NAC files, lot 60 D 137, “Documents”

The Secretary of the Treasury (Snyder) to Representative Jacob K. Javits1

Document No. 1388

Dear Mr. Javits: The pressure of work in Mexico City in conjunction with the Seventh Annual Meetings of the Fund and Bank Boards of Governors unfortunately prevented an earlier reply to your letters of September 9, 1952, addressed to me2 and to the U.S. Executive Directors and the Alternate Director of the Fund and the Bank.

The sessions of the Governors of the International Monetary Fund at Mexico City indicated greater interest than ever before in [Page 320] the Fund itself and in the problems which fall within the scope of its Articles of Agreement. The fact that the Fund operates in a difficult field in which governments hold strong views on such related questions as internal economic policy, exchange policy, and trade policy serve to emphasize the importance of the institution and its work.

The Fund and the International Bank stress the importance of maintaining an international economic system in which trade, exchange and international investment are free from restrictions and controls. In my opinion, inadequate recognition has been given to the unpublicized work which the Fund has done in trying to get its members to curb inflationary policies and to follow sound budget, credit, and investment practices.

Your letter suggests as one alternative that the Fund’s Articles might be amended to enable it “to operate in developing greater international trade through clearance and financing facilities.” The National Advisory Council, after full consideration, has recently expressed its view in its Third Special Report to the Congress, that “The Articles of Agreement admit of the degree of flexibility necessary to adapt operations and policies of the Fund to changing conditions, and, accordingly, the Council does not recommend any amendments at this time.” There was no indication at Mexico City that any other government favored a different view. In the course of the past year the Executive Board—with the active participation of the U.S. Director—continued its review of policies and procedures for making available the use of the Fund’s resources for short-term assistance to members in achieving Fund objectives. On the whole, the Governors at Mexico City expressed considerable satisfaction with the progress which the Fund had made in this direction. The National Advisory Council, through the U.S. Executive Director, has supported the Fund’s course in this program.

Your letter also repeats the suggestion of consolidating the Fund and the Bank. In replies to your earlier letters on this subject it has been pointed out that the Bank, which derives its loanable funds for the most part from the sale of its bonds, has not to the present time had any difficulty in raising funds for its loan purposes by the sale of its securities in the United States market. Additional securities have been sold as the Bank has required funds for lending purposes. Accordingly, it does not seem necessary to add to the Bank’s capital at this time. The National Advisory Council fully sympathizes with the objectives of economic development and technical assistance, but it does not believe that a merger of the Fund and the Bank is necessary or desirable as a means to this end.

Sincerely yours,

John W. Snyder
  1. A covering memorandum, dated Oct. 20, 1952, circulating this letter to members of the NAC, is not printed.
  2. Supra.