NAC files, lot 60 D 137, “Minutes”

Minutes of the 212th Meeting of the National Advisory Council on International Monetary and Financial Problems, Held at Washington, July 2, 1954

for nac use only

Mr. W. Randolph Burgess (Acting Chairman), Treasury Department

  • Mr. Andrew N. Overby
  • Mr. Clarence E. Hunter
  • Mr. W. L. Hebbard
  • Mr. Henry J. Bittermann
  • Mr. Philip P. Schaffner
  • Mr. Charles R. Harley
  • Mr. Donald W. Curtis

Mr. Samuel C. Waugh, State Department

  • Mr. Jack C. Corbett

Mr. Samuel W. Anderson, Commerce Department

  • Mr. Clarence I. Blau
  • Mr. Frederick Strauss

Mr. Arthur W. Marget, Board of Governors, Federal Reserve System

  • Mr. Frank M. Tamagna
  • Mr. J. Herbert Furth

Mr. John Stambaugh, Foreign Operations Administration

  • Mr. Warren W. Shearer
  • Mr. Jacob J. Kaplan
  • Mr. Jack F. Bennett

Major General Glen E. Edgerton, (Ret.), Export-Import Bank

Mr. Frank A. Southard, Jr., International Monetary Fund

Mr. John S. Hooker, International Bank

Mr. Percival F. Brundage, Bureau of the Budget, Visitor

Mr. Neil H. Jacoby, Council of Economic Advisers, Visitor

Mr. Clayton E. Whipple, Department of Agriculture, Visitor

Mr. George H. Willis (Acting Secretary)

  • Mr. C. L. Callander (NAC Secretariat)

1. Survey of Convertibility Problems

The Council discussed this general subject and considered a draft United States position paper1 on the problems of convertibility for the forthcoming O.E.E.C. Ministerial Meeting. The Acting Chairman indicated that the two principal financial aspects of the proposed United States position were the role of the International Monetary Fund and the proposal for a European Fund, and asked for comments on these matters.

Mr. Southard commented on relationships between the International Monetary Fund and the GATT 2 and between the Fund and the O.E.E.C. and reviewed some of the problems that may be anticipated in the Fund at the time positive steps toward convertibility [Page 365] are taken. He felt that as a permanent organization with an adequate staff, the Fund is in a position to respond to additional needs for coordination with respect to the GATT. With respect to O.E.E.C. he pointed out that the Fund has a representative in Paris for liaison with O.E.E.C. and that if more effective relationships are desired, this could be worked out. Among the anticipated problems, he mentioned the apparent restiveness on the part of the United Kingdom with the present system of weighted voting in the Fund and the desire of the United Kingdom to find a way of dealing with the extreme creditor problem. He felt that paragraph 6 of the paper presented an adequate United States position on the extreme creditor question and that the United States should not favor any arrangement which would result in automatic sanctions against itself.

Mr. Hunter reviewed the salient points of discussions in Europe on the question of the proposed European Fund. He pointed out that the European Payments Union has been useful and that the Europeans did not wish to abandon it without adequate replacement, since even after some currencies are made convertible, there will probably be some countries which will have inconvertible currencies for some time and which may need assistance. It was felt that a European Fund could help the weak countries through loans out of the $271 million of EPU assets which will be available upon dissolution of EPU. Loans to such countries would probably be non-automatic. He recalled that the United States has the right of veto over the ultimate disposition of the assets of EPU upon its liquidation, and he therefore expected the Europeans to present a plan for United States review and approval.

Mr. Shearer noted that there was general agreement that credits from a European Fund should be on an ad hoc basis, but that there was a wide range of views as to which countries would be eligible for aid and under what conditions the ad hoc loans would be appropriate.

There was further discussion of the European Fund proposal and general agreement that such a fund would be managed by the Council of the O.E.E.C. At the conclusion of the discussion, Mr. Burgess commented that in view of the United States veto over the disposition of EPU assets, it seemed clear that the United States would be asked to approve some plan for a European Fund. Therefore, he felt that the United States Government should be prepared to comment on the proposal. He suggested that additional work on the idea of the European Fund should be undertaken by the NAC Staff Committee and that the revised position paper should be submitted to the Council at a later date. The Council agreed to this procedure. (The Staff Committee subsequently presented NAC Document [Page 366] No. 1657 for the consideration of the Council, and the Council approved the document in a telephone poll completed on July 12, 1954 (NAC Action No. 7093).)

[Here follows discussion concerning the proposed International Finance Corporation.]

  1. Apparent reference to an earlier version of the position paper designated NAC Document No. 1657, dated July 9, 1954, infra . No copy of the earlier draft was found.
  2. Reference is to the General Agreement on Tariffs and Trade, concluded at Geneva, Oct. 30, 1947, and entered into force for the United States, Jan. 1, 1948; for text, see TIAS No. 1700 or 61 Stat. (pts. 5 and 6).
  3. Not printed. (NAC files, lot 60 D 137, “Actions”)