398.051IFC/2–454

Memorandum by the Director of the Office of Financial and Development Policy (Corbett) to the Assistant Secretary of State for Economic Affairs (Waugh) 1

official use only
  • Subject:
  • The International Finance Corporation
1.
The proposal to establish an International Finance Corporation has been before the United Nations and the International Bank, in one form or another, for about three years. You will recall that, as presently proposed, the Corporation would be an affiliate of the International Bank authorized to assist private enterprise by loans without government guarantees and by equity participation along with private capital. Mr. Black has indicated that a subscription of $50 to 100 million would be sufficient at the outset.
2.
During the period that this proposal has been discussed in the UN, the United States has formulated no governmental position on the feasibility or desirability of an IFC. Our delegations to UN meetings have, in general, confined themselves merely to supporting further analysis of the proposal by the International Bank. The Bank staff now feels that sufficient preliminary studies have been [Page 280] made, and that the possibility of further useful work depends on the attitude of the countries which would be the major contributors to the Corporation, and particularly the United States.
3.
Practically all of the underdeveloped countries have indicated their support of the IFC. Of the more developed countries, Canada, Belgium and the Netherlands are prepared to contribute. The Scandinavian countries and Australia have indicated that their attitude will be determined largely by the position of the United States. Neither the French nor the British have as yet taken a position, apparently waiting upon the United States.
4.
The General Assembly last December adopted a resolution which “urges governments which have not done so to give early consideration to the merits of establishing an International Finance Corporation, and to make known to the International Bank their views on the possibility of supporting such a corporation, in time for the Bank to take them into consideration when preparing its report for the 18th Session of the Economic and Social Council”. The 18th Session of ECOSOC is scheduled to begin on June 30.2 As indicated above, by that time over three years will have elapsed since the proposal was first put forward.

It would seem that we can hardly expect continued indulgence beyond the 18th Session of the ECOSOC on the part of other members of the United Nations with a refusal by the United States to say yes or no on this matter. At the very least, other countries will expect a pretty clear indication of the direction our thinking is taking. To discharge our obligations under existing UN resolutions on this matter, we should undertake fairly soon a full dress study of the proposal on its merits—before the International Bank presents its next report to ECOSOC. This would perhaps involve collaboration with the Bank as it carries forward such further studies of the proposal as it intends to make, as well as fairly extensive soundings of Congressional and business opinion concerning the proposal. Governments were requested to make such soundings of business opinion in the resolution adopted by the ECOSOC on the IFC in June 1952.

  1. Drafted by William J. Stibravy, Special Assistant in the Office of Financial Development Policy.
  2. The Eighteenth Session of ECOSOC was held in Geneva June 29–Aug. 6 and Nov. 5–Dec. 16, 1954.