth apportion the supply P R O C E E D I N G S AND D O C U M E N T S 315 of that currency with due regard to the relative needs of members, to the general international economic situation and to any other pertinent considerations. Those members whose currency has be come scarce may temporarily limit the freedom of exchange operations. Although this Article was approved, some reserva tions were expressed concerning the way in which the scarce currency or currencies will be apportioned. It seems clear that Alternative A practically gives a blanket control to the Fund. Specifically, the question was raised as to which majority will be necessary to decide upon such matters. 7 /9 /4 4 APPENDIX A £2 o\ STATUS OF ASSIGNMENTS OF COMMITTEE 2 (COMMISSION I) O p e r a t i o n s o f t h e F u n d a s o f 7 : 0 0 p . m ., J u l y 8 , 1 9 4 4 (References Made to Doe. S A / 1 ) ARTICLE III. Language Accepted Referred to Drafting or Other Subcommittee Transactions with the Fund III.l. Alt.A. as amended Par. (2) III.2. Introd. Sentence. Alt. A 111.2.(1) Alt. A 111.2.(2) Alt. A Par. (3) Par. (4) CONFERENCE Par. (1) 111.2.(3) 111.2.(4) Alt. A , Other Action FINANCIAL Section 2. Conditions Upon Which Any Member May Pur chase Currencies of Other Members, Alt. A, p. 6a Introductory Sentence No Action or Decision. Deferred, AND Section 1. Agencies Dealing with the Fund, Alt. A, p. 5. Referred to Commission I W ithout Decision MONETARY Article and Section— (Sections as numbered in Alternative A) Article and Section— (Sections as numbered in Alternative A) Final Sentence L anguage Accepted 'Keferred to D raftin g or Other Subcom m ittee Referred to Com m ission I W ithout D ecision No A ction or D ecision. Deferred Other Action III.2. Fin. Sent.Alt. A (P . 2 ) III.2a, Alt. A Section 3. Declaring Members Ineligible to use Resources of the Fund, Alt. A, p. 6b III .3 Alt. A Section 4. II 1.4. Alt. A Limitations on Operations of the Fund, Alt. A, p. 7 AND Section 2(a). Conditions Governing Purchases for Capital Transfers, Alt. A, pp. 6a, 6b DOCUMENTS Section 5. Operations for Purpose of Preventing Currencies Becoming Scarce, Alt. A, p. 8 Par. (1) and (2) PROCEEDINGS III .2 Alt. E Alt. 10, p. Gd 111.5(1) (2) Alt. A as amended III .6 Alt.A,B Section 6. Multilateral International Clearing, Alt. A and B, pp. 9, 9a (P. 3 ) Section 7. Acquisition by Members of the Currencies of Other Members for Gold, Alt. A, p. 10 III .7. Alt. A oo j- j — -4 Article and Section— (Sections as numbered in Alternative A) Language A ccepted R eferred to D raftin g or Other Subcom m ittee R eferred to C om m ission I W ithout D ecision No A ction or D ecision . D e fe rr ed 00 h -I Other A ction MONETARY III.8 Material Lacking Section 8. Other Acquisitions of Gold by the Fund, pp. 11, 11a, lib ,1 1 c Section 9. Transferability and Guarantee of Assets of the Fund, Alt. A AND 111.9(a). Alt. A Par. (a) 111.9(c) Alt. A Section 10. Charges and Commissions, Alt. A. and B, p. 13 Section 12. Consideration of Representations of the Fund, Alt. A and B, p. 15 (P. 4 ) Par Values of Member Currencies Transferred to Com. 3 of Com. I III.12. Alt. A & Alt. B CONFERENCE III.10. Alt.A,B Material Lacking Section 11. Furnishing Information, Alt. A and B, pp. 14, 14a, 14b ARTICLE IV. FINANCIAL 111.9(b). Alt. A Par. (b) Par. (c) O S Article and Soction— (Sections as numbered in Alternative A) L anguage A ccepted Section 1. Par Values of the Currencies of Members, Alt. A, 3e3 p. 16 R eferred to D ra ftin g or O ther Subcom m ittee No A ction or D ecision. D e fe rr ed R eferred to Com m ission I W ith out D ecision Other A ction IV.1. Alt. A Transferred to Article X III, p. 49, Doc .SA/1 Section 2, 3, 4. Changes in Far Values, Alt. A, B, pp. 17a, j 17aa, 17b j IV.2,3,4 i | ! 1 i! Section 6. Protection of the Assets of the Fund, Revised j IV.6. Alt. A, p. 19 ; Rev. Alt.A Section 7. Separate Currencies Within a Member’s Jurisdic tion, Alt. A, p. 20 IV.7. Alt. A | i i I 1 I (p. 5) ARTICLE V. | ! DOCUM ENTS IV.5 AND Section 5. Uniform Changes in Par Value, Alt. A, B, C, pp. ; 18, 18a, 18b | PROCEEDINGS Alt. B, p. 16a ; :i i i Capital Transactions Section 1. Use of Resources of the Fund for Transfers of Capital, Alt. A, p. 21 V.l. Alt. A As Amended 05 h—I 'O Section 2. Limitations on Controls of Capital Movements, Alt. A, p. 22 R eferred to C om m ission I W ithout D ecision No A ction or D ecision. D e fe rr ed V.2. Alt .A As Amended Apportionment of Scarce Currencies VI.l. Alt. A Section 2. Scarcity of the Fund’s Holding, Alt. A, p. 23b VI.2. Alt. A ARTICLE X. Transitional Arrangements 1 ! i| Section 5. Fixing Initial Par Values ! X III.5 Material Lacking CONFERENCE Final Provisions X Material Lacking FINANCIAL Section 1. General Scarcity, Alt. A, p. 23a ARTICLE X III. Other A ction AND ARTICLE VI. R eferred to D raftin g or Other Subcom m ittee MONETARY Language A ccepted A rticle and Section— ( Sections as num bered in A ltern a tiv e A ) P R O C E E D I N G S AND D O C U M E N T S 321 APPENDIX B T ex t of S ectio n s of A pproved by C o m m it t e e 2 C om m ission I as Article III, Section 1, Alternative A am ended (p . 5 ) Each member country shall deal with the Fund only through its Treasury, Central Bank, Stabilization Fund or other simi lar fiscal agency and the Fund shall deal only ivith or through the same agencies. Article III, Section 2 (Introductory cla u se), Alternative A (p . 6 a ) Conditions upon which any Member may purchase currencies of other Members. A member shall be entitled to buy the currency of another member from the Fund in exchange for its own currency subject to the following conditions: Article III, Section 2 ( 1 ) Alternative A (p . 6 a ) The member initmting the purchase represents that the cur rency requested is presently needed for making payments in that currency which are consistent with the provisions of this Agreem ent; Article III, Section 2 ( 4 ) Alternative A (p . 6 a ) The Fund has not previously declared under Section 3 of this Article that the member initiating the purchase is ineligible to use the resources of the Fund. Article III, Section 2 (F inal S en ten ce), Alternative A (p . 6 a ) The Fund may, in its discretion, and on terms which safe guard its interests, waive any of these conditions. In special circumstances, where the Fund considers it necessary, it may require collateral security as a condition of such waiver. Article III, Section 2a, Alternative A (p . 6a and 6 b ) If the Fund’s holdings of the currency of a member have remained below 75 percent of its quota for a period not less than six months such member shall be entitled, notwithstand ing the provisions of Article V, Section 1, to buy the cur rency of another member from the Fund for its own currency for any purpose, including capital transfers, provided, how ever, that purchases for capital transfers may not have the effect of raising the Fund’s holdings of the currency of such member above 75 percent of its quota, or reducing the Fund's holdings of the currency purchased below 75 per cent of the quota of the member whose currency is purchased. Article III, Section 3, Alternative A (p . 6 b ) Declaring Members Ineligible to Use the Resources of the Fund. Whenever the Fund is of the opinion that any member 322 MONETARY AND FINANCIAL CONFERENCE is using the resources of the Fund in a manner contrary to the purposes of the Fund, it shall present to the member a report setting forth the views of the Fund and stating a suitable time for reply. After presenting such a report to a 7/9/44 (P- 2 ) member the Fund may limit the use of its resources by the member. If no reply to the report is received from the mem ber within the stated time, or the reply received is unsatis factory, the Fund may continue to limit the member’s use of the Fund’s resources or, after giving reasonable notice to the member, declare it ineligible to use the resources of the Fund. Article III, Section 4 , Alternative A (p . 7 ) Limitation on the operations of the Fund. Except as otherwise provided in this Agreement, operations for the account of the Fund shall be limited to transactions for the purpose of supplying a member, on the initiative of such member, with the currency of another member in ex change for the currency of the member initiating the trans actions or for gold. Article III, Section 5 (Introductory c la u se), Alternative A (p . 8 ) Operations for the Purpose of Preventing Currencies from Becoming Scarce. The Fund may, if it deems such action appropriate to prevent the currency of any member from becoming scarce, take either or both of the following steps: Article III, Section 5 ( 1 ) , Alternative A as A m ended (p . 8 ) Propose to the member that, on terms and conditions agreed between them, it lend such currency to the Fund or, with the approval of the member, that the Fund borrow such currency from some other source either within or outside the territory of the member; but no member shall be under any obligation to make such loans to the Fund or to approve the Fund’s borrowing its currency from any other source. Article III, Section 5 ( 2 ) , Alternative A as A m ended (p . 8 ) Buy that currency from that member with gold. Article III, Section 7, Alternative A (p . 1 0 ) Acquisition by Members of the Currencies of Other Members for Gold. Any member desiring to obtain, directly or indirectly, the currency of another member for gold shall, provided that it can do so with equal advantage, acquire the currency by the PROCEEDINGS AND DOCUMENTS 323 sale of gold to the Fund. Nothing in this Section shall be deemed to preclude any member from selling in any market the new production of gold from mines located within territory subject to its jurisdiction. 7 /9 /4 4 (p. 3) Article III, Section 9, (a ) Alternative A (p . 1 2 ) All assets of the Fund shall, to the extent necessary to carry out the operations prescribed by this Agreement, be free from restrictions, regulations and controls of any nature imposed by members. Article III, Section 9, (c ) Alternative A (p . 1 2 ) All assets of the Fund shall be guaranteed by each member against loss resulting from failure or default on the part of the despository designated by such member. Article IV, Section 1, Alternative A (p . 1 6 ) Par Values of the Currencies of Members. The par value of the currency of each member shall be ex pressed in terms of gold, as a common denominator, or in terms of a gold-convertible currency unit of the toeight and fineness in effect on July 1, 19kh. All computations relating to currencies of members for the purpose of applying the pro visions of this Agreement shall be on the basis of their par values. Article IV, Section 6, Alternative A as Am ended, (p . 1 9 ) Protection of the Assets of the Fund. No change in the foreign exchange value of the currency of any member shall alter the gold value of the assets of the Fund. Whenever (i) the par value of a currency of a mem ber is reduced, or (ii) the foreign exchange value of the cur rency of any member has depreciated within its jurisdiction to a significant extent in the opinion of the Fund, the mem ber shall compensate the Fund by paying to the Fund within a reasonable time an amount of its own currency equal to the reduction in the gold value of the currency of such mem ber held by the Fund. Whenever the par value of the cur rency of any member has been increased the Fund shall com pensate such member by returning, within a reasonable time, an amount in the currency of such member equal to the increase in the gold value of the currency of such member held by the Fund. The provisions of this Section shall apply to the case in which a uniform proportional change is made in the par values of 324 MONETARY AND FINANCIAL CONFERENCE the currency of all members, unless at the time when such a change is proposed to be made the Fund shall declare them to be inapplicable. Article IV, Section 7, Alternative A (p . 2 0 ) Separate Currencies within a Member’s jurisdiction. A member proposing a change in the par value of its currency shall be deemed, unless it declares otherwise, to be proposing a corresponding change in the par value of the currencies of all territories under its jurisdiction. It shall however be open to a member to declare that its proposal relates either to the metropolitan currency alone, or to one or more specified subordinate currencies alone, or to the metropolitan currency and one or more specified subordinate currencies. 7 /9 /4 4 (P- 4 ) Article V, Section 1, Alternative A as Am ended (p . 2 1 ) Use of the Resources of the Fund for Transfers of Capital. A member may not make net use of the resources of the Fund to meet a large or sustained outflow of capital, and the Fund may request a member to exercise controls to prevent such use of the resources of the Fund. If after receiving such re quest, a member fails to exercise appropriate controls the Fund may declare such member ineligible to use the resources of the Fund. This Section is not intended to prevent the use of the re sources of the Fund for capital transactions of reasonable amount required for the expansion of exports or in the ordi nary course of trade, banking or other business. Capital movements which are met out of a member’s own resources of gold and foreign exchange are not affected by this section, but members undertake that such capital movements will be in accord with the purposes of the Fund. Article V, Section 2, Alternative A as Am ended (p . 2 2 ) Limitation on Controls of Capital Movements. Members may exercise such controls as are necessary to reg ulate international capital movements but no member may exercise such controls in a manner which will restrict pay ments for current transactions or which will unduly delay the transfer of funds in settlement of commitments, except as provided in VI, 2 and in X. Article VI, Section I , Substitute Alternative A (p p . 23b and 2 3 c ) # S e c t io n 1. General Scarcity If the Fund finds that a general scarcity of a particular cur- P R O C E E D I N G S AND D O C U M E N T S 325 rency is developing, the Fund may so inform members and may issue a report setting forth the causes of the scarcity and con taining recommendations designed to bring it to an end. In the preparation of such report there shall participate a representa tive of the member the currency of which is involved. # S e c t io n 2. Scarcity of the Fund’s Holdings If it becomes evident to the Fund that the demand for a mem ber’s currency seriously threatens the Fund’s ability to supply that currency, the Fund whether or not it has acted under Sec tion 1 above, shall formally declare such currency scarce and shall thenceforth apportion the existing and accruing supply of the scarce currency with due regard to the relative needs of members and the general international economic situation and any other pertinent considerations. The Fund shall also issue a report concerning its action. The formal declaration shall operate as an authorization to a member, after consulta tion between such member and the Fund, temporarily to limit the freedom of exchange operations in the affected currency. Subject to the provisions of Article IX, Section 2 (J. S.), the member shall have complete jurisdiction in determining the nature of such limitations, but they shall be no more restrictive than is necessary to limit the demand for the scarce currency to the supply of it held by, or accruing to, the member in ques tion ; and they shall be relaxed and removed as rapidly as con ditions permit. This authorization shall cease to be in effect whenever the Fund formally declares the currency in question no longer scarce. 7 /9 /4 4 (P. 5) #SEC TI0N 3. Administration of Restrictions on Scarce Currencies. Any member imposing restrictions in respect of the currency of any other member pursuant to the provisions of this Article shall give sympathetic consideration to any representations which may be made by such other member regarding the ad ministration of such restrictions. # S e c t io n 4. Effect of Other International Agreements on Re strictions on Scarce Currencies. Members agree not to invoke the obligations of any engage ments entered into with other members prior to this Agreement in such a manner as will prevent the operation of the provi sions of this Article, 7/9/44 326 MONETARY AND FINANCIAL CONFERENCE Document 235 C ll l / A Report Submitted to Commission III by the Agenda Committee Appointed to Receive and Consider Proposals Submitted for Consideration in Commission III (To be presented at m eeting of Commission I I I , Ju ly 10) Bretton Woods, July 1 0 ,19A4Mr . C h a ir m a n : At the first meeting of Commission III held at 5:00 p. m. on July 3, 1944, an Agenda Committee was appointed to receive and consider topics submitted as appropriate for consideration in Commission III. During the week ten proposals were received by the Agenda Committee. After studying these proposals, it appeared to the members of the Agenda Committee that the proposals related to three general fields of interest. One of the proposals related to the use of Silver for international monetary purposes. Several proposals related to the general subject of looted property and assets controlled by the enemy. A number of other proposals related to economic and fi nancial policies and the publication and interchange of informa tion. Accordingly, it is the recommendation of the Agenda Com mittee that there be established in Commission III three “ad hoc” committees to consider these general fields of interest and to make recommendations to the full Commission for action to be taken at this Conference with respect to their respective fields. Committee 1 would be charged with making recommendations concerning “The Use of Silver for International Monetary Pur poses;” Committee 2 would make recommendations concerning action to be taken by this Conference relating to “Enemy Assets, Looted Property, and Related Matters;” and Committee 3 would be charged with proposing recommendations to be made by this Commission relating to “Economic and Financial Policies, Ex change of Information, and Other Means of Financial Coopera tion”. It was felt by the members of the Agenda Committee that all of the proposals received by it should be placed before the mem bers of this Commission for such discussion as might be desired in the light of the recommendations of the Agenda Committee. Accordingly, I will read the full text of the proposals, indicating in each case the Committee to which the proposal, in the opinion of the Agenda Committee, should be assigned. It is suggested, Mr. Chairman, that after the reading of each proposal the Dele- PROCEEDINGS AND DOCUMENTS 327 gation which submitted it be permitted to make supporting or clarifying remarks, should it care to do so, and any other Dele gation wishing to comment upon the proposal be afforded an opportunity to do so. 1. Proposal on silver submitted by Mexican Delegation: (p. 2) W hereas it is undeniable that about half of the world’s population prefers silver coins to any other kind of currency for everyday use and trade, as well as for hoarding; W hereas the economically weaker silver-using nations of the world, upon becoming members of the proposed International Monetary Fund, would in fact agree, among other things, to collaborate with the stronger nations in the establishment of a world-wide free market for gold, and in the maintenance of a stable and fair price for that metal; W hereas it is just and fair that, in due correspondence, the economically stronger countries should agree to extend their co operation to the economically weaker ones, in order that silver may also have an ample market and a relatively stable and fair international price; W h ereas , to comply fully with the proposed agreement, the silver-using peoples would need proportionately larger, and there fore more burdensome, monetary reserves, since besides their normally heavy investments in silver coins, they would also have to maintain a gold reserve proportionately as large as that of any gold-using nation; W hereas it is not fair that the economically weaker peoples should carry the whole weight of their silver stocks, as well as the heavy losses caused by the wide fluctuations of their international value, and carry besides their proportionate share of the gold stocks; W hereas it has been fully demonstrated by the farsighted policy of the United States during the past decade, that it is not only possible but equally feasible, without the slightest danger to the monetary equilibrium even of a single nation, to maintain stable the relative international prices of gold and silver, and to stabilize both prices in terms of a single currency; W hereas it should be relatively easier and less costly for the United and Associated Nations to establish a fair and reasonable international price for silver than to fix one for gold, inasmuch as the present value of the visible stocks of gold is around thirty billion dollars, while that of silver is only a fifth or a sixth of that amount; W hereas one of the main purposes of this Conference should 749018--48■-22 328 MONETARY AND FINANCIAL CONFERENCE evidently be, not to select gold or anything else as a metallic standard which would lead the world back into the rigidity of an arbitrary yardstick for national and international values, but rather to lay the foundations of a well-integrated world monetary system, wherein certain important currencies generally accepted in international trade, as well as gold and silver itself, can and should be used to great advantage, each to fulfill a different inter national function; (p. 3) W hereas in the proposed agreement it is foreseen that the Monetary Fund may be forced to change the price of gold in terms of all the member countries’ currencies, in order to provide additional means of international payments; W hereas silver, because of its traditional monetary use by approximately half of the inhabitants of the world, can and should be used as a collateral monetary metal for meeting such increases in credit requirements of member countries: W hereas in principle there can be no better grounds for pegging the price of gold in terms of the United Nations’ currencies, than those for preventing the wide fluctuations of the international price of silver, in relation to the same currencies; W hereas the wide fluctuations in the international value of silver besides placing a heavy risk on the shoulders of those countries least able to carry it, are the direct source of recurrent dislocation of the monetary system of silver-using countries; and W hereas it is technically possible to achieve a minimum price of gold and a maximum price for silver in terms of all the cur rencies of member countries; The Mexican Delegation presents for the consideration of this Conference the following tentative plan to link silver with gold for international monetary purposes: I. That the Monetary Fund should buy and sell from and to member countries gold and silver together and jointly, at the fixed rate in terms of member currencies and in a ratio of, say, one ounce of pure gold to ten ounces of fine silver. II. That member countries would agree to buy and sell from and to the Fund, and from and to one another, gold and silver together and jointly, at the same rate and in the same ratio as above. III. That the Fund should have power: a. To alter permanently, by a four-fifths majority vote, the proportions of gold and silver set forth above in I and II, only when a permanent and fundamental change P R O C E E D I N G S AND D O C U M E N T S 329 in the average yearly rate of production and consump tion of both metals has taken place; and (p. 4) b. To eliminate silver entirely but temporarily from its joint purchases and sales of gold and silver, and to per mit member countries to do likewise, only when and just as long as, due to an increase in the price of silver, over and above an agreed ceiling, the price of one ounce of pure gold in the basic composite unit as defined under I and II above, should be less than the agreed minimum price of thirty-five U. S. dollars per ounce. T he Mexican Delegation submits to this Conference the fol lowing RESOLUTION: A. That the Fund shall determine the feasibility of linking silver with gold for international monetary purposes, in accordance with the formula preinserted or any other formula; B. That the Fund shall be authorized to carry out whatever policy it deems appropriate as regards the proper role and function of silver within the international monetary struc ture. The Agenda Committee recommends that this proposal be re ferred to Committee 1 on the use of Silver for International Monetary Purposes. 2. Proposal on enemy assets, submitted by the Polish Delegation: I. That the members of the United Nations Monetary Fund approach at the earliest possible time the neutral countries with a view to securing their cooperation in blocking all the assets of Axis governments and nationals located in neutral territory; II. That the blocked assets referred to above be liquidated by an appropriate United Nations agency and the proceeds used in settling the claims of the countries which are vic tims of Axis aggression; III. That the neutral countries which will collaborate in the above-mentioned measures become eligible for membership in the Fund and in the Bank. The Agenda Committee recommends that this proposal be referred to Committee 2 on Enemy Assets, Looted Property, and Related Matters. (p. 5) 3. Proposal on enemy assets and looted property sub mitted by the French Delegation: That Commission III consider and make recommendations concerning steps to be taken to prevent the enemy from sue- 330 MONETARY AND FINANCIAL CONFERENCE cessfully secreting funds in neutral territories or in United Nations territories under assumed names. The measures to be recommended should apply to beneficiaries of property looted by the enemy, whether such beneficiaries be enemy nationals, or their associates of whatever na tionality. They should be directed in particular against Axis leaders and their collaborators in occupied countries, war criminals and associates, who might attempt, by retaining control of such funds, to perpetuate their influence, power and ability to plan future aggrandizement and domination in the post-war period. The Agenda Committee recommends that this proposal be referred to Committee 2 on Enemy Assets, Looted Property, and Related Matters. 4. Proposal concerning the liquidation of the Bank for Interna tional Settlements, submitted by the Norwegian Delegation: Be it resolved that the United Nations Monetary and Financial Conference recommends the liquidation of the Bank for Interna tional Settlement at Basel. It is suggested that the liquidation shall begin at the earliest possible date, and that the Governments of the United Nations now at war with Germany, appoint a Com mission of Investigation, in order to examine the management and transactions of the bank during the present war. The Agenda Committee recommends that this proposal be re ferred to Committee 2 on Enemy Assets, Looted Property, and Related Matters. 5. Proposal for an international agreement on maintenance of high levels of employment submitted by the Australian Delega tion. W hereas the raising of standards of living throughout the world must be the primary aim of economic policy and the most essential conditions for this and for the achievement of the objec tives set out in Article I of the International Monetary Fund are the promotion and maintenance of high levels of employment; and (p. 6) W hereas the operations of the International Monetary Fund and other forms of international economic cooperation will have the best prospects of success if member countries by domestic measures maintain high levels of employment and consumption and by so doing enable the accumulation of persistent credit (and debit) balances on international account to be avoided; This Conference RESOLVES that Governments which are to be P R O C E E D I N G S AND D O C U M E N T S 331 invited to accept an International Monetary Agreement should be invited to accept concurrently an international agreement in which the signatories will pledge themselves to their own people and to one another to maintain high levels of employment in their respective countries, and to exchange information on measures necessary to prevent the growth of unemployment and its spread to other countries. The Agenda Committee recommends that this proposal be re ferred to Committee 3 on Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. 6. Proposal remanded to Commission III from Commission I con cerning the settlement of abnormal indebtedness arising out of the war, submitted to Commission I as Alternative G by the Delegation from India: To promote and facilitate the settlement of abnormal indebt edness arising out of the war. The Agenda Committee recommends that this proposal be re ferred to Committee 3 on Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. 7. Proposal concerning the use of members’ gold contribution to the Fund as coverage for note issuance, submitted by the Nor wegian Delegation: Member States whose note issue, according to their monetary legislation, bears some relation to the holdings of gold and/or gold convertible exchange of their central bank or some other institution, are advised to allow their gold contribution to the Fund to be regarded as part of the gold coverage of the note issue. Member States possessing rules limiting their note issue, are advised to regard notes held by the Fund as additional fiduciary money, which should not be included in the amount of notes bearing any required relation to prescribed legal cov erage. (p. 7) The Agenda Committee recommends that this proposal be referred to Committee 3 on Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. 8. Proposal concerning a political prerequisite for admission of Germany and Japan to membership of the Fund or Bank, sub mitted by the Norwegian Delegation: 332 MONETARY AND FINANCIAL CONFERENCE Be it resolved that the United Nations Monetary and Finan cial Conference is of the opinion that neither Germany nor Japan should be admitted to membership of the United and Associated Nations Monetary Fund or Bank for Reconstruction and De velopment until the country in question has been admitted to the planned Political World Organization. The Agenda Committee recommends that this proposal be re ferred to Committee 3 on Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. 9. Proposal for a conference on commercial policy submitted by the Delegation from Peru: W hereas the International Monetary Fund is devised to main tain orderly exchange arrangements and to lend help to member countries by supplying their needs of foreign exchange of a temporary nature not due to fundamental disequilibrium in their international balance of payments; W hereas the Fund is not meant to deal with basic economic factors which affect the rate of employment and production in the world at large; W hereas the Bank will, as its name implies, act only in the fields of Reconstruction and Development; W hereas the successful operation of these two institutions is dependent on the smooth development of economic phenomena free from crises of a disruptive nature; and, W hereas this condition requires the relaxation of artificial trade barriers to attain greater freedom of commerce; the pro vision of adequate markets for staple products on which so many national economies depend; and the attainment and maintenance of a high degree of employment and production which will raise the stadards of life and conditions of labour everywhere, which must be one of the primary objects of economic policy; R esolved that for the successful attainment of the objects to be pursued by the International Monetary Fund and the Bank for Reconstruction and Development a Conference of the United and Associated Nations on Commercial Policy be called to make recommendations for the achievement of greater freedom of commerce and for the orderly (p. 8) marketing of staple products; and that, in the sense of this Conference, the nations here assembled should pursue policies to promote the fuller em ployment of the nations’ resources both of men and materials. P R O C E E D I N G S AND D O C U M E N T S 333 The Agenda Committee recommends that this proposal be re ferred to Committee 3 on Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. 10. Proposal on status of earmarked gold submitted by the Mexi can Delegation: W hereas the practices for earmarking gold might not coincide in all particulars in different countries; W hereas earmarked gold is part of the monetary reserve of such countries and therefore should be free from all restrictions as to its use, transfer, and transportation; and W hereas , in order to avoid unnecessary movements of gold and thereby reduce to a minimum the cost and risks involved, it would be convenient to adopt a common international policy with respect to such gold; R esolved that the countries represented at this Conference agree to extend to earmarked gold the same treatment and immunites they may agree to give to the gold and other assets of the International Monetary Fund. The Agenda Committee recommends that this proposal be re ferred to Committee 3 on Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. Mr. Chairman, all of the proposals received to date by the Agenda Committee have now been placed before Commission III together with recommendations of the Agenda Committee—namely: that there be established in this Commission three “ad hoc” com mittees to consider these proposals and to make recommenda tions to the full Commission concerning action to be taken at this Conference with respect to the general subject assigned to each committee. Respectfully yours, (Signed) L udwik Grosfeld (Poland) L u d w ik G r o s f e ld , Chairm an (Signed) J. W. B ey en (Netherlands) J. W. B e y e n (Signed) F ernando Mardones (Chile) F ern a n d o M ard on es (Signed) H ugo Garcia (Uruguay) H ug o G a r c ia (Signed) George B lowers (Ethiopia) G eorge B lo w e r s To the Honorable Eduardo Suarez Chairman of Commission III 334 MONETARY AND FINANCIAL CONFERENCE Document 236 (p. 39a) sa/ 1/43 A lt e r n a t iv e B (Suggested as an alternative to A lternative A, Section 3, P aragraph (c) of Article IX, Page 39) (c) Exchange transactions in the territory of one member involving the currency of any other member, which evade or avoid the exchange regulations prescribed by that other member and authorized by this Agreement, shall be an offense in the territories of all members. 7 /9 /4 4 J.S. Art. IX Section 2 Document 237 (p . 26-G) / S A / 1 44 A lt e r n a t iv e G (The following material is suggested as an addition to Com bined Alternatives A and B for Joint Statement VII, 1, 2, and 3 and Additional Material on p. 27 of Document SA /1.) (a) Add to Section 2: Directors shall continue in office until their successors are appointed or elected. (b) Add as a new section after Section 3: 4. If the office of an elective director becomes vacant more than ninety days before the end of his term, another director shall be elected for the remainder of the term by the members who elected the former director. A majority of the votes cast shall be required for election. While the office remains vacant, the alter nate of the former director shall exercise his powers, except that of appointing an alternate. (Renumber subsequent sections.) 7 /9 /4 4 J.S. Art. V II Sections 1, 2 & 3 P R O C E E D I N G S AND D O C U M E N T S 335 Document 238 C I/ 1 / R P 2 Report of the Reporting Delegate of Committee 1 of Commission I on the Purposes, Policies, and Quotas of the Fund (Ju ly .9, 1944) Mr . C h a i r m a n : Since I had the honor to present to your Commission my first report on July 5th, your Committee I on Purposes, Policies, and Quotas of the Fund held three meetings, on July 5th at 4 :00 p.m.; on July 6th at 10:00 a.m.; and on July 8th at 9 :30 a.m. I consider it advisable, for the convenience of the members of this Commission, to report on the progress of the Committee's work by following the order of the Committee's assignments as stated in Document No. 51, and by referring to the Articles and sections of Document SA/1. At the end of this report I shall submit to the Commission the actual text of the provisions recommended by Committee 1 to your commission for acceptance, and a summary record of the disposition thus far made by the Committee of other matters submitted to it. Article I, Alternative A S e c tio n 1 (p. l a ) The purpose of section 1 of Alternative A was to substitute for the words of Section 1 of Article I of the Joint Statement “through a permanent institution which provides . . the words “by providing permanent machinery . . The Committee has shown a preference for the original word ing of the Joint Statement although it recognizes that the insti tution mentioned in the Joint Statement may be the Fund itself, and that the Fund would provide permanent machinery for con sultations on international monetary problems. S e c tio n 2 (p. l a ) As I have reported on page 2 of my first report to your Com mission, an Alternative C, Section 2 of Article I, (page lc) pre sented by the Indian Delegation raised a question of principle regarding the purposes of the Fund. The question was referred to the Drafting Committee, which was also asked to examine three other alternatives to the same Section 2 of Article I presented by the Colombian, French, and New Zealand Delegations. 336 MONETARY AND FINANCIAL CONFERENCE After considerable discussion on all issues involved in these alternatives, both in the Drafting Committee and in Committee 1, the full Committee accepted a proposal by the Drafting Committee 7/9/44 to (p. 2) add to Section 2 of Article I of Alternative A, page la, after the words “of high levels of employment,” the words “and to the development of the sources of productive power in all mem ber countries . . ", and to delete the words “and real income”. The Committee was guided in its decision by the general prin ciple that the declaration of the purposes and policies of the Fund must be in agreement with the real objectives and powers of the Fund as stated in the provisions contained in its constitutional document and with the means put at its disposal. The Committee thought that the direct purpose which the Fund can and must pursue by using the powers and means at its dis posal is to facilitate the expansion and balanced growth of inter national trade and that the promotion of high levels of employ ment and the development of the productive resources of the country may be and, it is hoped that it will be, an indirect result of the activities of the Fund. The Committee reached this decision because it felt obligated to limit its considerations to the one particular plan of post-war collaboration of the United and Associated Nations which is now under discussion, namely, the Fund. In view of the fact, however, that the united effort of our countries will not be limited to the constitution of the Fund alone, and that another very important plan of economic collaboration, that of the Bank for Reconstruction and Development, is under discussion, the Committee considers it necessary that a general preamble to the final document of the Conference be prepared in which all basic economic objectives of the work of the Confer ence regarding both the Fund and the Bank are clearly stated. The Indian Delegation, which presented Alternative C, and other delegations, declared that while they considered the amend ment of Section 2 of Article I, as proposed above by the Com mittee, an improvement, they reserved the right to raise the question later if their point of view did not find adequate expres sion in the general preamble mentioned above. S e c t io n 3 (p . l a ) Some doubts had been expressed by members of the Commit tee with regard to the exact meaning of the words “thus giving them time” which appear in Alternative A as well as in the Joint Statement. In order to disperse such doubts, the Committee, at P R O C E E D I N G S AND D O C U M E N T S 337 the proposal of the Drafting Committee, decided to propose the substitution of these words by the following: “thus providing them with opportunity . . S e c t io n 4. (p . l a ) As I had the opportunity to explain in my first report, the Committee examined Alternatives B, D, and E, relating to Sec tion 4 of Article I. These alternatives are to be found on pages lb and lc of Document SA/1. 7 /9 /4 4 (p. 3) It has been already reported that the Committee thought that the alternatives mentioned above were closely connected with Article IV of the Joint Statement, the examination of which has been assigned to Committee 2 of your Commission. Committee 1 accordingly decided to refer the subject to the Drafting Com mittee on the understanding that it would not make its report until the provisions of Article IV have been agreed upon. The Drafting Committee and the full Committee are now in a position to take up this subject since they have the text of Alter native A of Article IV (pages 17a and 17aa of Document SA/1) which has been discussed in Committee 2 of your Commission. S e c tio n 5 (p . l a ) Section 5 of Alternative A of Article I has been adopted with out any change. S ec t io n 6 (p . l a ) The Committee has examined the report of the Drafting Com mittee on Alternatives A and B of this section (pages la and lb of Document SA/1) and has accepted the proposal of the Drafting Committee to add at the beginning of Section 6 of Alternative A the following words: “In accordance with the above objectives ff The Committee has also accepted the recommendation of the Drafting Committee to include at the end of Article I the words “The Fund shall be guided in all its decisions by the purposes set forth above,” which are at the end of Alternative A of Article I, page la. The Committee has also examined a new Alternative H (page Id of Document SA/1) which is similar to Alternative G (page lc) which the Committee had already discussed and which it has already reported to your Commission. During the discussion of this new alternative, members of the Committee expressed their views about the advisability of including in the Agreement a clause referring to the balances accumulated during the war, 338 M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E along the same lines as that already reported to your Commis sion (page 3 of my first report). Following the same procedure as that adopted with reference to Alternative G, the Committee agreed to refer Alternative H to your Commission. The only section, therefore, of Article I of the plan which is still in the Drafting Committee is Section 4, mentioned above. The Committee then proceeded to the examination of the sec tions of Article II, assigned to it. Article II, Alternative A, Section 1 (p . a) Countries Eligible for Membership Upon the advice of the Drafting Committee, the Committee has decided to recommend the acceptance of Section 1 of Alternative A, Article II. 7 /9 /4 4 (p. 4) In view, however, of the fact that some members ex pressed doubts about the legal accuracy of the wording, the Committee, following the advice of the Drafting Committee recom mends that the first paragraph of this section should begin with the words, “At the outset,” and that the second paragraph should begin with the word “Subsequently”. The precise wording of this section, as of all other sections adopted by the Committee, is given in an appendix attached to this report. S e c t io n 2 (p . a ). Quotas. This section has not been discussed by the Committee because the document referred to on page 1 of the first report to the Com mission was not yet available. S ec t io n 3 (p . 2 ) Time and Place of Payment. The Committee has accepted the opinion of the Drafting Com mittee that the language in this clause was not susceptible of misinterpretation as some members suggested and that it was, therefore, satisfactory. The Committee recommends, therefore, the adoption of this section without amendment. In this connection, the Committee discussed Alternative B, (page 2a), which is proposed as an addition to Section 3 of Alter native A. The proposer of this amendment explained to the Committee that in some of the countries occupied by the enemy the currency system has been completely disorganized and that P R O C E E D I N G S AND D O C U M E N T S 339 special arrangements will have to be made by the Fund in the case of such countries with regard to the initial payment of their quotas. It was, therefore, proposed that the Fund should be free to provide for such special arrangements if, in its own discretion, it considers them necessary, and provided that the Fund does not suffer any loss as a result of such arrangements. The discussion of this specific proposal led to the discussion of the general question of how far a number of provisions in the agreement should apply to liberated countries, and the Commit tee agreed to recommend to your Commission the appointment of an ad hoc Committee to consider these problems. In accordance with the procedure determined by the Steering Committee, the Chairman of Committee I, who has been em powered to appoint such ad hoc committees as may be necessary, has appointed an ad hoc committee to consider the problems of liberated countries. This committee, so appointed, has already started the examination of the subject. 7 /9 /4 4 (p. 5) Alternative A, Article II, Section 4 (p . 3 ) Adjustm ent of Quotas This section was referred to the Drafting Committee, which has proposed the substitution of the word “shall” for the word “may” ; the addition after the words “of five years” of the words “review and, if it deems it appropriate, propose an adjustment of” ; and the deletion of the word “adjust”. The full Committee accepted these proposals. The new word ing of this section, as proposed, is given at the end of this report. S ec t io n 5 (p . 4 ) Initial Payments. The Drafting Committee has recommended and the full Com mittee has agreed to adopt Section 5 with a slight alteration in wording designed to prevent any possible misconstruction. Con sequently, it is proposed that the beginning of Section 5 should read as follows: “Each member shall pay in gold as a minimum either (a) twenty-five percent of its quota, or (b) ten percent of its official holdings of gold and gold convertible exchange, which ever is the smaller, o n ---------------------.” After the addition of the words as a minimum, it becomes clear that any member is entitled to pay a higher percentage of its quota in gold if it so wishes. 340 MONETARY AND FINANCIAL CONFERENCE S ec t io n 6 (p . 4 ) Payments when quotas are changed. The Committee has decided to recommend the adoption of para graphs (a) and (b) of this section without alteration. The Committee has discussed Alternatives B and C (page 4a) which are proposed as additions to Alternative A, Section 6 (page 6). As both alterations refer to liberated countries, the Com mittee decided to charge the ad hoc committee, mentioned above, with their examination. In addition to Articles I and II which have been already dealt with in this report, Article IX, Sections 1, 2, 3, and 4 have been assigned to your Committee I. The Committee had discussed the subjects with which these sections deal and has referred the greater part of them to the Drafting Committee. The present stage of the Committee’s work with regard to this Article may be reported as follows: Article IX— O bligations o f Member Countries Alternative A, Section 1— Purposes and Scope of Additional Undertakings, (p . 3 8 ) The wording of this section is to be inserted later. Conse quently, consideration has been deferred. 7 /9 /4 4 (P. 6 ) SECTION 2 —Gold Purchases Based on Parity Prices (p . 3 8 ) . In discussing this section, the Committee felt that the words “from or to the monetary authorities of another member,” might convey the impression that member countries were free to buy or sell gold from or to other sources at any price. It was agreed that this was not the intention of the proposers of Alternative A, Section 2. The Committee, therefore, decided to refer this section to the Drafting Committee. After the Drafting Committee had presented its first report, it became evident that this subject was closely connected with subjects relating to the operation of the Fund, which have been assigned to Committee 2 of Commission I. •The Committee thought, therefore, that it would be advisable to send this section back to the Drafting Committee with instruc tions to consult with Committee 2 and report on the matter. The same decision has been taken for the same reasons with regard to Alternative A, Section 3—Foreign Exchange Dealings Based on Par Values, Paragraph (a), page 39. This paragraph (a) is, therefore, still in the Drafting Committee. P R O C E E D I N G S AND D O C U M E N T S 341 3, Paragraph (b ), Alternative A (p. 39). The Committee agreed in principle with this paragraph (b), but decided to refer it to the Drafting Committee for reconsid eration. Some information regarding the recommendation on this paragraph which the Drafting Committee will make, is given at the end of this report. S ec t io n 3, Paragraph ( c ) , Alternative C (p. 3 9 ) . It has been suggested that the last line in this paragraph read ing : “not be enforceable in the territory of any member”, be sub stituted by the following: “be an offense in the territory of any member.” This proposal has been referred to the Drafting Com mittee. S e c t io n 4 —Exchange Controls on Current Payments (p . 4 0 ) . During the discussions of this section, it has been recognized that a distinction must be made between exchange control and exchange restrictions. However, as the discussion developed some uncertainty as to the character of restrictions which member countries obligate themselves to eliminate under this section, the Committee decided to request Commission I to clarify the matter and to postpone further consideration of it until Committee 2 had also discussed the question. The full text of provisions recommended by Committee I is attached to this report as an appendix. S e c t io n K . V a r v a r esso s Reporting Delegate 7 /9 /4 4 APPENDIX I T e x t o f P r o v is io n s R e c o m m e n d e d b y C o m m i t t e e 1 (J u ly 9, 1944) Article I. Purposes and Policies of the Fund The purposes of the International Monetary Fund are: 1. To promote international monetary cooperation through a permanent institution which provides the machinery for consul tation on international monetary problems. 2. To facilitate the expansion and balanced growth of inter national trade, and to contribute thereby to the promotion and maintenance of high levels of employment and to the develop ment of the sources of productive power in all member countries as primary objectives of economic policy. (Subject to revision.) 3. To give confidence to member countries by making the Fund’s resources available to them under adequate safeguards, 342 M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures de structive of national or international prosperity. 4. Still in the Drafting Committee. 5. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade. 6. In accordance with the above objectives, to shorten the periods and lessen the degree of disequilibrium in the interna tional balances of payments of member countries. The Fund shall be guided in all its decisions by the purposes set forth above. Article II. Subscription to the Fund SECTION 1. Countries Eligible for Membership At the outset the members of the Fund shall be those of the countries represented at the United Nations Monetary and Finan cial Conference whose governments accept membership in the Fund. Subsequently membership in the Fund shall be open to other countries at such times and in accordance with such terms as may be prescribed by the Fund. S e c t io n 2. Quotas Not yet taken up by the Committee. 7/9/44 (P. 2 ) S e c t io n 3. Time and Place of Payment Each member shall provide the Fund at the appropriate de pository with the full amount of its quota on or before the date fixed for exchange transactions in its currency to begin. Any member whose quota is increased shall provide the full amount of the increase within thirty days of the date on which the member approves the increase in its quota. S ec t io n 4. Adjustm ent of Quotas The Fund shall at intervals of five years review and, if it deems it appropriate, propose an adjustment of the quotas of the mem bers. It may also, if it thinks fit, consider at any other time the adjustment of any particular quota at the request of the member concerned. A four-fifths majority vote shall be required for any change in quotas and no quota shall be changed without the con sent of the member concerned. P R O C E E D I N G S AND D O C U M E N T S 343 Initial PaymentsEach member shall pay in gold as a minimum either (a) twenty-five percent of its quota, or (b) ten percent of its official holdings of gold and gold convertible exchange,1 whichever is smaller, o n ---------------. In the case of any member occupied by the enemy whose holdings are not ascertainable as of---------------, the Fund shall fix an appropriate alternative date. The data neces sary to determine official holdings of gold and gold convertible exchange shall be furnished by the members as provided in this Agreement. Each member shall pay the balance of its quota in its own currency. S e c tio n 5. Payments When Quotas are Changed (a) Each member whose quota is increased shall pay twentyfive percent of the increase in gold. Each member shall pay the balance of any increase in its own currency. If, however, on the date the member approves an increase, its holdings of gold and gold-convertible exchange are less than its new quota, the Fund may reduce the portion of the increase to be paid in gold. (b) Each member whose quota is reduced shall receive from the Fund within thirty days of the reduction an amount in its own currency or gold equal to the reduction. In making this pay ment, the Fund shall pay to such member only the amount of gold necessary to prevent reducing the holdings of the Fund of that currency below seventy-five percent of such new quota of the member. S ectio n 6. 7 /9 /4 4 (P. 3) Article IX. Obligations of Member Countries Purpose and Scope of Additional Undertakings Consideration deferred. S ectio n 2. Gold Purchases Based on Parity Prices In Drafting Committee. S ec tio n 3. Foreign Exchange Dealings Based on Par Values (a) In Drafting Committee. (b) Each member undertakes, through appropriate measures authorized under this agreement, not to permit within its juris diction an appreciation or depreciation of the exchange value of its own currency in terms of gold beyond the range prescribed under (a) above. In particular, a member whose monetary au thorities in fact freely buy and sell gold or gold convertible ex- S ec tio n 1. ’The phrase “gold and gold convertible exchange” is subject to definition and to such change in terminology as may be agreed upon. 749013—48—23 344 MONETARY AND FINANCIAL CONFERENCE change within the prescribed range, to settle international trans actions, shall be deemed to be fulfilling this undertaking . . .* (c) The Drafting Committee will report to the full Committee at its next meeting that this paragraph contains matters of legal substance and is, therefore, not within the competence of a draft ing committee. Exchange Controls on Current Payments Referred to Commission I. S e c t io n 4. II D is p o s itio n b y C o m m itte e 1 o f A d d i t i o n a l P r o v is io n s S u b m itte d f o r I n c l u s i o n i n t h e A r t i c l e s A s s ig n e d t o I t A rtic le I. Purposes of the Fund Alternative F Correlation of international exchange policy and international investment policy. Consideration deferred. 7 /9 /4 4 (P- 4) Alternatives G and H Liquidation of wartime indebtedness. Referred to Commission I. Alternatives I and J Alternative wording of Section 2 of Article I rejected by Draft ing Committee in favor of recommended text given above. Alternative K Facilitation of multilateral clearing. Not reached by Committee prior to adjournment on July 8, 1944. Article II. Subscription to the Fund Alternative B—Page 2a Special arrangements for time and place of payment of quotas by occupied countries. Referred to ad hoc committee of Commission I. Alternatives B and C—Page 4a Initial subscription payable in gold by countries suffering dam age by enemy occupation. Referred to ad hoc committee of Commission I. * This language will be recommended by the D rafting Committee to Com mittee 1 a t its next meeting, but has not been passed upon by the full Com mittee. P R O C E E D I N G S AND D O C U M E N T S 345 Alternative C—Page 2b, and Alternative D—Page 4b Inclusion of silver in quota subscriptions. Not reached by the Committee prior to adjournment July 8. Article IX. Obligation of Member Countries S e c t io n 8, Alternative A Cooperation of members in enforcing permissible exchange restrictions. Not reached by the Committee at the time of adjournment, July 8. 7 /9 /4 4 Document 239 CI/3/RP2 Submitted to Commission I Report of Committee 3 on Organization and Management of the Fund Committee 3 held altogether six regular meetings. The work ing assignment of the Committee was somewhat changed and this report takes into account these changes. The Committee es tablished several sub-committees. One ad hoc Committee of Com mission I discussed on July 8th problems connected with the elec tion of the Executive Directors. The following scheme may introduce-this report by presenting the skeleton of the fundamental organization of the Fund as ensuing from the provisions of the Draft agreed upon in Com mittee 3 up to now. Board o f G overnors: Jurisdiction: All powers except those assigned by the Consti tution to other agencies or expressly delegated to the Execu tive Directors. Members and Alternates: Appointed by the government of each member country; serve subject to the pleasure of their respective governments. Meetings: At least annually and in addition if provided for by the Board or convened by the Executive Directors. They should also be convened whenever requested by members having one quarter of the aggregate votes or by five member countries. 346 MONETARY AND FINANCIAL CONFERENCE Voting: If not otherwise provided for by a majority of the aggregate votes cast. Specific forms of voting (by telephone, cable, etc.) may be arranged if provided for by the regula tions of the Board. Quorum: Half of the member countries representing not less than two-thirds of the total voting power. Chairman o f the Board o f G overnors: Jurisdiction: Not specifically indicated in the Constitution. Selection: Selected by the Board of Governors for a period determined by this Board. Eligible are either members of the Board of Governors or the Managing Director. 7 /9 /4 4 (P. 2 ) E xecutive Directors: Jurisdiction: Expressly delegated by the Board of Governors within the limits contained in the Constitution and functions directly assigned by the Constitution. Responsible for the con duct of the general operations of the Fund. Selection of Members: (x) shall be appointed by the (x) members having the largest quotas, (x) shall be elected bi ennially in accordance .with separate provisions. Executive Directors need not be Governors. Alternates: May participate in meetings, but shall not vote if regular member present. Meetings: Executive Directors are in continuous session at the principal office. Voting: If not otherwise provided for, majority of the aggre gate votes cast. Each Executive Director casts the number of votes which actually counted towards his appointment or election. Quorum: Majority of the Directors representing not less than one-half of the voting power of all Directors. Managing Director D ir e c to r s): (A utom atically Chairman of the Executive Jurisdiction: Chief of the operating staff. Conducts business under the direction of the Executive Directors. Responsible for internal organization. Has no vote except a deciding vote in case of an equal division. Selection: Selected by the Executive Directors. Shall not be Governor or Executive Director. Serves according to contract; however, shall cease to hold office when the Executive Direc tors so decide. P R O C E E D I N G S AND D O C U M E N T S 347 Special Com m ittees: May be established by the Board of Governors or by the Executive Directors. Members need not be limited to Gover nors or Executive Directors. Staff: Appointed and dismissed by Managing Director. Must not be influenced by any member in the discharge of duties. In ap pointing staff due regard has to be paid to selecting personnel on as wide a geographical basis as is possible. 7 /9 /4 4 (p. 3) This report follows the text of the Draft and of other documents duly distributed. Board of Governors.—Joint Statement V II, 1 (pages 24 and 24a of the D raft). The committee jointly considered Alternatives A and B. By unanimous consent the text of Alternative A was accepted with the following modifications: Section 1 ( a ) : In the introductory sentence the passage “The administration of the Fund shall be vested. is to be replaced by “All powers of the Fund shall be vested...” Furthermore, the last sentence of this paragraph shall read: The Board shall select a Chairman from its members. The Managing Director, however, may be eligible to this office as well. ( b ) : To the 7 items enumerated, indicating the subject matters which cannot be delegated, an 8th item is to be added, namely: (8) Decisions concerning the distribution of the net income of the Fund. (c) : The second sentence of this paragraph has to be changed to read: “Meetings of the Board shall be convened by the Execu tive Directors whenever requested by members having one quarter of the aggregate votes or by five member countries.” Executive Directors—Joint Statement VII, 1, 2 and 3. The final consideration of the Committee was based on a Docu ment, without number, entitled “Final Alternative Submitted by the Special Subcommittee Appointed to Consider All Proposals Relative to the Executive Directors”. This Document is the result of the work of a Subcommittee appointed to discuss all matters concerning the Executive Directors, the Managing Director and the Staff. Committee 3 expressed consent to the text of this Docu ment with the exception of the following provisions: 2. Formation of the Executive Directors. 348 MONETARY AND FINANCIAL CONFERENCE There was general agreement that a certain number of member countries with the largest quotas should appoint Executive Direc tors and their Alternates. The other Executive Directors are to be selected by the rest of the member countries, according to a specific procedure to be discussed. Such a specific procedure is included in Schedule B of Document 152 (pages 26b and 26c of the Draft). Two Alternatives were presented to modify the pro cedure as suggested in Schedule B. One of them (Alternative D) is contained in Document No. 179 (page 26e of the Draft). The other (Alternative E) is contained in Document 214 (page 26f of the D raft). However, the Committee did not take action on para graph 2 of the “Final Alternative”, because several members expressed doubts whether a fruitful discussion could take place before the quota participation of the member countries is known. It should be noted that the Chairman of Commission I on July 8th established an Ad Hoc Committee of this Commission to discuss controversial points pertaining to the election of the Executive Directors. 7 /9 /4 4 (p. 4) 3. Alternate Directors. The “Final Alternative” provides that every Executive Director may appoint an Alternate. An Alternative was presented to this provision which is contained as Alternative C in Document 178 (page 26d of the Draft). According to this Alternative C the Alternates for every Executive Director shall be elected. Alterna tive C formulates expressly (what is implied in the Final Alterna tive) that an Executive Director and his Alternate need not belong to the same country. Because no agreement could be reached on the point whether Alternates of elected Executive Directors should be elected as well, or whether they should be appointed by the respective Executive Director, the Committee submits this item to Commission I for decision. 8. Managing Director. The Committee consented unanimously to the provisions included in the “Final Alternative”. Thus Section 4 of Article VII (pages 27 and 27a of the Draft) need not be considered. Election of the Executive Directors. The Committee did not take action on Schedule B of the combined Alternatives contained in Document 152 on the balloting for the elective Executive Directors (pages 26b and 26c of the Draft) because this election procedure is substantially connected with the PROCEEDINGS AND DOCUMENTS 349 other problems related to the Executive Directors on which action was deferred. Voting—Joint Statement VII, 2, 3 (pages 26 and 26a of the Draft) Committee 3 considered voting only with reference to the Board of Governors, because voting by the Executive Directors is regu lated in the pertinent section on Executive Directors. The discus sion was based on Alternatives A and B, contained in the Draft. The first paragraph of Alternative A was accepted in principle. Thus unless otherwise provided for each Governor should have a uniform and rigid number of votes in addition to his votes directly related to his quota participation. The Committee deferred action on the number of additional uniform votes. The second paragraph of Alternative A contains specific provi sions on votes required under Article III. It should be noted that the member, who presented Alternative A, interpreted this pro posal by restricting the respective decisions under Article III, to two items: (a) to the decision of the Fund of suspending a member from making further use of the Fund’s resources on the ground that it is using them in a manner contrary to the purposes and policies of the Fund (III, 2d of the Joint Statement) and (b) to the decisions of the Fund in exercising its discretion in determining whether and on what terms it shall waive the conditions mentioned under III, 2a to d of the Joint Statement. The Committee expressed its desire that paragraph 2 should be more clearly drafted if adopted for the Final Draft. 7 /9 /4 4 (p. 5) However, as to the merit of this paragraph three opinions were advanced: one approving it, as contained in Alter native A; the other modifying it by replacing the unit of two hundred thousand United States dollars by two million United States dollars and the third outrightly opposing this deviation from the normal voting procedure. These three Alternatives are hereby submitted to Commission I for decision. Paragraph 3, containing the provision that unless otherwise provided for, all matters in the Board of Governors shall be decided by a majority of the aggregate votes cast, was accepted. The Committee included in this Section from Alternative B the modified provision according to which a quorum of the Board of Governors should consist of not less than two-thirds of the voting power provided it being exercised by at least one half of all Governors. 350 MONETARY AND FINANCIAL CONFERENCE Publication of Reports—Joint Statement VII, 4 (pages 28 of the Draft) The Committee considered and accepted Alternative A as con tained in Section 5 of the Draft. It should be noted that one of the members called attention to the fact that if in the first years follow ing the war specified statements concerning the Fund’s holdings of currencies of members would be published this might violate the interest of member countries. No objection was made that such specified data on currency holdings be confidentially communicated to member countries. Depositories—Joint Statement—No Provision (pages 29, 29a and 29b of the Draft) The Committee discussed the three Alternatives (A, B and D ). Alternative C was dropped by unanimous consent. Paragraph (a) of Alternative A was accepted. However, no agreement was reached on paragraph (b) about the selection of depositories where the Fund may hold assets other than local currency. It was agreed upon to refer the decision on this point to Commission I. One of the members found Alternative A acceptable with the modification that not four members having the largest quotas may be designated as depositories but five or more members. Thus four Alternatives go to Commission I, for decision. It should be noted that the first two sentences of Alternative B in reality compose an Amendment and not an Alternative, thus that they may be attached to either of the Alternatives. Form of Holdings of Currency—Joint Statement—No Provision (p. 29 of the Draft) Section 7 as contained in Alternative A has been accepted. Distribution of N et Income—Joint Statement—No Provision (pages 32 and 32a of the Draft) Alternative A as contained in the Draft (Additional Section— 7 /9 /4 4 10—to Article VII) has been accepted with the (p. 6) modifi cation that decisions pertaining to the distribution of the net income have to be taken by the Board of Governors and that this power cannot be delegated to the Executive Directors. (On page 32a the first line “Alternative B continued” should read “Alterna tive A continued”) . Miscellaneous Poivers—Joint Statement—No Provision (page 33 of the D raft). Items 4 and 5 of this Article which was intended to be included P R O C E E D I N G S AND D O C U M E N T S 351 as Section 11 in Article VII of the Draft, were accepted as con tained in the Draft. The Committee assumed that the rules and regulations mentioned in item 5 may relate both to member countries and to agencies of the Fund. Items 1 to 3 were assigned to Committee 4 of Commission I for consideration. Settlement of Accounts with Governments Ceasing to be Members —Joint Statement—VIII, 2 and 3 (pages 36, 36a, 36b and 36c of the D raft). Alternatives A and B were presented as Section 3 of Article VIII of the Draft to the Committee. They are contained in Docu ments 124 and 180. The Committee referred this matter to a Sub committee. The Subcommittee did not reach an agreement concerning Alternatives A and B and its report will be submitted to the Committee as a separate document. It was not available at the time of the writing of this paper. Liquidation of the Fund—Joint Statement—No Provision (pages 37, 37a, 37b and 37c of the Draft) Alternatives A and C as contained in Documents 211 and 220 were presented to the Committee. The same Subcommittee, which is in charge of the Article on Settlement of Accounts With Govern ments Ceasing to be Members will report on this matter to the Committee. This report is not yet available. Furnishing Information—Joint Statement—No Provision (pages 14c and 14d of the Draft) Section 11 of Article III was considered by the Committee according to Alternative C (Document 182) and Alternative D (Document 203, page 14e of the Draft). The report of the Special Committee on Furnishing Information of the Pre-Conference Agenda Committee, June 28, 1944 (Document 129) was duly distributed. No agreement was reached on this point because the member country introducing Alternative D sharply opposed the extent of the minimum information as enumerated under items 1 to 12 in Alternative C. Committee 3 is hereby referring this item for decision to Commission I. The prevailing part of the assignment was disposed of by Com mittee 3. The Ad Hoc Committee of Commission I on the Election of the Executive Committee will proceed in its discussion. E r v in H e x n e r , 7 / 9 /44 Reporting Delegate 352 MONETARY AND FINANCIAL CONFERENCE Document 240 (202) C l/ 3 (C l/2 ) C o m m is s io n I : S t a t u s of C o m m it t e e A s s ig n m e n t s A s o f 6:00 p.m., J u ly 9, 1944 Com m ittee 1— Purposes , Policies9 and Quotas of the Fund Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I Without Decision No Action or Decision Deferred Article I —Purposes and Policies of the Fund Sec. 1 Sec. 2 Sec. 3 Joint Statement Drafting Committee's revision Drafting Committee's revision Sec. 4 XX Sec. 5 Alt. A Sec. 6 Drafting Committee’s revision Additional paragraph (Alt. A, p. la) Alt. A Alt. F, XX Alts. G, H Alt. K XX XX Article I I —Subscription to the Fund S ec. 1— C o u n tr ie s Eligible for Mem bership Sec. 2—Quotas Drafting Committee’s revision XX* PROCEEDINGS AND DOCUMENTS Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I W ithout Decision 353 No Action or Decision Deferred Sec. 3—Time and Place Alt. \ of Payment A l t . B ( p . 2 a) an d Alt. B & C (p. 4a) XX A lt. C (p. 2b) an d D (p. 4b) XX 7 /9 /4 4 (P -2 ) Sec. 4—Adjustment of Quotas Drafting Committee's R evision as amended Sec. 5—In itial P ay ments Drafting Committee’s : Revision Sec. 6—Payments when Quotas are Changed Alt. A Article I X —Obligations of Member Countries Sec. 1—Purpose and scope of additional undertaking XX* Sec. 2—Gold purchases based on parity prices XX Sec. 3—Foreign Ex change dealings based on par values XX Sec. 4—Exchange con trols on Current Pay ments Sec. 8 7 /9 /4 4 XX XX 354 MONETARY AND FINANCIAL CONFERENCE (p. 3) Com m ittee 2 — Operations of the Fund Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I W ithout Decision No Action or Decision Deferred Article I I I — Transactions with the Fund Sec. 1— Agencies Deal ing with the Fund A l t . A as amended Sec. 2—C o n d itio n s u p o n w h ic h a n y Member May Pur chase Currencies of Other Members par (1) Alt. A par. (2) Alt. A par. (3) XX par. (4) Alt. A Final Sentence Alt. A Sec. 2(a)—Conditions Governing Purchases for Capital Transfers Alt. A Sec. 3 — D e c la rin g Members Ineligible to Use Resources of the Fund Alt. A Alt. E (p.6d) Sec. 4—Limitations on Operations of Fund Sec. 5 —Operations for Purpose of Prevent ing Currencies Be coming Scarce par. (1) par. (2) XX Alt. A Drafting Committee’s revision Al t . A as amended P R O C E E D I N G S AND D O C U M E N T S 355 (p. 4 ) 1 Article and Section Referred to Commission I Without Decision Referred to Drafting or Other SubCommittee Language Accepted No Action or Decision Deferred Sec. 6—Multilateral In ternational Clearing Sec. 7— Acquisition by Members of Curren cies of Other Mem bers for Gold XX Alt. A Sec. 8— Other Acquisi tions of Gold by the Fund Sec. 9— Transferability and Guarantee of Assets of the Fund Par. (a) Par. (b) Par. (c) XX * Alt. A XX Alt. A Sec. 10— Charges and Commissions XX* Sec. 12— Consideration of Representations of the Fund XX Article IV — Par Values of Member Currencies Sec. 1— Par Values of the Currencies of Members Alt. A Sec. 2 XX Sec. 3 XX I Sec. 4 XX S e c . 5 — U n if o r m Changes in Par Value Sec. 6— Protection of the Assets of the Fund Sec. 7—Separate cur rencies within a Member’s Jurisdic tion 7 /9 /4 4 XX Revised Alt. A ii ! 3 is ! ; Alt. A ! 1 1 [ ; . I ! 356 MONETARY AND F I N AN C I A L CONFERENCE (P. 5) Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I W ithout Decision No Action or Decision Deferred Article V —Capital Tran sactions Sec. 1—Use of Re sources of the Fund for Transfers of Cap ital A l t . A , as amended Sec. 2—Limitations on Controls of Capital Movements A 11. A , as amended Article V I —Apportion ment of Scarce Currencies Sec. 1—General Scar city S u b s titu te Alt. A Sec. 2—Scarcity of the Fund’s holding S u b s titu te Alt. A Sec. 3—Administration of Restrictions on ■S u b s t i t u t e Scarce Currencies Alt. A Sec. 4—Effect of Other Internationa] Agree ments on Restric tions on Scarce Cur rencies ' S u b s titu te Alt. A Article X —Transitional Arrangements Sec. 1—Exchange re strictions and cur rency arrangements and p ra c tic e sretained X* X Sec. 2—Withdrawal of exchange restrictions X* X Sec. 3—Policy of the F u n d d u rin g th e transition period X* X Sec. 4 XX* 357 P R O C E E D I N G S AND D O C U M E N T S Article and Section Referred to Drafting or Other SubCommittee Language Accepted Referred to Commission I Without Decision No Action or Decision Deferred Article XT IT—Final Pro visions Sec. 5—Fixing initial par values i! XX* ! (P. 6) Com m ittee 3 — Organisation and Management of the Fund Article and Section Referred to Drafting or Other SubCommittee Language Accepted Referred to Commission I Without Decision A rticle I I I —Transactions with the Fund Sec. 11—Furnishing In formation Alts. C and D A rticle V I I —M anage ment of the Fund Sec. 1—Board of Gov ernors Combination of Alt. A & A lt. B, as amended Sec. 2—Executive Di rectors Drafting Committee’s Revision (in part) Sec. 3—Voting Drafting Committee's Revision Sec. 4—The General Manager In part Drafting Committee’s Revision Sec. 5—Publication of Reports Alt. A Sec. 6—Depositories par. (a) Alt. A j i No Action or Decision Deferred 358 MONETARY AND FINANCIAL CONFERENCE Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I W ithout Decision No Action or Decision Deferred Alts.A,B,& D referred to Commis sion I par. (b) Sec. 7— F o rm an d Holdings of Currency Alt. A Sec. 9—Location of Office XX Sec. 10—Distribution of Net Income of the Fund Alt. A, amended Sec. 11—Miscellaneous Powers item (4) Alt. B item (5) Alt. B (P . 7) Article V I I I —Withdraw al from the Fund Sec. 2—Suspension of Membership or Com pulsory Withdrawal XX* Sec. 3—Settlement of accounts with coun tries ceasing to be members XX Sec. 4—Liquidation of Fund XX i Com m ittee 4— Form and Status of the Fund Article and Section Language Accepted Referred to Drafting or Other SubCommittee Referred to Commission I Without Decision A rticle V I I —M anage ment of the Fund i No Action or Decision Deferred P R O C E E D I N G S AND D O C U M E N T S Article and Section Referred to Drafting or Other Sub com m ittee Language Accepted Sec. 8 — Relationship to other international organizations Sec. 11—Miscellaneous powers. Introduction and items (1), (2), and (3). Referred to Commission I Without Decision 359 No Action or Decision Deferred Alt. A Alt. B ! i Article V I I I —Withdraw al from the Fund Sec. 1—Right of Mem bers to Withdraw Alt. A Article I X —Obligations of Member Countries Sec. 5—Immunity of Assets of the Fund Alt. A Sec*. (> —Immunity from Suit Inclu d ed in new Sec. 5 Sec. 7—Restrictions on taxation of Fund, its . employees and obli gations Alt. B ; (p . 8 ) Article X I - ii i | Amendments Alt. C as amended Article X I I —Interpreta tion of the Agreement Sec. 1—Interpretation Alt. C Sec. 2—Definitions Sec. 3—Effect on Other International Com mitments XX* 1 Alt. A Article X I I I —Final Pro ; visions; 749013—48—24 i 360 MONETARY AND FINANCIAL CONFERENCE Article and Section Language Accepted Referred to Drafting or Other Sub com m ittee Referred to Commission I "Without Decision No Action or Decision Deferred Sec. 1—Entry Into Ef fect XX* Sec. 2—Effective Date of Agreement XX* Sec. 3—Calling the Ini tial Meeting of the Fund XX* Sec. 4—Agenda of Ini tial Meeting XX* A rt ide X I V —Execution of the Agreement XX* *—Indicates that material not yet available to Committees. Document 241 (p . 37bb) S A /l/4 5 A lte r n a tiv e B A rticle V III, S ectio n 4 . Liquidation of the Fund Substitute for (d) of Section 4 of Alternative A: “The assets of the Fund available after the discharge of the above liabilities shall be distributed in such manner as the Board of Governors shall decide to be most equitable in the circum stances then existing.” 7 /9 /4 4 J.S. Art. V III A d d itio n a l Section P R O C E E D I N G S AND D O C U M E N T S 361 Document 242 (p. 36d) SA/1/46 A l t e r n a t iv e C to A r t ic l e VIII, S e c t io n 3 S ection 3. Settlement of Accounts with Governments Ceasing to be Members. (a) When a government ceases to be a member in any of the cases referred to in sections---------above, settlement of all accounts between the Fund and such government shall be made with reason able dispatch by agreement between the Fund and the government. Failing such agreement, settlement shall be made in accordance with the provisions of (c ), (d) and (e ). The Fund shall not engage in any transactions in the currency of such country except in accordance with this Section. (b) The Fund shall be obligated to pay to such government an amount equal to its quota, plus any other amounts due to it from the Fund, less any amounts due to the Fund from such govern ment, including charges accruing after the government ceases to be a member; but no payment shall be made prior to six months from the date when such government ceases to be a member. Pay ments shall be made in the currency of that country. (c) If the Fund’s holdings of the currency of the withdrawing member are not sufficient to pay the net amount due from the Fund, the balance shall be paid in a manner to be agreed between the Fund and the withdrawing member. If the Fund and the with drawing member have not reached agreement within six months from the date of withdrawal, the currency of that member held by the Fund shall immediately be paid to it. The balance shall be payable in not less than 12 equal quarterly installments in any 7 /9 /4 4 J.S. Art. V III Secs. 2 and 3 (p. 36e) currency available in the Fund and not declared scarce and desired by the withdrawing government, or at the option of the Fund, by the delivery of gold. (The preceding paragraph replaces (c) and (d) of Alternative A.) (e) If the Fund’s holdings of the currency of such country exceed the amount due to such government, and the Fund and the government do not reach agreement on the method of settling their accounts within six months from the date of withdrawal, 362 MONETARY AND FINANCIAL CONFERENCE settlement shall be made as provided in this and the following paragraphs. (i) The withdrawing member shall be free to redeem such excess currencies in gold or in the currencies of members which at the time of actual redemption are convertible under III (6) (J.S. I ll 5.) within three years from the date of withdrawal or such longer period which may be fixed by the Fund. (ii) The Fund may place any portion of the remaining balance of the withdrawing member’s currency at the disposal of any member desiring it at a rate in any quarterly period not exceeding one-twelfth of the Fund’s excess holdings at the date of with drawal of the currency to be redeemed plus current accruals of such currency during such quarterly period. (iii) If at the end of five years any balance of the withdrawing member’s currency still remains in the hands of the Fund, the Fund may continue the arrangements under (i) and (ii) above for a further period, or the Fund having regard to the means of payment available to the withdrawing member may prescribe to it the manner in which it shall liquidate the balance. 7 /9 /4 4 J.S. Ar*. V III Secs. 2 and 3 (p. 36f) (iv) The withdrawing government unconditionally guarantees at all times the unrestricted use of such currency for the purchase of goods or for the payment of other sums due to it or to its nationals. Further, the withdrawing government shall indemnify the Fund against any loss resulting from exchange depreciation until such currency has been used or redeemed. (f) Any member desiring to obtain the currency of a former member shall acquire the currency by purchase from the Fund, to the extent that such member has access to the resources of the Fund and such currency is available under the preceding paragraph. (g) In the event of the Fund going into liquidation under ................ .. within six months of the date upon which any government ceased to be a member, all rights and obligations of such government shall be determined in accordance ^ith the pro visions governing liquidation instead of the provisions of this section. 7/9/44 J.S. Art. V III Secs. 2 and 3 P R O C E E D I N G S AND D O C U M E N T S 363 Document 243 C I/ 3 / S 3 Report of Subcommittee of Committee 3 of Commission I on Liquidation and Withdrawal The sub-committee wishes to report progress in its consideration of the matter of liquidation. In its meeting it decided to recommend to the Committee the approval of Article VIII, Section 4(a) of Alternative A, Document 211. The sub-committee wishes to recommend that paragraph (b) be amended to read: “If a decision to liquidate the Fund is carried, (i) the Fund shall forthwith cease to engage in any activities except those incident to an orderly liquidation of its assets and the settlement of its liabilities, and (ii) all the obligations of members under this agreement other than those specified in the following paragraphs of this Section and ........................ shall cease to have effect.” The sub-committee was of the opinion that this clause might be inserted either at this place or in some other Section of the document relating to the obligations of the members, ait the discretion of the final drafting committee. With this amendment the substance of paragraph (b) was recommended for the approval of the committee. Paragraph (c) was recommended for adoption as given in Alternative A. The sub-committee regrets that it was unable to reach agree ment on paragraph (d) of Article VIII, Section 4. Two drafts of this paragraph were under consideration while a third was added in the course of discussion. The sub-committee wishes to refer this back to the whole Committee for action. It may be noted that some members of the sub-committee favored leaving the matter of liquidation to the discretion of the Board of Governors. The predominant sentiment, however, favored some more definite provision though it could not agree upon the exact provision to be suggested. A draft of a discretionary method of treatment is given in Alternative D. The sub-committee recom mended approval of paragraph (e), but one member favored a five-year term for redemption of excess currency instead of the three-year term now provided. In dealing with the question of withdrawal the Committee had before it two Alternatives. It was the opinion of some of the members that the Alternatives must be discussed as a whole since the principles involved are similar to the principles of liquidation and accordingly the sub-committee was unable to embody its delib erations in an approved draft for the consideration of Committee 364 MONETARY AND FINANCIAL CONFERENCE 3. Certain amendments to Alternative A were offered to perfect this draft without prejudice to consideration of Alternative B. It was suggested that Article VIII, Section 3(a) be amended with 7 /9 /4 4 (p. 2) the insertion after the first sentence of the following: “Failing such agreement settlement shall be made in accordance with the provisions of (c), (d) and (e).” A new draft, Alternative C, for the entire Section was submitted and this draft will be presented to the whole Committee. Respectfully submitted, C a m il l e G u t t , Chairman H . J . B it t e r m a n , Secretary 7 /9 /4 4 Document 244 (p. 45) JOURNAL UNITED NATIONS MONETARY No. 70 AND FINANCIAL CONFERENCE Bretton W o o d s, N ew H am pshire ORDER OF THE July 10, 1944 DAY Meetings for Monday, July 10 9:30 a.m. 2:30 p.m. 5 p.m. Commission I ...................................................................Auditorium (Reserved for Commission I) .................................... Auditorium Commission III ...............................................................Auditorium (p. 46) R e s u m e o f M e e t i n g o f A g e n d a C o m m i t t e e o f C o m m is s io n II Bank for Reconstruction and Development (Ju ly 9, 5 p.m.) At its second meeting, at 5 p.m. on July 9, the Agenda Committee decided that the Secretariat should prepare a document similar to that used in the Fund, incorporating all the amendments received up to 10 a.m. on Monday, July 10. Consideration of this document will commence at a meeting of Commission II to be held in the afternoon of Tuesday, July 11. Ad H o c C o m m it t e e s o f C o m m is s io n I Canada should be added to the list of members of the ad hoc Committee on Relations with Non-Member Countries (Journal No. 9, July 9, p. 41). N o t ic e R e g a r d in g P R O C E E D fNGS AND D O C U M E N T S 365 (p. 47) L is t o f D o c u m e n t s I s s u e d as o f July 9, 1944 Symbol Subject Journal No. 9 ........................................................................ Minutes of Committee 1, Commission I, July 8, 9:30 a.m. Minutes of Committee 2, Commission I, July 8, 11:30 a.m............................................................... Minutes of Committee 3, Commission I, July 8, 9:30 a.m................................................................. Minutes of Committee 4, Commission I, July 8, 11:30 a.m............................................................... Order of the Day ................................................................ News Bulletin No. 1 0 .......................................................... French Translation of Rules and Regulations................ Supply Tabulation F o r m .................................................... Second Report of Committee 4, Commission I .............. Second Report of Committee 2, Commission I .............. Agenda Committee, Report to Commission III, July 8 .. Additional Page to SA/1 (p. 39a) .................................... Additional Page to SA/1 (p. 26g) .................................... Report of the Reporting Delegate*of Committee 1 ot Commission I on Purposes, Policies, and Quotas of the Fund .......................................................................... Report of Committee 3, Commission I, on Organization and Management of the F u n d ...................................... Commission I—Status of Committee Assignments as of 6 p.m., July 9 .................................................................... Additional Page to SA/1 (p. 37bb) .................................. Additional Pages to SA/1 (pp. 36 d, e, f) ...................... Report of Subcommittee of Committee 3, Commission I, on Liquidation and W ith d ra w a l.................................... Doc. No. J /9 CI/1/M5 223 224 CI/2/M 6 225 CI/3/M6 226 CI/4/M 5 GD/25 C/RR/4 GD/27 CI/4/RP2 CI/2/RP2 CIII/A SA/1/43 SA/1/44 227 228 229 230 232 233 234 235 236 237 CI/1/RP2 238 CI/3/RP2 239 CI/3 SA/1/45 SA/1/46 240 241 242 CI/3/S3 243 Document 245 S A /3 Preliminary Draft of Proposals for the Establishment of a Bank for Reconstruction and Development There is attached a preliminary draft of provisions which have been submitted to the Secretariat. At the top of each page there is set forth as Alternative A the pertinent provision of the “Proposal for a Bank for Reconstruction and Development (Doc. SA/2, #169). Immediately below appear alternative and supplementary texts submitted to the Secretariat (Room 147). It is expected that further suggestions will be made 366 MONETARY AND FINANCIAL CONFERENCE and as they are presented to the Secretariat, they will be distrib uted for inclusion in the attached draft. The Secretariat has attempted to put the various proposals together in a manner which would be helpful in the consideration of the alternative provisions suggested. The order adopted is in no way indicative of where the provisions might appropriately appear in a final document. The Secretariat is aware of the possibility that errors and omissions have been made in the attached draft, despite the care employed in its preparation. Accordingly, the Secretariat requests the indulgence of any delegation whose proposals may have been partially or wholly omitted or improperly presented. If the atten tion of the Secretariat is called to any error or omission, such error or omission will be corrected promptly. 7 /1 0 /4 4 (p .l) T itle Alternative A Agreement to Establish a Bank for Reconstruction and Development. Alternative B It is suggested that the title be: “The International Corporation for Reconstruction and Development”, or some other title omitting the word “Bank”. 7/10/44 Title Alts. A & B (p. la) T itle Alternative C It is suggested that the title be either “The International Guarantee and Investment Association” or “The International Investment and Guarantee Association”. 7 /1 0 /4 4 Title Alt. C (p. 2) A r tic le I Purposes of the Bank Alternative A The bank shall be guided in all its decisions by the following purposes. 1. To assist in the reconstruction and development of member P R O C E E D I N G S AND D O C U M E N T S 367 countries by facilitating provision of long-term investment capi tal for productive purposes through private financial agencies, by means of guaranteeing and participating in the loans made by private investors; 2. To supplement private financial agencies by providing capital for productive purposes out of its own resources, on conditions that amply safeguard its funds, when private capital is not avail able on reasonable terms; 3. To promote the long-range balanced growth of international trade by encouraging international investment for the develop ment of the productive resources of member countries; • 4. To coordinate loans made or guaranteed by it with interna tional loans through other channels so that the more useful and urgent projects will be dealt with first; 5. To conduct its operations with due regard to the effect of international investment on business conditions in member countries and, in the immediate post-war years, to assist in bring ing about a smooth transition from a wartime to a peacetime economy. A lternative B (a) Respecting subdivision 2, it is proposed that the words “on conditions which amply safeguard its funds” should be replaced by “on suitable conditions”. 7 /1 0 /4 4 Art. 1 Alts. A & B (p. 2a) (b) Substitute the following for subdivision 3: 3. To assist in raising the productivity, the standard of life, and conditions of labour in mem ber countries, thereby helping to make avail able through international collaboration long-term capital for the sound development of production and resources. 4. To permit the long-range balanced growth of international trade among member countries. (and renumber other subdivisions accordingly) Alternative C 1. To assist in the reconstruction and the restoration of the economy destroyed by the hostilities, and in the development of member countries by facilitating provision of long-term investment capital for productive purposes through private financial agencies, by means of guaranteeing and participating in the loans made by private investors: 2. To supplement private financial agencies by providing capital 368 MONETARY AND FINANCIAL CONFERENCE for reconstruction and restoration of the economy destroyed by the hostilities and for development for productive purposes out of its own resources, on conditions that amply safeguard its fund, when private capital is not available on reasonable terms; 7 /1 0 /4 4 Art. I Alts. B & C (P .2 b ) A r tic l e I Alternative D An International Bank for the Reconstruction and Development of Member Countries is hereby established for the following purposes: (1) To assist in the reconstruction or the development of the productive resources of member countries, more especially those whose economy has been disrupted by the war or has been inadequately developed, by providing or facilitating the provision of long-term investment capital; (2) To help promote the balanced growth of international trade by encouraging international investment; and (3) In the immediate post-war years, to assist in bringing about a smooth transition from a wartime to a peacetime economy. Alternative E The following Section has been proposed as an alternative to Section 2: (2) To supplement private financial agencies by providing capital for promising productive purposes out of its own resources when private capital is not available on reason able terms. 7/10/44 Art. I Alts. D & E (p.2c) A r tic l e I Alternative F Paragraph 1 should read; 1. To assist in the reconstruction and development of member countries by facilitating provision of capital for sound and con structive international investment through private financial agen cies by means of guaranteeing and participating in the loans made by private investors. Paragraph 5 should read: 5. To facilitate a rapid and a smooth transition from a wartime to peacetime economy by increasing the flow of international P R O C E E D I N G S AND D O C U M E N T S 369 investment and thus to help to bring economy back to work and to avoid serious disruption of economic life of member countries. 7 /1 0 /4 4 Art. I Alt. F (P. 3) A r tic l e II Membership in and Capital of the Bank Alternative A 1. Countries Eligible for Membership The members of the Bank shall be those members of the Inter national Monetary Fund which accept membership in the Bank. S ec tio n 7 /1 0 /4 4 Art. II Sec. 1 Alternative A (P. 4) A r tic l e II Alternative A Authorized Capital. The authorized capital stock of the Bank shall be $10,000,000,000, in terms of United States dollars of the weight and fineness in effect o n _______ The capital stock shall be divided into 100,000 shares having a par value of $100,000 each, which shall be avail able for subscription only by members. The Capital stock may be increased when the Bank deems it advisable by four-fifths of the aggregate votes. S ec t io n 2. Alternative B It is proposed that the second paragraph of this Section should read as follows: The Capital Stock may be increased when the Bank deems it advisable. But no member shall be obligated to increase its sub scription pro rata unless it desires to do so. 7/1 0 /4 4 Art. II Sec. 2 Alts. A & B (p. 5) A r tic l e II Alternative A Subscription for Stock. Each member shall subscribe for shares of stock. The minimum numbers of shares to be subscribed by countries represented at the United Nations Monetary and Financial Conference shall be S ec t io n 3. 370 MONETARY AND FINANCIAL CONFERENCE those set forth in Schedule A. (Schedule A to be added later). The minimum number of shares for other countries which become members of the Bank shall be determined by the Bank. Any member may subscribe for additional shares of stock in accordance with rules to be established by the Bank, except that a part of the authorized capital shall be reserved by the Bank for minimum subscriptions of countries not represented at the United Nations Monetary and Financial Conference. 7 /1 0 /4 4 Art. II Sec. 3 Alt. A (p. 6) A r t ic l e II Alternative A 4. Availability of Subscribed Capital. The subscription of each member country shall be divided into two parts as follows: (a) Twenty percent shall be callable by the Bank as needed for any of its operations. (b) The remaining 80 percent shall be callable by the Bank only when required to implement obligations of the Bank created under IV(1) (b) and (c) below. Calls on unpaid subscriptions shall be uniform on all shares. SECTION Art. II Sec. 4 Alt. A 7 /1 0 /4 4 (p. 6a) A r t ic l e II A lternative B Substitute for Alternative A, subdivision (a) the following: (a) Twenty percent shall be callable by the Bank as follows: (i) two percent in gold or gold-convertible currency within 60 days after the date set for the operations of the Bank to begin; (ii) eighteen percent in maximum amounts of five per cent in any three months period as needed for any of its operations; provided, however, that not less than ten percent in the aggregate shall be called within one year from the date set for the operations of the Bank to begin. And add to the last sentence of the section: If one or more shareholders fail to meet a call in whole or in part, an additional call or additional calls shall be made until P R O C E E D I N G S AND D O C U M E N T S 371 the entire amount of the call shall have been paid, subject always to the provision of section 7, below. 7 /1 0 /4 4 (p . Art. II Sec. 4 Alt. B 7) A rtic le II Alternative A Payment of Subscription. (a) Payments under Section 4(a) shall be partly in gold and partly in local currency except that payments required to implement obligations of the Bank created under Article IV, Section 1(b) or 1(c), shall be made in the manner provided in the following subdivision. The proportions to be paid in gold and local currency under this subdivision shall be graduated according to an agreed upon schedule which shall take into account the adequacy of the gold and free foreign exchange holdings of each member country. The portion to be paid in gold shall not in any event exceed 20 percent of the total payment. S e c t io n 5. (Schedule to be inserted) (b) Payments under Section 4(b) shall at the option of the member be made either in gold or in the currency required to implement the obligations with respect to which a call is made. (c) The initial payment on each share issued shall be such as to equal the total amount per share already called on out standing shares, adjusted for the amount by which the issue price of the share differs from par value. 7 /1 0 /4 4 Art. II Sec. 5 Alt. A (p. 7a) B It is suggested that the following should replace the last sentence of Section 5(a) : “No Member will be expected to contribute in gold more than 20 percent of its callable subscription under 4(a), and every member will be required to contribute not less than 10 per cent unless the member satisfies the Bank that a lower per centage would be appropriate to its circumstances.” Alternative Alternative C Add the following to Section 5: To any country represented at the United Nations Mone 372 MONETARY AND FINANCIAL CONFERENCE tary and Financial Conference whose home areas have suffered from enemy occupation and hostilities during the present war will be granted the right to postpone till the end of its restora tion period the payment of its gold contribution in the amount from twenty-five to fifty percent, dependent on the extent of the damage caused by the enemy occupation and hostilities. 7 /1 0 /4 4 Art. II Sec. 5 Alts. B & C (P . 8 ) A r t ic l e II Alternative A Issue Price of Shares. Shares of stock included in the initial subscription of a member represented at the United Nations Monetary and Financial Con ference shall be issued at par if the subscription is received not later than one year after the date set for operations of the Bank to begin. Other shares shall be issued at par or such other price as may be fixed by three-fourths vote of the Bank. S e c t io n 6. 7 /1 0 /4 4 Art. II Sec. 6 Alt. A (p. 8a) A r t ic l e II Alternative B It is proposed that the last sentence of Alternative A should be amended to read as follows: Other shares shall be issued at a price equal to the total of the net assets as shown on the last balance sheet, divided by the number of shares in existence at the time of the issue of that balance sheet, or such other price as may be fixed by a threefourths vote. 7 /1 0 /4 4 Art. II Sec. 6 Alt. B (P . 9 ) A r t ic l e II Alternative A Limitation on Liability. Liability on shares shall be limited to the unpaid portion of the issue price of the shares. S ec t io n 7. 7 /1 0 /4 4 Art. II Sec. 7 Alt. A P R O C E E D I N G S AND D O C U M E N T S 373 (P .10) A r t ic l e I I A lte rn a tiv e A Disposal of Shares Limited. Shares shall not be pledged or encumbered in any manner what ever and they shall be transferable only to the Bank. S e c t io n 8. 7 /1 0 /4 4 Art. II Sec. 8 Alt. A (P. 11) A rtic le II Alternative A Return of Subscriptions. When the liquid resources of the Bank are substantially in excess of prospective needs, the Bank may return, subject to call, uniform amounts on all shares of stock outstanding. S e c t io n 9. 7/1 0 /4 4 Art. II Sec. 9 Alt. A (p.11a) A rtic le II Alternative B It is suggested that the following be added to Alternative A : , provided always that the amounts returned do not encroach upon the amounts of currency and/or gold to be held avail able pursuant to Article III, Section 3, Alternative B. Art. II 7 /1 0 / 4 4 Sec. 9 Alt. B (P. 12) III General Provisions Relating to Loans A rtic le Alternative A 1. Use of Resources Restricted. The resources and the facilities of the Bank shall be used exclu sively for the benefit of members. S e c t io n Alternative B The resources and the facilities of the Bank shall be used exclu sively for the benefit of members. The Bank shall give equal consideration to projects for develop ment and to projects for reconstruction, and its resources and 374 MONETARY AND FINANCIAL CONFERENCE facilities shall always be made available to the same extent for either kind of project. 7 /1 0 /4 4 Art. Ill Sec. 1 B Alts. A & (p. 13) A r t ic l e III Alternative A Agencies Dealing ivith the Bank. Except as otherwise indicated in this Agreement, the Bank shall conduct its business only with or through the governments of the members, their central banks, stabilization funds and other similar fiscal agencies, the International Monetary Fund, and other inter national agencies participated in primarily by governments of members. Alternative B It is proposed that the last two lines be amended to read “and other public international organizations, at least one-half of the members of which are members of the Bank.” S ec t io n 2. 7 /1 0 / 4 4 Art. Ill Sec. 2 B Alts. A & (p. 14) A r t ic l e III Alternative A Limitation on Loans and Guarantees. The total amount of guarantees, participations in loans, and loans and other investments made by the Bank shall not exceed at any one tim e--------percent of the subscribed capital and surplus of the Bank. S ec t io n 3. Alternative B At the time of an issue of securities guaranteed by the Bank or of an issue by the Bank of its own bonds, the amounts thereof, added to the amounts outstanding of previous issues shall never exceed 75% of the unpaid subscriptions to the shares of the Bank. The Bank shall always maintain for each loan it has guaranteed (and for each loan it has issued) either a deposit on call in the currency or currencies in which the service of such loan is to be ful filled or an amount of gold, sufficient to cover at least the service of six months. These funds will be taken out of its paid up capital, P R O C E E D I N G S AND D O C U M E N T S 375 its reserves, or, if necessary by calling for payments on the unpaid part of the capital. 7 /1 0 /4 4 Art. Ill Sec. 3 Alts. A & B ( P . 15) A r t ic l e III Alternative A Conditions on tvhich Bank may Guarantee or make loans. The Bank may guarantee, participate in, or make loans to the government of any member, political sub-divisions thereof, and business and industrial enterprises therein, subject to the follow ing conditions: (1) The government of the member in which the project is located, the central bank of such member, or some comparable agency fully guarantees the payment of interest on the loan and repayment of the principal. (2) The borrower is unable to secure the funds from other sources under conditions which, in the opinion of the Bank, are reasonable. (3) A competent committee, after a careful study of the merits of the project, has submitted a written report concluding that the project would serve to increase the productivity of the member country in which it is located. ( 4 ) In the opinion of the Bank, the rate of interest is reasonable and such rate and the schedule for repayment of the principal are appropriate to the project and to the balance of payments prospects of the member country in which the project is located. (5) In guaranteeing a loan made by other investors, the Bank receives compensation for its risk. S e c t io n 4. 7 /1 0 /4 4 Art. Ill Sec. 4 Alt. A (p. 15a) A r t ic l e III (4 ) Alternative B P art (1 ) It is proposed that: (a) The preamble be amended as follows: “The Bank may guarantee, participate in, or make loans to the government of any member, political sub-division thereof, public utilities, and semi-public bodies and organizations engaged in 7 4 9 0 1 3 — 4 8 — 25 376 M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E production, including agricultural co-operatives and credit institutions.” (b) The following be substituted for sub-division 2: “The Bank is satisfied that in the prevailing market conditions the borrower would be unable otherwise to secure the funds under conditions which in the opinion of the Bank are reasonable for the borrower”. P art (2 ) In general, loans made or guaranteed by the Bank, shall be for the purpose of specific projects of reconstruction and development, and except as otherwise provided in this plan, the proceeds of loans shall only be made available to meet specific purposes. In exceptional circumstances, however, the Bank, acting in agree ment with the International Monetary Fund, may make or guarantee a loan which provides the borrowing country with gold or foreign exchange for the purpose of establishing its exchanges and allowing a breathing space for the recovery of its economy and the balancing of its international payments. 7 /1 0 /4 4 Art. Ill Sec. 4 Alt. B (p. 15b) P art (3 ) In making or guaranteeing a loan the Bank shall pay due regard to the prospects of the borrowing country being in a position to service the loan; and in determining the destination, the character and the volume of its loans it shall act prudently in the interests both of the borrowing member country and also of the guarantee ing members. At the same time it shall not seek to avoid the incur ring of some measure of reasonable risk (taking account of the commission chargeable—see below) where the loan is in the general interests of reconstructing or developing the world's resources or expanding international trade along mutually advan tageous lines; and shall seek to conduct its operations taken as a whole in such manner as to avoid, so far as possible, the calling up of the capital reserved for guarantees, rather than seek full security from risk in each transaction taken separately. These considerations shall govern the lending policy of the Bank espe cially in approving reconstruction loans to countries which have suffered from the war. Alternative C Substitute for Art. I l l — Section 4— Section 4— Alternative B— Part (2) In general, loans made or guaranteed by the Bank shall be for P R O C E E D I N G S AND D O C U M E N T S 377 the purpose of specific projects of reconstruction and development. The Bank acting in agreement ivith the International Monetary Fund shall pay due regard to loans or guarantees with the specific purpose to foster exports in a member country whose balance of payments is disrupted by a reduction in its exports. Art. Ill Sec. 4 Alts. B & C 7 /1 0 / 4 4 (p. 15c) A rtic le III ( 4 ) Alternative D It is proposed that sub-division (3) be amended as follows: A competent committee, after a careful study of the purpose of the loan or the merits of the project, has submitted. . . . Alternative E When making direct loans, participating in loans, or guarantee ing the loans for restoration and reconstruction of the economy of countries whose home areas suffered considerable damage from enemy occupation and hostilities, the Bank shall take into con sideration the special position of these countries in establishing for them the most favorable rates of interest, terms and conditions of repayment of such loans. Alternative F It is proposed that Section 4 be amended: (1) to make it clear that the Bank may guarantee, participate in, or make loans to enterprises engaged in agriculture, forrestry and fisheries, includ ing co-operative and credit institutions; (2) to require that in the case-of an application involving a loan, or the guaranteeing of a loan, in respect of an agriculture, forestry or fisheries project, the United Nations Food and Agriculture Organization, or pending its establishment, the United Nations Interim Commission on Food and Agriculture, shall be given an opportunity of examining the proposal and making recommendations, and that the Bank shall give due consideration to such recommendations before taking a final decision on the application. Art. Ill Sec. 4 Alts. D, E & F 7 /1 0 /4 4 (p.15d) A r tic le III ( 4 ) Alternative G It is suggested that Section 4 be amended to include loans to 378 MONETARY AND FINANCIAL CONFERENCE “public international organizations, at least one-half of the mem bers of which are members of the Bank.” 7 /1 0 /4 4 Art. Ill Sec. 4 Alt. G (p. IBe) A r t ic l e I I I ( 4 ) Alternative H It is proposed that Alternative B, Part (2) sentence 2, should read: In exceptional circumstances, however and particularly during the early postivar period the Bank, acting in agreement with the International Monetary Fund, may make or guarantee a loan which provides the borrowing country with gold or foreign exchange for the purpose of establishing its exchanges and allow ing a breathing space for the recovery of its economy and the balancing of its international payments. It is proposed that Alternative B, Part (3), last sentence, should read: These considerations shall govern the lending policy of the Bank especially in approving reconstruction and recovery loans to countries which have suffered from the war. Alternative I It is proposed that there be added at the end of Alternative A, section 4, sub-division (1) : except that the Bank may, out of the capital paid in pursuant to Article II, section 4 (a), and with the approval of the debtor's government, provide long-term investment capital to business* and industrial enterprises in member countries without such guarantee. 7 /1 0 /4 4 Art. Ill Sec. 4 Alts. H & I (P . 1 6 ) A r t ic l e I I I Additional Material It is proposed that the following section be added between sections 4 and 5: The Bank shall make no loans or investments that can be •placed through the usual private investment channels on terms which can be considered as reasonable for the member Govern ment of the project concerned. The bank shall by reputation P R O C E E D I N G S AND D O C U M E N T S 379 prescribe procedure for its operations that will assure the application of this principle. Art. Ill A d d itio n a l Section 7 /1 0 / 4 4 (P. 17) A rtic le III Alternative A Provision of currencies for loans. When the Bank makes loans it shall: (a) Furnish the borrower with the currencies of members other than that of the member in which the project is located which are needed by the borrower in connection with the loan; (b) Finance the expenditures of the borrower in the member in which the project is located only as follows, (1) under excep tional circumstances when the local currency required cannot be raised on reasonable terms in the country where the project is located, the Bank may provide an appropriate part of the loan in that currency, or (2) if the development program or project gives rise to an increased need for foreign exchange, the Bank may make available to the borrower an appropriate amount of gold or foreign exchange not to exceed the borrower’s expenditure in the member in which the project is located; (c) Make available at the request of a member in which a por tion of a loan is spent an amount of gold or foreign exchange not to exceed the amount by which the expenditure of the loan in that member gives rise to an increased need for foreign exchange. S e c t io n 5. B It is proposed that Section 5 commence as follows: Except where the borroiver is a member Government the Bank in making loans shall: A ltern ative 7 /1 0 /4 4 Art. Ill Sec. 5 Alts. A & B (p. 18) A rtic le III Alternative A Use of loans guaranteed, participated in or made by the bank. (a) The Bank shall impose no conditions as to the particular member in which the proceeds of a loan shall be spent. (b) The Bank shall make arrangements to assure that the' proceeds of any loan are used only for the purposes for which the S e c t io n 6. 380 MONETARY AND FINANCIAL CONFERENCE loan was granted, with due attention to considerations of economy and efficiency regardless of political or other non-economic influ ences or considerations. (c) In addition to any other action which the Bank may take to implement the provisions of subsection (b) above with respect to loans it makes, it shall credit the account of the borrower with the amount of the loan and shall make payment from the account only to meet expenses as they are actually incurred. A ltern a tiv e B It is proposed that subdivision (c) commence as follows: (c) When a loan is made by the Bank to a borroxver other than a member government, it shall credit.. . . 7 /1 0 /4 4 Art. Ill Sec. 6 Alts. A & B (P . 1 9 ) A rtic le IV Operations A ltern a tiv e A Methods of facilitating provision of loans. The Bank may facilitate the provision of loans which satisfy the general conditions of Article III in any of the following ways: (a) By direct loans out of the Bank’s own capital subscribed under Article II, Section 4 (a ). (b) By direct loans out of funds raised by the Bank in the market of a member. (c) By guaranteeing in whole or in part loans made by private investors through the usual investment channels. S e c t i o n 1. 7 /1 0 /4 4 Art. IV Sec. 1 Alt. A (P . 2 0 ) A rtic le IV A ltern a tiv e A Loans from subscribed capital. The Bank shall make loans from currency subscribed under Article II, Section 4 (a ), only with the approval in each case of the member whose currency is to be loaned. If the currency required by the borrowing country is not available in whole or in part out of capital so subscribed, the Bank may supply such currency from its holdings derived from other sources or may supply gold, sub ject to Article III, Section 5, and Section 8 of this Article. S e c t io n 2. PROCEEDINGS AND DOCUMENTS 381 A ltern ativ e B In the case of loans under Section 1(a) of this Article, the bor rower shall notify the Bank in which members it desires to incur expenditure to be met out of the loan, and the Bank shall make the required currencies available out of its subscribed capital, provided that the country whose currency is to be supplied has agreed in each case. If local currency subscribed under II (4) (a) is not available in whole or in part, the Bank shall make it available out of its holdings of gold or other free resources, if it possesses an adequate amount of such resources and is satisfied that, with out this provision, the country in which the borrowing country desires to place the order, would have difficulty in maintaining the equilibrium of its international balance of payments. Otherwise it shall request the borrowing country to transfer its proposed expenditure to another member country. Furthermore, at the request of the countries in which portions of the loan are spent, the Bank will repurchase for gold or needed foreign exchange a part of the sum expended in the currencies of those countries made by the borrower from the proceeds of the loan. 7 /1 0 /4 4 Art. IV Sec. 2 Alts. A & B (P.21) A r tic le IV A ltern ativ e A Loans from borrowed funds and guarantees. The Bank shall borrow funds under Section 1 (b) of this Article or guarantee loans under Section 1 (c) only with the approval of the member in the market of which the funds are raised and only if that member agrees that the proceeds may be expended in any member without restriction. S e c t io n 3. A lter native B It is proposed that the following be added: . . . . The aggregate amount of outstanding borrowed capital shall not at any time exceed 12 billion dollars. 7 /1 0 /4 4 Art. IV Sec. 3 Alts. A & B (P .22) A r t ic l e IV A lternative A 4. Payment Provisions for Direct Loans. Loans made directly by the Bank under Section 1 (a) or (b) of this Article shall contain the following payment provisions:— S e c t io n 382 MONETARY AND FINANCIAL CONFERENCE (a) The annual service of the loan shall be made up of three parts, namely: (i) a standard rate of interest fixed by the Bank and the same to all borrowers but modifiable from time to time for new loans; (ii) an annual commission at a flat rate fixed at one percent in the first instance but alterable by the Bank from time to time at its discretion for new loans in the light of ex perience, the same to all borrowers, to cover the general expenses of the Bank, and as a provision against risk, but the particular expenses of investigation, etc., attaching to the individual loan, may be charged separately against the borrowers. (iii) an annual contribution to amortization either at a flat, or at a progressive, rate sufficient to repay the capital within a determined number of years, the length of which shall be fixed with regard not only to the character and purpose of the loan, but also, especially in the case of reconstruc tion loans, to the conditions in the country of the borrower which may delay the time within which the borrower can repay the loan. 7 /1 0 /4 4 Art. IV Sec. 4 Alt. A (p. 22a) The time normally shall not exceed thirty years but may be extended to fifty years in particular cases. (b) The loan and its annual service shall be fixed in whatever currency may be stipulated by the Bank when making the loan, and may be paid, at the option of the borrower, in gold, or at the discretion of the Bank, in any other currency of a member. (c) In the event of the country of the borrower suffering from an acute exchange stringency, so that the service of the loan cannot be provided in the stipulated manner, the country may appeal to the Bank for a relaxation of the conditions of payment. If the Bank is satisfied that some relaxation is in the interests of the country of the borrower and of the operations of the Bank and the other members as a whole it may take action under either, or both, of the following headings in respect of the whole, or part, of the annual service:— (i) The Bank may in its judgment accept payments in respect of the service of the loan for periods not exceeding three years at a time in local currency. The Bank shall arrange with the borrowing country for the repurchase of such PROCEEDINGS AND DOCUMENTS 383 local currency over a period of years on appropriate terms that safeguard the Bank’s holdings of such currency. The Bank may also require that the whole, or part of such currency, may be transferred to another member in whose 7 /1 0 /4 4 Art. IV Sec. 4 Alt. A hands it shall (p. 22b) be freely available to make payments or to purchase exports in the borrowing country, (ii) The Bank may re-arrange the instalments of amortiza tion so as to increase the amount due in later years or to prolong the life-time of the loan. (d) Payments of interest, commissions, and principal, whether made in currency or in gold, must be equivalent to the gold value of the loan and of the contractual interest and commissions thereon. 7/1 0 /4 4 Art. IV Sec. 4 Alt. A (p. 22c) A r t ic l e IV (4 ) A ltern a tiv e B It is proposed that Alternative A be amended as follows: (1) Substitute for subdivision (a) (i) : A rate of interest varying with the conditions of the financial markets and the credit position of the borrower; (2) Delete subdivision (a) (ii) ; (3) Substitute for subdivision (b) : The loan and its annual service shall be fixed in the currency agreed between the borrower and the Bank when making the loan, and may be paid, at the option of the borrower, in the same currency or in gold, or in any other member currency agreed between the Bank and the borrower. (4) Delete subdivision (d). 7 /1 0 /4 4 Art. IV Sec. 4 Alt. B (p.22d) A r t ic l e IV (4 ) A ltern a tiv e C It is proposed that Alternative A, subdivision (c) (i), sentence 3, should read: The Bank may also require that the whole, or part of such currency, may be transferred to another member in whose hands 384 MONETARY AND FINANCIAL CONFERENCE it shall be freely available to make payments on existing obliga tions or to purchase exports in the borrowing country. A lternative D It is proposed that Alternative A, subdivision (c) (i), sentence read as follows: Payments of interest, commissions, and principal, whether made in currency or in gold, must, in the case of loans under Article IV, 1 (a), be equivalent to the gold value of the loan and of the contractual interest and commissions thereon. In the case of loans under Article IV, 1(b) and (c), payments of commissions must be maintained at their initial gold value. Payments of interest and principal will be governed by the provisions of the loan contract. 7/10/44 Art. IV Sec. 4 Alts. C & D (p . 2 3 ) A r tic le IV Alternative A Participations. The Bank may participate in loans with any of its resources ex cept those subscribed under Article II, Section 4(a ). Loans par ticipated in by the Bank shall be placed through the usual invest ment channels. S e c t i o n 5. 7 /1 0 /4 4 Art. IV Sec. 5 Alt. A (p . 2 4 ) A r tic le IV Alternative A Guarantees. In guaranteeing a loan placed through the usual investment channels, the Bank shall charge a commission on the entire original amount of the loan at a flat rate fixed at one percent per annum in the first instance but alterable by the Bank from time to time at its discretion for new guarantees in the light of experience. Commissions shall be paid direct to the Bank by the borrower. S e c t io n 6. Alternative B In guaranteeing a loan placed through the usual investment channels, the Bank shall charge a guarantee commission on the outstanding amount of the loan. The rate of the guarantee com mission shall be fixed at a certain percent per annum varying PROCEEDINGS AND DOCUMENTS 385 with the conditions of the financial markets and the credit position of the borrower. It shall, however, not be higher than V/zfo per annum and not lower than *4% per annum. Guarantee commis sions shall be paid direct to the Bank by the borrower. Art. IV Sec. 6 Alts. A & B 7 /1 0 /4 4 ’ ( P .25) A r t ic l e IV A lternative A Order of Meeting Obligations. The obligation of the Bank on borrowings or guarantees under Section 1 (b) and (c) of this Article shall be met first from its receipts from commissions and other profits, then from a call on unpaid subscriptions, and finally from paid-in capital. When there is any interruption in the service of a loan guaranteed by the Bank, it shall assume the service. If losses of the Bank are re covered the funds received shall be returned pro rata to members responding to any calls by which the obligations of the Bank were met. With the approval of the Bank, a member subjected to a call, may, in lieu of paying the call, purchase from the Bank currency of the country the default of which or of a borrower in which has necessitated the call but in such case the amount returnable to the member if the loss is recovered shall be appropriately reduced. SECTION 7. 7 /1 0 /4 4 Art. IV Sec. 7 Alt. A ( P . 26) A rtic le IV Alternative A Miscellaneous Operations. In addition to the operations specified elsewhere in this Agree ment, the Bank shall have the power: (1) To issue, buy and sell (i) its own securities including se curities collateralized by loans or investments it has made, (ii) securities it has guaranteed and, (iii) securities in which it has invested, but the Bank shall obtain the ap proval of the member in which securities are to be issued, bought or sold, and when the Bank buys securities it has issued it shall also obtain the approval of the member whose currency will be paid for such securities. S e c t io n 8. 386 MONETARY AND FINANCIAL CONFERENCE (2) To guarantee securities in which it has invested for the purpose of facilitating the sale of such securities. (3) To borrow the currency of any member with the approval of such country; and (4) After consultation with the International Monetary Fund, to buy and sell gold and the currencies of members when ever such transactions are necessary in connection with the operations of the Bank but with respect to each trans action other than any undertaken to pay creditors, the Bank shall obtain the approval of the member in which the transaction takes place and the member currency of which is disposed of by the Bank. In exercising the powers conferred by this Section, the Bank may deal with any person, partnership, association, corporation or other legal entity in any member country. 7 /1 0 /4 4 Art. IV Sec. 8 Alt. A (p. 27) A r t ic l e I V Alternative A Warning to be Placed on Securities. Every security guaranteed or issued by the Bank shall bear on its face a conspicuous statement that it is not an obligation of the government of any country other than any expressly stated to be obligated on the security. S e c t io n 9. 7 /1 0 /4 4 Art. IV Sec. 9 Alt. A (P. 2 8 ) A r t ic l e IV A lternative A Political A ctivity Prohibited. The Bank and its officers shall scrupulously avoid interference in the political affairs of any member. This provision shall not limit the right of an officer of the Bank to participate in the political life of his own country. The Bank shall not be influenced in its decisions with respect to applications for loans by the political character of the govern ment of the member concerned with the loan. Only economic con siderations shall be relevant to the Bank’s decisions. The Bank, acting with the strictest impartiality, shall pay par S ec t io n 10. PROCEEDINGS AND DOCUMENTS 387 ticular regard, both in selecting the place of its borrowing and of its lending to maintaining the equilibrium of the international balance of payments of members. 7 /10/44 Art. IV Sec. 10 Alt. A (P. 2 9 ) A r t ic l e V Management Alternative A 1. Board of Governors. (a) The administration of the Bank shall be vested in a Board of Governors consisting of one governor and one alternate ap pointed by each member country in such manner as it may de termine. Governors and alternates shall serve for five years, subject to the pleasure of their respective governments, and may be reappointed. No alternate may vote except in the absence of his governor. The Board shall select a chairman from its members. (b) The Board of Governors may delegate to the Executive Director Directors authority to exercise any powers of the Board, except: (1) Determining what new members may be admitted and the conditions of their admission; (2) Increasing the capital stock; (3) Requiring a member to withdraw; (4) Deciding appeals against interpretations of the Agreement by the Executive Directors given on application by a member; (5) Making agreements to cooperate with other international organizations; (6) Deciding to liquidate the Bank. (c) The Board of Governors shall hold an annual meeting and such other meetings as may be provided for by the Board or convened by the Executive Directors whenever requested by five members or by one-quarter of the aggregate votes. S e c t io n 7 /1 0 /4 4 Art. V Sec. 1 Alt. A (p. 29a) (d) The Board may by regulation establish a pro cedure whereby the Executive Directors, when they deem such action to be in the best interest of the Bank, may obtain votes of the governors on a specific question in lieu of calling a meeting of the Board. 388 MONETARY AND FINANCIAL CONFERENCE (e) Governors and alternates shall serve as such without com pensation from the Bank, but the Bank shall pay such reasonable expenses as are incurred by the Governors and alternates in attending any meetings. 7 /1 0 /4 4 * rt- w Sec. 1 Alt. A (p. 30) A r t ic l e V A lternative A Voting. Each member shall have ------------ votes plus one additional vote for each share of stock held. Except as otherwise specifically provided, all matters before the Bank shall be decided by a majority of the aggregate votes. S e c t io n 2. 7 /1 0 /4 4 Art. V Sec. 2 Alt. A (P. 3 1 ) A r t ic l e V A lternative A The Executive Directors. (a) The Executive Directors shall be responsible for the con duct of the general operations of the Bank, and for this purpose, shall exercise all the powers delegated to them by the Board of Governors. (b) There shall b e---------Executive Directors, of whom---------shall be appointed by the --------- members holding the largest number of shares an d ---------shall be elected bien nially, in accordance with the provisions of Schedule B, by all the Governors other than those appointed by the members having the --------- largest number of shares. Persons chosen as Executive Directors need not be Gov ernors. (c) Every Executive Director may appoint an alternate with full power to act for him when he is not present. When the Executive Directors appointing them are present, al ternates may participate in meetings but shall not vote. (d) The Executive Directors shall function in continuous ses sion at the principal office of the Bank and shall meet as often as the business of the Bank may require. S e c t io n 3. 7/10/44 Art. V Sec. 3 Alt. A PROCEEDINGS AND DOCUMENTS 389 (p. 31a) (e) In order to constitute a quorum for any meeting of the Executive Directors, there must be present a majority of the Directors representing not less than one-half of the voting power of all the Executive Directors. (f) Each Executive Director appointed by one of the members with th e ---------largest quotas shall be entitled to cast the number of votes allotted under Section 2 of this Article to the member appointing him. Each elected Executive Di rector shall be entitled to cast only the number of votes which actually count toward his election. Each Executive Director shall cast all of the votes to which he is entitled as a single unit. (g) Except as otherwise specifically provided, all matters be fore the Executive Directors shall be decided by a majority of the votes cast. (h) The Board of Governors shall make regulations contain ing provisions under which a member which is not entitled to appoint an Executive Director under (b) above shall be permitted to send a representative to attend any meeting of the Executive Directors when a request made by, or a matter particularly affecting, that member is under con sideration. (i) The Executive Directors shall select a President who shall 7 /1 0 /4 4 Art. V Sec. 3 Alt. A cont'd not be a Governor or an (p. 31b) Executive Director. The President shall be Chairman of the Executive Direc tors, but shall have no vote except a casting vote in case of an equal division. He may participate in meetings of the Board of Governors, but shall not vote at such meet ings. He shall, however, be eligible for election as Chair man of the Board of Governors. The President shall hold office at the pleasure of the Executive Directors. (j) The President shall be chief of the operating staff of the Bank and shall conduct under the direction of the Execu tive Directors, the ordinary business of the Bank’s work. Subject to the general control of the Executive Directors, he shall be responsible for the internal organization of the Bank’s staff and the appointment and dismissal of its staff. (k) The President and the staff of the Bank, in the discharge of their offices owe their duty entirely to the Bank and to no other authority. 390 MONETARY AND FINANCIAL CONFERENCE Each member of the Bank shall respect the international character of this duty and shall refrain from all attempts to influence any member of the staff in the discharge of his duty. (1) In appointing the staff the President shall, subject to the paramount importance of securing the highest standards of efficiency and of technical competence, pay due regard to the importance of selecting personnel recruited on as wide a geographical basis as is possible. 7 /1 0 /4 4 Art. V Sec. 3 Alt. A cont’d (p. 31c) (m) The Executive Directors may appoint such committees as they deem advisable. Members of such committees need not be limited to Governors or Executive Directors or their alternates. (n) The Board of Governors shall determine the remuneration to be paid to the Executive Directors and the salary and terms of service of the President. SCHEDULE B (a) In balloting for the elective Executive Directors, each governor eligible to vote shall cast for one person all of the votes to which he is entitled under Section 2 of this article. The six persons receiving the greatest number of votes shall be Executive Directors, except that no person who receives less than sixteen percent of the aggregate eligible votes shall be considered elected, (b) When six persons are not elected on the first ballot, a second ballot shall be held in which the person receiving the low est number of votes shall be ineligible for election and in which there shall vote only those governors who voted on the first ballot for a person not elected and those governors all or part of whose votes for a person elected are deemed to have raised the votes cast for that person above seven teen percent of the aggregate eligible votes. 7 /1 0 /4 4 Art. V Sec. 3 Alt. A cont’d (p. 31d) (c) In determining whether any part of the votes cast by a governor are to be deemed to have raised the total of any person above seventeen percent, there shall be considered as not forming part of the excess over seventeen percent PROCEEDINGS AND DOCUMENTS 391 the votes of the governor casting the largest number of votes for such person, then the votes of the governor casting the next largest number, and so on until the total reaches seventeen percent. (d) Any governor whose votes are partly not in excess and partly in excess shall be eligible to vote in the second bal loting only to the extent of the votes in excess. (e) If on the second ballot, six persons have not been elected, further ballots shall be taken on the same principles until six persons have been elected, provided that after five persons are elected, the sixth may be elected by a simple majority of the reclaming votes and shall be deemed to have been elected by all such votes. 7 /1 0 /4 4 Art. v Sec. 3 Alt. A cont’d (p. 3 2 ) A r t ic l e V Alternative A Advisory Council. There shall be an Advisory Council of seven persons elected by the Bank from outstanding representatives of banking, busi ness, labor and agricultural interests, who are citizens of mem bers, but only one citizen of any member shall serve on the Council at any one time. The Council shall advise with the Bank on matters of general policy. The Council shall meet annually and on such other occasions as the Bank may request. Councillors shall serve for two years, and may be reelected. They shall be paid their reasonable expenses incurred in behalf of the Bank. Alternative B It is suggested that Section 4 be amended to provide that one member of the Advisory Council shall be nominated by the United Nations Food and Agriculture Organization. S e c tio n 4. 7 /1 0 /4 4 Art. V Sec. 4 Alts. A & B (p. 33) A r t ic l e Y Alternative A Loan Committees. The committees required to report on loans under Article I, S e c t io n 5. 749013— 48— 26 392 MONETARY AND FINANCIAL CONFERENCE Section 5, shall be appointed by the Bank, except that such com mittee shall include an expert selected by the Governor represent ing the member in which the project is located, who may or may not be from the technical staff of the Bank. The majority of each committee shall be from the technical staff. 7 /1 0 /4 4 ■ Art. V Sec. 5 Alt. A (p. 34) A r t ic l e V Alternative A Relationship to Other International Organizations. The Bank, within the terms of this Agreement, shall cooperate with any general international organization and with public inter national organizations having specialized responsibilities in related fields. Any arrangements for such cooperation which would involve a modification of any of the provisions of this Agreement may be effected only after amendment to this Agreement in conformity with the procedure set forth in Article IX. S e c t io n 6. 7 /1 0 /4 4 Art. V Sec. 6 Alt. A (p. 35) A r t ic l e V Alternative A Location of Offices The principal office of the Bank shall be located in the member holding the greatest number of shares and agencies or branch offices may be established in any member or members. Alternative B The location of the principal office of the Bank shall be decided by the Fund at the first meeting of the Board of Governors, which will take place in the territory of the member having the largest quota. S e c t io n 7. 7 /1 0 /4 4 Art. V Sec. 7 Alts. A & B (p .36) A r t ic l e V A lternative A Depositories. (a) Each member shall designate its central bank as a deposi tory for all the Bank’s holdings of its currency or, if it has no S ec t io n 8. PROCEEDINGS AN1) DOCUMENTS 393 central bank, it shall designate such other institution as may be acceptable to the Bank. (b) The Bank may hold other assets, including gold, in desig nated depositories in the four members holding the greatest number of shares and in such other depositories as the Bank may select. At least one-half of the holdings of gold of the Bank shall be held in the designated depository in the member in which the Bank has its principal office. In an emergency, the Executive Directors may transfer all or any part of the Bank’s holdings of gold to any place where it can be adequately protected. 7/1 0 /4 4 Art. V Sec. 8 Alt. A (p. 37) A r t ic l e V Alternative A Form of Holdings of Currency. The Bank shall accept from any member in lieu of any part of the currency of that member not needed by the Bank in its opera tions, notes or similar obligations issued by the Government of the member or the depository designated by such member, which shall be non-negotiable, non-interest bearing and payable at their par value on demand by a credit to the currency account of the Fund in that member. S e c t io n 9. 7/10/44 Art.V Sec. 9 Alt. A (p. 38) A r t ic l e V Alternative A Protection of the Assets of the Bank. No change in the foreign exchange value of the currency of any member shall alter the gold value of the assets of the Bank. When ever (i) the par value of a currency of a member is reduced, or (ii) the foreign exchange value of the currency of any member has depreciated within the jurisdiction to a significant extent in the opinion of the Bank, the member shall compensate the Bank by paying to the Bank within a reasonable time an amount of its own currency equal to the reduction the gold value of the currency of such member held by the Bank. Whenever the par value of the currency of any member has been increased the Bank shall com pensate such member by returning, within a reasonable time, an S e c t io n 10. 394 MONETARY AND FINANCIAL CONFERENCE amount in the currency of such member equal to the increase in the gold value of the currency of such member held by the Bank. 7 /1 0 /4 4 Art. V Sec. 10 Alt. A (P. 3 9 ) A r t ic l e V Alternative A Publication of Reports. The Bank shall publish an annual report containing an audited statement of its accounts and shall issue at intervals of three months or less a summary statement of its financial position and a profit and loss statement showing the results of its operations. The Bank may publish such other reports as it deems desirable for carrying out its purposes and policies. Art. v 7 /1 0 /4 4 S e c t io n 11. Sec. 11 Alt. A (P. 4 0 ) A r t ic l e V Alternative A Allocation of Income. The Bank shall determine annually what part of its net income shall be placed to reserve and what part, if any, shall be distributed. If any part is distributed, two per cent non-cumulative shall be paid, as a first charge against the distribution of any year, to each member on the basis of the amount by which at the end of the fiscal year the amount paid on the par value of its shares exceeds the amount of its currency held by the Bank; and the balance to the members in proportion to their shares. Payments to each member shall be made in its own currency. S e c t io n 12. 7 /1 0 /4 4 Art. V Sec. 12 Alt. A (P- 4 1 ) A r t ic l e V Alternative A Miscellaneous Powers. In order to carry out its purposes, the Bank may: (1) Make contracts; (2) Acquire and dispose of real and personal property; (3) Institute legal proceedings in any court of competent jurisdiction; S e c t io n 13. P R O C E E D I N G S AND D O C U M E N T S 395 (4) Enter into such compromises or settlements of obligations due to or by the Bank as in the judgment of the Board are to the best interests of the Bank; (5) Employ such staff as shall be necessary to conduct the business of the Bank; and (6) Adopt such rules or regulations as may be necessary or appropriate to conduct the business of the Bank. 7 /1 0 / 4 4 Art. V Sec.13 Alt. A ( P . 42) VI Withdrawal and Suspension of Membership and Liquidation A r t ic l e Alternative A Right of Members to Withdraw. Any member may withdraw from the Bank at any time by serving written notice on the Bank at its principal office. With drawal shall become effective on the date such notice is received. S e c t i o n 1. 7 /1 0 /4 4 Art. V I Sec. 1 Alt. A (p .43) A r t ic l e VI Alternative A Suspension of Membership . A member country failing to meet any of its obligations to the Bank may be suspended from membership by decision of a major ity of the member countries, each of which for this purpose shall have one vote, to be cast by its director or alternate. At the end of one year from the date of suspension, the country shall auto matically cease to be a member of the Bank unless a majority of the member countries, voting in the same manner as for suspen sion, restores the country to good standing. While under suspension, a country shall be denied all of the privileges of membership except the right of withdrawal, but shall be subject to all of its obligations. S e c t i o n 2. 7 /1 0 /4 4 Art. V I Sec. 2 Alt. A (p. 44) A r tic le VI Alternative A Financial Assistance to be Withheld. If any country is suspended from membership, the members S e c t i o n 3. M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E 396 agree that they and their agencies will not extend financial assis tance to that country during the period of suspension without approval of the Bank. 7/10/44 Art. VI Sec. 3 Alt. A (P. 4 5 ) A rtic le VI A lternative A S e c t io n 4. Cessation of Membership in International Monetary Fund. Any member which ceases to be a member of the International Monetary Fund shall immediately cease to be a member of the Bank. B Any member country that withdraws or is dropped from the International Monetary Fund, shall relinquish its membership in the Bank unless three-fourths of the member votes favor its remaining as a member. A lternative A lternative C It is proposed that this Section be omitted. 7/10/44 Art. VI Sec. 4 Alts. A, B, C ( P .46) A rtic le VI A lternative A Settlement of Accounts with Countries Ceasing to be Members. (a) When a country ceases to be a member, the Bank shall arrange to repurchase its shares as a part of the settle ment of accounts with such country. The repurchase price of the shares shall be the amount at which such shares are to be carried on the books of the Bank on the day the country ceases to be a member of the Bank plus a pro rata share of any surplus existing on that date. (b) The payment for shares repurchased by the Bank under this section shall be governed by the following conditions: (1) No amount shall be paid for shares prior to six months from the date upon which the country ceases to be a member nor thereafter so long as the country, its central bank or any of its agencies remain liable, SECTION 5. P R O C E E D I N G S AND D O C U M E N T S 397 directly, or contingently, to the Bank, except as to liability of the country resulting from its subscrip tion for shares, and any amount so withheld may, at the option of the Bank, be applied on any matured obligation. Payments for shares shall be made from time to time to the extent by which the amount due as the repurchase price exceeds the aggregate of such liabilities until the former member has received the full repurchase price. 7/10/44 Art. VI Sec. 5 Alt. A (p. 46a) (2) Payments shall be made in the currency of the country receiving payment and any deficiency shall be paid in gold or gold-convertible exchange at the option of the Bank. (c) In the event the Bank goes into liquidation within six months of the date upon which any country ceases to be a member of the Bank, all rights of such country shall be determined by the provisions governing liquidation. 7/10/44 Art. VI Sec. 5 Alt. A (p .47) A rtic le VI A ltern ativ e A Assessments to Meet Losses (a) In the event any loss is sustained by the Bank on any guarantee, participation in a loan, or loan which was out standing on the date the country ceased to be a member of the Bank, and the amount of such loss exceeds the amount of the reserve existing on the date the country ceased to be a member, such country shall be obligated to repay upon demand that amount by w7 hich the repurchase price of its shares would have been reduced if the loss had been taken into account when the repurchase price was determined. In addition, the former member country shall remain liable on any call for unpaid subscriptions to the extent that it would have been required to respond if the impair ment of capital had occurred and the call had been made at the time the repurchase price of its shares was determined. S e c t io n 6. 398 MO NETA R Y AND F IN A N C IA L C O N F E R E N C E (b) Repayment to the Bank under this section shall be in currency and gold or gold-convertible exchange in the same proportion as the payments by the Bank for the repurchase of the shares. 7/10/44 Art. VI Sec. 6 Alt. A (p .48) A r t ic l e V I A lternative A. Liquidation In an emergency, the Executive Committee by a majority vote, temporarily may suspend the operations of the Bank, pending an opportunity for further consideration and action by the Board. The Bank may be voted into liquidation by a majority of the aggregate votes. Upon being voted into liquidation, the Bank shall forthwith cease engaging in any activities except those incident to the orderly liquidation, conservation and preservation of its assets and the settlement of its obligations. The liability of all member countries for uncalled subscriptions to the capital stock of the Bank and their guarantees with respect to the depreciations of their own currencies shall continue until all claims of creditors including all contingent claims shall have been discharged. Upon liquidation, all creditors holding direct claims shall be paid immediately if the Bank has sufficient assets, and if the assets are not sufficient, the Executive Committee shall pay such credi tors as soon as possible out of payments to the Bank or calls on subscriptions, but before making any payments to holders of direct claims, the Committee shall make such arrangements as are necessary, in its judgment, to insure a distribution to holders of contingent claims ratably with creditors holding direct claims. S e c t io n 7. 7/10/44 Art. VI Sec. 7 Alt. A (p. 48a) No distribution shall be made to a member country on account of its capital subscription until all claims of creditors, including all contingent claims, have been discharged or have been provided for by the Executive Committee having made arrangements suffi cient, in its judgment, to accomplish that purpose. P R O C E E D I N G S AND D O C U M E N T S 399 (Detailed provisions relating to method of distribution to shareholders will be supplied later on basis of principles provided for liquidating the In ter national Monetary Fund.) 7 /1 0 /4 4 Art. VI Sec. 7 Alt. A ( P .49) A r t ic l e VII Additional Undertakings on the part of Member Countries A lternative A 1. Purposes and Scope of Undertakings. In order to support the activities of the Bank and to foster the accomplishment of its purposes and policies, each member country, in addition to commitments appearing elsewhere in this Agree ment, undertakes the performance of and agrees to the stipula tions set forth herein, all of which shall remain binding during suspension or after termination of membership. S ec t io n 7 / IQ/44 Art. VII Sec. 1 Alt. A (p. 50) A r t ic l e VII A lternative A Immunities of the Bank. (a) The Bank and its assets of whatsoever nature shall, where soever located and by whomsoever held, be exempt and immune in the territory of any member from: (i) search, seizure, attachment, execution, requisition, con fiscation, moratorium and expropriation, except as provided in 3, below; and (ii) any exchange, debt, or export controls, except such as are consented to by the Bank. (b) All governors, executive directors, officers and employees of the Bank shall, with respect to their official acts, be exempt from suit except when the Bank consents. (c) The archives of the Bank shall be inviolable. N ote . There are certain other minor privileges or immunities which will also be required such as courier facilities. Further material will be supplied completing this section in this respect. S ec tio n 2. 7/10/44 Art. VII Sec. 2 Alt. A 400 MONETARY AND FINANCIAL CONFERENCE ( P . 51) A r t ic l e VII Alternative A Suits against the Bank. Suits may be brought against the Bank only in a court of com petent jurisdiction in a member in which the Bank has an office, and only by litigants other than members and those acting for or deriving claims from members. The Bank and its assets of what soever nature shall, wheresoever located and by whomsoever held, be exempt and immune from seizure, attachment and execution in advance of final judgment. S e c t io n 3. 7 /1 0 /4 4 Art. V II Sec. 3 Alt. A (P. 52) A r t ic le VII Alternative A Restrictions on Taxation of the Bank, its Employees and Obligations (a) The Bank, its assets, property, income and its operations and transactions authorized by these articles of Agreement shall be exempt and immune from all taxation and from all customs duties. The Bank shall also be exempt and immune from liability for the collection or payment of any tax or duty. (b) No member, or any political subdivision or any taxing authority thereof, shall impose or collect any tax on or measured by salaries paid by the Bank to its executive directors, officials and employees who are not citizens of such member. (c) No member, or any political subdivision or taxing authority thereof, shall impose or collect any taxation on any obligation or security issued by the Bank, or any dividend or any interest thereon, by whomsoever held or received: (i) which discriminates against such obligation, dividend, or interest, because of its origin; or (ii) which is applied solely on the basis of the place or cur rency in which it* is issued, made payable or paid, or solely on the basis of the location of any office or place of business maintained by the Bank. (d) Each member shall inform the Bank of the detailed action it has taken to grant the exemptions and immunities provided for in this section and in section 2 respectively. Differences which may S ec tio n 4. PROCEEDINGS AND DOCUMENTS 401 arise between such member and the Bank as to the sufficiency or propriety of any action shall be resolved in accordance with the provisions of Article IX, Section 1. Art. V II Sec. 4 Ait. A 7 /1 0 /4 4 (P. 53) VIII Amendments A r t ic l e Alternative A Any proposal to introduce modifications in the agreement, whether emanating from a member, a Governor or an Executive Director, shall be communicated to the Chairman of the Board of Governors who shall bring the proposal before the Board. If the proposed amendment is approved by the Board by a majority of the aggregate votes, the Bank shall, by circular letter, ask the governments of all the members whether they accept the proposed amendment. When three-fifths of the members, having four-fifths of the aggregate votes, have accepted the proposed amendment, the Bank shall certify the fact by means of a proces verbal, which it shall communicate to the governments of all members. However, the acceptance of the amendment by the governments of all members is required in the case of modifications of the right to withdraw from the Bank. The amendment will enter into force for all members three months after the date of the proces verbal unless a shorter period is specified in the circular letter. 7 /1 0 /4 4 Art. V II! Ait. A (p. 54) IX Interpretation of the Agreement A r t ic l e Alternative A Interpretation. (a) All questions of interpretation of the provisions of this agreement arising between any member and the Bank or between any members of the Bank shall be submitted to the Executive Directors of the Bank for their decision. If the question particu larly involves any member and that member is not represented among the Executive Directors by a Director appointed by it, then the provisions of Article VI, section 3, apply. (b) In any case where the Executive Directors have given a S e c t io n 1. 402 MONETARY AND FINANCIAL CONFERENCE decision under paragraph (a) above, any member may require that the question be submitted to the Board of Governors, and the decision of the Board shall be final. Pending the result of the reference to the Board, the Bank may (so far as is necessary) act on the basis of the decision of the Executive Directors. (c) Whenever a disagreement arises between the Bank and a country which has ceased to be a member, or between the Bank and any member country after liquidation of the Bank, such disagree ment shall be submitted to arbitration by a tribunal of three arbitrators, one appointed by the Bank, another by the country involved and an umpire who, unless the parties otherwise agree, shall be appointed by the President of the Permanent Court of International Justice. The umpire shall have full power to settle all questions of procedure in any case where the parties are in disagreement with respect thereto. 7 /1 0 /4 4 Art. IX Sec. 1 Alt. A (p. 55) A r t ic l e IX Alternative A S e c t io n 2. Definitions. (To be supplied later) 7 /1 0 /4 4 Art. IX Sec. 2 Alt. A (P. 56) A r t ic l e IX Alternative A Approval Deemed Given. Whenever the approval of any member is required before any act may be done by the Bank, approval shall be deemed to have been given unless the member presents an objection within such reasonable period as the Bank may fix in notifying the member of the proposed Act. S e c t io n 3. 7 /1 0 /4 4 Art. IX Sec. 3 Alt. A (P. 57) A r t ic l e X (Final Provisions ) (To be supplied later) 7 /1 0 /4 4 A rt.X P R O C E E D I N G S AND D O C U M E N T S 403 Document 247 (201) G D / 2 9 (G D /2 3 ) Representation of Delegations on Commissions and Committees C o m m is s io n I Chairman—Harry D. White (U.S.A.) Vice Chairman—Rodolfo Rojas (Venezuela) Reporting Delegate—L. Rasminsky (Canada) Secretary—Leroy D. Stinebower Assistant Secretary—Eleanor Dulles AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Camille Gutt BOLIVIA No designation BRAZIL No designation CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre J. J. Deutsch D. C. Abbott J. A. Blanchette CHILE Luis Alamos German Riesco A rturo Maschke Fernando Mardones CHINA Tingfu F. Tsiang COLOMBIA Carlos Lleras Restrepo COSTA RICA Luis D. Tinoco Castro Jose Rafael Oreamuno CUBA E. I. Montoulieu Oscar Garcia Montes Ramiro Guerra Luis Machado J. M. Menocal Miguel A. Pirez Eduardo D urruthy Felipe Pazos CZECHOSLOVAKIA Ladislav Feierabend Jan Mladek Antonin Basch Josef Hanc Ervin Hexner DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes ETHIOPIA B latta Ephrem T. Medhen FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye Robert Mosse GREECE Kyriakos Varvaressos Alexander Argyropoulos GUATEMALA Manuel Noriega Morales 404 MONETARY AND FINANCIAL CONFERENCE (P . 2) HAITI Pierre Chauvet HONDURAS Julian R. Caceres ICELAND Magnus Sigurdsson INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Deshmukh A. D. Shroff IRAN Abol H asan Ebtehaj Hosein Navab A. A. D aftary IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO Eduardo Suarez Antonio Espinosa de los Monteros NETHERLANDS J. W. Beyen D. Crena de longh H. Riemens J. J. Polak C. H. Schoch A. Broches NEW ZEALAND W alter Nash B. C. Ashwin B. R. Turner A. G. B. Fisher E. C. Fussell NICARAGUA Guillermo Sevilla Sacasa J. Jesus Sanchez Roig Leon DeBayle NORWAY Wilhelm Keilhau Ole Colbjornsen Arne Sk^ug PANAMA Guillermo Arango Narciso E. Garay PARAGUAY Celso R. Velazquez Nestor M. Campos Ros • * PERU Pedro G. Beltran Juvenal Monge Emilio Barreto Latzeb P H IL IP P IN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael M athay POLAND Leon Baranski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS M. S. Stepanov P. A. Maletin A. P. Morozov A. M. Smirnov UNITED KINGDOM Lord Keynes R. H. Brand Sir W. Eady R. Opie UNITED STATES OF AMERICA F. M. Vinson URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar . P R O C E E D I N G S AND D O C U M E N T S C o m m is s io n I Committee 1 Chairman—Dr. Tingfu F. Tsiang (China) Reporting Delegate—Kyriakos Varvaressos (Greece) Secretary—W. A. Brown AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Baron Rene Boel BOLIVIA No designation BRAZIL Eugenio Gudin CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre CHILE Luis Alamos CHINA Te-Liang Soong COLOMBIA No designation COSTA RICA No designation CUBA Ramiro Guerra Garcia Montes Eduardo D urruthy CZECHOSLOVAKIA Jan Mladek Antonin Basch E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin Alfaro Moran Victor Manuel Valdes Raul Gamero ETHIOPIA B latta Ephrem Medhen FRENCH DELEGATION A. Istel J. de Lar gent aye R. Mosse GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Pierre Chauvet HONDURAS Julian R. Caceres ICELAND A. Asgeirsson INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Deshmukh A. D. Shroff IRAN A. II. Ebtehaj Ilosein Navab IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO Daniel Cosio Villegas Victor L. Urquidi 406 MONETARY AND FINANCIAL CONFERENCE (p. 2.) NETHERLANDS J. W. Beyen D. Crena de Iongh H. Riemens NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. T urner NICARAGUA Leon DeBayle J. Jesus Sanchez Roig Guillermo Sevilla Sacasa NORWAY ' Wilhelm Keilhau Arne Skaug K aare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Ju an Chavez Emilio Barreto Latzeh P H IL IP PIN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND S. Kirkor Z. Karpinski M. Heilperin W. Malinowski UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS A. P. Morozov F. P. Bystrov P. Titov N. Ivanov U NITED KINGDOM Lionel Robbins A. W. Snelling U NITED STATES OF AMERICA Mabel Newcomer F. M. Vinson E. A. Goldenweiser E. A. Collado H. Edmiston URUGUAY Mario La Gamma Acevedo V ENEZUELA Rodolfo Rojas Cristobal L. Mendoza M. Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m is s io n I Committee 2 Chairman—N. A. Maletin (U.S.S.R.) Vice Chairman—W. A. Mackintosh (Canada) Reporting Delegate--Robert Mosse (French Delegation) Secretary—Karl Bopp Assistant Secretary-— Alice Bourneuf AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Georges Theunis EL SALVADOR Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes ETH IO PIA George A. Blowers P R O C E E D I N G S AND D O C U M E N T S BOLIVIA No designation BRAZIL Francisco Alves dos Santos Filho CANADA L. Rasminsky W. A. Mackintosh J. J. Deutsch CHILE German Riesco CHINA Tsu-Yee Pei COLOMBIA No designation COSTA RICA No designation CUBA Garcia Montes Eduardo D urruthy Felipe Pazos CZECHOSLOVAKIA Antonin Basch Jan Mladek DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim (P. 2 .) NETHERLANDS D. Crena de Iongh A. Andriesse A. Bestebreurtje J. J. Polak NEW ZEALAND E. C. Fussell A. G. B. Fisher B. C. Ashwin B. R. T urner NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle 7 4 9 0 1 3 — 48 — 27 407 FRENCH DELEGATION A. Istel J. de Lar gent aye R. Mosse GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Pierre Chauvet HONDURAS No designation ICELAND S. Frimannsson INDIA Sir A. J. Raisman Sir Theodore E. Gregory Sir Shanmukham Chetty Sir Chintaman D. Deshmukh A. D. Shroff IRAN A. H. Ebtehaj Hosein Navab IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LUXEMBOURG Hugues Le Gallais MEXICO Antonio Espinosa de los Monteros Rodrigo Gomez UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS N. Maletin A. Smirnov L. Andreev M. Chekmarev N. Kuznetzov 408 MONETARY AND FINANCIAL CONFERENCE NORWAY Ole Colbjornsen Arne Skaug K aare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Juvenal Monge Emilio G. Barreto PH IL IP P IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Zygmunt Karpinski S. Kirkor M. Heilperin W. Malinowski UNITED KINGDOM D. H. Robertson G. L. F. Bolton H. E. Brooks U NITED STATES OF AMEI E. E. Brown M. S. Eccles J. P. Wolcott E. M. Bernstein J. W. Angell W. Gardner A. H. Hansen E. G. Collado URUGUAY Mario La Gamma Acevedo VENEZUELA Rodolfo Rojas J. J. Gonzales Gorrondona M. Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m is s io n I Committee 3 Chairman—Arthur de Souza Costa (Brazil) Reporting Delegate—Erwin Hexner (Czechoslovakia) Secretary—Malcolm Bryan Assistant Secretary—J. H. Bitterman AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rth u r H. Tange BELGIUM Camille Gutt BOLIVIA No designation BRAZIL Valentim Boucas CANADA J. J. Deutsch J. A. Blanchette D. C. Abbott CHILE A rturo Maschke CHINA Te-Mou Hsi COLOMBIA No designation EL SALVADOR A gustin Alfaro Moran Victor Manuel Valdes Raul Gamero ETH IO PIA George A. Blowers FRENCH DELEGATION J. de Largentaye R. Aglion GREECE Alexander Argyropoulos Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Pierre Chauvet HONDURAS No designation ICELAND M. Sigurdsson P R O C E E D I N G S AND D O C U M E N T S COSTA RICA No designation CUBA Luis Machado J. M. Menocal Miguel Pirez CZECHOSLOVAKIA Ervin Hexner Josef Hanc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR S. E. Duran Ballen E. F. Carbo EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim 409 INDIA Chintaman Deshmukh Theodore Gregory IRAN A. A. D aftary T. N assr IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA W alter F. W alker LUXEMBOURG Hugues Le Gallais MEXICO Antonio Espinosa de los Monteros Rodrigo Gomez (P. 2.) NETHERLANDS J. W. Beyen C. H. Schoch NEW ZEALAND A. G. B. Fisher E. C. Fussell B. C. Ashwin B. R. T urner NICARAGUA Guillermo Sevilla Sacasa Leon DeBayle J. Jesus Sanchez Roig NORWAY Arne Skaug Ole Colbjornsen Kaare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Andres F. Dasso P H IL IP PIN E COMMONWEALTH Jaim e Hernandez Ismael M athay POLAND Janusz Zoltowski M. Heilperin UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS I. Slobin M. Idashkin N. Cheklin UNITED KINGDOM Sir Eady W. E. Beckett G. L. F. Bolton R. T. G. Miles UNITED STATES OF AMERICA R. F. Wagner C. W. Tobey A. F. Luxford B. Cohen E. M. Bernstein 0. Cox URUGUAY Hugo Garcia VENEZUELA Rodolfo Rojas J. J. Gonzalez Gorrondona M. Perez Guerrero YUGOSLAVIA Vladimir Rybar 410 MONETARY AND FINANCIAL CONFERENCE C o m m is s io n I Committee 4 Chairman—Manuel B. Llosa, Peru Reporting Delegate—Wilhelm Keilhau, Norway Secretary—Colonel Charles M. Dyson Assistant Secretary—Lauren Casaday AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Joseph Nisot BOLIVA No designation BRAZIL Octavio Bulhoes CANADA D. C. Abbott A. F. W. Plum ptre J. A. Blanchette CHILE Fernando Mardones CHINA Victor Hoo COLOMBIA No designation COSTA RICA No designation CUBA Luis Machado Miguel Pirez J. M. Menocal CZECHOSLOVAKIA Josef Hanc E rvin Hexner DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR Sixto E. Duran Ballen Esteban F. Carbo (P . 2 .) LUXEMBOURG Hugues Le Gallais MEXICO Victor L. Urquidi EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes ETH IO PIA B latta Ephrem T. Medhen FREN CH DELEGATION Raoul Aglion Jean de Largentaye GREECE A thanase Sbarounis Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Pierre Chauvet HONDURAS No designation ICELAND Magnus Sigurdsson INDIA Sir Chintaman D. Deshmukh Sir Theodore E, Gregory IRAN A. A. D aftary T. N assr IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA William E. Dennis POLAND Leon Baranski J. Zoltowski P R O C E E D I N G S AND D O C U M E N T S NETHERLANDS A. H. Philipse A. Broches NEW ZEALAND B. C. Ashwin E. C. Fussell A. G. B. Fisher B. R. Turner NICARAGUA Leon DeBayle J. Jesus Sanchez Roig Guillermo Sevilla Sacasa NORWAY Wilhelm Keilhau Ole Colbjornsen Kaare Petersen PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Manuel B. Llosa Juvenal Mo»ge Emilio Barreto Latzeh PH IL IPPIN E COMMONWEALTH Jaime Ilerandez Ismael M athay UNION OF SOUTH AFRICA J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS A. A rutiunian F. Bystrov N. Panchenko UNITED KINGDOM N. B. Ronald W. E. Beckett J. W. Russell UNITED STATES OF AMERICA D. Acheson B. Spence L. T. Crowley 0. Cox L. S. Pasvolsky R. B. Brenner URUGUAY Hugo Garcia VENEZUELA Rodolfo Rojas Cristobal L. Mendoza Alfonso Espinoza Manuel Perez Guerrero YUGOSLAVIA Vladimir Rybar C o m m is s io n II Chairman—Lord Keynes (U. K.) Vice Chairman—Luis Alamos Barros (Chile) Reporting Delegate—Georges Theunis (Belgium) Secretary—A. Upgren Assistant Secretary—A. Smithies AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Camille Gutt BOLIVIA No designation BRAZIL No designation CANADA W. A. Mackintosh 411 DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR S. E. D uran Balien EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR * Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes 412 MONETARY AND FINANCIAL CONFERENCE CHILE Luis Alamos German Riesco A rturo Maschke Fernando Mardones CHINA Yee-Chung Koo COLOMBIA Miguel Lopez Pumarejo COSTA RICA Francisco de P. Gutierrez Ross Jose Rafael Oreamuno CUBA E. I. Montoulieu Oscar Garcia Montes Ramiro Guerra Miguel A. Pirez Luis Machado Juan M. Menocal Eduardo D urruthy CZECHOSLOVAKIA Ladislav Feierabend Antonin Basch Josef Hanc Ervin Hexner Jan Mladek ETH IO PIA George A. Blowers FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye Robert Mosse GREECE Kyriakos Varvaressos Athanase Sbarounis GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS Julian R. Caceres ICELAND Magnus Sigurdsson INDIA A. J. Raisman Theodore Gregory Shanmukham Chetty Chintaman Deshmukh A. D. Shroff * (P . 2 .) IRAN Taghi N assr A. H. Ebtehaj A. A. D aftary IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA James E. Cooper LUXEMBOURG Hugues Le Gallais MEXICO Eduardo Suarez Daniel C.osio Villegas NETHERLANDS J. W. Beyen D. Crena de Ic*igh A. H. Philipse A. Andriesse A. Bestebreurtje PANAMA Guillermo Arango Narciso E. Garay PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Andres F. Dasso Juvenal Monge P H IL IP P IN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael M athay POLAND Ludwik Grosfeld UNION OF SOUTH AFRICA M. H. de Kock J. E. Holloway W. C. Naude PROCEEDINGS AND DOCUMENTS NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. Turner NICARAGUA Leon DeBayle Guillermo Sevilla Sacasa J. Jesus Sanchez Roig NORWAY Ole Colbjernsen Wilhelm Keilhau Arne Skaug UNION OF SOVIET SOCIALIST REPUBLICS M. S. Stepanov N. F. Chechulin A. R. A rutiunian F. P. Bystrov UNITED KINGDOM R. H. Brand Sir W. Eady UNITED STATES OF AMERICA D. Acheson URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No delegation YUGOSLAVIA Vladimir Rybar C o m m issio n II Committee 1 Chairman—J. W. Beyen (Netherlands) Reporting Delegate—Luis D. Tinoco Castro (Costa Rica) Secretary—J. P. Young Assistant Secretary—Janet Sundelson AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Baron Rene Boel BOLIVIA No designation BRAZIL Eugenio Gudin CANADA W. A. Mackintosh W. A. Tucker CHILE Luis Alamos CHINA Te-Mou Hsi COLOMBIA No designation COSTA RICA No designation CUBA Ramiro Guerra Garcia Montes Eduardo D urruthy 413 EL SALVADOR Agustin Alfaro Moran Victor Manuel Valdes Raul Gamero ETHIOPIA B latta Ephrem T. Medhen FRENCH DELEGATION A. Istel J. de Largentaye R. Mosse GREECE K. Varvaressos GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND A. Asgeirsson INDIA A. J. Raisman Theodore E. Gregory Shanmukham Chetty Chintaman Deshmukh A. D. Shroff 414 MONETARY AND FINANCIAL CONFERENCE CZECHOSLOVAKIA Ervin Hexner Ja n Mladek E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim IRAN No designation IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA James E. Cooper LUXEMBOURG Hugues Le Gallais MEXICO Daniel Cosio Villegas Victor L. Urquidi (P- 2 .) NETHERLANDS J. W. Boyen A. H. Philipse J. J. Polak D. Crena de Iongh A. Andriesse NEW ZEALAND W alter Nash B. C. Ashwin A. G. B. Fisher E. C. Fussell B. R. T urner NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Pedro G. Beltran Andres F. Dasso Juvenal Monge Emilio G. Barreto PH IL IPP IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Leon Baranski Z. Karpinski M. Heilperin W. Malinowski UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS A. Morozov” E. Bystrov P. Titov UNITED KINGDOM L. C. Robbins A. W. Snelling UNITED STATES OF AMERICA Sen. C. W. Tobey Mabel Newcomer Sen. R. F. W agner E. A. Goldenweiser N. T. Ness I. Lubin URUGUAY Mario La Gamma Acevedo VENEZUELA No designation YUGOSLAVIA Vladimir Rybar PROCEEDINGS AND DOCUMENTS 415 C o m m issio n II Committee 2 Chairman—Eduardo Montoulieu I. (Cuba) Reporting Delegate—Frederick H. Wheeler (Australia) Secretary—J. H. Bitterman Assistant Secretary—Ruth Russell AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Georges Theunis BOLIVIA No designation BRAZIL Francisco Alves dos Santos Filho CANADA L. Ilasminsky Lionel Chevrier CHILE German Riesco CHINA Tsu-Yee Pei COLOMBIA No designation COSTA RICA No designation CUBA Garcia Montes Eduardo D urruthy Felipe Pazos CZECHOSLOVAKIA Jan Mladek Antonin Basch DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR E. F. Carbo S. E. Duran Ballen EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes ETHIOPIA George A. Blowers FRENCH DELEGATION Andre Istel Robert Mosse Jean de Largentaye GREECE Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND Sveinbjorn Frimannsson INDIA A. J. Raisman Theodore E. Gregory Shanmukham Chetty Chintaman Deshmukh A. D. Shroff IRAN No designation IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA William E. Dennis LUXEMBOURG Hugues Le Gallais MEXICO Antonio Espinosa de los Monteros Rodrigo Gomez 416 MONETARY AND FINANCIAL CONFERENCE (P. 2 ) NETHERLANDS D. Crena de Iongh A. Andriesse A. Bestebreurtje NEW ZEALAND E. C. Fussell A. G. B. Fisher B. C. Ashwin B. R. T urner NICARAGUA Guillermo Sevilla Sacasa Leon DeBayle J. Jesus Sanchez Roig NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Alberto Alvarez Calderon Juvenal Monge P H IL IP P IN E COMMONWEALTH Andres Soriano Joseph H. Foley POLAND Leon Baranski S. Kirkor UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS N. Chechulin A. Smirnov A. Borisov Mrs. L. Gouseva UNITED KINGDOM R. H. Brand Sir W. Eady D. H. Robertson G. L. F. Bolton H. E. Brooks U NITED STATES O F AMERICA L. T. Crowley E. E. Brown M. S. Eccles H. D. White A. H. Hansen W. Louchheim, Jr. W. Pierson E. M. Bernstein A. F. Luxford URUGUAY Mario La Gamma Acevedo VENEZUELA No designation YUGOSLAVIA Vladimir Rybar C o m m issio n II Committee 3 Chairman—Miguel Lopez Pumarejo (Colombia) Reporting Delegate—M. H. de Kock (Union of South Africa) Secretary—Mordecai Ezekiel Assistant Secretary—Captain William L. Ullmann AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM B. S. Chlepner BOLIVIA No designation BRAZIL Francisco Alves dos Santos Filho EL SALVADOR Agustin A lfaro Moran Victor Manuel Valdes Raul Gamero ETH IO PIA George A. Blowers FRENCH DELEGATION J. de Largentaye R. Aglion GREECE Alexander Argyropoulos Kyriakos Varvaressos PROCEEDINGS AND DOCUMENTS CANADA J. J. Deutsch CHILE A rturo Maschke CHINA Ts-Liang Soong COLOMBIA No designation COSTA RICA No designation CUBA Miguel Pirez Luis Machado Juan Menocal CZECHOSLOVAKIA Antonin Basch Ernest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR S. E. Duran Ballon E. F. Carbo EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim (P. 2 ) NETHERLANDS el. W. Beyen H. Riemens NEW ZEALAND A. G. B. Fisher E. C. Fussell C. B. Ashwin B. R. T urner NICARAGUA Leon DeBayle Guillermo Sevilla Sacasa J. Jesus Sanchez Roig NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Alberto Alvarez Calderon Juan Chavez 417 GUATEMALA Manuel Noriega Morales HAITI Andre Liautaud HONDURAS No designation ICELAND M. Sigurdsson INDIA Chintaman Deshmukh Theodore Gregory IRAN No designation IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA W alter E. Walker I/UXEMBOURG Hugues Le Gallais MEXICO Antonio Espinosa de los Monteros Rodrigo Gomez UNION OF SOUTH AFRICA No designation UNION OF SOVIET SOCIALIST REPUBLICS T Slobin . M. Idashkin N. Cheklin UNITED KINGDOM Sir W. Eady W. E. Beckett G. L. F. Bolton R. T. G. Miles UNITED STATES OF AMERICA Rep. J. P. Wolcott Rep. B. Spence Judge F. M. Vinson B. Cohen G. Luthringer A. F. Luxford URUGUAY Hugo Garcia VENEZUELA No designation 418 MONETARY AND FINANCIAL CONFERENCE P H IL IP P IN E COMMONWEALTH YUGOSLAVIA Jaime Hernandez Vladimir Rybar Ismael Mathay POLAND Janusz Zoltowski M. Heilperin C o m m issio n II Committee 4 Chairman—Sir Chintaman D. Deshmukh (India) Reporting Delegate—Leon Baranski (Poland) Secretary—Henry Edmiston Assistant Secretary—Colonel Charles M. Dyson AUSTRALIA Leslie G. Melville Jam es B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Joseph Nisot BOLIVIA No designation BRAZIL Valentim Bougas CANADA A. F. W. Plum ptre CHILE Fernando Mardones CHINA Kuo-Ching Li COLOMBIA No designation COSTA RICA No designation CUBA Juan M. Menocal Miguel Pirez Luis Machado CZECHOSLOVAKIA Josef Hanc E rnest Sturc DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez ECUADOR Sixto E. Duran Ballen Esteban F. Carbo EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim FRENCH DELEGATION Raoul Aglion Jean de Largentaye GREECE Athanase Sbarounis Kyriakos Varvaressos GUATEMALA Manuel Noriega Morales H A ITI Andre Liautaud HONDURAS No designation ICELAND Magnus Sigurdsson INDIA Chintaman Deshmukh Theodore E. Gregory IRAN •No designation IRAQ Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir C. E. Loombe LIBERIA Jam es F. Cooper LUXEMBOURG Hugues Le Gallais MEXICO Victor L. Urquidi N ETHERLANDS C. H. Schoch A. Broches NEW ZEALAND B. C. Ashwin E. C. Fussell A. G. B. Fisher B. R, Turner PROCEEDINGS AND DOCUMENTS EL SALVADOR Agustin Alfaro Moran Raul Gamero Victor Manuel Valdes ETHIO PIA B latta Ephrem T. Medhen (P -2) NORWAY No designation PANAMA Guillermo Arango Narciso E. Garay PARAGUAY No designation PERU Manuel B. Llosa Alberto Alvarez Calderon P H IL IPPIN E COMMONWEALTH Jaime Hernandez Ismael M athay POLAND Stanislaw Kirkor Z. Karpinski W. Malinowski UNION OF SOUTH AFRICA No designation NICARAGUA J. Jesus Sanchez Roig Leon DeBayle Guillermo Sevilla Sacasa UNION OF SOVIET SOCIALIST REPUBLICS A. A rutiunian UNITED KINGDOM N. B. Ronald W. E. Beckett J. W. Russell UNITED STATES OF AMERICA Rep. B. Spence D. Acheson 0. Cox E. Arnold E. G. Collado URUGUAY Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rvbar C o m m is s io n I I I Chairman—Eduardo Suarez (Mexico) Vice Chairman—Mahmoud Saleh El Falaky (Egypt) Reporting Delegate—A. G. B. Fisher (New Zealand) Secretary—Orvis Schmidt AUSTRALIA Leslie G. Melville James B. Brigden Frederick H. Wheeler A rthur H. Tange BELGIUM Baron de Gruben BOLIVIA No designation BRAZIL Valentim Bougas Eugenio Gudin Octavio Bulhoes CANADA W. A. Mackintosh L. Rasminsky A. F. W. Plum ptre J. J. Deutsch 419 ECUADOR No designation EGYPT Sanny Lackany Bey Mahmoud Saleh El Falaky Ahmed Selim EL SALVADOR No designation ETHIOPIA B latta Ephrem T. Medhen FRENCH DELEGATION Andre Istel Raoul Aglion Jean de Largentaye GREECE Kyriakos Varvaressos Alexander Argyropoulos Athanase Sbarounis 420 MONETARY AND FINANCIAL CONFERENCE CHILE Luis Alamos German Riesco A rturo Maschke Fernando Mardones CHINA Kuo-Ching Li COLOMBIA Sr. Victor Dugand COSTA RICA Fernando Madrigal J. Rafael Oreamuno CUBA E. I. Montoulieu Oscar Garcia Montes Ju an Menocal Luis Machado CZECHOSLOVAKIA Ladislav Feierabend Ervin Hexner Antonin Basch Josef Hanc Jan Mladek DOMINICAN REPUBLIC Anselmo Copello J. R. Rodriguez GUATEMALA Manuel Noriega Morales H A ITI Andre Liautaud Pierre Chauvet HONDURAS Julian R. Caceres ICELAND Asgeir Asgeirsson INDIA A. J. Raisman Theodore E. Gregory Shanmukham Chetty Chintaman Desmukh A. D. Shroff IRAN A. A. D aftary Hosein Navab IRAQ Senator Ibrahim Kamal L. M. Swan Ibrahim Al-Kabir Claude E. Loombe (P. 2) LIBERIA W alter F. W alker LUXEMBOURG Hugues Le Gallais MEXICO Eduardo Suarez Rodrigo Gomez Antonio Espinosa de los Monteros Daniel Cosio Villegas Victor L. Urquidi NETHERLANDS J. W. Beyen D. Crena de Iongh NEW ZEALAND W alter Nash Bernard Carl Ashwin Edward C. Fussell Bruce R. Turner NICARAGUA J. Jesus Sanchez Roig Guillermo Sevilla Sacasa Leon DeBayle NORWAY No designation Andres F. Dasso Alberto Alvarez Calderon Juvenal Monge P H IL IP P IN E COMMONWEALTH Andres Soriano Jaim e Hernandez Joseph H. Foley Ismael M athay POLAND L. Grosfeld Leon Baranski UNION OF SOUTH AFRICA S. F. N. Gie J. E. Holloway M. H. de Kock W. C. Naude UNION OF SOVIET SOCIALIST REPUBLICS I. D. Slobin M. M. Idashkin UNITED KINGDOM R. H. Brand N. B. Ronald P R O C E E D I N G S AND D O C U M E N T S PANAMA Guillermo Arango Narciso E. Garay PARAGUAY Celso R. Velazquez Nestor M. Campos Ros PERU Pedro G. Beltran 421 UNITED STATES OF AMERICA Senator Robert F. W agner URUGUAY Mario La Gamma Acevedo Hugo Garcia VENEZUELA No designation YUGOSLAVIA Vladimir Rybar Document 249 C I/A H /R P 1 Report of Ad Hoc Committee of Commission I on Voting Arrangements and Executive Directors. The Committee met in room B at 4 p.m., July 8 and at 9 p.m., July 9 in room A; Dr. de Souza Costa presided at the sessions. Representatives of Brazil, Belgium, Netherlands, Cuba, France, the United Kingdom, the United States, the Union of Soviet Socialist Republics, and Czechoslovakia were present at the meetings. The Committee considered at length the various points relating to paragraph 2 of the “Final Alternative Submitted by Special Sub-committee Appointed (by Committee 3, Commission I) to Consider all Proposals Relative to the Executive Directors.” No agreement being reached, the Committee was adjourned pending the availability of further information regarding quotas. 7 /1 0 /4 4 Document 250 D P /1 3 United Kingdom Delegation Memorandum to Commission I The following proposed comprehensive text on the capacities and immunities of the Fund is submitted with the following objects in view:— (a) To facilitate discussion and ultimate drafting by gather ing together related text now appearing on separate pages. It is designed to replace the following documents: Doc. 32 p. 33 422 MO N ETA R Y AND F I N A N C I A L C O N F E R E N C E Items 1, 2, 3*, Doc. 120 p. 41; Doc. 32 p. 43; Doc. 194 p. 43(e) and to fill up the gap left by the note on Doc. 120 p. 41 which simply refers to other matters to be specified later. (b) To facilitate acceptance by expressing the principles as shortly and simply as possible and to avoid technical words having different meanings in different legislations. As stated in paragraph 11 it is understood that each member of Fund will translate these principles into suitable form to give effect to them under its own law. (c) To take account of the experience of the past in con nexion with the League of Nations and the I.L.O. and the recent agreements relating to UNRRA and the F.A.O. The different functions with which various public international organisations are entrusted render complete uniformity in this matter imprac ticable and it is undesirable to create precedents by conferring on any given international organisation privileges or immuni ties which it does not really require for the proper fulfilment of its functions. Nevertheless, subject to these limitations as much uniformity is desirable as is practicable. In order to fulfil the functions with which it is entrusted, the following attributions, immunities and privileges shall be accorded to the Fund in the territory of each member:— 1. The Fund shall be accorded the attributions of full juridical personality and in particular:— (a) the power to contract: (b) the power to acquire and dispose of immovable and mov able property: (c) the power to institute legal proceedings. (p. 2) 2. The Fund shall enjoy immunity from legal process instituted against it except when it waives its immunity for the purpose of any proceedings or by the terms of any contract. 3. Property and assets of the Fund shall be immune from any form of attachment or seizure as the result of any juridical process. 4. Property and assets of the Fund shall be immune from requi sition, confiscation, expropriation or any other form of seizure by executive action whether under legislation or otherwise. 5. The archives of the Fund shall be inviolable. 6. All Governors, Executive Directors, Officials and Employees of the Fund shall be exempt from legal process with respect to *It is understood th a t points (4) and (5) of Doc. 32 p. 33 will be included in Article VII (M anagement). P R O C E E D I N G S AND D O C U M E N T S 423 acts performed by them in their official capacity except when the Fund waives this immunity. 7. The Governors, Executive Directors, Officials and Employees of the Fund not being local nationals shall be granted the same immunities from immigration restrictions, alien registration requirements and national service obligations and the same facili ties as regards exchange restrictions as are accorded to the representatives, officials, and employees of comparable rank of other members. 8. The official correspondence of the Fund shall be accorded the same treatment as the official correspondence of other members. 9. The same treatment in respect of travelling facilities shall be granted to the Governors, Executive Directors, Officials and Employees of the Fund as is granted to representatives and officials and employees of comparable rank of other members. 10. The following immunities shall be granted in the matter of taxation:— (a) No tax or duty of any kind shall be levied on the Fund in the territory of any member; this provision does not apply to indirect taxes or duties which may be regarded as a charge for services rendered. (b) No duties shall be levied on gold imported or exported by the Fund or other goods so imported or exported for the purpose of carrying on its activities including goods required for the equipment of its offices. (c) No tax shall be levied on salaries and emoluments paid by the Fund to Executive Directors, Officials or Employees of the Fund who are not local nationals. (d) No taxation of any kind shall be levied on any obligation or security issued by the Fund (including any dividend or interest thereon) by whomsoever held— (i) which discriminates against such obligation or secu rity solely because of its origin ; or (ii) which is applied solely on the basis of the place or currency in which it is issued, made payable or paid or solely on the basis of the location (p. 3) of any office or place of business maintained by the Fund. 11. It is understood that the above provisions of this section are expressed as principles and it is for each member to take such action as is necessary in its own territory for the purpose of expressing and making effective these principles in the terms of its own law. Each member shall inform the Fund of the detailed action which it has taken to grant the capacities, exemptions and immunities provided for in this section. 749013— 48— 28 424 MONETARY AND FINANCIAL CONFERENCE Document 251 D P /1 4 UNITED N ATIONS MONETARY AND FIN ANCIAL CONFERENCE Speech of Mr. A. D. Shroff, Delegate for India Made Before Committee 1 of Commission I on July 6, 19 Supporting the Egyptian Amendment to Article I, “Purposes and Policies of the Fund” I am in entire accord with Alternative H moved by the delegate for Egypt. In principle, it is the same as Alternative G which was moved the other day by the Leader of my Delegation, though our Alternative was more modestly worded. I am very sorry to say that the manner in which the proposal of the India Delegation was received by this Committee and the very casual fashion in which it was disposed of have caused serious disappointment to this side of the Committee. In general, two criticisms of the Indian proposal were made on behalf of the U.S.A. and the U.K. Delegations. The delegate from the U.S.A. raised the objection that if the foreign credit balances accumulated during the war were to be given multilateral convertibility through the Fund, they would unduly overload the Fund. The United Kingdom delegate put forth the view that this was a matter for bilateral arrangement between the parties and interests concerned. I should like to make it very clear that so far as India is concerned public opinion and feeling on this question have not only been unanimous but extremely strong and unless some method is devised to facilitate the solution of what is an extremely important matter for us the ultimate attitude of our country towards the International Monetary Fund which is proposed to be established will be largely influenced by the decision of the Conference on this question. What is our position? Under the various provisions of the Joint Statement relating to foreign exchange resources and reserves of member countries, it appears that though we have four billion dollars worth of sterling balances, we have practically no foreign exchange reserves. I would also like the Committee to appreciate that what we visualise for the future of our country is in full consonance with the primary objectives of the International Monetary Fund, namely, the expansion and balanced growth of international trade and the attainment of a high level of employment and real income. I have heard it said several times at these meetings, and it was repeated this morning by the delegate from Brazil, that the settlement of current balances in international trade was the P R O C E E D I N G S AND D O C U M E N T S 425 main if not the only objective of establishing the International Monetary Fund. Well, if that was so, why was the primary objec tive of economic policy defined in the Purposes of the Fund as the promotion and maintenance of a high level of employment and real income? We felt enthusiastic about the proposals for the International Monetary Fund as we hoped and believed that through international co-operation we would be enabled to build up our economy to a stage where (p. 2) we should make our own contribution towards the strengthening of the resources of the International Monetary Fund. During the war we have built up, as I have said, large foreign exchange balances in London and if we cannot make any use of them through the machinery of the International Monetary Fund I cannot comprehend how a country situated as we are can be enthusiastically interested in the establishment and operation of such a Fund. I plead for some constructive reply from the sponsors of the scheme that the machinery will assist us in the solution of this problem. Here you are creating an international monetary fund and you are entirely ignoring the existence of huge foreign balances. Are you not thereby creating at the same time a sort of rival to the Fund? Mr. Chairman, I would like the Committee to bear with me for a few moments for a reference on this point to what was stated on the subject in the original United Kingdom proposals for an international clearing union as also in what is known as the White Proposals from the U. S. A. The delegate from Egypt has already drawn the attention of this Committee to these original proposals. I would particularly like to read paragraph 34 from the Keynes Proposals. Paragraph 34 reads as under:— The position of abnormal balances in overseas ownership held in various countries at the end of the war presents a problem of considerable importance and special difficulty. A country in which a large volume of such balances is held could not, unless it is in a creditor position, afford the risk of having to redeem them in bancor on a substantial scale, if this would have the effect of depleting its bancor resources at the out set. At the same time, it is very desirable that the countries owning these balances should be able to regard them as liquid, at any rate over and above the amounts which they can afford to lock up under an agreed programme of funding or long term expenditure. Perhaps there should be some special over-riding provision for dealing with the transitional period only by which, through the aid of the Clearing Union, such 426 MONETARY AND FINANCIAL CONFERENCE balances would remain liquid and convertible into bancor by the creditor country whilst there would be no corresponding strain on the bancor resources of the debtor country, or at any rate, the resulting strain would be spread over a period. Dr. Goldenweiser, the delegate from the U.S.A., mentioned that this item was excluded from the Joint State on the ground that it would unduly overload the Fund. I presume that he said this on the understanding that perhaps at the very outset of the Fund the entire amount of these foreign credit balances would be taken over by the Fund in one lump sum. This is (p. 3) not our case. We plead for the assistance of the Fund spread over a period of years to secure multilateral convertibility of at least a portion of our foreign balances. I say this because with the long standing relationship between India and the United Kingdom and the traditional commercial ties between the two countries, I take it that a large portion of our sterling balances will ultimately be utilised in obtaining capital goods from the United Kingdom. I appreciate and very greatly sympathise with the difficulties of the United Kingdom now and in the early post-war period owing to the unfortunate loss of valuable foreign investments, and, due to other difficulties, it is not likely that the United Kingdom will be in a position to reach a stage of free convertibility for sterling at an early date. On the other hand, our country is pulsating with hopes and aspirations of large scale industrial development to raise the standard of living of four hundred millions of our popu lation. We cannot, therefore, be asked to wait indefinitely till the United Kingdom has reached a stage when sterling would be freely convertible into other currencies. We therefore want con version at least of a portion of our balances into other foreign currencies. Document 255 (233) C I/ 4 / R P 3 (CI/4/RP2) Second Report of Committee 4 of Commission I D r. W ilh e lm K e ilh a u , R ep o rter. The second meeting of Committee 4 was held on July 5. The Committee adopted the same rules of procedure as had already been introduced for the other committees. The Committee discussed the articles dealing with immunity and P R O C E E D I N G S AND D O C U M E N T S 427 taxation exemption of the Fund, its Governors and staff. One of the delegations suggested that the Governors and staff of the Fund should enjoy “diplomatic status,” but it was pointed out that if the Governors and functionaries of the Fund were given diplomatic status, they would, in reality, be placed in a better position than persons belonging to any country's diplomatic service. The fact is that the diplomats and the diplomatic staffs are responsible to their governments which have every power to act against them if they commit any trespasses, whilst the Gover nors and the staff of the Fund will be responsible to an international body with no power of jurisdiction. The suggestion was withdrawn. The discussions revealed that a number of complicated legal questions were connected with the substance of Article IX, Sec tion 7 (page 43a), and it was resolved to refer these questions to a special subcommittee to be appointed by the Chair. As mem bers of that subcommittee were chosen the delegates from Cuba, Norway, Union of Soviet Socialist Republics, United Kingdom and the United States of America, with the delegate of the United States as Chairman. As members of the “asterisk” committee were chosen the same delegates with the addition of the delegates from China, Ecuador and Poland. The delegate from Cuba was appointed Chairman of the asterisk committee. Consequently, these two committees were able to join in a final meeting. The work of the subcommittees as well as that of the whole Committee encountered one difficulty of a particularly theoretical character, as it proved to be rather difficult to find legal expres sions which meant quite the same thing in the legal systems of the Anglo-Saxon powers as they mean in the legal systems of most other countries. Accordingly, the discussions, and, in particular, those of the subcommittee on Article IX, Section 7, had to con centrate on a number of legal points, but I daresay that we at last succeeded in finding formulations which were deemed satis factory by the representatives of all nations participating. The final drafts of the two subcommittees were placed before the fifth meeting of the Committee, held on Saturday, the 8th of July, and adopted. At the end of that meeting the Committee had dealt with all provisos contained in the material which, until then, had been made available. The Committee has even done more. The fact is that most questions concerning form and status of the Fund will be identical with the same questions in relation to the Bank, and I should think that the solutions found and elaborated by the Committee for the Fund may be applied to the Bank with very slight and unimportant alterations, 428 MONETARY AND FINANCIAL CONFERENCE If I am not mistaken, I have to report only one disagreement on substance. It refers to Article VIII, Section 1. The Australian delegation will bring before the Commission Alternative B (Docu ment 32, page 34), to the effect that “a member country may withdraw from the (p. 2) Fund by giving notice in writing, and the right of withdrawal shall not be prejudiced by membership of the Fund being made a condition of membership of any other international body.” The other delegates who partook in the dis cussion, declared that the proposal could not be accepted, because the Fund was not in a position to dictate to other international bodies what policy such bodies might find it appropriate to adopt. Against this observation, the Australian delegation remarked that their proposal would act as a recommendation from the Fund to other international bodies, and that it would be up to these bodies to attach the right importance to such recommendation. The Australian delegation firmly wished the inclusion of the proviso because the whole system of the Fund was such that an immediate and unconditional withdrawal was left as the only means of securing the sovereignty rights of member countries in case of serious conflicts with the Fund. As the various proposals of Committee 4 have been distributed to all members of Commission I, I do not find it appropriate in this short report to comment upon them in any detail. I should only like to draw the attention of the members to the nature of the problem which we have tried to solve by the provisos in Article XII, Section 1, (a), (b), and (c) (Document #198, to substitute for Page 46a). This problem consisted in keeping dis putes concerning the interpretation of the Agreement between the Fund and any member country, within the setup of the Fund itself, but, at the same time, to secure for the member in question privileges of fair treatment. I think that members, when they read our proposals, will acknowledge that we have succeeded in finding a workable solution. If a conflict should end in the withdrawal of the member country, or disputes between member countries and the Fund should arise after its possible liquidation, we have drafted rules of arbitration. We have found it necessary that the Convention itself prescribe the composition of the tri bunal of arbitration. We propose that each party should appoint one member and that the umpire, unless the parties otherwise agree, shall be appointed by the President of the Permanent Court of International Justice. P R O C E E D I N G S AND D O C U M E N T S 429 Document 256 C l 11/A /1 Additional page on Clll/A Report submitted to Commission III by the Agenda Committee Appointed to Receive and Consider Proposals Submitted for Consideration in Commission III (To be presented at meeting of Commission III, July 10) 11. Proposal for the use of a gold unit in keeping the books of the Fund and the Bank, submitted by the Norwegian Delegation: The United Nations Monetary and Financial Conference rec ommends that the books of the International Monetary Fund and the Bank for Reconstruction and Development shall be kept in a special international bookkeeping monetary unit, called (say) Demos, being defined as the equivalent of a certain gold weight. The Conference has no objection to the earlier American proposal to make that monetary unit equal in value to 137-1/7 grains of fine gold, or the equivalent of 10 Dollars in the present gold value of United States currency. The Agenda Committee recommends that this proposal be re ferred to Committee 3 on Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. Document 264 DP/15 Statement by the Cuban Delegation on Article III, Section 2 (c) The Cuban Delegation has considered with the greatest care the Australian and French Alternatives to Article III, Section 2 (c) of the Joint Statement, providing more flexibility to the use by member countries of the Fund’s resources, in order to meet the special needs of raw materials producing countries and of devastated nations. The Cuban Delegation is in sympathy with the objectives pur sued by the Australian and French Delegations. Cuba is one of the countries that may need to draw relatively larger quantities 430 MONETARY AND FINANCIAL CONFERENCE of foreign exchange from the Fund if her foreign trade behaves in the future with the same pattern as in the past. If the Cuban Delegation considered that the Fund would be able to meet the special needs of raw material producing countries, it would be very eager to indorse this policy, because Cuba is vitally interested in the stabilization of world markets. But the Cuban Delegation fears that the Fund is not able to meet this task. Examining the problem from the point of view of its own particular case, it finds the Fund resources utterly insufficient to fulfill its needs. If a drop in the sugar market prices, similar to those which occurred in the ’20’s and ’30’s, should recur, resulting in a reduction of 40 or 50% of Cuba’s foreign trade, the facilities that we could obtain from the Fund, even if we were able to use our entire quota, would be very far from sufficient to avoid a downfall of the Cuban economy. In the ab sence of an international price stabilization scheme, the Fund resources seem to be utterly insufficient to compensate for the fluctuations of international trade. The Cuban Delegation fears that burdening the Fund with the task of meeting the enormous needs of devastated countries for reconstruction and the special requirements of raw materials ex porting countries, might place an excessive strain on the Fund, jeopardizing its specific purposes of monetary stabilization with out accomplishing the foregoing objectives. To accomplish the reconstruction task, the present Conference is contemplating the establishment of an International Bank for Reconstruction and Development. To stabilize the prices of staple commodities, in ternational arrangements other than those under consideration by this Conference, must be provided. Therefore, the Cuban Delegation considers that the Fund re sources must be administered carefully and conservatively in ac cordance with the provisos of Alternative A, in order that it may better accomplish its specific task of short range monetary stabili zation. The financing of reconstruction must be left to the Inter national Bank and price stabilization to another international agency created for this purpose. As price stabilization has not been contemplated in this Con ference, the Cuban Delegation wants to state very clearly and definitely that if prices of staple commodities are not stabilized the purposes of monetary stabilization cannot be attained, and henceforth deems it essential that an international conference on commercial policy and commodity arrangements be convened. P R O C E E D I N G S AND D O C U M E N T S 431 Document 265 DP/16 Proposal of the Bolivian Delegation to Commission III of the United Nations Monetary and Financial Conference W hereas the full and efficient development of all countries is the prerequisite of an expanding economy; W piereas a vastly increased purchasing power in the economic areas over which the produce of the industrialized powers must find its outlet is one of the fundamental elements of future pros perity and well-being; W hereas such an increased purchasing power can only be ob tained if the raw materials of countries importing finished prod ucts can be sold abroad under conditions and at prices capable of maintaining a high level of domestic productivity; W hereas the success and stability of such international mech anisms of economic cooperation, such as the Monetary Fund, will be further insured if supported by policies of international co operation in other fields of economic activity; Be i t Resolved that the United Nations Monetary and Finan cial Conference recommends the adoption by its members of the following principles in their international trade policies:— 1.—Whenever contracts have been entered into covering the purchase and delivery of certain materials supporting the economy of the supplying country, the expiration of said contracts should be a matter of mutual concern, and policies should be devised to arrange for the orderly and gradual termination of those contracts in a manner designed to avoid serious disruptions in the economy of the supplying country; 2.—The development and use of synthetic products and of sub stitute materials should not be encouraged by the granting of subsidies, or of any other protective fiscal policy such as high import ,duties, et cetera. However, if materials of this type have already been developed and are in use, all conditions being equal, the natural product should always be preferred; 3.—Cooperation in the organization and implementation of In ternational Commodity Agreements designed to maintain fair and stable prices, and provision for the orderly distribution of raw materials throughout the world, whether or not a member country is a party to any such Agreement; 4.—Abstention from—except under abnormal political, social or 432 MONETARY AND FINANCIAL CONFERENCE economic circumstances—any form of trade barriers or discrim inatory practices, such as import or export quotas, high tariffs, subsidies, et cetera. Document 266 (p . 39b) SA/1/47 A l te r n a t iv e C (Suggested as substitute for Article IX, Section 2, paragraph (b) p. 39) Each member undertakes, through appropriate measures authorized under this Agreement, not to permit within its juris diction an appreciation or depreciation of the exchange value of its own currency in terms of gold beyond the range prescribed under (a) above. It is understood, however, that this provision does not affect bonuses paid by a producing country to promote gold production within its territory, or taxes collected on domestic gold production or domestic gold transactions. A member whose monetary authorities in fact freely buy and sell gold within the prescribed range, to settle international transactions, shall be deem ed to be fu lfillin g this u n d erta k in g . 7 /1 0 /4 4 J.S. Art. IX Section 2 Document 267 Cl/M/3 Minutes of Third Meeting of Commission I International Monetary Fund (July 10, 1944, 11:30 a.m.) The Chairman announced that the reports of the four Com mittees were now before the Commission (Documents Nos. 233, 234, 238, and 239) and that it would be necessary for the ad hoc committees and drafting committees of Commission I to finish their work by Wednesday night so that they could report to the next meeting to be held on Thursday. The Commission authorized the Chairman to appoint a drafting committee to deal with all items P R O C E E D I N G S AND D O C U M E N T S 433 previously agreed upon in the Committees (listed in column 1 of Document #240, “Status of Committee Assignments”) . The mem bership of the drafting committee is announced in the Journal for July 11. The items in columns 2 and 4 of Document #240 are to be reported to Commission I on Thursday. The Commission then proceeded to discussion of the items in column 3 of Document #240 which had been referred by the Com mittees to the Commission for decision. With regard to Alternatives G, H, and K to article I (pp. lc, Id, l g ) , the Delegate from India urged the adoption of Alternative K. Members of the United States, United Kingdom, and French Dele gations expressed the view that the proposal was not appropriate for the operations of the Fund. The Chairman found the consensus to be that Alternatives G, H, and K were not accepted by Com mission I. The Commission next considered article II, Alternatives B (p. 2a) and C and D (p. 4a). Since the ad hoc Committee on Special Problems of Liberated Countries was currently considering these items, they were left for later report. Article IX, section 4 (p. 40), was referred to an ad hoc commit tee of Commission I to include representatives of Committees 1 and 2. After a brief exposition by the Reporter of Committee 2, article IV, section 5, Uniform Changes in Par Values (pp. 18, 18a, and 18b), was referred to a special ad hoc committee to be appointed by the Chairman and to include representation of Committees 2 and 3. Alternatives C and D to article III, section 11, on Furnishing Information (pp. 14c, 14d, 14e) were referred to an ad hoc sub committee of Committee 3 for reconciliation. (Subsequently it was agreed that the ad hoc committee should report directly to the Commission.) (p. 2) After discussion of article VII, as amended by Docu ment #212, most of which had already been accepted by Committee 3, section 3 of Document #212 (Amendment to Article VII) was accepted by the Commission in the sense that alternate directors are to be appointed by their principals. The question of depositories, article VII, section 6(b) (pp. 29, 29a, 29b), was then discussed and referred to an ad hoc committee to report back to Commission I. 434 MONETARY AND FINANCIAL CONFERENCE Document 268 (p. 48) J OU R N A L UNI TE D NATI ONS No. n MONE T ARY AND FI NANCI AL CONFERENCE Bretton Woods, New Hampshire ORDER OF THE July 11,1944 DAY Meetings for Tuesday, July 11 10 a.m. a.m. a.m. p.m. p.m. 6 p.m. 10:30 11:30 2:30 4 Committee 3 of Commission I ............................ The Hemicycle A d Hoc Committee on Liberated Countries.. Room A D rafting Committee of Commission I ............. Room B Committee 2 of Commission I ............................ The Hemicycle Commission I I ........................................................ Auditorium A d Hoc Committee on Relations With NonMember Countries......................................... Room B (p. 49) R e s u m e s o f C o m m is s io n M e e t i n g s Commission I International Monetary Fund (July 10, 11:30 a.m.) At the opening of the third meeting of Commission I on July 10 at 11:30 a.m., the Chairman stated that all the Committees of Commission I should finish their work by Wednesday night in order to be able to report to the Commission on Thursday. The Chairman was authorized to appoint a drafting committee of Commission I to deal with agreed items listed in column 1, Docu ment 240. Items in columns 2 and 4 will be reported to the Com mission on Thursday. Alternatives G, H, and K, article I (pp. lc, Id, lg ), were rejected by the Commission. Alternative B (p. 2a) and Alternatives B and C (p. 4a) to article 11 were referred back to the ad hoc committee of Commission I. The Chairman was authorized to appoint an ad hoc committee of Commission I to consider section 4 of article IX (p. 40). Article IV, section 5 (pp. 18, 18a, 18b), was referred to an ad hoc committee of Commission I. Alternatives C and D to article III, section 11 (pp. 14c, 14d, 14e), were then discussed and referred to an ad hoc subcommittee of Committee 3 for reconciliation. (Subsequently it was agreed that the ad hoc committee should report directly to the Com mission.) P R O C E E D I N G S AND D O C U M E N T S 435 After consideration of section 3 of Document 212 amending article VII, the Commission accepted the proposal that alternate executive directors are to be appointed by their principals. Article VII, section 6b (pp. 29, 29a, 29b), was referred to an ad hoc committee to report back to Commission I. (The minutes of this meeting are being distributed separately as document No. 267.) (P. 50) Commission III Other Measures for International Monetary and Financial Cooperation {July 10, 5 p.m .) At a meeting held at 5 p.m. on July 10 Commission III received the report of its Agenda Committee. In accordance with the recommendation of the Agenda Com mittee, the Commission appointed three ad hoc committees to consider the proposals received and to make recommendations to the full Commission with respect to the following general fields: (1) The Use of Silver for International Monetary Purposes (2) Enemy Assets, Looted Property, and Related Matters (3) Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation (The minutes of this meeting are being distributed separately as document no. 279.) (P. 51) C o r r ig e n d a of and R e se r v a t io n s C o m m it t e e s of to t h e M in u t e s C o m m is s io n I (1) By the United Kingdom Delegation: “The U.K. Delegation present their compliments to the Secretary-General and have the honour to point out that no reference was made in C.I.3, Status of Commission I’s Com mittee Assignments, or in C.I/4/R.P.2, Second Report of Committee 4 to the fact that the U.K. Delegation had felt it necessary to reserve their views in regard to the draft of Article IX.7. (a) and (c) as submitted to Commission I, relating to the immunities to be conferred on the Fund. There was no convenient opportunity to draw attention to this point orally at this morning’s meeting of Commission I. If 436 MONETARY AND FINANCIAL CONFERENCE necessary it can be raised at the next meeting of the Commission. “10th July 1944." (2) By the Peruvian Delegation: “10th July 1944.” “The Peruvian Delegation makes the following statement to the Conference through the Office of the Secretary General with regard to certain provisions of existing Peruvian legislation: ‘“ Peruvian Law No. 7526 of 18th May 1932, which suspended the free conversion of the currency into gold, provided that the gold reserves existing at that time, viz: 16,338.71115 kilos of gold, valued by law at 38,784,832.53 Peruvian Soles, were to be earmarked and kept in custody by the Central Reserve Bank, and were not to be used in any way or manner, nor were to be encumbered, mortgaged or given as a guarantee, nor were ever to become liable to seizure or disposal in any contingency whatsoever. (“Oro intangible” in the original Spanish wording of that Law.) Consequently, the gold thus set aside by Law 7526 cannot be taken into account, either for the purpose of estimating Peru’s quota and its proportion to be paid in gold, or for use in any of the operations of the Fund, or to cover any eventual liability of Peru if it ceases to be a member or if the Fund is liquidated.’ “The above would be a reservation, which the Peruvian Delegation would feel bound to make, in due course, if the provisions in the Draft Agreement of the Fund were to be approved by the Conference as they stand at present. “ Ju an Chavez, Delegate.” (P. 5 2 ) (3) By the Australian Delegation: “10th July, 1944. “With reference to Alternative B (Document 32, page 34) submitted by the Australian Delegation and relating to Article VIII Section 1 — ‘Withdrawal’, I notice that the report on ‘Status of Committee Assignments — Commission I’ records that the language of Alternative A was accepted by Com mittee 4. “I should like to advise you that the Australian Delegation reserves its position with regard to Alternative A, and wishes P R O C E E D I N G S AND D O C U M E N T S 437 to have the opportunity of discussing this section of Article VIII in the full Commission. “L. G. Melville “Chairman—Australian Delegation.” A ppo in tm en ts of C o m m ittees of C ommission I Pursuant to the action of Commission I at its meeting on July 10, the Chairman of Commission I announces the appointment of additional Committees of that Commission as follows: Drafting Committee of Commission I Canada, Chairman China French Delegation Mexico Netherlands Union of Soviet Socialist Republics United Kingdom United States S ecr eta ry : Leroy D. Stinebower Ad Hoc Committee of Commission I on Article IV, Section 5 ( Uniform Changes in Par Value) French Delegation, Chairman Brazil Canada Czechoslovakia Mexico Union of South Africa Union of Soviet Socialist Republics United Kingdom United States S e cr eta ry: Karl Bopp Ad Hoc Committee of Commission I on Article VII, Section 6b (Depositories) Peru, Chairman Cuba Czechoslovakia French Declaration Netherlands Norway Union of South Africa Union of Soviet Socialist Republics United Kingdom United States S ecreta ry: H. J. Bittermann (P. 53) Ad Hoc Committee of Commission I on Article IX, Section 4 (Exchange Controls on Current Payments) China, Chairman Canada . Costa Rica French Delegation Greece Iran New Zealand Union of Soviet Socialist Republics United Kingdom United States S ecreta ry: W. A. Brown, Jr. N otice R egarding “ Order of t h e Da y ” The Secretariat is arranging to have the Order of the Day for the following morning and afternoon posted on the bulletin board in the Lobby each evening as soon as possible. It is anticipated that the notice can be posted usually at about 9 or 10 o’clock in the evening. 438 MONETARY AND FINANCIAL CONFERENCE (P- 54) List o f Documents As o f J u l y 10, 1944 Subject. Symbol Doc.No. Journal No. 10 J/10 244 Preliminary Draft for the Bank (Basic Document on the Bank) SA/3 245 Order of the Day, Juty 10 GD/28 246 Representation of Delegations on Commissions and Com mittees (Corrected Re-run of Doc. 201(156)) GD/29 247 News Bulletin No. 10 248 Report of Ad Hoc Committee of Commission I on Voting Arrangements and Executive Directors C I/A H /R Pl 249 United Kingdom Delegation Memorandum to Commission I DP/13 250 Speech by Mr. A. D.Shroff, Indian Delegation, in Support of Egyptian Amendment to Article I, Purposes and Policies of the Fund, Committee 1, Commission I, July 6 D P/14 251 Press Release No. 21, Norwegian Proposals PR/21 252 Press Release No. 23, Bolivian Proposal PR/23 254 Corrected Copy of Second Report of Committee 4, Com mission I C I/4/R P3 (CI/4/RP2) 255 (233) Additional Page to Report Submitted to Commission III by Agenda Committee C III/A /1 256 Press Release No. 22, Statement of United States Delegation to Commission I PR/22 257 Press Release No. 24, Statement by Lord Keynes to Com mission I PR/24 258 Press Release No. 25, Statement by Mr. Shroff to Com mission I PR/25 259 Press Release No. 26, Statement by Mr. Istel to Commis sion I PR/26 260 Press Release No. 27, Norwegian Proposal to Commission III, July 10 PR/27 262 News Bulletin No. 11 263 P R O C E E D I N G S AND D O C U M E N T S 439 Symbol Subject Doc.No. (P- 55) Statement by Cuban Delegation on Article III, Sec. 2(c) DP/15 264 Proposal of Bolivian Delegation to Commission III DP/16 265 Additional Page to SA/1 (p. 39b) SA/1/47 266 Document 272 (,p. 15 f) SA/3/1 A r t ic le III (4) Alternative J* P art ( l ) It is proposed that the following subdivision be added to Alter native A : (6) In case of loans to be guaranteed by the Bank the loan agreement shall provide (a) if the loan is made through the issuance of bonds: (i) that a delay o f _______ days in the servicing of the loan shall constitute a default; (ii) that in case of default the Bank shall have the right to offer to purchase from the bondholders upon the expiration of sixty days from the date of the offer all outstanding bonds at par and interest accrued up to the end of the sixty days period; (iii) that if the bank exercises this right it shall not be liable with respect to interest accruing after the expiration of the sixty days period; (iiii) that the Bank shall have the right to limit the duration of its offer to purchase the bonds to five (ten?) years and that in such event the Bank’s liability with respect to both principal and interest shall cease upon the expiration of the offer; (iiiii) that the Bank shall have the right to declare any bonds * For Preliminary D raft of Proposals for the Establishment of a Bank for Reconstruction and Development, to which this and following SA /3 alterna tive texts refer, see Doc. 245, p . 365.— E d i t o r . 749013—48—29 440 MONETARY AND FINANCIAL CONFERENCE which it has acquired pursuant to (ii), above, due and payable forthwith. (b) if the loan is not made through the issuance of bonds: (will be inserted later) P a rt (2 ) It is proposed that the following sentence be added to Alterna tive B, Part (2): Loans of the type specified in the preceding sentence shall not, however, be made or guaranteed during the transition period, nor shall their aggregate amount exceed 10% of the paid in capital. 7 /1 1 /4 4 Art. Ill Sec. 4 Alt. J Document 273 (p. 20a) SA /3/2 A r t ic le IV (2) Alternative C It is proposed that Alternative B be amended by inserting in line 10, after the word “resources” the words: over and above the currency and/or gold to be held available pursuant to Article III, section 3, Alternative B. 7 /1 1 /4 4 Art. IV Sec. 2 Alt. C Document 274 (p. 22e) sa /3 /3 A r t ic le IV (4) Alternative E It is proposed to substitute the following for the first 7 words of Alternative A, Sub-division (a) ( i i ) : (ii) an annual commission on the amount outstanding at the beginning of each year at a r a te ... 7 /1 1 /4 4 Art. IV Sec. 4 Alt. E P R O C E E D I N G S AND D O C U M E N T S 441 Document 275 (p. 24a) SA /3/4 A r t ic l e IV Alternative C It is .proposed to substitute the following for the first sentence of Alternative A : In guaranteeing a loan placed through the usual investment channels, the Bank shall charge an annual commission on the amount outstanding at the beginning of each year, at a rate fixed at one percent in the first instance but alterable by the Bank from time to time at its discretion for new guarantees in the light of experience. 7/1 1 /4 4 Art. IV Sec. 6 Alt. C Document 276 (p. 25a) sa /3 /5 A r t ic l e IV Alternative B It is proposed to substitute the following for the second sentence of Alternative A : When there is any interruption in the service of a loan guaran teed by the Bank, it shall assume the service as long as it has not exercised its right of purchase pursuant to article III, section 4 ( 6). Article III, section 4 (6) is contained in Alternative J, Part (1), page 15f of document #272. N ote: 7 /1 1 /4 4 Art. IV Sec. 7 Alt. B Document 277 (p. 13a) SA/1/48 C o m b in e d A l t e r n a t iv e s A a n d B Charges and Commissions a. Any member buying the currency of any other member from the Fund in exchange for its own currency shall pay a service charge of % of 1 per cent in addition to the parity price. The S e c t io n 10. 442 MONETARY AND FINANCIAL CONFERENCE Fund in its discretion may increase this service charge to not more than 1 per cent or reduce it to not less than y% of 1 per cent. b. The Fund may levy a reasonable handling charge on any member buying gold from the Fund or selling gold to the Fund. c. The Fund shall prescribe charges uniform among members which shall be payable by any member on the amount of its cur rency held by the Fund in excess of its quota and shall not be less chan the following per cent per annum: i. Amounts up to 25 per cent: no charge during the first 3 months; y% per cent per annum during the next nine months; and thereafter an increase in the charge of V Per cent for 6 each subsequent year. ii. Additional amounts: on each additional bracket of 25 per cent an additional y^ per cent charge; and for each subse quent year an increase of y% per cent in the charge levied on that bracket. d. Minimum charges as determined above shall not exceed 5 per cent; but the Fund may in its discretion levy higher charges uniform among members. Whenever the charge applicable to any particular average amount for any particular period has reached the rate of 4 per cent per annum the Fund and the member shall then consider means by which the Fund’s holdings of (p. 13b) the currency can be reduced, and failing agreement the Fund may impose such charges as it deems appropriate. e. All charges and commissions shall be paid in gold. If, however, the member’s holdings of gold and gold-convertible exchange are less than one-half of its quota, it shall pay in gold that proportion which such holdings bear to one-half of its quota, and shall pay the balance in its own currency. Alternative C (Substitute for (d) in Combined Alternatives A&B) d. These charges may be uniformly varied if three-fourths of the member votes approve (and consequential amendments). 7/11/44 J.S. Art. Ill Add. Sec. Document 278 (P- 5 0 ) S A /l/4 9 Fixing Initial Par Values. (a) Each member on whose behalf this Agreement is signed S ec t io n 5. P R O C E E D I N G S AND D O C U M E N T S 443 before January 1, 19__ , shall communicate to the Fund not later than thirty days after the date on which this Agreement becomes binding on that member, the par value for its currency based on the de facto rates of exchange prevailing for its currency sixty days prior to the date on which this Agreement first comes into force. The par value so communicated shall be the par value of the member's currency for the purposes of the Fund, unless the member signifies within a period of ninety days from the date on which this Agreement became binding on that member that it regards such par value as unsatisfactory. In the case of a member whose territory has been occupied by the enemy, this period of ninety days may be extended by the Fund if the member so requests. (b) If the Fund is of opinion that the par value thus indicated by the member cannot be sustained without recourse to the Fund on a scale damaging to the Fund and to other members, it shall so inform the member within [ ] after receipt of the communication from the member. (c) When a member or the Fund signifies that the par value of a currency communicated under (a) above is unsatisfactory, the Fund and the member shall, during a period to be determined by the Fund in the light of all relevant circumstances, agree upon a suitable par value for that currency. If the Fund and the member (p. 50a) do not agree within the period so determined, the mem ber shall be deemed to have withdrawn from the Fund as of the date of the termination of such period. (d) A member communicating to the Fund a par value for the currency of its metropolitan territory shall at the same time com municate a value, in terms of that currency, for each separate currency, where such exists, in the territories in respect of which it accepted this Agreement under Section_____ From the values so communicated, the Fund shall compute the par value of each such separate currency. A member making a communication to the Fund under (c) above shall be deemed, unless it declares other wise to be making a corresponding communication regarding the par values of such separate currencies. It shall, however, be open to any member to make a communication relating to the metropoli tan or any of these separate currencies alone and if the member does so, the provisions of the preceding paragraphs shall apply to each of these currencies separately. (e) The Fund shall begin exchange transactions at such date as it may determine after par values have been established for the currencies of members having sixty percent of the aggregate 444 MONETARY AND FINANCIAL CONFERENCE quotas set forth in Schedule A but in no event until after August 1,1945 or after the expiration of one hundred fifty days from the date on which this Agreement first comes into force, whichever is the later. 7/10/44 Art. XIII Sec. 5 Document 279 Cl I l/M /2 Minutes of Meeting of Commission III O t h e r M e a su r e s f o r I n t e r n a t io n a l M o n e t a r y a n d F in a n c i a l C o o p e r a t io n (J u ly 10, 19Uh, 5 p.m.) The Chairman announced that Mahmoud Saleh El Falaky (Egypt) is to serve as Vice Chairman of Commission III instead of Sany Lackany Bey (Egypt). The report of the Agenda Committee was presented to the Commission. The Agenda Committee recommended the appoint ment of three ad hoc committees to consider the proposals received and to make recommendations to the full Commission with respect to the following general fields: 1. The Use of Silver for International Monetary Purposes 2. Enemy Assets, Looted Property, and Related Matters 3. Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation. The proposals that had been received by the Agenda Committee were read by the Reporter of the Agenda Committee and discussed in the Commission. It was decided that the proposal concerning a political prerequisite for the admission of Germany and Japan to membership in the Fund or Bank (proposal No. 8 in the Report of the Agenda Committee, Document 235) should not be given further consideration by Commission III or its Committees. In accordance with the recommendation of the Agenda Com mittee, the Chairman of the Commission was empowered to appoint three ad hoc committees. It was also agreed' that four additional proposals, submitted by the Delegations of Bolivia, Chile, Cuba, 445 P R O C E E D I N G S AND D O C U M E N T S and Brazil, respectively (each circulated as separate documents) should be referred to Committee 3. The Chairman appointed the following ad hoc committees: C o m m itte e 1. The Use of Silver for International Monetary Purposes Peru, Chairm an China, R eporter Bolivia Canada Ethiopia India Mexico Norway Union of Soviet Socialist Republics United Kingdom United States (p. 2) 2. Enemy Assets, Looted Property, and Related Matters C o m m it t e e French Delegation, Chairm an Poland Norway, R eporter Union of Socialist Republics Belgium United Kingdom China U ruguay Dominican Republic Yugoslavia Netherlands C o m m itte e 3. Recommendations on Economic and Financial Policy, the Exchange of Information, and Other Means of Financial Cooperation Chile, C hairm an Iraq, R eporter A ustralia Bolivia Brazil Cuba Czechoslovakia Ecuador Egypt El Salvador Greece Iceland New Zealand Nicaragua Peru Union of South Africa United Kingdom United States It was suggested that the committees, in considering the various proposals, bear in mind the general scope and nature of the Conference. Document 280 C l/ D C Working Paper for Drafting Committee of Commission I Text of Provisions Recommended by Committees (Ju ly 10, 1944) A rticle I. Purposes and Policies of the Fund The purposes of the International Monetary Fund are: 1. To promote international monetary cooperation M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E 446 Alt. I & J (rejected by Committee 1) X (P. through a permanent institution which provides the machinery for consultation on international monetary problems. 2. To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and to the development of the sources of productive power in all member countries as primary objectives of economic policy. (Subject to revision) 3. To give confidence to member countries by making the Fund’s resources available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity. 4. [Still in the Drafting Committee.'] 5. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade. 6. In accordance with the above objectives, to shorten the periods and lessen the degree of disequilib rium in the international balances of payments of member countries. 2) Alt. F (Add. Mat. not yet considered by Committee) Alt. C (p .2 b ) not yet considered by Committee 1 The Fund shall be guided in all its decisions by the purposes set forth above. Article II. Subscription to the Fund S e c t i o n 1. Countries Eligible for Membership At the outset the members of the Fund shall be those of the countries represented at the United Nations Monetary and Financial Conference whose govern ments accept membership in the Fund. Subsequently membership in the Fund shall be open to other countries at such times and in accordance with such terms as may be prescribed by the Fund. P R O C E E D I N G S AND D O C U M E N T S S ec t io n x Alt. B (p . 2a) and Alts. B & C (p . 4a) pend ing before ad hoc committee 447 2. Quotas [Not yet taken up by the Committee.] S e c t i o n 3. Time and Place of Payment Each member shall provide the Fund at the appropriate depository with the full amount of its quota on or before the date fixed for exchange transactions in its currency to begin. Any member whose quota is increased shall provide the full amount of the increase within thirty days of the date on which the member approves the increase in its quota. Adjustm ent of Quotas The Fund shall at intervals of five years review and, if it deems it appropriate, propose an adjustment of the quotas of the members. It may also, if it thinks fit, consider at any other time the adjustment of any particular quota at the request of the member con cerned. A four-fifths majority vote shall be required for any change in quotas and no quota shall be changed without the consent of the member concerned. S e c t i o n 4. (p. 3) Alt. C (p .2 b ) and Alt. D (p .4 b ) not reached by Committee 1 Initial Payments Each member shall pay in gold as a minimum either (a) twenty-five percent of its quota, or (b) ten percent of its official holdings of gold and gold convertible exchange,1 whichever is smaller, o n _______ In the case of any member occupied by the enemy whose holdings are not ascertainable as of_______, the Fund shall fix an appropriate alternative date. The data necessary to determine official holdings of gold and gold convertible exchange shall be furnished by the members as provided in this Agreement. Each member shall pay the balance of its quota in its own currency. S e c t i o n 6. Payments When Quotas are Changed. (a) Each member whose quota is increased shall pay twenty-five percent of the increase in gold. Each mem ber shall pay the balance of any increase in its own currency. If, however, on the date the member approves an increase, its holdings of gold and gold-convertible exchange are less than its new quota, the Fund may reduce the portion of the increase to be paid in gold. S e c t io n 5. 1 The phrase “gold and gold convertible exchange” is subject to definition and to such change in terminology as may be agreed upon. 448 M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E (P. 4 ) Alt. Alt. Alt. Alt. A B D F (p . (p. (p . (p. (P. 5) Alt. E (p .6 d ) still open 6a) 6b) 6c) 6e) (b) Each member whose quota is reduced shall receive from the Fund within thirty days of the reduction an amount in its own currency or gold equal to the reduction. In making this payment, the Fund shall pay to such member only the amount of gold necessary to prevent reducing the holdings of the Fund of that currency below seventy-five percent of such new quota of the member. Article III. Transactions with the Fund S e c t io n 1. Agencies Dealing w ith the Fund Each member country shall deal with the Fund only through its Treasury, Central Bank, Stabilization Fund or other similar fiscal agency and the Fund shall deal only w ith or through the same agencies. S ection 2. Conditions wpon which any Member may Purchase Currencies of other Members. A member shall be entitled to buy the currency of another member from the Fund in exchange for its own currency subject to the following conditions: (1) The member initiating the purchase represents that the currency requested is presently needed for making payments in that currency which are consistent with the provisions of this Agreement; (2) The Fund has not given notice under Article VI that its holdings of the currency requested have become scarce; [ (3) Still in ad hoc committee.] (4) The Fund has not previously declared under Section 3 of this Article that the member initiat ing the purchase is ineligible to use the resources of the Fund. The Fund may, in its discretion, and on terms which safeguard its interests waive any of these conditions. In special circumstances, where the Fund considers it necessary, it may require collateral security as a con dition of such waiver. Section 2a. Conditions Governing Purchases for Capital Transfers. If the Fund’s holdings of the currency of a member have remained below 75 percent of its quota for a period PROCEEDINGS AND DOCUMENTS 449 not less than six months such member shall be entitled, notwithstanding the provisions of Article V, Section 1, to buy the currency of another member from the Fund for its own currency for any purpose, including capital transfers, provided, however, that purchases for capital transfers may not have the effect of raising the Fund’s holdings of the currency of such member above 75 percent of its quota, or reducing the Fund's holdings of the currency purchased below 75 percent of the quota of the member whose currency is purchased. Declaring Members Ineligible to Use the Resources of the Fund. Whenever the Fund is of the opinion that any member is using the resources of the Fund in a manner con trary to the purposes and policies of the Fund, it shall present to the member a report setting forth the views S e c t io n 3. (p. 6) of the Fund and stating a suitable time for reply. After presenting such a report to a member the Fund may limit the use of its resources by the member. If no reply to the report is received from the member within the stated time, or the reply received is unsatis factory, the Fund may continue to limit the member’s use of the Fund’s resources or, after giving reasonable notice to the member, declare it ineligible to use the resources of the Fund. Limitation on the operations of the Fund. Except as otherwise provided in this Agreement, operations for the account of the Fund shall be limited to transactions for the purpose of supplying a member, on the initiative of such member, with the currency of another member in exchange for the currency of the member initiating the transactions or for gold. S e c t io n 4. Operations for the Purpose of Preventing Currencies from becoming scarce. The Fund may, if it deems such action appropriate to prevent the currency of any member from becoming scarce, take either or both of the following steps: (1) Propose to the member that on terms and condi tions agreed between them, it lend such currency to the Fund or, with the approval of the member, that the Fund borrow such currency from some S e c t io n 5. 450 MONETARY AND FINANCIAL CONFERENCE (p. 7) other source either within or outside the territory of the member, but no member shall be under any obligation to make such loans to the Fund or to approve the Fund’s borrowing its currency from any other source. (2) Buy that currency from that member with gold. [S ection. 6. Multilateral International Clearing. Ac tion not completed by Committee.] S ection 7. Acquisition by Members of the currencies of other Members for Gold. Any member desiring to obtain, directly or indi rectly, the currency of another member for gold shall, provided that it can do so with equal advantage, acquire the currency by the sale of gold to the Fund. Nothing in this Section shall be deemed to preclude any member from selling in any market the new production of gold from mines located within territory subject to its jurisdiction. Other Acqtiisitions of Gold by the Fund. Action not completed by Committee.] S ection 9. Transferability and Guarantee of the Assets of the Fund. (a) All assets of the Fund shall, to the extent necessary to carry out the operations prescribed by this Agreement, be free from restrictions, regulations and controls of any nature imposed by members. [(b) Still pending in committee.] (c) All assets of the Fund shall be guaranteed by each member against loss resulting from failure or default on the part of the depository designated by such member. [S e c t io n 8. (p. 8) Changes and Commissions. Committee action not completed.] [S e c t io n 10. Furnishing Information. Alternatives C and D before ad hoc Committee.] [S e c t io n 12. Consideration of Representations of the Fund. Committee action not completed.] [S e c t io n 11. PROCEEDINGS AND DOCUMENTS 451 Article IV. Par Values of M ember Currencies Section 1. Par Values of the Currencies of Members. The par value of the currency of each member shall be expressed in terms of gold, as a common denominator, or in terms of a goldconvertible currency unit of the weight and fineness in effect on July 1, 19IfU. All computations relating to currencies of members for the purpose of applying the provisions of this Agreement shall be on the basis of their par values. [S ection 2. Still before Committee.] [S ection 3. Still before Committee.] [S ection 4. Still before Committee.] [S ection 5. Uniform Changes in Par Values. Referred to ad hoc committee.] (p. 9) Section 6. Protection of the Assets of the Fund. No change in the foreign exchange value of the currency of any member shall alter the gold value of the assets of the Fund. Whenever (i) the par value of a currency of a member is reduced, or (ii) the foreign exchange value of the currency of any member has depreciated within its jurisdiction to a significant extent in the opinion of the Fund, the member shall compensate the Fund by paying to the Fund within a reasonable time an amount of its own currency equal to the reduction in the gold value of the currency of such member held by the Fund. Whenever the par value of the currency of any member has been increased the Fund shall compensate such member by returning, within a reasonable time, an amount in the currency of such member equal to the increase in the gold value of the currency of such member held by the Fund. The provisions of this Section shall apply to the case in which a uniform proportionate change is made in the par values of the currencies of all members, unless at the time when such a change is proposed to be made the Fund shall declare them to be inapplicable. Section 7. Separate currencies ivithin a Member's jurisdiction. A member proposing a change in the par value of its currency shall be deemed, unless it declares otherwise, to be proposing a corresponding change in the par value of the currencies of all territories under its jurisdiction. It shall, however, be open to a member to declare that its proposal relates either to the metro politan currency alone, or to one or more specified subordinate 452 MONETARY AND FINANCIAL CONFERENCE currencies alone, or to the metropolitan currency and one or more specified subordinate currencies. Article V. Capital Transactions Use of the Resources of the Fund for Transfers of Capital. A member may not make net use of the resources of the Fund to meet a large or sustained outflow of capital, and the Fund may (p. 10) request a member to exercise controls to prevent such use of the resources of the Fund. If after receiving such requests, a member fails to exercise appropriate controls the Fund may declare such member ineligible to use the resources of the Fund. This Section is not intended to prevent the use of the resources of the Fund for capital transactions of reasonable amount required for the expansion of exports or in the ordinary course of trade, banking or other business. Capital movements which are met out of a member’s own resources of gold and foreign exchange, are not affected by this section, but members undertake that such capital movements will be in accord with the purposes of the Fund. S e c t io n 2. Limitation on Controls of Capital Movements. Members may exercise such controls as are necessary tojegulate international capital movements but no member may exercise such controls in a manner which will restrict payments for current transactions or which will unduly delay the transfer of funds in settlement of commitments, except as provided in VI, 2 and in X. S e c t i o n 1. Article VI. Apportionm ent of Scarce Currencies 1. General Scarcity If the Fund finds that a general scarcity of a particular currency is developing, the Fund may so inform members and may issue a report setting forth the causes of the scarcity and containing recommendations designed to bring it to an end. In the preparation of such report there shall participate a representative of the mem ber the currency of which is involved. S e c tio n Scarcity of the Fund’s Holdings. If it becomes evident to the Fund that the demand for a member’s currency seriously threatens the Fund’s ability to supply that currency, the Fund whether or not it has acted under (p. 11) Section 1 above, shall formally declare such currency scarce and shall thenceforth apportion the existing and accruing supply of the scarce currency with due regard to the relative needs of members and the general international economic situation and any other pertinent considerations. The Fund shall also issue a report concerning its action. The formal declaration shall operate as an S e c t io n 2. PROCEEDINGS AND DOCUMENTS 453 authorization to a member, after consultation between such mem ber and the Fund, temporarily to limit the freedom of exchange operations in the affected currency. Subject to the provisions of Article IX, Section 2 (J.S.), the member shall have complete juris diction in determining the nature of such limitations, but they shall be no more restrictive than is necessary to limit the demand for the scarce currency to the supply of it held by, or accruing to, the member in question; and they shall be relaxed and removed as rapidly as conditions permit. This authorization shall cease to be in effect whenever the Fund formally declares the currency in question no longer scarce. Section 3. Administration of Restrictions on Scarce Currencies. Any member imposing restrictions in respect of the currency of f>ny other member pursuant to the provisions of this Article shall give sympathetic consideration to any representations which may be made by such other member regarding the administration of such restrictions. SECTION 4. Effect on Other International Agreements on Restric tions on Scarce Currencies. Members agree not to invoke the obligations of any engagements entered into with other members prior to this Agreement in such a manner as will prevent the operation of the provisions of this Article. (P. 12) Article VII. Management of the Fund Board of Governors. (a) All powers of the Fund shall be vested in a Board of Governors consisting of one governor and one alternate appointed by each member in such manner as it may determine. Governors and alternates shall serve for five years, subject to the pleasure of their respective governments, and may be reappointed. No alter nate may vote except in the absence of his governor. The Board shall select a chairman from its members. The Managing Director, however, may be eligible to this office as well. (b) The Board of Governors may delegate to the Executive Directors authority to exercise any powers of the Board, except: (1) Determining what new members may be admitted and the conditions of their admission; (2) Approving a revision of quotas; (3) Approving an agreed uniform change in the par value of the currencies of all member countries; (4) Requiring a member to withdraw; S e c t i o n 1. 454 MONETARY AND FINANCIAL CONFERENCE (5) Deciding appeals against interpretations of the Agreement by the Executive Directors given on application by a member country; (6) Making agreements to cooperate with other international organizations; (7) Deciding to liquidate the Fund. (8) Decisions concerning the distribution of the net income of the Fund. (c) The Board of Governors shall hold an annual meeting and such other meetings as may be provided for by the Board or con vened by the Executive Directors. Meetings of the Board shall be convened by the Executive Directors whenever requested by members having one quarter of the aggregate votes or by five member countries. (d) The Board may by regulation establish a procedure whereby the Executive Directors, when they deem such action to be in (p. 13) the best interests of the Fund, may obtain a vote of the governors on a specific question in lieu of calling a meeting of the Board. (e) Governors and alternates shall serve as such without com pensation from the Fund, but the Fund shall pay such reasonable expenses as are incurred by the governors and alternates in attend ing any meetings. 2. Executive Directors Duties and Powers of the Executive Directors 1. The Executive Directors shall be responsible for the conduct of the general operations of the Fund, and for this purpose, shall exercise all the powers delegated to them by the Board of Governors. [2. Formation of the Executive Directors—Pending before ad hoc Committee.] Alternate Directors 3. Every Executive Director may appoint an alternate with full power to act for him when he is not present. When the Execu tive Directors appointing them are present, alternates may par ticipate in meetings but shall not vote. S e c tio n Meetings of Executive Directors 4. The Executive Directors shall function in continuous session at the principal office of the Fund and shall meet as often as the business of the Fund may require. 5. In order to constitute a quorum for any meeting of the Executive Directors, there must be present a majority of the PROCEEDINGS AND DOCUMENTS 455 Directors representing not less than one-half of the voting power of all the Executive Directors. (p. 14) 6. Each Executive Director appointed by one of the members with th e _______ largest quotas shall be entitled to cast the number of votes allotted under Section 3 of this Article (J.S. VII, 2) to the member appointing him. Each elected Executive Director shall be entitled to cast only the number of votes which actually counted toward his election. When the provisions of the second paragraph of Section 2 of this Article are applicable, the votes to which an Executive Director would otherwise be entitled shall be increased or decreased proportionately. Each Executive Director shall cast all of the votes to which he is entitled as a single unit. 6a. Except as otherwise specifically provided, all matters before the Executive Directors shall be decided by a majority of the aggregate votes cast. 7. The Board of Governors shall make regulations containing provisions under which a member which is not entitled to appoint an Executive Director under 2 above shall be permitted to send a representative to attend any meeting of the Executive Directors when a request made by, or a matter particularly affecting, that member is under consideration. Managing Director 8. The Executive Directors shall select a Managing Director who shall not be a Governor or an Executive Director. The Manag ing Director shall be Chairman of the Executive Directors, but shall have no vote except a deciding vote in case of an equal divi sion. He may participate in meetings of the Board of Governors, but shall not vote at such meetings. He shall, however, (p. 15 be eligible for election as Chairman of the Board of Governors. The Managing Director shall cease to hold office when the Execu tive Directors shall so decide. 9. The Managing Director shall be chief of the operating staff of the Fund and shall conduct under the direction of the Executive Directors, the ordinary business of the Fund's work. Subject to the general control of the Executive Directors, he shall be respon sible for the internal organization of the Fund's staff and the appointment and dismissal of its staff. 10. The Managing Director and the staff of the Fund, in the discharge of their offices, owe their duty entirely to the Fund and to no other authority. Each member of the Fund shall respect the international 7 4 9 0 1 3 — 4 8 — 30 456 MONETARY AND FINANCIAL CONFERENCE character of this duty and shall refrain from all attempts to influence any member of the staff in the discharge of his duty. 11. In appointing the staff the Managing Director shall, subject to the paramount importance of securing the highest standards of efficiency and of technical competence, pay due regard to the importance of selecting personnel recruited on as wide a geo graphical basis as is possible. Appointment of Committees 12. The Executive Directors may appoint such committees as they deem advisable. Members of such committees need not be limited to Governors or Executive Directors or their alternates. Remuneration 13. The Board of Governors shall determine the remuneration to be paid to the Executive Directors and the salary and terms of the contract of service of the Managing Director. (p. 16) [Section 3. Voting Before Committee or Commission—not completed.] [S ection 4. The General Manager Now included in Section 2.] Section 5. Publication of Reports The Fund shall publish an annual report containing an audited statement of its accounts and shall issue at intervals of three months or less, a summary statement of its transactions and its holdings of gold and currencies of members. The Fund may publish such other reports as it deems desirable for carrying out its purposes and policies. Section 6. Depositories. (a) Each member country shall designate its central bank as a depository for all the Fund’s holdings of its currency or, if it has no central bank, it shall designate such other institution as may be acceptable to the Fund. [ (b) Alternatives A, B and D referred to ad hoc committee.] Section 7. Form of Holdings of Currency. The Fund shall accept from any member in lieu of any part of the currency of that country not needed by the Fund in its opera tions, notes or similar obligations issued by the Government of the country or the depository designated by such member, which shall be non-negotiable, non-interest bearing and payable at their par value on demand by a credit to the currency account of the Fund in that country. PROCEEDINGS AND DOCUMENTS 457 ( p . 17) Relationship to other International Organizations The Fund, within the terms of this Agreement, shall cooperate with any general international organization and with public inter national organization having specialized responsibilities in related fields. Any arrangements for such cooperation which would involve a modification of any of the provisions of this Agreement may be effected only after amendment to this Agreement in conformity with the procedure set forth in Article_____ S e c t io n 8. Location of Office Still before Committee.] LSec t io n 9. Distribution of N et Income of the Fund The Board of Governors shall determine annually what part of its net income shall be placed to reserve and what part, if any shall be distributed. If any part is distributed, two per cent non-cumulative shall be paid, as a first charge against the distribution of any year, to each member on the average amount during the year by which 75 per cent of its quota exceeds the holdings by the Fund of its currency; and the balance to the members in proportion to their quotas. Payments to each member shall be made in its own currency. S ec t io n 10. (P. 1 8 ) Miscellaneous Powers. In order to carry out its purposes, the Fund shall have full legal personality and, in particular, may: (1) Make contracts; (2) Acquire and dispose of movable and immovable property; and: (3) Institute legal proceedings in any court of competent jurisdiction; (4) Employ such staff as shall be necessary to conduct the business of the Fund; and (5) Adopt such rules or regulations as may be necessary or appropriate to conduct the business of the Fund. SECTION 11. ( P .19) Article VIII. W ithdrawal from the Fund 1. Right of Members to Withdraw Any member may withdraw from the Fund at any time by serving written notice on the Fund at its principal office. Withdrawal shall become effective on the date such notice is received. S ec t io n 458 MONETARY AND FINANCIAL CONFERENCE [S ection 2. Suspension of Membership or Compulsory Withdraival Still in committee.] [S ection 3. Settlement of Accounts with Countries Ceasing to be Members. Still in committee.] [S ection 4. Liquidation of the Fund. Still in committee.] Article IX. Obligations of M ember Countries [S ection 1. Purpose and Scope of additional Undertakings. Consideration deferred.] [S ection 2. Gold Purchases Based- on Parity Prices In Drafting Committee.] [S ection 3. Foreign Exchange De.alings Based on Par values. In Drafting Committee.] [S ection 4. Exchange Controls on Current Payments Referred to ad hoc Committee.] S ection 5. Immunities of the Fund. (a) The Fund shall be immune from suit except when it con sents to be sued. (b) The Fund and its assets of whatsoever nature shall, where soever located and by whomsoever held, be exempt and immune from search, seizure, attachment, execution, requisition, confisca tion^ moratorium and (p. 20) expropriation, whether under judicial process or otherwise, in the territory of any member. (c) All governors, executive directors, officers and employees of the Fund shall, with respect to their official acts, be exempt from suit except when the Fund consents. (d) The archives of the Fund shall be inviolable. N o t e: T h ere are c e r ta in o th er m in o r p r iv ile g e s a ls o b e r e q u ir e d s u c h a s c o u r ie r f a c ili t i e s . A or im m u n itie s w h ic h w ill fu r t h e r d o c u m e n t w ill b e is s u e d c o m p le tin g t h is s e c tio n in t h is r e s p e c t. | Section 6. Im munity from Suit. Now included in section 5 above.] Section 7. Restrictions on Taxation of the Fund, its Employees, and Obligations. (a) The Fund, its assets, property, income and its operations, and transactions authorized by these articles of Agreement shall be exempt and immune from all taxation and from all customs duties. The Fund shall also be exempt and immune from liability for the collection or payment of any tax or duty. PROCEEDINGS AND DOCUMENTS 459 (b) No member, or any political subdivision or any taxing authority thereof, shall impose or collect any tax on or measured by salaries paid by the Fund to its executive directors, officials and employees who are not citizens of such member. (c) No member, or any political subdivision or taxing authority thereof, shall impose or collect any taxation on any obligation or security issued by the Fund, or any dividend or any interest thereon, by whomsoever held or received: (P .21) (i) which discriminates against such obligation, dividend, or interest, because of its origin; or (ii) which is applied solely on the basis of the place or currency in which it is issued, made payable or paid, or solely on the basis of the location of any office or place of business maintained by the Fund. (d) Each member shall inform the Fund of the detailed action it has taken to grant the exemptions and immunities provided for in this section and in section 5 respectively. Differences which may arise between such member and the Fund as to the sufficiency or propriety of any action shall be resolved in accordance with the provisions of Article XII, Section 1. Article X. Transitional Arrangements [Not yet available.] Article XI. Amendments Any proposal to introduce modifications in the agreement, whether emanating from the government of a member, a Governor or an Executive Director, shall be communicated to the Chairman of the Board of Governors who shall bring the proposal before the Board. If the proposed amendment is approved by the Board by a majority of the aggregate votes, the Fund shall, by circular letter, ask the governments of all the members whether they accept the proposed amendment. When three-fifths of the governments of the members, having four-fifths of the aggregate votes, have accepted the (p. 22) proposed amendment, the Fund shall cer tify the fact by means of a proces verbal, which it shall communi cate to the governments of all members. However, the acceptance of the amendment by the governments of all members is required in the case of modifications of (1) the right to withdraw from the Fund; (2) the provision that no change in a member’s quota shall be made without its consent; (3) the provision that no change may be made in the par value of a member’s currency except on the initiative of that member. 460 MONETARY AND FINANCIAL CONFERENCE The amendment will enter into force for all members three months after the date of the proces verbal unless a shorter period is specified in the circular letter. A rlicle XII. Interpretation of the Agreement S ection 1. Interpretation (a) All questions of interpretation of the provisions of this agreement arising between any member and the Fund or between any members of the Fund shall be submitted to the Executive Directors of the Fund for their decision. If the question is one which involves a dispute affecting particularly one (or more) member (s) and that (or those) member (s) are not represented among the Executive Directors by a Director appointed by it (or them) then the provisions of Article VII, section 7, document 152, apply. (b) In any case where the Executive Directors have given a decision under paragraph (a) above, any member may require that the question be submitted to the Board, and the decision of the Board shall be final, (p. 23) Pending the result of the reference to the Board of Governors, the Fund may (so far as is necessary) act on the basis of the decision of the Executive Directors. (c) Whenever a disagreement arises between the Fund and a country which has ceased to be a member, or between the Fund and any member country after liquidation of the Fund, such dis agreement shall be submitted to arbitration by a tribunal of three arbitrators, one appointed by the Fund, another by the country involved and an umpire who, unless the parties otherwise agree, shall be appointed by the President of the Permanent Court of International Justice. The umpire shall have full power to settle all questions of procedure in any case wT here the parties are in disagreement with respect thereto. [Section 2. Definitions Not yet available.] Section 3. Effect on Other International Commitments. Where under this Agreement a member is authorized in the special or temporary circumstances specified in the Agreement to maintain or establish restrictions on exchange transactions, and there are other engagements between members entered into prior to this Agreement which conflict with the application of such restrictions, the parties to such engagements will consult with one another with a view to making such mutually acceptable adjust PROCEEDINGS AND DOCUMENTS 461 ments as may be necessary. The provisions of this Article shall be without prejudice to the operation of Article VI, Section 4. (p .24) Article XIII. Final Provisions [Not yet available.] Article XIV. Execution of the Agreement [Not yet available.] Document 281 CI/2/MC Memorandum to Committee 2 U se o f C u r r e n c ie s H e ld b y t h e F u n d 1. The Fund will be provided with resources of gold and cur rencies subscribed by member countries. If the Fund is to be most effective in contributing to the attainment of its important purposes, all of the resources of the Fund must be made available for use by the Fund in maintaining a high level of trade and the beneficial flow of capital. The resources of the Fund should not be diverted to building up idle balances of foreign exchange. When international trade is customarily carried on in a few currencies such as dollars and sterling, a considerable part of the world’s trade not involving these countries will be carried on in terms of their currencies. If imports from countries other than the United States and the United Kingdom must be paid for in dollars and sterling, the Fund will find its holdings of other cur rencies of limited usefulness in settling international payments. Clearly, the Fund must be in a position to dispose of its franc balances in meeting payments due to France, its guilder balances in meeting payments due to the Netherlands, etc. At the same time the dollar and sterling balances should be available for use in maintaining trade and other current transactions with the United States and the United Kingdom. 2. There is no doubt that the provision can be made in the Fund proposal to facilitate the use of all of the currencies in the Fund in meeting balances of payments with the countries that have subscribed these resources. Whatever provision is made must be within the framework of (p. 2) the customary manner of carrying on international trade. Above all, it must not prove burdensome to the countries engaged in trade. 462 MONETARY AND FINANCIAL CONFERENCE The problem can be more clearly indicated by a concrete illustra tion: If Country A customarily carries on its international trade in terms of dollars, then a favorable balance of payments for Country A will be settled in dollars. The Fund should not be required to finance this favorable balance of payments with its resources of dollars. Instead, it should be possible for the Fund to use directly or indirectly its holdings of currency A to finance this favorable balance of payments with Country A. The views expressed before this Committee indicate general agreement with this principle. Some method must be found to assure the use of the Fund’s holdings of currency. At the same time, nothing must be done to discourage the continued use of dollars, sterling and other currencies by foreign traders who find the exchange markets and the availability of credit in such cur rencies of great convenience in conducting their trade. 3. The provision proposed below will not be burdensome to a country that customarily conducts its foreign trade in dollars or other currencies. Consider the following cases in which Country A carries on a considerable part of its foreign trade in dollars. ' i.~ Country A~would be paid dollars for" exports to the" United States. It would be free to use such dollars for its own imports from the United States, to pay for its imports from other countries payable in (p. 3) dollars, or to build up its holdings of dollars. It is no burden to the Fund when a country decides to hold balances in the currency of the country with whom its payments are favor able. The holding of such balances does not directly deplete the foreign exchange resources of other countries and there is no reason why the Fund should discourage it. ii. Country A might be paid dollars for its exports to countries other than the United States. If the dollars so acquired are used to make payments in the United States, the use of the dollars avoids a drain on the Fund’s resources of dollars and is therefore unobjectionable. If the dollars so acquired are used to make pay ments in other countries, the use of the dollars avoids the use of other resources of the Fund. Setting aside the ultimate disposition of the dollars paid to other countries, the acquisition and use of dollars in this manner by Country A should not concern the Fund. iii. Country A might acquire dollars from countries other than the United States and build up dollar balances. The favor able balance of payments of Country A would then have drained foreign exchange resources from other countries or from the Fund. 4. Some method should be found by which the Fund’s holdings PROCEEDINGS AND DOCUMENTS 463 of currency A can be used to meet the favorable balance of pay ments of Country A. Under the Fund proposal (III-7, Joint State ment) Country A would be required to use half of the increment of dollars to repurchase its (p. 4) currency from the Fund. If this repurchase provision could be extended to cover the entire increment of dollars resulting from Country A’s favorable balance of payments in dollars with countries other than the United States, the Fund would be able to make the fullest use of its holdings of currency A. It is suggested, therefore, that the following provision be included in the Fund proposal: “Where the international transactions of a country are carried on in the currencies of other countries, the Fund may require that the increments in its holdings of member currencies, to the extent that such increments are attributable to transactions with other countries, shall be offered to the Fund in the repurchase of its own currency.” Document 284 (p. 18c) SA /1/50 A l t e r n a t iv e D Changes in P a r V alues (S e c tio n s 2, 3, 4 as in Alternatives A) S e c t io n 5. (a) The Fund shall concur in a proposed change under 4 (b) or (c) above if it is satisfied that the change is necessary to correct a fundamental disequilibrium. In particular, provided it is so satisfied, it shall not object to a proposed change on the ground of the domestic, social or political policies of the member proposing the change. (b) The Fund shall also concur in a proposed change under 4 (b) or (c) above if it is satisfied that such change will not affect the international transactions of the member proposing the change. (c) If the Fund is not satisfied in accordance with (a) or (b) above, and deems the proposed change unjustified, having regard to the proper working of the Fund, it shall object to the proposed change; but in arriving at its decision it shall take into considera tion the extreme uncertainties prevailing when the par values of the currencies of members were initially determined. S e c t i o n 6. (Section numbered 4c in Alternative A) 7/1 1 /4 4 J.S. Art. IV Sec. 5 Document 285 T a b le £ I i n E x p l a n a t i o n o f C o m b in e d A l t e r n a t i v e s A a n d B, A r t i c l e III, S e c t i o n 1 0 , p . 1 3 a (d o c . 2 7 7 ) SA /1/51 M arginal Charges Amount of country’s currency held Per cent per annum payable on excess currency during 1 st Year Vs* 3rd Year 4th Year 5th Year th Year 6 7th Year th Year 8 9th Year ]0th Year 1 lH 2 2V2 3 sy2 4* 4^ 5 4* 4M 5 5 5 5 5 5 5 5 126— 150 1 m 2 2l A 3 m 151—175 m 2 2M 3 3'A 4* 176—200 2 23^ 3 3^2 4* 4^2 4K > ... . 5 201—225 23^ 3 3^ 4* 4H 5 5 5 5 5 226—250 3 zv>. 4* 4^ 5 5 5 5 5 5 !.... Additional amounts Corresponding increases up to 5% i N o paym ent in first three months; in next nine. * At this point the Fund and the member shall consider ways and means by which the Fund’s holdings of the member’s currency can be reduced. N o te: N o charge is made on use of the Fund resources in an amount equivalent to a member’s gold subscription. 7 /1 1 /4 4 CONFERENCE 2 FINANCIAL 101— 125 nd Year AND percentage of country’s quota MONETARY MINIMUM PERCEN TA G E CHARGES PAYABLE BY A COUNTRY ON F U N D ’S HOLDINGS OF IT S CURRENCY IN EXCESS OF ITS QUOTA T a b le II i n E x p l a n a t i o n o f C o m b in e d A l t e r n a t i v e s A a n d B, A r t i c l e III, S e c t i o n 10, p . 1 3 a (doc. 277) S A /l/5 1 MINIMUM PERC EN TA G E CHARGES PAYABLE BY A COUNTRY ON FU N D ’S HOLDINGS OP ITS CURRENCY IN EXCESS OF ITS QUOTA its currency have reached 100% of its quota) Amount of country’s currency held percentage of country's quota Per cent per annum payable on excess currency during 1 st Year 6 8 9th Year 10 th Year oth Year th Year 7th Year th Year 1 ix 2 2K 3 3^ 4* 1 1H 2 214 3 3H 4* 43/9 5 151—175 2 2'A 3 3H 4* 4l A 5 176—200 2 2V2 3 sy2 4* 4A 5 101—125 126—150 Vs# f No paym ent in first three months; in ne*t nine. * At this point the Fund and the member shall consider ways and means by which the Fund’s holdings of the member’s currency can be reduced. N o te : N o charge is made on use o f the Fund resources in an amount eauivalent to a member’s gold subscription. 5 DOCUMENTS 4th Year AND 3rd Year -2 n d Year PROCEEDINGS M arginal C harges: assum ing a member to draw the full amount perm itted each year without waiver (a fte r the Fund’s holdings of 466 M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E Document 286 CII/MC/l Memorandum Submitted to Commission II by United Nations Interim Commission on Food and Agriculture F i n a n c i n g o f A g r ic u l t u r a l D e v e l o p m e n t a n d t h e P r o p o s e d B a n k f o r R e c o n s t r u c t io n a n d D e v e l o p m e n t At the conference on Food and Agriculture, held at Hot Springs, Virginia, in May 1943 the United Nations recognized the need for coordinated policies of the various countries designed to raise levels of nutrition and standards of living and to improve the efficiency of agriculture on a world-wide scale. Among the specific objectives of these policies are: 1. to increase the supply of foods that are needed in larger quantities to provide better diets for the low-income groups; 2. to reduce the production of chronic-surplus commodities in relatively inefficient areas, where it is maintained largely through government measures; 3. to secure better living conditions for rural people who still comprise more than two-thirds of the world population; and 4. to enable agriculture to contribute to a high level of general economic activity and world trade. The Conference at Hot Springs established an Interim Commis sion, which will be succeeded by a permanent Organization after the constitution of the latter has been accepted by the governments of the United Nations. It will be the task of this Organization to promote separate and collective action by the Member nations towards the achievement of these policies. These objectives will however not be achieved unless credit is effectively made available for the purposes of production, storage, processing, transportation, and marketing of agricultural com modities and for other purposes that are in the interest of that agricultural reorientation and development which is a prerequisite of improving the nutrition, especially of the low-income groups, and the standards of living in rural areas. In countries where the agricultural credit system is not sufficiently developed, the government and the agricultural credit authorities should use all means at their disposal to improve the (p. 2) situation. Some countries will, however, not be in a position to provide effectively for all agricultural credit needs from domestic sources; their efforts should therefore be supported by the supplementary pro P R O C E E D I N G S AND D O C U M E N T S 467 vision of international agricultural credit. In recognition of this fact, the Conference at Hot Springs resolved that it shall be a function of the Food and Agriculture Organization to submit to Member governments and to international authorities recom mendations concerning agriculture credit. The Interim Commission has given considerable attention to the problems of agricultural credit. In particular in the draft Report to the Governments of the United Nations, it has recognized that international agricultural and industrial credit would most suitably be administered by one international agency, such as the proposed Bank for Reconstruction and Development.1 The Interim Commission has recognized that capital develop ment of other parts of the economy is also needed if the desired improvement and adjustment in agriculture shall become possible and if the purchasing power of low-income groups is to increase so as to enable them to buy more nutritionally needed food and consequentially to provide a wider market for agricultural products. A balanced and wisely directed development of industry and agriculture is, furthermore, necessary in order to provide employment for the rural surplus populations of many areas where over-population is depressing living conditions and impeding technological progress. The Interim Commission has particularly borne in mind the need of some regions for large-scale development programs to be financed by international loans. Such programs involve study and action on a wider front than that of food and agriculture alone. In a subsequent portion of this statement reference is made to the part that the Food and Agriculture Organization might play, in cooperation with the Bank and other appropriate international organizations, in the development of such broad programs. The memorandum presented herewith by the Interim Commis sion to the United Nations Monetary and Financial Conference deals with (p. 3) I. the need for agricultural credit in general and for inter national agricultural credit in particular, and the economic advantages that may be obtained from the adequate pro vision of such credit; 1 Attention may be drawn to Appendix I of this memorandum containing the statem ent on A gricultural Credit in the Final Act of the United Nations Conference on Food and Agriculture, Hot Springs, Virginia, 1943; and to Appendix II containing a statem ent on A gricultural Credit th a t is p a rt of a draft Report to the Governments of the United Nations by the Interim Com mission on Food and Agriculture. 468 MONETARY AND FINANCIAL CONFERENCE II. the differences in terms and conditions under which agri cultural credit is at present available in various countries and a brief account of how these differences developed; III. certain principles that should be followed in coordinating national and international efforts to provide adequate credit to agriculture; IV. a proposal of ways and means to facilitate cooperation between the proposed Bank for Reconstruction and Development and the Food and Agriculture Organization. I. Need for, and Advantages of, the Development of Agricultural Credit on a National and an International Basis Agricultural production employs, relative to its output, large quantities of fixed and working capital, which farm operators, mostly small-scale entrepreneurs, are unable to provide, and which therefore has to be obtained by the way of credit. In modern times, there has been a progressive increase in the credit need for farm and forest enterprises as well as for many undertakings required for the utilization of their products. Even under normal circumstances, this need is likely to increase further as a result of progress in production techniques, improvements in the construction of farm houses and out-buildings; land reclama tion, flood control, drainage, irrigation, and other means of soil conservation; rural roads and rural electrification; and a wider use of disease resistant seeds, improved livestock, insecticides, commercial fertilizers, modern machinery and equipment, refrig eration, and dehydration. In short the more the capital equip ment of agriculture is developed, the greater will be the need of credit. Similarly, there will be an increase in the need for agricul tural credit to make good the damage to agricultural capital caused by floods, droughts, plant and animal diseases, and other catastrophes of nature, at least as long as the natural hazards of farming are insufficiently covered by insurance. The need for forest credit will increase with the opening up of undeveloped forest areas, with the afforestation of denuded soils, and with the wider acceptance of the principles of sustained-yield management, (p. 4) Under postwar conditions, additional credit will be needed to replace wartime deterioration and destruction of farm capital, to correct accumulated maladjustments in agricultural production, and to conform to changes in consumer demand. If expansionist economic policies prevail, and if the nutritional levels of the lowincome groups are raised—as is the hope and the policy goal of P R O C E E D I N G S AND D O C U M E N T S 469 the United Nations — expansion in agricultural production in accordance with the growing demand will further increase the volume of credit needed in agriculture. From the viewpoint of a policy oriented towards the objectives set at the Hot Springs Conference, the need for credit for improve ment and adjustment must receive special attention, since it is an indispensable means for solving the paradox of agricultural sur pluses on the one hand and malnutrition on the other. Success will, however, be possible only if the financial structure of the agricul tural enterprises that are to be improved is sound and healthy. In countries where credit has been used largely for wasteful purposes, and where debtor distress has become widespread, cor rection of this situation will be a preliminary condition for the improvement of agricultural conditions. Where other legitimate credit needs arise in the agricultural sector of the economy (e.g. for the acquisition of farm land and buildings or for the refinanc ing of outstanding debts), which cannot be financed at appropriate terms because of the lack of efficient credit facilities - credit must be made available for these purposes as well as for purposes of improvement and adjustment. Recognition of the foregoing does not, of course, mean that it would be necessary to draw upon international loan funds for all those purposes; on the contrary, the primary responsibility for the provision of appropriate and effective agricultural credit facilities must - in the future as in the past - rest upon the governments and the agricultural credit institutions and authori ties of the various countries. This will in general hold true for all those credit needs that normally are local, such as the financing of land transfers and the refinancing of outstanding debts. After its agricultural credit system has been adequately developed, it will be possible for every country to finance those credit needs with domestic loan funds. Some countries, particularly highly developed and financially strong countries, will be in a position to go further and to finance their agricultural development entirely with domestic funds; but even countries that are in a less fortunate position will be able to supply from domestic sources part of the funds needed, - as, in particular, funds for those undertakings which involve payments for domestic labor and other domestic resources, (p. 5) In the latter group of countries, the financing of agricultural develop ment will, however, encounter difficulties if the projects in question operate, directly or indirectly, to increase the need for foreign exchange. A situation of this kind arises directly where agricul 470 MONETARY AND FINANCIAL CONFERENCE tural or forest development depends on imports, from abroad, especially imports of capital goods, as for example, breeding stock, agricultural machinery, machinery needed in the construction of rural roads and in modern storage and processing facilities, or refrigerator cars, and trucks. It may arise indirectly, if in con sequence of local labor and resources being used for an agricul tural improvement scheme, temporarily more goods have to be imported from abroad. Some countries, however, will not be in a position to provide for such increased needs of foreign exchange without depressing domestic living standards or dumping their products on the world market—measures which would be contrary to the manifest policies of the United Nations; these countries must, therefore, be enabled to borrow capital from abroad. Past experience has, how ever, demonstrated that private international capital, for the most part, is not interested in the financing of agriculture with the exception of plantation farming, centralized processing, or other large-scale undertakings that hold out prospects for high profits. Adequate financing for the world-wide reorientation of agricul ture after this war will, therefore, require that an international credit agency - such as the proposed Bank for Reconstruction and Development - should provide loans to countries in need of foreign funds for agricultural improvement and adjustment. If international loans are made available for these purposes, this will benefit agriculture not only in the capital-importing countries but also in capital-exporting countries, because the world-wide maladjustments of agricultural production can be corrected only if corresponding adjustments are carried out in the production patterns of the one as well as the other group of countries. Furthermore, the international financing of agricul tural development will benefit industry and commerce by (a) providing wider markets for many types of capital goods and (b) creating broader and more stable markets for manufactured con sumer goods in the rural areas. The amounts of international credit needed to finance agricul tural development and reorientation are in many cases small as compared with the sums required for industrialization projects, and in many less developed countries, useful results in the form of increased cash returns for borrowers, increased production, more trade, better nutrition and other benefits could be obtained from certain agricultural projects (e.g. improvement of seeds and livestock, provision of modern machinery and equipment, building of rural roads, construction of storage and processing P R O C E E D I N G S AND D O C U M E N T S 471 facilities) within a comparatively short period. In these cases therefore (p. 6) the financing of such agricultural projects would faster produce tangible results in the direction of the development of an expanding economy and an improvement in living conditions than would many of the more far-reaching industrial development schemes, however necessary the latter may be. II. Development of Agricultural Credit in Different Countries The terms and conditions under which credit may be obtained for agricultural purposes vary considerably from country to country and—within the individual countries—by regions, by types of farming, and furthermore with differences in the kinds of security offered by the borrower. Leaving out of consideration the special types of loans whose rates of interest are reduced by government subsidies and the loans the conditions of which were determined largely by con siderations of personal relationship or friendship, we find that the effective rates of interest charged on agricultural loans vary from the relatively low charges of 4 to 5 per cent and even less in a few countries to the usurious charges of 40 to 100 per cent and more in parts of Eastern Europe, in wide areas of Asia, and in some parts of Africa and of the Americas. To a certain extent, the differences in the costs of agricultural loans are the result of differences in the availability of loan funds and in the risks involved; and of the small size of many agricul tural loans involving high administrative costs. But the greatest differences in the costs of agricultural credit stem from differences in the development of the credit systems of the various countries, and especially in the develop ment of their institutional credit facilities for agriculture. In countries where farmers cannot obtain credit from institu tional sources usury flourishes, credit is used largely for wasteful purposes, and the methods of production and marketing have re mained primitive; the results are appalling poverty and malnutri tion in rural areas and inadequate food supplies for the lowincome groups in the cities. On the other hand, where—through private initiative, cooperation among farmers, or government action—appropriate and efficient credit agencies have been devel oped, this has substantially helped to reduce the costs of agri7 4 9 0 1 3 — 4 8 — 31 472 MONETARY AND FINANCIAL CONFERENCE cultural credit and to promote progress in agriculture and in living standards. (p. 7) Specialized mortgage credit institutions date back to the second half of the eighteenth century. Since then, many types of private, governmental, and cooperative mortgage credit agencies have been established. Wherever such agencies have attained im portance as agricultural lenders, they have, directly and by the way of competitive lending, contributed to a substantial reduction in the rates of interest charged for farm mortgage loans. By offering amortizable loans, they have helped hundreds of thou sands of farmers to pay off their mortgages. Some of them have rendered important services to agriculture, and to the general economy, also through their refinancing operations in periods of monetary stringency. While, in the long history of institutional farm-mortgage credit, some losses inevitably occurred, it is no table that, where these agencies were well organized and under experienced management, the losses were kept within relatively small limits. As a result, agricultural mortgage bonds were rated as high class investments in many countries. In the field of short-term and intermediate agricultural credit, the competitors of private lenders and merchants are commercial banks, cooperative associations, and government agencies. The commercial banks have become a large source of agricultural loans in countries where they have extended their activities into rural areas, as especially in the Anglo-Saxon countries. The other im portant source of short-term and intermediate agricultural credit is the cooperative credit associations; their contribution to the improvement of the terms and conditions of these types of credit has, in many countries, been far greater than those of any other type of lending agency; in some countries they have, for all prac tical purposes, become the only institutional source of short-term and intermediate loans to farmers. The development of credit cooperatives has been furthered by governments in almost every country in which they have obtained prominence. In a consid erable number of countries, government agencies have been established either for the refinancing of credit cooperatives or, directly, for the provision of short-term and intermediate loans to agriculture. If international credit is made available to agriculture, the importance of domestic lending agencies will not decline; but, on the contrary, it will increase; for, besides providing agriculture with domestic loan funds, such agencies will have to accept the PROCEEDINGS AND DOCUMENTS 473 responsibility for making and servicing loans made possible by action of the Bank. (p. 8) III. Problems of Coordinating International and National Agricultural Credit Policies To ensure the effective use of credit for the furtherance of the objectives stated above (world-wide reorientation of agricultural production, better nutrition in low-income groups, better living conditions for rural people, and high levels of economic activity and world trade), well coordinated measures are needed on the domestic as well as the international level. The following pages discuss: (1) tasks arising in the development of the agricultural credit system that need to be performed by the governments and agricultural credit authorities of various countries. (2) the probable scope of the agricultural lending activities of the Bank for Reconstruction and Development. (3) means by which the Food and Agriculture Organization could give assistance to the development of domestic credit facilities in various countries and to the agricultural lend ing of the Bank for Reconstruction and Development. 1. Tasks of the National Governments and Agricultural Credit Agencies. Since loans by the Bank for Reconstruction and Development are intended to supplement, and not to substitute for, credit from the domestic sources—countries at present not making loans ef fectively available for desirable agricultural purposes will have to remedy this situation with all means at their disposal. The specific measures required for improving the domestic agri cultural credit system will differ considerably as between coun tries. There are, however, certain institutional provisions that are needed in every country to ensure efficient functioning of the system. They include: (a) Legislative provisions for effective legal instruments and records required in agricultural lending, for example, real estate and chattel mortgages, negotiable warehouse re ceipts, land registers and registers for deeds or preferably titles. 474 MONETARY AND FINANCIAL CONFERENCE (p. 9) (b) Efficient lending agencies for the various types of credit needed in agriculture, such as—short-term, intermediate, and long-term credit for farmers in general, credit for cooperative warehouses, credit for processing and market ing cooperatives, and credit for public corporations in rural areas. Where private capital does not provide these types of credit at reasonable terms, it will often be neces sary to develop agricultural credit agencies on a coopera tive or governmental basis. In either case, it will be neces sary to provide (i) satisfactory refinancing opportunities, e.g., through the accumulation of savings, the floating of bonds, government guarantees, or direct government financ ing; and (ii) adequate coverage of refinancing costs, ad ministrative expenses, and loan risks out of interest and service charges and, where needed, with the help of gov ernment guarantees or subsidies. The operations of local credit cooperatives, or other lending agencies with a lim ited area of operations, may need to be supported by or ganizing them on a nation-wide basis or by establishing central refinancing agencies. (c) Provision for advice to farmers as to the economic use of credit in their own farming operations, in cooperative as sociations, and in local public corporations. In the application of these principles, due consideration should be given to the specific problems predominant in each country. For example, if in a certain country farmers are inexperienced in the economic use of credit and in modern methods of farm management, the credit policy of such a country should aim at an effective coordination of an advisory service with the lending serv ice. This might be achieved in various ways, as for example through the combination of these two types of services in one system, commonly called “supervised credit”. (The administrative costs of the educational part of such a program should, of course, be recognized as government expenditures and should not be charged to the borrowers.) Where severe debtor distress has become an obstacle to agricul tural improvement and to the effective financing of such improve ment, there would have to be relief by measures designed to facili tate farm debt adjustment. If usurious money lending for unpro ductive purposes is the main reason of the widespread debtor dis tress, the governments are faced with the formidable task of fighting these practices through stern legislative and administra PROCEEDINGS AND DOCUMENTS 475 tive measures. Though it will be difficult to eradicate usury where it has dominated for centuries, there are some countries where such action is the indispensable prerequisite to the successful financing of agricultural development. (p. 10) If in a country the prevailing pattern of land tenure impedes the improvement and adjustment of agricultural produc tion or the improvement of nutrition and living standards in rural areas, changes in the land tenure system may have to be facili tated by the provision of the special types of credit needed by settlers for the acquisition of land, livestock, equipment, and other necessaries and by such additional measures as may be required. Furthermore, there may be countries in which the effec tive provision of agricultural credit may depend upon other im provements in the national agricultural pattern. 2. Agricultural Lending Activities of the Proposed Bank for Re construction and Development. Within the general policies governing the lending operations of the Bank for Reconstruction and Development (such as balance-of-payment considerations), its agricultural lending opera tions (or its guarantees of loans for agricultural purposes) might mainly be confined to agricultural improvement and adjustment projects which, in the course of their development, give rise, either directly or indirectly, to an increased need for foreign exchange. Under such a policy, the Bank might be called upon to provide certain countries with foreign exchange for the import of capital goods, such as breeding stock, agricultural implements, machinery for the building of rural roads, and modern equipment for storage and processing plants and for the transport of agricultural and forest products, or other imports that arise indirectly from the use of domestic resources in agricultural development. In any of these cases, it should be made a condition for lending by the Bank that the imports are directly or indirectly needed in carry ing out agricultural and forest improvements intended to achieve the aims agreed upon at Hot Springs. If, because of special circumstances, the domestic-currency needs for desirable improvements and adjustments cannot be financed from domestic sources at reasonable terms, the Bank for Re construction and Development would, on the basis of the pub lished plan for the establishment of the Bank, be in a position to provide funds also for the domestic part of the project. It is, however, assumed that the Bank will not undertake such lending 476 MONETARY AND FINANCIAL CONFERENCE operations unless satisfactory evidence has been presented with regard to the circumstances that make it impossible to obtain domestic loan funds at reasonable terms. Moreover, the countries receiving such assistance will have to make every feasible effort to reduce and ultimately to eliminate the need for the provision of funds by the Bank for such purposes. Except in the case of large developments undertaken by govern ments or corporations (e.g. dam construction), the financing of agricultural improvement and adjustment will require the making of loans to a great number of individual borrowers. It is, how ever, expected that the Bank will in (p. 11) such cases confine itself to the providing of the needed loan funds to the domestic credit agencies and to the setting of the standards governing the making of the loans to the individual borrowers. It would then be the responsibility of the domestic credit agencies to make and service these loans and to control the use of the borrowed money and the maintenance in good repair of the property of the debtors. 3. Activities of the Food and Agriculture Organization in the Field of Agricultural Credit. It is anticipated that the Food and Agriculture Organization will, in accordance with the recommendations at Hot Springs, establish a reporting and consulting service on the problems of agricultural credit. This service will be able to give valuable aid (1) to individual countries seeking to develop their national agri cultural credit systems and (2) to any agricultural lending opera tions of the Bank for Reconstruction and Development. In the establishment and maintenance of this service, the Organization will have the benefit of periodic reports of all member countries on the progress made and the actions taken by them in the field of agricultural credit since in accordance with the recommendations of the Hot Springs Conference, the making of such reports will be obligatory to the member countries. Among the main tasks of the reporting and consulting service of the Food and Agriculture Organization on problems of agri cultural credit will be the following: (a) To collect basic and current information on the conditions of agricultural credit in various countries,2 and to make it 2This m ight include collecting inform ation on: (i) legal and adm inistrative measures affecting farm tenure, real estate mortgages and chattel mortgages, foreclosure, moratorium, debt adjust ment, resettlement, term s of loan contracts, etc.; Footnote continued on page 477 PROCEEDINGS AND DOCUMENTS 477 available, through a current information service, to mem ber countries and to the proposed Bank for Reconstruction and Development. (P. 12 ) (b) To embark on comparative studies of problems that are of actual importance for the improvement of agricultural credit facilities in member countries, and to make the results of these studies available to member countries and to the Bank. (c) To maintain a staff of international experts on technical, social, and economic problems of agricultural credit which would be at the disposal of (i) governments of member countries for the purpose of consultation on general or specific problems related to the development of agricultural credit, and (ii) the Bank for Reconstruction and Development for the purpose of analyzing agricultural problems that are of interest to the Bank. In view of the direct concern of the Organization with all problems of agricultural reorientation and development, it is clearly appropriate that the Organization, if it is to be enabled to exercise an influence in its own field commensurate with the pur poses for which it is to be established, should be recognized as a complementary body to the Bank in regard to agricultural credit. As such it would have to cooperate with the proposed Bank for Reconstruction and Development in the examination and control of agricultural reorientation and development projects for which international financing is desired. To make such cooperation Continued from page 476 (ii) availability, conditions, and term s of various kinds of credit needed in agriculture (short-term , intermediate, and long-term credit in general; and specific kinds of credit, such as supervised credit, land settlement credit, credit for farm er cooperatives, and credit for local governments) ; (iii) use of m ortgage and chattel securities and of sureties in agricultural credit; (iv) sources of credit (types of lenders, scope of their business, refinancing methods and opportunities, adm inistrative and managerial problems, etc.) ; (v) government assistance in the provision of agricultural credit by the way of guarantees and subsidies, and the relationship of such assistance to other aids to agriculture; (vi) purpose, extent, and effect of the use of agricultural credit; especially interrelationships between the use of credit and the natural, social, and economic conditions in agriculture. 478 MONETARY AND FINANCIAL CONFERENCE effective, a borrowing country should, upon recommendation of the Organization, be required, as a condition of the loan, to avail itself to the fullest extent, of the technical services and advice of the Organization in regard to the projects for which the loan is granted. In many regions general developmental programs may be needed, including such coordinated activities as flood control, water con servation, electric power development and transmission, soil con servation, land reclamation and irrigation, agricultural reorienta tion, road and rail transport, and expansion of manufacturing and trade. Assistance to countries developing such programs may involve cooperation not only between the Bank and the Food and Agriculture Organization, but also with appropriate specialized international organizations. IV. Cooperation between the Proposed Bank for Reconstruction and Development and the Food and Agriculture Organization The use of the lending powers of the proposed Bank for Re construction and Development in conformity with the policy ob jectives of the United Nations in the field of food and agriculture would be facilitated by providing for continuous close coordination between the Bank for Reconstruction and Development and the Food and Agriculture (p. 13) Organization of the United Nations, since it will be the task of the latter to give technical assistance to countries desiring to improve and adjust agricul tural production, processing, and marketing in accordance with these principles. Coordination of the advisory activities of the one agency and the agricultural lending activities of the other will help to secure the use of the Bank's funds for projects that will best contribute to the achievement of needed nutritional and agricultural improvements. In addition, it should also help to reduce the risks of the Bank’s lending in the agricultural field. As an example of the common tasks of the two agencies, there may be mentioned the case of a country with badly balanced agriculture and poor agricultural credit facilities. In such a case, the Food and Agriculture Organization of the United Nations would be the agency to assist in the reorganization of the country's agricultural production program and to help in the establishment of effective agricultural credit institutions. The Bank for Recon struction and Development, on the other hand, would consider proposals for the financing of agricultural projects in this coun try that could not be financed from domestic sources. PROCEEDINGS AND DOCUMENTS 479 On the general policy level, coordination between the two agencies could be effected by providing for (1) a representation of the Organization on the Advisory Council of the Bank and (2) a representation of the Bank on the Conference of the Organization. Effective coordination on the operating level could be brought about by providing, in the charter of the Bank, for the naming of one of the Bank's vice-presidents from a panel, suggested by the Organization, of say three persons with a wide knowledge of agriculture and experience in the administration of agricultural credit. It would be desirable for this vice-president to be a mem ber of the Bank's Board of Directors and of the Bank’s Executive Committee. Such an arrangement would be in conformity with the practices of private financial institutions of appointing a vice-president, or other high-ranking officer, as head of the agricultural loan department. In addition, continuous contacts would need to be maintained between the management of the Bank and the Secretariat of the Food and Agriculture Organiza tion. To have available to the Food and Agriculture Organization the experience of the agricultural vice-president of the Bank, arrangements should be made for his serving ex-officio as a con sultant to the Organization on financial problems. APPENDIX I Excerpt from the Final Act of the United Nations Conference on Food and Agriculture, Hot Springs, Virginia, 1943. Article XVI. Agricultural Credit W hereas : 1. Capital development and adequate credit facilities are necesFarv if agricultural production is to be restored, increased, and intensified; 2. Agricultural credit in some countries has frequently been obtainable only at rates which the farmer could not afford to pay; 3. The agricultural communities in many countries have been unable to obtain information on the organization and development of agricultural credit systems in other countries; 4. In some countries full agricultural development has been or may be obstructed by difficulties in providing adequate capital; The United Nations Conference on Food and Agriculture R ecom m ends: 1. That every endeavor be made to ensure an adequate supply of credit to agriculture; 480 MONETARY AND FINANCIAL CONFERENCE 2. That to this end full use be made of all types of suitable private, cooperative, and public credit institutions; 3. That the rate of interest be as low as possible and the con ditions regarding initial cost, redemption, etc., be as favorable as possible for the borrowers, particularly with a view to helping the small farmer; 4. That, in view of the importance of agricultural credit, its requirements be duly recognized by international action taken as a result of this Conference. APPENDIX II Excerpt from a D raft Report to the Governments of the United Nations by the Interim Commission on Food and Agriculture. 5. Agricultural Credit 65. The Commission has given careful thought to the functions that ought to be performed by the Organization in the domain of agricultural credit. It is manifest that the basic purposes of the Organization will not be achieved unless international credit for agricultural projects is made available and effective on a consid erable scale, and it follows that the promotion of a wise and liberal administration of international agricultural credit is among the major concerns of the Organization. Such an administration, indeed, is important not only to world agriculture but to world economy, and the doctrine of an expanding world economy, to which, at the Hot Springs Conference and elsewhere, the majority of governments have subscribed, is unlikely to be realized in the absence of sound policy and practice in regard to international agricultural credit. Investments directed towards the improve ment of agricultural methods should bring quick returns in increased production, and this would not only be reflected in im proved nutrition but also in increased international trade. In deed, that portion of international investments which may be directed towards agriculture may bring about quicker effects upon world economy than larger sums needed for longer term devel opments. 66. The Commission conceives, however, that international credit and investment, whether related to agricultural or indus trial development or to other purposes, would most suitably be administered by a single international authority charged with the appropriate functions in respect of all such purposes. It rec ommends that such an authority be established by agreement be PROCEEDINGS AND DOCUMENTS 481 tween the governments concerned, and that adequate arrange ments be made for including the provision of agricultural credit among its functions. It further recommends that the Organization, or in the event of its not being established in time the Interim Commission itself, should be represented at any international conference that may be convened for the purpose of setting up an international credit and investment authority. 67. Credit will be needed for many agricultural developments— for example, the re-equipment of agriculture, mechanization, land reclamation, irrigation, afforestation, and increased storage, proc essing, and marketing facilities for agricultural products. Agri cultural credit should, however, be interpreted not only as covering its conventional forms but also as including credit for adjustments in other parts of the economy in the interests of agricultural re orientation and better standards of nutrition. (p. 2) 68. The Organization will have a direct concern with all these matters, and it is clearly appropriate, if it is to be enabled to exercise an influence in its own field commensurate with the purposes for which it is established, that it should be recognized as a complementary body to the international credit and investment authority with specific functions in regard to agricultural credit. 69. The specific functions relating to agricultural credit which the Commission recommends should be assigned to the Organiza tion are as follows: (a) The Organization should participate in the manage ment of the international credit organization through represen tation on its governing body, in order to provide for due con sideration of agricultural interests in the determination of general international credit and investment policies. (b) Applications for international credit for an agricultural purpose should be considered by the international credit author ity only after examination by the Food and Agriculture Organi zation and in the light of its recommendations. (c) In appropriate cases, and if the Food and Agriculture Organization should so recommend, the borrowing country should be required, as a condition of the loan, to avail itself to the fullest extent, in regard to the projects for which the loan is granted, of the technical services and advice of the Organiza tion. 482 MONETARY AND FINANCIAL CONFERENCE Document 287 D P /1 7 Proposal for a Conference to Promote Stability in the Prices of Primary International Commodities Presented by Brazilian Delegation to United Nations Monetary and Financial Conference. 1. Fluctuations in the prices of primary products during the interwar period were as much of a curse as recurring large scale unemployment. The Economist index of sensitive commodity prices (1935 = 100) fell from 369 in February 1920 to 163 in January 1922; it rose gradually to 232 in November 1925 and fell, almost without inter ruption, reaching its low point of 75 in August 1931. It recovered to 175 in March 1937, to sink again to 88 in May 1938. It may be said that after 1920 the disparity between the prices of agricultural commodities and raw materials and those of manu factured goods was the main cause of disequilibrium in inter national trade. 2. The introduction to the United States proposal for an Inter national Monetary Fund states that “it is recognized that an international stabilization fund IS o n l y o n e of the instru mentalities which may be needed in the field of international economic cooperation. Other agencies are also needed to provide capital for post-war reconstruction and development, to provide funds for rehabilitation and relief and to promote stability in the prices of primary international commodities.” This Conference is expected soon to achieve an agreement on the international monetary fund and on the bank for reconstruc tion and development. The problem of rehabilitation and relief has already been dealt with by the Food Conference. Out of the four main problems mentioned in the United States proposal, that of the promotion of stability in the prices of primary international commodities is, therefore, the only one which still remains to be. considered. The inter-relationship between these international agencies has been similarly emphasized by the United Kingdom Treasury plan, in which it is said that “if an international investment or de velopment corporation is also set up together with a scheme of Commodity Controls for the control of stocks of the staple primary products, we might come to possess in these three Institutions a powerful means of combating the evils of the Trade Cycle” and “it is possible that TAKEN TOGETHER these institutions may PROCEEDINGS AND DOCUMENTS 483 help the world to control the ebb and flow of the tides of economic activity wr hich have, in the past, destroyed security of livelihood and endangered international peace.” 3. The heavy fall in prices of the products imported by the industrial nations and the consequent improvement in these na tions’ terms of trade were of but illusory advantage to them, as the decline in purchasing power in the countries producing primary products brought about a corresponding reduction in the imports of these countries and thereby a depression in the export industries of manufacturing countries. (p. 2) Manufacturing industries and raw materials produc tion must stand or fall together. It is often held that the maintenance of a high level of employ ment is, by itself, a guarantee of satisfactory prices for raw ma terials and agricultural products. It should not be overlooked, however, that even if a high level of employment is achieved everywhere, it may be seriously disturbed by price fluctuations in primary products resulting from climatic or other factors, with a resulting disequilibrium in relative prices capable of endangering the whole price structure. 4. Before the war, several international organizations had been formed to deal with the problem of raw material prices. These organizations could be made the starting point for more com prehensive ones in which both primary producer and manufactur ing and consumer interests would be represented to prevent, as far as possible, violent fluctuations in the production stocks and prices of rawTmaterials. Experience has already taught that organizations of this kind can have a strong stabilizing effect on markets. They have, of course, to develop a technique of their own and the history of some of them has shown how their methods can gradually be improved and simplified. It has also shown that different raw materials reed different methods. The development and improvement of these organizations should not be made to contribute to restriction of production or to monopo listic practices, but rather to a continuous improvement in efficiency of methods of Droduction and to the maintenance of ever-normal granaries, credit for which might be supplied both by the Inter national Monetary Fund and by the producing countries. 5. Be it R esolved that for the successful attainment of the objects pursued by the International Monetary Fund and the Bank for Reconstruction and Development, a Conference of United and Associated Nations to promote stability in prices of raw 484 MONETARY AND FINANCIAL CONFERENCE materials and agricultural products be called to make recommenda tions for the achievement of a better balanced growth of interna tional trade. Document 288 DP/18 Draft Resolution Submitted to Commission III by Cuban Representatives to United Nations Monetary and Financial Conference (Submitted as A lternative A to the motion filed with Commission III by the Peruvian Delegation (No. 9—Page 7—Doc. #235) ) that to implement the aims and objects of the Inter national Monetary Fund and the Bank for Reconstruction and Development a Conference of the United and Associated Nations be convened in order to consider the necessary meas ures to insure higher standards of living and full employment through greater freedom and expansion of trade and the orderly marketing of staple commodities. R e s o lv e d , Document 289 D P /1 9 Draft Resolution Submitted to Commission III by Chilean Representatives to United Nations Monetary and Financial Conference (Submitted as alternative to the motion filed with Commission III by the Peruvian Delegation (No. 9—Page 7—Doc. # 2 3 5 )) T h e Conferen ce declares : That the practical application of the International Monetary Fund, the technical organization of which has been approved, will be subordinated to the previous or simultaneous adoption of economic and financial measures w h ich will facilitate the development of the production and insure the disposal of the staple products of economically weaker nations, so as to guar antee the safe operation of the new institution. PROCEEDINGS AND DOCUMENTS 485 Document 290 D P /2 0 Mexican Delegation Com m ission II BANK FOR RECONSTRUCTION AND DEVELOPMENT Proposed Amendment to Draft A rticle I Purposes of the Bank The purposes of the Bank shall be the following: 1.—To encourage permanently the economic development of member countries. 2.—To assist, during the first post-war years, in the reconstruc tion of member countries and in the transition from a war time to a peace-time economy. 3.—To coordinate its financial operations with those of other international and national financial agencies. 4.—To cooperate with all the agencies which the United and Associated Nations have created or may create. To achieve these purposes, the Bank shall facilitate the provision of long-term capital for productive purposes, either by guarantee ing and participating in loans made by private investors, or when private capital is not available on reasonable terms, by furnishing capital out of its own resources. Document 293 (p . 2d) SA /3 /6 A lte r n a t iv e G The purposes of the Bank shall be the following: 1. To encourage permanently the economic development of member countries. 2. To assist, during the first post-war years, in the reconstruc tion of member countries and in the transition from a war time to a peace-time economy. 3. To coordinate its financial operations with those of other international and national financial agencies. 4. To cooperate with all the agencies which the United and Associated Nations have created or may create. 486 MONETARY AND FINANCIAL CONFERENCE To achieve these purposes, the Bank shall facilitate the provision of long-term capital for productive purposes, either by guarantee ing and participating in loans made by private investors, or when private capital is not available on reasonable terms, by furnishing capital out of its own resources. 7 /1 1 /4 4 Art. I Alt. G Document 294 (p. 50b) S A /l/5 2 Alternative A July 11th, 191th Fixing initial par values of occupied countries (Sug gested modification of Article XIII, Section 5.). Any member country that has been occupied by the enemy in whole or in part shall be entitled to postpone communicating to the Fund the initial par value of its currency during a period to be agreed upon with the Fund. Pending agreement with the Fund upon the initial par value of its currency, a member country shall be entitled to buy from the Fund with its currency the currency of other member countries after agreement with the Fund upon a provisional initial rate of exchange, which may be changed by action of such country within a period and range to be agreed with the Fund, subject to the provisions of Article IV, Section 6. S e c tio n 5. This is a d ra ft of the substance. The exact wording and possible revision of X III, 5 is a m atter for fu rth er consideration. N o te: 7 /1 1 /4 4 J.S. Article X III Section 5 Document 295 C I/ 1 / D C 3 Revised Wording of Article II, Section 5 (p. 4 of S A /l) Suggested by the Drafting Committee of Commission I and sub mitted to Committee 1, since it covers a point of substance not passed upon by the Committee. The proposed wording reads as follows: “Each member shall pay in gold as a minimum either (a) P R O C E E D I N G S AND D O C U M E N T S 487 twenty-five percent of its quota or (b) ten percent of its official holdings of gold and gold convertible exchange1 as a t ------------ , whichever is smaller. If the holdings of any member are not ascertainable as at such date because its territories have been occupied by the enemy the Fund shall fix an appropriate alterna tive date.” Committee 1 is asked to fill in the date left blank in this section. Document 296 C l/2 / AH Proposals Put Before Committee 2 of Commission I on July 11th I. The Ad Hoc subcommittee of Committee 2 to consider Article III-2-(3) of Alternative A (p. 6a), Alternative B (p. 6b), Alterna tive D (p. 6c), and Alternative F (p. 6e) presented the following report at yesterday’s meeting: 1. That Section 2-(3) of Alternative A (p. 6a) be accepted as it stands; 2. That the first sentence following paragraph (4) of Section 2 of Alternative A (p. 6a) be amended to read as follows: “The Fund may in its discretion, and on terms which safeguard its interests, waive any of these conditions, es pecially in the case of members with a record of avoiding large or continuous use of the Fund’s resources. In making such waiver it shall take into consideration periodic or ex ceptional requirements of members.” II. Mr. Monteros of the Mexican Delegation suggested that the second sentence following paragraph (4) of Section 2 be amended as follows: “The Fund shall also take into account a member’s willing ness to pledge as collateral gold, silver, securities, or other acceptable assets having a value sufficient in the opinion of the Fund to protect its interests and may require as a con dition of such waiver the pledge of such collateral.” III. Mr. Passos of the Cuban Delegation suggested that the 1 The phrase “gold and gold convertible exchange” is subject to definition and to such change in terminology as may be agreed upon. 7 4 9 0 1 3 — 48— 32 488 MONETARY AND FINANCIAL CONFERENCE following words be inserted in the amendment of the Mexican Delegate after the word securities in the second line: “and warehouse receipts of staple commodities in interna tional trade.” 7 /1 1 /4 4 Document 297 (p. 2d) S A /3/7 I Alternative H A r t ic l e It is proposed to substitute the following for subdivision 4 of Alternative A: 4. To coordinate loans made or guaranteed by it with interna tional loans through other channels so that the more useful and urgent projects will be dealt with first, and taking into account the fundamental needs of all and each one of the member countries applying for reconstruction or development loans alike. Alternative I The following is submitted as an amendment to Article I (3) : To promote the long range balanced growth of international trade by encouraging international investment for the development of the productive resources of member countries and to contribute thereby to the promotion and maintenance of high levels of em ployment and real income as a primary objective of economic policy. 7 /1 2 /4 4 Art. I Alt. H & I Document 298 Commission II— Schedule of Work Assignments to Committees and Subcommittees of Bank Commission Work Assignment la pp. 3, 4, 5 “Membership, etc.” 1 lb pp. 4-9 inc. p. 11 “Subscriptions” 2 2a 2 Chairmen Membership Reporting Delegate Beyen Secretary: Oreamuno Young (U.S., U.K., Netherlands, USSR, France, \ Canada, China Beyen Secretary: Oreamuno Sundelson pp. 14-18 inc., p.21 “Ratio of Capital Em fU.S., U.K., USSR, China, France, Netherlands, Belgium, Poland, Cuba, ployable” [Brazil, Czechoslovakia, Canada Montoulieu Secretary: Brigden Bitterman 2b pp. 19, 20, 22, 24, 25 “Flat Rate of Commis ( U.S., U.K., USSR, China, France, Cuba, sion” ] Netherlands, Norway, Mexico, Belgium Montoulieu Secretary: Brigden Russell 3 3a p. 13, 15c, 15d, 34 “Relationship of Inter /U .S., U.K., India, national Agencies” IColombia, S. Africa China, Pumarejo Secretary: deKock Ezekiel 3 3b pp. 29-36 inc., 38, 40 “Management” {U.S., U.K., USSR, Cuba, Belgium, Norjway, Netherlands, Brazil, South Africa Pumarejo Secretary: deKock Ezekiel 3 3c pp. 42-44 inc., 47. 48 “ Suspension, W ith /U.S., U.K., Belgium, Czechoslovakia, \ Mexico, Netherlands drawals” 4 4a pp. 51-52 inc. “Taxation” U.S., U.K., Norway, Australia, India Canada, U.S., U.K., India, Cuba, Poland Belgian Rep. deKock Secretary: Dyson Deshmukh Secretary: Baranski Edmiston DOCUMENTS 1 Subject AND Subcom. Ad Hoc PROCEEDINGS Com mittee (P. 2 ) Subcom. Ad Hoc Work Assignment Subject Drafting Subcommit All Pages Remaining tee of Agenda Com mittee Agenda Committee “Drafting” “Agenda” Reporting Delegate Membership Chairmen /U.S., U.K., USSR, China, Czechoslo v a k ia , India, Mexico Acheson Secretary: Smithies [U.K., U.S., USSR, China, Brazil, Canada, ('iiba. France, India, Czechoslovakia Keynes Secretary: U pgren MONETARY Comm ittee AND Time of M eeting Wed., July 12, 9:30 a.m. Wed., July 12, 2:30 p.m. Wed., July 12, 11:30 a.m. Wed., July 12, 4:30 p.m. Thurs., July 13 Thurs., July 13 Wed., July 12, 9:30 a.m. Wed., July 12, 2:30 p.m. Wed., July 12, 8:30 p.m. la lb 2a 2b 3a 3b 3c 4a Drafting Subcommittee of Agenda Committee ! Room Hemicycle B B B B Hemicycle A CO N FEREN CE 1 1 2 2 3 3 3 Subcom. Ad Hoc FINANCIAL Committee P R O C E E D I N G S AND D O C U M E N T S 491 Document 299 (P. 56) J OURNAL UNI TED NATI ONS No. 12 MONE T ARY AND FI NANCI AL CONFERENCE Bretlon Woods, New Hampshire July 12, 1944 ORDER OF THE DAY Meetings for Wednesday, July 12 9:30 a.m. 9:30 a.m. 9:30 a.m. 9:30 a.m. 10 a.m. 11:30 a.m. 12 noon 2:30 p.m. 2:30 p.m. 2:30 p.m. 4:30 p.m. 8:30 p.m. Drafting Committee of Commission I ............. A d Hoc Committee C of Committee 3 of Com mission II ............................................................ A d Hoc Committee A of Committee 1 of Com mission II ............................................................ A d Hoc Committee IV, 5 of Commission I . . .. Committee 2 of Commission I .............................. A d Hoc Committee A of Committee 2 of Com mission II ............................................................ A d Hoc Committee of Commission I on Ex change C o n tro ls................................................. A d Hoc Committee B of Committee 1 of Com mission II ............................................................ A d Hoc Committee A of Committee 4 of Com- .Room A .Room B .The Hemicycle . Auditorium .Auditorium .Room B .The Hemicycle .Room B •The Hemicycle Committee 1 of Commission I ............................ . Auditorium A d Hoc Committee B of Committee 2 of . Room B Drafting Committee of Commission I I ............. .Room A (p. 57) R esu m es of Com m is s io n and Co m m it t e e M e e t in g s Committee 2 of Commission I Operations of the Fund (July 11, 2:30 p.m.) The seventh meeting of Committee 2 of Commission I was held on July 11 at 2 :30 p.m. The Committee continued its discussion of article IV, Par Values of Member Currencies. The Committee approved article IV, sec tions 2, 3, and 4 of Alternative A (p. 17a of Document SA/1) and sections 5 and 6 of Alternative D (p. 18c). The Committee may reopen discussion of section 5(b) (p. 18c) after discussing article III, section 9(b) (p. 12). The Australian Delegate noted his reservation on Alternative C (p. 17c). The observation of the Canadian Delegate expressed at the last meeting will also be reported to the Commission. 492 MONETARY AND FINANCIAL CONFERENCE The Committee deferred discussion of article III, section 10, and article XIII, section 5. The Committee began discussion of the report of the ad hoc committee on article III, section 2(3) and will continue this discussion at its next meeting at 10 a.m. on July 12. (The minutes of this meeting are being distributed separately as document no. 302.) Committee 3 of Commission I Organization and Management of the Fund (July 11, 10 a.m.) The Committee raised several questions about the interpretation of article VIII, section 2, Alternative A (Document 210) and re ferred it to the Drafting Committee of Commission I for clari fication. The Committee referred article VIII, section 4, Alterna tives A and C to the Commission. Article VIII, section 3, was also referred to the Commission. No action was taken on article VII, section 7. (The minutes of this meeting are being distributed separately as document no. 303.) (p. 58) Commission 11 Bank for Reconstruction and Development (July 11, 4 p.m.) At the second meeting of Commission II the Chairman reported that the Agenda Committee had recommended that Document 245 be considered by the Commission. He announced the names of the Committee Chairmen and Reporting Delegates and the Com mittee assignments. The following parts of the document were referred to the draft ing committee: article I; article II, sections 7 and 8; article IV, sections 5, 8, 9, and 10; article V, sections 9, 11, and 13; article VI, section 5; article VII, sections 1 and 2; article V III; article IX, sections 1 and 3; article III, section 2, as amended by the Com mission. There was some discussion of the title. It was agreed that the words “reconstruction and development” should be used, but agreement was not reached as to whether the organization should be called a “bank”, a “corporation”, or some other name. It was agreed that sections of the document other than the title and those sections referred to the drafting committee should be considered by the various Committees. It was suggested by the Chairman that when a section is referred to a Committee, the P R O C E E D I N G S AND D O C U M E N T S 493 Chairman and Reporter of that Committee should have discretion either to discuss it in full committee or, in consultation with the Chairman, to appoint ad hoc committees forthwith. It was em phasized that where ad hoc committees were appointed, countries not represented on those committees should be perfectly free to make any suggestions and to attend the committee meetings if they wished. It was agreed that where ad hoc committees were set up they should report directly to the Commission. The Chairman announced that the next meeting of the Com mission would be held on Thursday, July 13, at which time Com mittee reports would be received. At the close of the meeting the Chairman met with Committee Chairmen and Reporting Delegates and also with the Agenda Committee. Ad hoc committees were set up and their assignments are shown in a document distributed with the minutes of the meeting. (The assignment sheet and minutes of this meeting are being distributed separately as documents nos. 298 and 300, respec tively.) N otice R egarding on ad hoc A r ticle C o m m ittee of C ommission I IX, S ection 4 The Netherlands has been added to the list of members of the ad hoc committee of Commission I on article IX, section 4 (Ex change Controls on Current Payments). (p. 59) L ist of D o cum ents I ssued as of J u l y 1 1 , 1944 Subject Symbol Doc. No. Minutes of Third Meeting of Commission I, July 10 C I/M /3 267 Journal No. 11 J /ll 268 Transportation Form—Estimate of Special Train Space GD/30 269 Transportation Form—Pullman Sleeper Space on Special Train GD/31 270 Order of the Day, July 11 GD/32 271. Additional Page to SA/3 (p. 15f) SA/3/1 272 Additional Page to SA/3 (p. 20a) SA/3/2 273 Additional Page to SA/3 (p. 22e) SA /3/3 274 494 M ONE TAR Y AND F I N A N C I A L C O N F E R E N C E Subject Symbol Doc. No. Additional Page to SA/3 (p. 24a) SA /3/4 275 Additional Page to SA/3 (p. 25a) SA /3/5 276 Additional Pages to SA/1 (pp. 13a and 13b) SA/1/48 277 Additional Pages to SA/1 (pp. 50 and 50a) SA/1/49 278 Minutes of Meeting of Commission III C III/M /2 279 Drafting Committee of Commission I—Working Paper CI/DC 280 Memorandum to Committee 2, Commission I (Misc.) CI/2/M C 281 News Bulletin No. 12 282 Press Release No. 28—Statement by the Delegation of Panama PR/28 283 Additional Page to SA/1 (p. 18c) SA /1/50 284 Tables I and II in Explanation of Combined Alternatives A and B, Article III, pp. 13a and 13b SA/1/51 285 Memorandum Submitted to Commission II by the Interim Commission on Food and Agriculture CII/M C/1 286 Brazilian Delegation Proposal for a Conference to Promote Stability in the Prices of Primary International Com modities DP/17 287 Draft Resolution Submitted to Commission III by Cuban Representatives as Alternative A to Motion Filed with Commission III by the Peruvian Delegation (No. 9, p. 7, Doc. 235) DP/18 288 Draft Resolution Submitted to Commission III by Chilean Representatives as Alternative to Motion Filed with Commission III by Peruvian Delegation (No. 9, p. 7, Doc. 235) D P/19 289 Proposed Amendment by Mexican Delegation to Draft of a Bank for Reconstruction and Development—Article I, Purposes of Bank DP/20 290 (P. 60) News Bulletin No. 13 291 P R O C E E D I N G S AND D O C U M E N T S 495 Document 300 Cl l/M /2 Minutes of Meeting of Commission II B a n k for R e c o n s t r u c t io n (July and D ev elo pm en t 1 1 , 1 9 4 4 , 4 p .m .) At the second meeting of the Commission, the Chairman, Lord Keynes (United Kingdom), reported that the Agenda Committee recommended that the Preliminary Draft of Proposals for the Establishment of a Bank for Reconstruction and Development (Document No. 245) be considered by the Commission. He announced that the following Committee Chairmen and Reporting Delegates had been nominated by their respective delegations: Committee 1: Chairman: Netherlands, J. W. Beyen Reporting Delegate: Costa Rica, J. Rafael Oreamuno Committee 2: Chairman: Cuba, E. I. Montoulieu Reporting Delegate: Australia, James B. Brigden Committee 3: Chairman: Colombia, Miguel L6pez Pumarejo Reporting Delegate: Union of South Africa, M. H. de Kock Committee 4: Chairman: India, Sir Chintaman D. Deshmukh Reporting Delegate: Poland, Leon Baranski The committee work of the Commission was assigned as follows: Committee 1 (Purposes, Policies, and Capital), articles I, II, and VI (4) Committee 2 (Operations), articles III and IV Committee 3 (Organization and Management), articles V and VI, except (4) Committee 4 (Form and Status), articles VII, VIII, IX, and X The Chairman suggested that the present Agenda Committee or a subcommittee thereof constitute the drafting committee for the Commission. This was agreed to and there was further agree ment that the drafting committee continue to accept suggestions from any delegation and refer such suggestions to the Commission if questions of substance were involved. After discussion, the Commission arranged its program of work in the following way: 496 MONETARY AND FINANCIAL CONFERENCE (a) The following parts of the document were referred to the drafting committee: (P. 2) Art. I Art. II, 7 and 8 Art. IV, 5, 8, 9, and 10 Art. V, 9, 11, and 13 Art. VI, 5 Art. VII, 1 and 2 Art. VIII Art. IX, 1 and 3 (b) The following details of the document were considered at the meeting: (1) Title of the “bank”. Alternative C was dropped. After some discussion it was agreed that the words “reconstruction and development” were preferred to “investment and guarantee”, but agreement was not reached on whether the organization should be called a “bank”, a “corporation”, or by some other name. (2) Article III, section 1. It was agreed that the word “restrict ed” be deleted from the title of the section and that Alternatives A and B be combined and amended as follows and referred to the drafting committee: “The resources and the facilities of the Bank shall be used exclusively for the benefit of members with equitable consideration to projects for development and projects for recon struction alike.” (3) Article III, section 5, Alternative B. It was agreed that this Alternative should be considered in conjunction with article III, section 4, Alternative B. (4) Article IV, section 3, Alternative B. It was agreed that this Alternative be considered with article III, section 3. (c) The sections of the document other than the title and those sections referred to the drafting committee are to be considered by the various committees. It was suggested by the Chairman that when a section is referred to a Committee the Chairman and Reporter of that Committee should have discretion either to discuss it in full committee or, in consultation with the Chairman, to appoint ad hoc committees forthwith. It was emphasized that where ad hoc committees were appointed, countries not repre sented on those committees should be wholly free and urged to make additional suggestions and to attend such committee meet ings as they might wish. It was agreed that ad hoc committees should report directly to the Commission. PROCEEDINGS AND DOCUMENTS 497 The Chairman announced that the next meeting of the Commis sion would be held on Thursday, July 13, at which time committee reports would be received. While it is not expected that committee work should necessarily be complete by that time, it was hoped that substantial sections of the document could be passed on to the drafting committee. (At the close of the meeting the Chairman met with the Com mittee Chairmen and Reporting Delegates and also with the Agenda Committee. Ad hoc committees were appointed and detailed assignments made as shown in Document No. 298. A subcommittee of the Agenda Committee was appointed to serve as drafting committee.) Document 302 C I/ 2 / M 7 Minutes of Meeting of Committee 2 of Commission I O p e r a t io n s o f t h e F u n d (Ju ly 11, 1944, 2:30 p.m .) The seventh meeting of Committee 2 of Commission I was held on July 11 at 2 :30 p.m. The Chairman announced that article IV, section 5, Alternatives A, B, and C (pp. 18, 18a, and 18b of Document SA/1) were referred by Commission I to an ad hoc committee of Commission I, and that article III, section 6, Alternatives A and B (pp. 9 and 9a) and article IX, section 4, Alternatives A, B, C, and D (pp. 40, 40a, and 40b) were also referred by Commission I to an ad hoc committee of Commission I and that all of these items are there fore removed from the agenda of Committee 2. The Committee then continued its discussion of article IV, Par Values of Member Currencies. The Committee agreed to approve article IV, sections 2, 3, and 4 of Alternative A (p. 17a) and article IV, sections 5 and 6 of Alternative D (p. 18c). The Com mittee, however, reserved the right to reopen discussion of section 5 (b) (p. 18c) after it has discussed article III, Alternative A, section 9 (b)- (p. 12). The Australian Delegate asked that his reservation on Alternative C (p. 17c) be noted in the report to Commission I. The Delegates of New Zealand, Czechoslovakia, 498 MONETARY AND FINANCIAL CONFERENCE and the Netherlands withdrew the reservations they had sent to the Reporter after the discussion of Alternative A at the last meeting. The Chairman said that the observation of the Canadian Delegate was not withdrawn. The Committee deferred action on article III, section 10, Charges and Commissions (p. 13), to allow the committee mem bers more time to study the material. The Committee also deferred discussion of article XIII, section 5, Fixing Initial Par Values (p. 50). The Committee began discussion of the report of the ad hoc subcommittee of Committee 2 appointed to consider article III, section 2 (3), Alternatives A, B, D, and F (pp. 6a, 6b, 6c, and 6e) and will continue discussing this report at its next meeting at 10 a.m. on July 12. Document 303 C I/3/M 7 Minutes of Meeting of Committee 3 of Commission I O r g a n iz a tio n a n d M a n a g e m e n t o f t h e F u n d (Ju ly 11, 1944, 10 a.m.) The Committee considered article VIII, section 2, Alternative A (Document 210), dealing with suspension and compulsory with drawal from the Fund. A number of questions about the inter pretation of this article were raised in the meeting. After the discussion, the Committee decided to approve the Alternative, section 2, 2(a) and 2(b ), with a suggestion to the Drafting Com mittee of the Commission to state clearly under what conditions a country would be suspended from using the Fund’s resources or be compelled to withdraw from membership and the fair pro cedure therefor. It was the consensus of the Committee that these sanctions should be applied only when the country’s action directly affects the operation of the Fund. The Committee received the report of its subcommittee on Liquidation and Withdrawal (Document 243).* The Committee agreed to eliminate from further consideration Alternative B, article VIII, section 4 (Document 241). It was unable to reach * Document 243 should be corrected in the third paragraph, line 7, to re a d : “A lternative B” in place of “A lternative D”. In the fourth paragraph, line 9, to read: “Alternative C” instead of “A lternative B”. PROCEEDINGS AND DOCUMENTS 499 agreement on Alternatives A and C for this section and referred the matter to Commission I. Article VIII, section 3 (p. 36), Settlement of Accounts with Governments Ceasing to be Members, was also referred to the Commission for action. No action was taken on article VII, section 7. Document 304 (p . 51) SA/1/53 A l t e r n a t iv e A A rticle X ffl Provisions Relating to Signature and Entry into Force of the Agreement 1. Signature (a) This Agreement shall remain open for signature at Wash ington on behalf of the Governments of the countries whose names are set forth in Schedule A, un til_________, 19_____ (b) A fte r _________, 19_____ , it shall be open for signature on behalf of the Government of any country whose membership has been approved in accordance with Article II, Section 1. (c) By their signature of this Agreement all Governments accept it both on their own behalf and in respect of all of their colonies, overseas territories, all territories under their protection, suzerainty or authority and all territories in respect of which they exercise a mandate. (d) Each Government that signs this Agreement will deposit with the Government of the United States of America an instru ment setting forth that it has accepted this Agreement in accord ance with its law and has taken all steps necessary to enable it to carry out all of its obligations under this Agreement. (e) The Government of the United States of America shall inform the Government of all countries whose names are set forth in Schedule A, and all Governments whose membership is approved in accordance with Article II, Section 1 of all signa tures of this Agreement. S e c tio n 7/11/44 Art. XIII (p. 51a) ( f ) At the time this Agreement is signed on its behalf each Government shall transmit to the Government of the United States of America one-twentieth of one per cent of its 500 MONETARY AND FINANCIAL CONFERENCE quota in gold or gold-convertible exchange for the purpose of meeting administrative expenses of the Fund. The Government of the United States of America shall hold such funds in a special deposit account and shall transmit them to the Board of Gover nors of the Fund when the initial meeting has been called under Section 3 of this Article. If the initial meeting has not been called b y _________ , 19_____ , the Government of the United States of America shall return such funds to the Governments that trans mitted them. S e c t io n 2. E ntry into Force As soon as this Agreement has been signed on behalf of Govern ments having sixty-five percent of the aggregate of the quotas set forth in Schedule A, this Agreement shall come into force between those Governments, which thereupon become members of the Fund. Each Government on whose behalf this Agreement is signed after that time shall become a member of the Fund as from the date of its signature. S e c t io n 3. Organizing the Fund (a) As soon as this Agreement comes into force under Section 2 of this Article each member shall appoint a Governor and the Government of the member having the largest quota shall call the first meeting of the Board of Governors. 7 /1 1 /4 4 Art. X III (p. 51b) (b) The Board of Governors shall at its first meet ing elect the Executive Directors and arrange for the first meeting of the Executive Directors. (c) As soon as possible after the first meeting of the Executive Directors has been held, the Managing Director shall be appointed and the Fund shall proceed to carry out the provisions of Section 4 of this article. Communications under that section addressed to the Fund and received before the Executive Directors have held their first meeting shall be entrusted to the Governor appointed by the member in whose territory the first meeting is held and shall be delivered by him to the Board of Governors or Executive Directors as the case may be. S e c t io n 4. Fixing Initial Par Values. [Distributed separately.] Signed in a single copy which shall remain deposited in the archives of the Government of the United States of America which shall transmit certified copies to all Governments whose names are set forth in Schedule A and to all Governments whose member ship is approved in accordance with Article II, Section 1. 7 /1 1 /4 4 Art. XIII PROCEEDINGS AND DOCUMENTS 501 Document 307 C I/ 1 / D C 4 Third Report of the Drafting Committee of Committee 1 of Commission I (Ju ly 11, 1944) In view of the action taken by Committee 2 in agreeing on those parts of Article IV which deal with changes in exchange rates, the Drafting Committee considered Article I, Section 4, which deals with the promotion of exchange stability as an objective of the Fund. The Drafting Committee recommends that the language of Alternative A of Section 4, Article I, be approved by the full Com mittee. The language is as follows: “To promote exchange stability, to maintain orderly exchange arrangements among member countries, and to avoid com petitive exchange depreciation.” The Drafting Committee wishes to report that the representa tive of the Australian Delegation reserved the Australian position on this section in favor of Alternative D, page lb of Document SA/1. The Drafting Committee recommends the following language for Article IX, Section 2 (p. 38 of S A /1 ): “The Fund shall prescribe for transactions in gold by member countries a permissible margin above and below the agreed parity. No member country shall buy gold at a price above the prescribed range, nor sell gold at a price below that range.” This language permits member countries to buy gold below the range and to sell gold above the range. The Committee considered Alternative C relating to this section, page 39b, but does not recommend the inclusion in this agreement of special provisions for bonuses to the gold mining industry of member countries. The Drafting Committee recommends the following language for Article IX, Section 3, paragraph (a), which deals with the (p. 2) range of exchange transactions over and under the agreed parities: “ (a) The Fund shall prescribe a uniform maximum margin not exceeding-------- % by which rates for transactions in the 502 MONETARY AND FINANCIAL CONFERENCE currencies of members may differ from parity. In exceptional circumstances the Fund may authorize a member country to establish a wider margin for transactions in its currency.” The Drafting Committee felt that the insertion of a figure in the above paragraph and the decision as to whether the prescribed margin should apply to spot transactions only or to both spot and future transactions were matters of substance to be decided by the full Committee. In the discussion of this section some of the members of the Drafting Committee expressed a preference for leaving out the words “not exceeding-------The Drafting Committee considered Alternatives A and B of Article IX, Section 3, Paragraph (c) (pages 39 and 39a), Docu ment SA/1. The Committee as a whole was not in favor of the wording of Alternative B but the position of the representative of the United Kingdom on this Alternative was reserved. There was some feeling in the Committee in favor of an under taking on the part of member countries to cooperate in dealing with illegal exchange transactions milder than is provided either in Alternative A or B. The Committee therefore submits to the full Committee the following language for its consideration: “Article IX, Section 3. “ (c) Exchange transactions in the territory of one mem ber involving the currency of any other member which are outside the prescribed variation from parity set forth in (a)‘ above shall not be enforceable in the territory of any member country. “Each member agrees to cooperate with other members in their efforts to effectuate exchange regulations prescribed by such members in accordance with this Agreement.” The above language is not submitted as a definite recommenda tion by the Drafting Committee but merely as a possible third alternative for the consideration of the full Committee. Document 310 (p. 26j ) S A /1 /5 4 A l t e r n a t iv e J Alternative J is submitted as a substitute for P aragraph 2 of the “Final Alternative submitted by the Special Committee . . . et cetera” (C I/3/SI, P R O C E E D I N G S AND D O C U M E N T S 503 Doc. 212 and for Schedule B in the “ Combined A lternative A and B . . (SA/1/17, Doc. 152, page 26). 2. There shall be twelve Executive Directors of whom (a) five shall be appointed by the five members having the largest quotas, (b) five shall be elected by the remaining members, other than the American Republics, and (c) two shall be elected by the American Republics, exclusive of any entitled to appoint an Executive Director under (a), above. Elections shall be conducted biennially in accordance with the provisions of Schedule B. Persons chosen as Executive Di rectors need not be Governors. SCHEDULE B (a) In balloting for the five Executive Directors to be elected under 2(b), above, each of the governors eligible to vote shall cast for one person all of the votes to which he is entitled under the first paragraph of Section 3 of this article (J.S. VII, 2). The five persons receiving the greatest number of votes shall be Executive Directors, except that no person who receives less than nineteen per cent of the aggregate eligible votes shall be considered elected. (b) When five persons are not elected on the first ballot, a second ballot shall be held in which the person receiving the lowest number of votes shall be ineligible for (p. 26k) election and in 7 /1 2 /4 4 Art. V II Sec. 2 and Schedule B of Com bined Alternatives A and B which there shall vote only those governors who voted on the first ballot for a person not elected and those governors all or part of whose votes for a person elected are deemed to have raised the votes cast for that person above twenty per cent of the aggregate eligible votes. (c) In determining whether any part of the votes cast by a governor are to be deemed to have raised the total of any person above twenty per cent, there shall be considered as not forming part of the excess over twenty per cent the votes of the governor casting the largest number of votes for such person, then the votes of the governor casting the next largest number, and so on until the total reaches twenty per cent. (d) Any governor whose votes are partly not in excess and partly in excess shall be eligible to vote in the second balloting only to the extent of the votes in excess. 749013— 48— 33 504 MONETARY AND FINANCIAL CONFERENCE (e) If on the second ballot, five persons have not been elected, further ballots shall be taken on the same principles until five persons have been elected, provided that after four persons are elected, the fifth may be elected by a simple majority of the re maining votes and shall be deemed to have been elected by all such votes. (f) The balloting for the two Executive Directors to be elected by the American Republics under 2(e) above shall be conducted as follows: (1) Each of the Directors shall be elected separately. (2) In the election of the first Director, each governor repre senting an American Republic eligible to (p. 261) participate 7/12/44 Art. VII Sec. 2 and Schedule B of Combined Alternatives A and B in the election shall cast for one person all the votes to which he is entitled under the first paragraph of Section 3 of this Article (J.S. VII-2). The person receiving the largest number of votes shall be elected provided that he has received not less than 45 per cent of the ag gregate eligible votes. (3) If no person is elected on the first ballot, then further ballotings shall be held, at each one of which the person receiving the lowest number of votes shall be eliminated, until one person is elected in accordance with the provisions of paragraph (2) above. (4) Governors whose votes contributed to the election of the first Director shall take no part in the election of the second Director. (5) Persons who did not succeed in the first election shall, nevertheless, be eligible for election as the second Director. (6) The second Director shall be elected in the same manner as the first except that only a majority of the votes participating shall be required for election. If at the first ballot no person re ceives a majority vote, then further ballotings shall be taken at each one of which the person receiving the lowest number of votes shall be eliminated, until only two persons are left, at which time the person receiving the largest number of votes shall be elected. (7) The second Director shall be deemed to have been elected by all the votes eligible to participate in the second election. 7/12/44 Art. VII Sec. 2 and Schedule B of Combined Alternatives A and B P R O C E E D I N G S AND D O C U M E N T S 505 Document 311 CI/AH/RP2 July 11,1944 A d hoc Committee of Commission I on Relations with Non-Member Countries The following text is submitted to Commission I by the A d hoc Committee on Relations with Non-Member Countries. The following material is suggested as a new section to be added to Article IX, Obligations of Member Countries: Each Member Country agrees: (a) Not to undertake any transactions with a non-member country which would be contrary to the purposes and pro visions of the Fund, and not to allow its agencies with the Fund to undertake such transactions, (b) Not to cooperate with non-member countries in practices which are against the purposes and provisions of the Fund, (c) To cooperate with the Fund in order to apply appropriate measures to prevent transactions with non-member coun tries which are contrary to the purposes and provisions of the Fund. Document 313 (p. e) SA/3/8 A lte r n a tiv e J A rticle I Purposes of the Bank The Bank shall be guided by the following purposes: 1. To assist in the reconstruction and development of member countries by facilitating provision of investment capital for productive purposes including the restoration of economies disrupted by war and the reconversion of productive facilities to peacetime needs. 2. To promote private foreign investment by means of guar antees or participations in loans and other investments made by private investors; and when private capital is not avail able on reasonable terms, to supplement private financial agencies by providing capital for productive purposes out of its own resources on suitable conditions. 506 M O N E T A R Y AND F I N A N C I A L C O N F E R E N C E 3. To promote the long-range balanced growth of international trade by encouraging international investment for the de velopment of the productive resources of member countries. 4. To coordinate loans made or guaranteed by it with inter national loans through other channels so that the more useful and urgent projects will be dealt with first. 5. To conduct its operations with due regard to the effect of international investment on business conditions in member countries and, in the immediate post-war years, to assist in bringing about a smooth transition from a wartime to a peace-time economy. 7/12/44 Art. I Alt. J Document 314 (p. 12a) SA/3/9 A l t e r n a t iv e C (A lternative A as amended in Commission Meeting, July 11) S e c t i o n 1. The resources and facilities of the Bank shall be used exclusively for the benefit of member countries with due regard to the extreme urgency of immediate post-war recon struction of war torn areas. 7/12/44 Art. Ill Sec. 1 Alt. C Document 315 (p. 25h) SA/1/55 A l t e r n a t iv e E (Substitute for A rticle VII, I of the Joint Statem ent—as a variant for A lternative C, p. 25d) Formation Of the Executive Committee: The Executive Committee shall consist of fifteen executive di rectors, appointed as follows: (1) Five directors representing each one of the member coun tries having the largest quotas. (2) Three directors representing the member countries in the economic area of the British Empire. (3) Three directors representing the member countries in the economic area of the American Republics. PROCEEDINGS AND DOCUMENTS 507 (4 ) One director representing the mid-east countries. (5) Three directors representing the member countries in all other economic areas. Each director shall have an alternate appointed in the same manner. Executive directors and their alternates need not be governors and may be reappointed. 7/12/44 J.S.Art.VII Sec. 1 Document 316 (p . 43c) S A / 1/56 J o i n t S t a t e m e n t —No Provisions The following material has been suggested as an addition to Article IX. # S e c tio n 9. Obligations of Member Countries. Each Member Country agrees: (a) Not to undertake any transactions with a non-member country which would be contrary to the purposes and pro visions of the Fund, and not to allow its agencies with the Fund to undertake such transactions, (b) Not to cooperate with non-member countries in practices which are against the purposes and provisions of the Fund, (c) To cooperate with the Fund in order to apply appropriate measures to prevent transactions with non-member coun tries which are contrary to the purposes of the provisions of the Fund. 7/12/44 J.S. Art. IX A d dition Section (9) Document 317 DP/21 Egyptian Delegation Amendment to Article VII, I of the Joint Statement The Egyptian Delegation suggests the following amendment, which is a variant of Alternative C, page 25d. Formation of the Executive Committee: The Executive Committee shall consist of fifteen executive di rectors, appointed as follows: 508 MONETARY AND FINANCIAL CONFERENCE (1) Five directors representing each one of the member coun tries having the largest quotas. (2) Three directors representing the member countries in the economic area of the British Empire. (3) Three directors representing the member countries in the economic area of the American Republics. (4) One director representing the mid-east countries. (5) Three directors representing the member countries in all other economic areas. Each director shall have an alternate appointed in the same manner. Executive directors and their alternates need not be governors and may be reappointed. Document 318 C I/ 3 / R P 3 Third Report of Committee 3 to Commission I. I. Committee 3 submitted to Commission I for decision one item about Voting in the Board of Governors (Document 239, page 5, first paragraph). The difference of opinion in Committee 3 related to the second paragraph of Alternative A of Section 3 of Art. VII of the Draft (pages 26 of the Draft). This paragraph contains a specific provision on votes required under Article III. It should be noted that the member, who presented Alternative A, inter preted this proposal by restricting the respective decisions under Article III, to two items: (a) to the decision of the Fund of sus pending a member from making further use of the Fund’s resources on the ground that it is using them in a manner contrary to the purposes and policies of the Fund (III, 2d of the Joint Statement) and (b) to the decisions of the Fund in exercising its discretion in determining whether and on what terms it shall waive the conditions mentioned under III, 2a to d of the Joint Statement. The Committee expressed its desire that paragraph 2 should be more clearly drafted if adopted for the Final Draft. However, as to the merit of this paragraph three opinions were advanced: one approving it, as contained in Alternative A; the other modifying it by replacing the unit of two hundred thousand PROCEEDINGS AND DOCUMENTS 509 United States dollars by two million United States dollars and the third outrightly opposing this deviation from the normal voting procedure. Commission I did not take action on this item. That is why these three Alternatives are hereby submitted again to Com mission I for decision. II. Committee 3 did not consider Section 9 of Art. VII—Location of Office. Action will be taken probably by Commission I directly. III. Committee 3 considered Section 2 of Art. VII (Suspension of Membership or Compulsory Withdrawal, page 35 of the Draft). Alternative A was accepted with a suggestion to the Drafting Committee of the Commission to state clearly under what con ditions a country would be suspended from using the Fund’s resources or be compelled to withdraw from membership and the fair procedure therefor. It was the consensus of the Committee that these sanctions should be applied only when the country’s action directly affects the operation of the Fund. (p. 2) IV. Committee 3 considered jointly Sections 3 and 4 of Art. VIII. (Settlement of Accounts with Countries Ceasing to be Members, and Liquidation of the Fund, pages 36, 36a, 36b, 36bb, 36c, 36d, 36e, 36f, 37, 37a, 37b, 37c of the D raft). Committee 3 based its discussion and its recommendations to Commission I on a Re port submitted by a Subcommittee which worked under the chair manship of Mr. Camille Gutt, and is included in Document 243. The result of the deliberations of Committee 3 is the following: Liquidation of the Fund (Art. VIII, Sec. 4.) Paragraph (a) as contained in Alternative A (page 37 of the Draft) was approved. Paragraph (b) as contained in Alternative A was approved in the following version: “If a decision to liquidate the Fund is carried, (i) the Fund shall forthwith cease to engage in any activities except those in cident to an orderly liquidation of its assets and the settlement of its liabilities, and (ii) all the obligations of members under this agreement other than those specified in the following para graphs of this Section and.................................. shall cease to have 510 MONETARY AND FINANCIAL CONFERENCE effect.” (The dotted space indicates that there may be some other obligations remaining, which are not directly connected with the liquidation; these other obligations may be inserted here by the Drafting Committee.) The Committee was of the opinion that this clause might be inserted either at this place or in some other Section of the document relating to the obligations of the •members, at the discretion of the final drafting committee. Paragraph (c) was adopted without change. Paragraph (d) was considered in the light of Alternatives A, B, and C. Alternative B is, among the three Alternatives, the broadest because it confers upon the Board of Governors the jurisdiction to decide how the assets of the Fund shall be distrib uted after the discharge of the liabilities in case the Board of Governors should choose to liquidate the Fund. Thus the first per tinent question submitted to Commission I is tvhether the principles concerning the distribution of assets should be included into the Constitution of the Fund, or whether they should be determined by the Board of Governors in the case that this agency chooses to liquidate the Fund. The following considerations are based on the assumption that Commission I chooses to include into the (p. 3) Constitution the principles c o n c e r n in g the d istr ib u tio n of assets, thus they are based on Alternatives A and C (with reference to paragraph d). According to Alternative A, in the words of the Chairman of the Subcommittee, the creditor countries (beginning with the'largest creditor) will be paid first in their own currency, as far as it is held by the Fund, then in gold, as far as gold is held by the Fund. The balance (if any) is paid in the currency of the next largest creditor and then in that of the next largest creditors. Alterna tive C provides that each country shall have a prior claim up to its quota to its own currency held by the Fund and that the re maining assets (including gold and currencies) shall then be dis tributed proportionally to the remaining credit balances. In the opinion of the Chairman of the Subcommittee, in the process of a liquidation according to Alternative A, the largest creditor or creditors may absorb the whole of the gold and/or strong cur rencies, whilst according to Alternative C the gold and currencies will be divided proportionately. Committee 3 refers Alternatives A and C (with reference to paragraph d) to Commission I for decision provided that Commission I did not choose previously Alternative B. PROCEEDINGS AND DOCUMENTS 511 Paragraph (e) was accepted in principle. However, one mem ber favored a five-year term for redemption of its excess cur rency instead of the three-year period provided for in Amend ment A. Thus, Committee 3 decided to refer the tivo Alternatives (redemption within three or five years) to Commission I for de cision. This paragraph includes the provision that members who are under obligation to redeem their currency under this para graph, unconditionally guarantee at all times the unrestricted use of such currency for the purchase of goods or for the payment of other sums due to it or to its nationals. It was suggested in the Committee that the Drafting Committee should consider how to shape this provision in the light of possible exchange and trade regulations and existing private contracts. Settlement of Accounts with Governments Ceasing to be Members. Committee 3 considered Alternatives A, B, and C (pages 36, 36a, 36b, 36c, 36d, 36e, and 36f) in the light of the Report of its Subcom mittee (Document 243). It was suggested that Article VIII, Sec tion 3 (a) be amended with the insertion after the first sentence of the following: “Failing such agreement settlement shall be made in accordance with the provisions of (c), (d) and (e).” However, no agreement was reached which of the three Alterna tives should be recommended for adoption. The discussion focused on the same point as mentioned in this Report in connection with Art. VIII, 2(d) (Liquidation of the Fund). It was assumed that after decision is taken by Commission I on the provision contained in VIII, 2d of the Draft (p. 4) (Liquidation of the Fund) it will be feasible for the Drafting Committee to combine the three Alternatives. It has been suggested that the Drafting Committee clarify paragraph (f) as far as the exchange rate of currencies which have to be acquired is concerned, because the currency of the country which has left the Fund may deteriorate, and in demnification is provided for (last sentence of par. f, Alternative A) only in respect to the Fund. If Commission I would find that the coordination of the pro visions of the Section concerning “Settlement of Accounts with Governments Ceasing to be Members” would transcend the scope of its Drafting Committee, an Ad Hoc Committee could be charged with that task. Committee 3 considers to have completed the work on its as signment. E r v in H e x n e r , Reporting Delegate, 512 MONETARY AND FINANCIAL CONFERENCE Document 319 (p. 61) JOURNAL UN ITED N A T I O N S N o. 13 M O N E T A R Y A N D Bretton W o o d s, N ew ORDER OF F I N A N C I A L .C O N F E R E N C E H am pshire THE July 13, 1944 DAY Meetings for Thursday, July 13 9:30 11 11:30 2:30 5 8:30 a.m. a.m. a.m. p.m. p.m. p.m. Committee 3A of Commission II .............. ....... Room A D rafting Committee of Commission I ...... ....... Room B Committee 3B of Commission II ................ ....... Room A Commission I .................................................. ....... Auditorium Commission II ................................................ ....... Auditorium Committee 3 of Commission III ................ ....... Room A (p. 62) R e s u m e s o f C o m m i t t e e M e e t in g s Committee 1 of Commission I P u rp oses, P o lic ie s, an d Q u otas o f th e F u n d (Ju ly 12, 2:30 p.m .) The Committee considered section 5, article II, as submitted by the drafting committee and decided to refer the question of the date to be inserted in paragraph (b) to Commission I on the ground that there had been insufficient time to consider the question. The Committee agreed to drop Alternative F, article I (p. lc of SA /1). It also considered Alternatives C (p. 2b) and D (p. 4b) under article II and referred them to Commission III. It then considered article IX, section 8, Alternative A (p. 43b), and agreed that this matter was covered elsewhere. The third report of the language subcommittee was then considered. The recommendations to accept section 4, article I, and section 2, article IX (p. 38), were adopted. The Committee then referred to Commission I the proposed language for article IX, section .3, paragraph (a), since the matter is related to questions under consideration by Committee 2. Alternatives A and B of article IX, section 3, paragraph (c) (pp. 39 and 39a), as redrafted by the language subcommittee, were considered. It was decided to refer the redraft and Alter natives A and B to Commission I. (The minutes of this meeting are being distributed separately as document no. 326.) PROCEEDINGS AND DOCUMENTS 513 Committee 2 of Commission I O p eration s o f th e F u n d (Ju ly 12, 10 a.m. and 2:30 p.m .) The Committee accepted the report of the ad hoc subcom mittee that article III, section 2, paragraph (3), be approved as it stands in Alternative A (p. 6a). The Committee accepted the report of the ad hoc subcommittee that the sentences fol lowing paragraph (4) of article III, section 2 (p. 6a), be revised, and amended the revision as proposed by the subcommittee. (p. 63) The Committee agreed on the principles involved in article III, section 10, Charges and Commissions, combined Alternatives A and B, (pp. 13a and 13b), but there was considerable diver gence of views as to the nature and amount of the charges. Alternative C (p. 13b) was also discussed and received sub stantial support. The Committee accepted the wording of article III, section 12, Consideration of Representations of the Fund (p. 15), recom mended by the language subcommittee. The Committee agreed to eliminate article III, section 9, Transferability and Guarantee of the Assets of the Fund, para graph (b) (p. 12), and a subcommittee was appointed to revise, in the light of the Committee’s discussion, the proposal made on page 4 of Document 281. The Committee approved article IV, section 5, Changes in Par Values, paragraph (b), Alternative D (p. 18c). The Committee discussed article XIII, section 5, Fixing of Initial Par Values, Document 278 (p. 50), Alternative A (p. 50b), Alternative B (presented orally), and Alternative B (p. 16a). The Committee approved paragraphs (a), (b), (c), and (d) of Document 278 and Alternative B as presented orally, and appointed a subcommittee to expand Alternative B to meet in part the proposals made in Alternative B (p. 16a) and Alter native A (p. 50b). (The minutes of this meeting are being distributed separately as document no. 325.) N o tic e R e g a rd in g D o c u m e n t 243 Document 243, “Report of Subcommittee of Committee 3 of Commission I on Liquidation and Withdrawal”, should be cor rected in the third paragraph, line 7, to read “Alternative B” in place of “Alternative D”. In the fourth paragraph, line 9, “Alternative C” should be substituted for “Alternative B”. 514 MONETARY AND FINANCIAL CONFERENCE (P. 64 ) L ist o f D o c u m e n t s I ssu e d as o f J u l y 1 2 , 1 9 4 4 Subject Sym bol Doc . No. Revised Telephone Directory, UNMFC, July 12 Additional Page to SA/3—A lternative G; Article I—Submitted by Mexican Delegation ( P . 2d) .................................................................... Additional Page to SA/1—Alternative A, Article X III, sec. 5 (p. 50b).............................. Proposed Revised Wording of Article II, sec. 5, p. 4 of SA/1—by D rafting Committee of Commission I and Submitted to Committee 1 Proposals by Ad Hoc Subcommittee, Committee 2, Commission I, July 11, on Article III, 2 and 3, Alternative A (p. 6a), A lternative B (p. 6b), A lternative D (p. 6c), and Alternative F (p. 6 e )................................................................ Additional •Page for SA/3—Alternatives H and I, Article I (p. 2 d ) .............................................. Commission II— Schedule of Work Assignments to Committees and Subcommittees of Bank Commission ............................................................ Journal No. 12............................................................ Minutes of Meeting of Commission II, July 11, 4 p.m........................................................................ Order of the Day, July 12.................................... Minutes of Meeting of Committee 2, Commission I, July 11, 2:30 p.m........................................... Minutes of Meeting of Committee 3, Commission I, July 11, 10 a.m................................................. Additional Page to SA/1—Alternative A, P ro visions Relating to Signature and E ntry into Form of Agreement.............................................. News Bulletin No. 14............................................ Press Release No. 29—Statement by Mexican Delegation .............................................................. Third Report of D rafting Committee of Committee 1, Commission I .................................. GD/33 (13) (114) 292 (p . 65) Additional Pages to SA/1 (pp. 26j, k, 1 ).......... Report of A d Hoc Committee to Commission I on Relations with Non-Member C ountries.. . . News Bulletin No. 15.............................................. Additional Page to SA/3—Alternative J, Article I, Purposes of the Bank (p. 2 e )___ Additional Page to SA/3—A lternative C, Article III, sec. 1, A lternative A as Amended in Commission Meeting, July 11 (p. 1 2 a )___ SA/3/6 293 SA /1/52 294 CI/1/DC3 295 C I/2/A H 296 SA /3/7 297 C II/ J/1 2 298 299 C II/M /2 GD/34 300 301 C l/2/M 7 302 CI/3/M 7 303 SA/1/53 304 305 PR/29 306 CI/1/DC4 307 SA/1/54 310 C I/A H /R P2 311 312 SA /3/8 313 SA /3/9 314 PROCEEDINGS AND DOCUMENTS 5U Sym bol S ubject Additional Page to SA/1—Alternative E, Article VII, sec. 1 (V ariant of Alternative C, p. 25d) (p. 2 5 h ).................................................. Additional Page to SA/1—Joint Statement, No Provisions—Article IX, Additional sec. 9 ___ Egyptian Delegation Amendment to Article VII, I of Joint Statement (V ariant of Alternative C, p. 2 5 d ).............................................................. Third Report of Committee 3, Commission I, July 12 .................................................................. Doc. No. SA/1/55 315 SA/1/56 316 DP/21 317 CI/3/RP3 318 Document 320 G l/D C /1 Report of Drafting Committee of Commission I— Annex I O u t l i n e o f A r t ic l e s a n d S e c t io n s o f F u n d A g r e e m e n t (References are to pages of SA/1) Introductory Article (New) I. Purposes (I-p. 1) II. Membership (II, in part) 1. Original members (p. 2) 2. Other members (p. 2) III. Quotas and Subscriptions (II, remainder) 1. Quotas (p. 2) 2. Adjustment of quotas (p. 2) 3. Subscriptions: time, place and form of payment (p. 2, p. 5) 4. Payments when quotas are changed (p. 2, p.* 5) 5. Substitution of securities for currency (p. 29) IV. Par Values of Currencies (IV) 1. Expression of par value (p. 16) 2. Gold purchases based on parity (p. 38) *3. Foreign exchange dealings based on par values (p. 39) 4. Obligations regarding exchange stability (p. 17a) 5. Changes in par values (p. 17a) *Text not yet available. 516 MONETARY AND FINANCIAL CONFERENCE 6. Action by the Fund on proposed changes (p. 17aa) 7. Effect of unauthorised changes (p. 17aa) *8. Uniform changes in par values (p. 18) 9. Maintenance of gold value of the Fund’s assets (P. 19) 10. Separate currencies within a member’s territories (p. 20) (P. 2) V. Transactions with the Fund (III, in part) 1. Agencies dealing with the Fund (p. 5) 2. Limitation on the Fund’s operations (p. 7) 3. Conditions governing use of the Fund’s resources, (p. 6a) 4. Waiver of conditions (p. 6a) 5., Ineligibility to use the Fund’s resources (p. 6b) 6. Purchases of currencies from the Fund with gold (P. 10) *7. Other acquisitions of gold by the Fund (p. 11) *8. Charges and commissions (p. 13) VI. Capital Transfers (V; III) 1. Use of the Fund’s resources for capital transfers (P. 21) 2. Special provisions for capital transfers (p. 6a) 3. Control of capital transfers (p. 22) VII. Scarce Currencies (VI; III, in part) 1. General scarcity of currency (p. 23b) 2. Measures to maintain the Fund’s holdings of scarce currencies (p. 6a) 3. Scarcity of the Fund’s holdings (p. 23b) 4. Administration of restrictions (p. 23c) 5. Effect of other international agreements or restric tions (p. 23c) VIII. General Obligations of Members (IX, in part; III, in part; VII, in part) 1. Introduction (p. 38) *2. Exchange controls on current payments (p. 40) *3. Multilateral clearing (p. 9) *4. Acceptance of currency purchased from the Fund (P. 12) *5. Furnishing of information (p. 14c) 6. Consultation between members regarding existing international agreements (p. 48) *T ext not y et available. PROCEEDINGS AND DOCUMENTS IX. 517 Status, Immunities and Privileges of the Fund (IX, in part; III, in part) 1. Purposes of Article (New) 2. Status of the Fund (p. 33) (p. 3) X. XI. XII. *XIII. XIV. *XV. XVI. (P- 4) XVII. *XVIII. 3. Immunity from judicial process (p. 41) 4. Immunity from other action (p. 41) 5. Freedom of assets from restrictions (p. 12) 6. Exemption of officers and employees from suit (p. 4D 7. Immunity of officers and employees from restric tions (New) 8. Privilege for communications (New) 9. Privilege of officers and employees in respect of travel (New) 10. Immunities from taxation (p. 43a) 11. Application of Article (p. 43a) Relation with Other International Organizations (VII-8, p. 30) Organization and Management (VII, in part) 1. Structure of the Fund (New) 2. Board of Governors (p. 24) 3. Executive Directors (p. 26) 4. Managing Director and staff (p. 26) *5. Voting (p. 26) 6. Distribution of net income (p. 32) 7. Publication of reports (p. 28) 8. Communication of views to members (p. 15) Offices and Depositories (VII, in part; III, in part) *1. Location of offices (p. 31) 2. Depositories of the Fund (p. 29) 3. Guarantee of the Fund’s deposits (p. 12) Transitional Period (X) Withdrawal from Membership (VIII, in part) 1. Right of members to withdraw (p. 34) 2. Compulsory withdrawal (p. 35) 3. Settlement of accounts after withdrawal (p. 36) Liquidation of the Fund (VIII, -4, p. 37) Amendments (XI, p. 45) Interpretation (XII-1, p. 46) Definitions (XII-2, p. 47) T e x t not yet available. 518 MONETARY AND FINANCIAL CONFERENCE XIX. Final Provisions (XIII) 1. Signature (p. 51) 2. Entry into force (p. 51a) 3. Inauguration of the Fund (p. 51a) *4. Initial determination of par values (p. 51b) Document 321 C l/D C /2 Report of the Drafting Committee of Commission I— Annex II A r t ic l e s o f A g r e e m e n t o f t h e I n t e r n a t io n a l M o n e t a r y F u n d The Governments on whose behalf the present Agreement is signed agree as follows:— Introductory Article The International Monetary Fund is established and shall operate in accordance with the following provisions: Article I. Purposes The purposes of the International Monetary Fund are: (a) To promote international monetary cooperation through a permanent institution which provides the machinery for con sultation on international monetary problems. (b) To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and to the develop ment of the sources of productive power in the territories of all members as primary objectives of economic policy. (c) To give confidence to members by making the Fund’s resources available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures de structive of national or international prosperity. (d) To promote exchange stability, to maintain orderly ex change arrangements among member countries, and to avoid competitive exchange depreciation. (p. 2) (e) To assist in the establishment of a multilateral *T ext not yet available. P R O C E E D I N G S AND D O C U M E N T S 519 system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade. (f) In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members. The Fund shall be guided in all its decisions by the purposes set forth above. Article II. Membership S ection 1. Original Members. The original members of the Fund shall be those of the countries represented at.the United Nations Monetary and Financial Con ference whose governments accept membership in accordance with Article XIX, Section 1. S ection 2. Other Members. Membership shall be open to other countries at such times and in accordance with such terms as may be prescribed by the Fund. Article III. Quotas and Subscriptions S ection 1. Quotas. Each member shall be assigned a quota. The quotas of the members represented at the United Nations Monetary and Finan cial Conference which accept membership in accordance with Article XIX, Section 1, shall be those set forth in Schedule A annexed hereto subject to subsection (b) of that Section. (a) Quotas of other members shall be determined by the Fund. (P- 3) Adjustment of Quotas The Fund shall at intervals of five years review and, if it deems it appropriate, propose an adjustment of the quotas of the mem bers. It may also, if it thinks fit, consider at any other time the adjustment of any particular quota at the request of the member concerned. A four-fifths majority vote shall be required for any change in quotas and no quota shall be changed without the consent of the member concerned. S ection 2. S ection 3. Subscriptions: Time, Place and Form of Payment (a) The subscription of each member shall be equal to its quota and shall be paid in full to the Fund at the appropriate depository on or before the date fixed under Article XIX, Section 4, for exchange transactions in the member’s currency to begin. (b) Each member shall pay in gold as a minimum either (i) 749013 — 48 — 34 520 MONETARY AND FINANCIAL CONFERENCE twenty-five per cent of its quota or (ii) ten per cent of its official holdings of gold and gold convertible exchanged as a t ---------, whichever is the smaller. If the holdings of any member as at such date are not ascertainable because its territories have been occupied by the enemy, the Fund shall fix an appropriate alterna tive date. Each member shall furnish to the Fund the data necessary to determine its official holdings of gold and gold convertible exchange. (c) Each member shall pay the balance of its quota in its own currency. (P- 4 ) Payments when quotas are changed (a) Each member shall pay within thirty days of the date on which it approves an increase in its quota twenty-five per cent of the increase in gold and the balance in its own currency. If, however, on the date when the member approves an increase, its holdings of gold and gold convertible exchange are less than its new quota, the Fund may reduce the proportion of the increases to be paid in gold. (b) The Fund shall pay each member whose quota is reduced within thirty days of the date' on which the member approves the reduction an amount equal to the reduction. The payment shall be made in the currency of that member and in such amount of gold as may be necessary to prevent reducing the Fund’s holdings of that member’s currency below seventy-five per cent of its new quota. S e c t io n 5. Substitution of Securities for Currency. The Fund shall accept from any member in place of any part of the member’s currency not needed by the Fund in its opera tions, notes or similar obligations issued by the member or the depository designated by such member, which shall be nonnegotiable, non-interest bearing and payable at their par value on demand by a credit, to the account of the Fund in the territory of the member. This section shall apply not only to currency subscribed by members but also to any currency otherwise acquired by the Fund. (p. 5) Article IV. Par Values of Currencies S e c t io n 1. Expression of Par Values. (a) The par value of the currency of each member shall be S e c t io n 4. (i)The phrase “gold and gold convertible exchange” is subject to definition and to such change in terminology as may be agreed upon. PROCEEDINGS AND DOCUMENTS 521 expressed in terms of gold, as a common denominator, or in terms of a gold-convertible currency unit of the weight and fineness in effect on July 1,1944. (b) All computations relating to currencies of members for the purpose of applying the provisions of this Agreement shall be on the basis of their par values. S ec t io n 2. Gold Purchases Based on Parity. The Fund shall prescribe for transactions in gold by members a permissible margin above and below parity. No member shall buy gold at a price above parity plus the prescribed margin, nor sell gold at a price below parity minus the prescribed margin. S e c t io n 3. Foreign Exchange Dealings Based on Par Values. (Text not yet available.) 4. Obligations Regarding Exchange Stability. (a) The members agree that they will collaborate with the Fund to promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange alterations. (b) A member shall not propose a change in the par value of its currency except to correct a fundamental disequilibrium. S e c tio n Changes in Par Values. A change in the par value of a member’s currency may be made only on the proposal of the member and only after consultation with the Fund. When a change is proposed, (p. 6) the Fund shall first take into account the changes, if any, which have already taken place in the initial par value of the member’s currency. If the proposed change, together with all previous changes, whether increases or decreases: S e c t io n 5. (a) does not exceed ten percent of the initial par value, the Fund shall raise no objection; (b) does not exceed a further ten percent of the initial par value, the Fund may either concur or object, but shall declare its attitude within seventy-two hours if the member so requests; (c) is not within (a) or (b) above, the Fund may either concur or object, but shall be entitled to a longer period than seventy-two hours in which to declare its attitude. Action by Fund on Proposed Changes. (a) The Fund shall concur in a proposed change under Section 5(b) or (c) above if it is satisfied that the change is necessary to correct a fundamental disequilibrium. In particular, S ec t io n 6. 522 MONETARY AND FINANCIAL CONFERENCE provided it is so satisfied, it shall not object to a proposed change on the ground of the domestic social or political policies of the member proposing the change. (b) The Fund shall also concur in a proposed change under Section 5(b) or (c) if it is satisfied that such change will not affect the international transactions of the member proposing the change. (p. 7) (c) If the Fund is not satisfied in accordance with (a) or (b) above, and deems the proposed change unjustified, having regard to the proper working of the Fund, it shall object to the proposed change; but in arriving at its decision it shall take into consideration the extreme uncertainties prevailing when the par values of the currencies of members were initially determined. Effect of Unauthorized Changes. If a member changes the par value of its currency despite the objection of the Fund, in cases where the Fund is entitled to object, the member shall be ineligible to use the resources of the Fund unless the Fund otherwise determines; and if, after the expiration of a reasonable period, the difference between the member and the Fund continues, the matter shall be subject to the provisions of Article XIV, Section 2. S ec t io n 7. S e c t io n 8. Uniform Changes in Par Values. (Text not yet available.) Maintenance of Gold Value of the Fund’s Assets. (a) The gold value of the assets of the Fund shall be main tained notwithstanding changes in the par or foreign exchange value of the currency of any member. (b) Whenever (i) the par value of a member’s currency is reduced, or (ii) the par value of a member’s currency has, in the opinion of the Fund, depreciated to a significant extent within that member’s territories, the member shall compensate the Fund by paying to the Fund within a reasonable time an amount of its own currency equal to the reduction in the gold value of its currency held by the Fund. (p. 8) (c) Whenever the par value of a member’s currency is increased the Fund shall compensate such member by returning, within a reasonable time, an amount in the member’s currency equal to the increase in the gold value of its currency held by the Fund. (d) The provisions of this Section shall apply to a uniform proportionate change in the par values of the currencies of all S e c t io n 9. P R O C E E D I N G S AND D O C U M E N T S 523 members, unless at the time when such a change is proposed the Fund decides otherwise. Separate currencies within a Member’s Territories. A member proposing a change in the par value of its currency shall be deemed, unless it declares otherwise, to be proposing a corresponding change in the par value of the separate currencies of all territories in respect of which it has accepted this agreement under Article XIX, Section 1. It shall, however, be open to a member to declare that its proposal relates either to the metro politan currency alone, or to one or more specified separate currencies alone, or to the metropolitan currency and one or more specified separate currencies. S e c t io n 10. Article V. Transactions with the Fund 1. Agencies Dealing with the Fund Each member shall deal with the Fund only through its Treasury, Central Bank, Stabilization Fund or other similar fiscal agency and the Fund shall deal only with or through the same agencies. S e c t io n Limitation on the Fund’s Operations Except as otherwise provided in this Agreement, operations on the account of the Fund shall be limited (p. 9) to transactions for the purpose of supplying a member, on the initiative of such member, with the currency of another member in exchange for the currency of the member initiating the transactions or for gold. S ec tio n 2. Conditions Governing Use of the Fund’s Resources. A member shall be entitled to buy the currency of another member from the Fund in exchange for its own currency subject to the following conditions: S ection 3. (i) The member desiring to purchase the currency repre sents that it is presently needed for making payments in that currency which are consistent with the provisions of this Agreement; (ii) The Fund has not given notice under Article VII that its holdings of that currency have become scarce; (iii) The purchase shall not cause the Fund’s holdings of the member’s currency to increase over the period of twelve months ending on the date of the purchase by more than twenty-five per cent of the member’s quota (after having been restored to seventy-five per cent, if below that figure, of the quota) nor to exceed two hundred per cent of the mem ber’s quota. 524 MONETARY AND FINANCIAL CONFERENCE (iv) The Fund has not previously declared under Section 5 below that the member initiating the purchase is ineligible to use the resources of the Fund. (p .10) Waiver of Conditions. The Fund may in its discretion, and on terms which safeguard its interests, waive any of the conditions prescribed in Section 3 above, especially in the case of members with a record of avoid ing large or continuous use of the Fund’s resources. In making such waiver it shall take into consideration periodic or exceptional requirements of members. The Fund shall also take into account a member’s willingness to pledge as collateral security gold, silver, securities, or other acceptable assets having a value sufficient in the opinion of the Fund to protect its interests and may require as a condition of waiver the pledge of such collateral security. S ection 4. Ineligibility to Use the Fund’s Resources. Whenever the Fund is of the opinion that any member is using the resources of the Fund in a manner contrary to the purposes of the Fund, it shall present to the member a report setting forth the views of the Fund and prescribing a suitable time for reply. After presenting such a report to a member the Fund may limit the use of its resources by the member. If no reply to the report is received from the member within the prescribed time, or the reply received is unsatisfactory, the Fund may continue to limit the member’s use of the Fund’s resources'or, after giving reasonable notice to the member, declare it ineligible to use the resources of the Fund. S ection 5. (p. 11) Purchases of Currencies from the Fund for Gold. (a) Any member desiring to obtain, directly or indirectly, the currency of another member for gold shall, provided that it can do so with equal advantage, acquire the currency by the sale of gold to the Fund. (b) Nothing in this Section shall be deemed to preclude any member from selling in any market gold newly produced from mines located within its territories. S ection 7. Other Acquisitions of Gold by the Fund. Section 6. (Text not yet available) S ection 8. Charges and Commissions. (Text not yet available) PROCEEDINGS AND DOCUMENTS 525 Capital Transfers S ection 1. Use of the Fund’s Resources for Capital Transfers. (a) A member may not make net use of the resources of the Fund to meet a large or sustained outflow of capital, and the Fund may request a member to exercise controls to prevent such use of the resources of the Fund. If after receiving such a request, a member fails to exercise appropriate controls, the Fund may declare the member ineligible to use the resources of the Fund. (b) Nothing in this Section shall be deemed (i) to prevent the use of the resources of the Fund for capital transactions of rea sonable amount required for the expansion of exports or in the ordinary course of trade, banking or other business or (ii) to affect capital movements which are met out of a member’s own resources of gold and foreign exchange, but members undertake that such capital movements will be in accord with the purposes of the Fund. Article VI. (p. 12) Special Provisions for Capital Transfers. If the Fund’s holdings of the currency of a member have remained below 75 per cent of its quota for an immediately pre ceding period of not less than six months, such member shall be entitled, notwithstanding the provisions of Article V, Section 3, to buy the currency of another member from the Fund for its own currency for any purpose, including capital transfers. Pur chases for capital transfers under this Section shall, however, not be permitted if they have the effect of raising the Fund’s holdings of the currency of such member above 75 per cent of its quota, or of reducing the Fund’s holdings of the currency purchased below 75 per cent of the quota of the member whose currency is purchased. SECTION 3. Controls of Capital Transfers. Members may exercise such controls as are necessary to reg ulate international capital movements but no member may exercise such controls in a manner which will restrict payments for current transactions or which will unduly delay the transfer of funds in settlement of commitments, except as provided in Article VII, Section 3, and in Article XIII, Section---------. Article VII. Scarce Currencies. S ection 1 . General Scarcity of Currency. If the Fund finds that a general scarcity of a particular cur rency is developing, the Fund may so inform members and may issue a report setting forth the causes of the scarcity and contain S ection 2. 526 MONETARY AND FINA