peoples in these countries. It will serve to advance their economic life under free institutions, which we all desire. It is up to the United States to take the initial steps to bring this venture into active operation.

EXHIBIT 32.-Statement by Secretary of the Treasury Anderson, July 1, 1960, before the Senate Appropriations Committee on the U.S. subscription to the International Development Association1

I wish to support the appropriation request for $73,666,700 for payment during fiscal 1961 of the first installment of the U.S. subscription to the International Development Association. I urge your favorable consideration of this important item. Funds for four additional annual installments, each of $61,655,825, will be requested in the future. All together, the U.S. subscription to the IDA payable over the 5-year period amounts to $320.29 million.

The President, in a message to the Congress on February 18, 1960, recommended legislation authorizing U.S. membership in the IDA and providing for payment of the subscription obligations. Final action on this legislation was completed yesterday.

The IDA is to be an international organization, affiliated with the International Bank, to provide development financing on flexible terms for its less developed member countries. Most of its initial resources will be provided by countries other than the United States. While the U.S. subscription is about $320 million, the other economically stronger member countries would provide about $443 million of the $763 million to be subscribed by the economically stronger countries as a group. The total subscriptions, including those of the less developed countries, are scheduled at $1 billion.

The articles of agreement will enter into force when signed on behalf of governments whose subscriptions comprise not less than 65 percent of the total schedule of subscriptions; the agreement cannot, however, enter into force before September 15, 1960. The U.S. subscription represents about 32 percent of this total. We are confident that the agreement will enter into force and that the IDA will begin operations this year, if the Congress at this session approves the legislation necessary for paying the first installment on our subscription. We have been informed that good progress is already being made on legislative action in a number of countries.

The IDA would provide financing in such forms and on such terms as may be appropriate for a particular project in a particular area. It could provide foreign exchange, local currency, or a combination of various currencies. Repayment terms and grace periods may be somewhat longer than under conventional financing. Its loans may be at lower interest or interest-free. Repayment may be in hard currencies or wholly or partly in the currency of the borrower. This flexibility will permit the IDA to operate under circumstances not possible for conventional lending agencies. It will, in this way, help to meet important needs. To assure appropriate safeguards in connection with such financing, and to assure that the financing provided by the IDA shall be for sound projects of high developmental priority, for which private capital on reasonable terms and conventional loans are not available, the close affiliation with the International Bank is especially significant. The President, the Board of Governors and the Executive Directors of the International Bank will serve in the same capacity, ex officio, on the IDA. In being able to call upon the experience and competence of the International Bank's staff, the IDA will maintain technical standards in connection with its operations similar to those maintained by the Bank. The IDA is to be, nevertheless, a separate entity, and the funds of the IDA are to be kept separate and apart from those of the Bank.

The proposal for an IDA grew out of consideration in the United States of the pressing financial problems in the less developed areas and the impact of these problems on the entire free world. At the same time, we were convinced that additional efforts, in particular by the other economically stronger countries, were needed to provide more of the essential capital requirements in the less developed areas. It was clear that substantially greater efforts could well be made by these countries. An important contribution to this thinking was made by the U.S. Senate, which on July 23, 1958, adopted a resolution suggesting that prompt study be given to the establishment of an International Development Association as an affiliate of the International Bank. Under the terms of this

1 Assistant Secretary of the Treasury Upton read a statement by Secretary Anderson on the same subject before the Special Subcommittee on Deficiences of the House Appropriations Committee, June 8, 1960.

resolution, the study was undertaken by the National Advisory Council on International Monetary and Financial Problems. Shortly thereafter, with the approval of the President, Secretary Anderson as Chairman of the NAC began a series of informal discussions on the proposal with representatives of other member governments of the International Bank. In October 1959 the Bank's Executive Directors were instructed to formulate articles of agreement of an IDA. This was accomplished, and in January the Directors approved the agreement for submission to member governments.

For the purposes of membership in the IDA, the 68 countries presently members of the International Bank are divided into two groups, part I and part II of schedule A of the IDA agreement. This schedule of subscriptions, which I have attached to this statement, is based upon subscriptions in the Bank. Among the part I members are those economically stronger countries which are able to provide significant amounts of capital for overseas development financing. The less developed countries, those eligible for IDA financing comprise part II. Each member's subscription is divided into a 10 percent portion and a 90 percent portion. The part I members, the economically stronger countries, must pay the 10 percent portion and the 90 percent portion in gold or freely convertible currency to be used in its operations by the IDA without restriction.

The part II members, the less developed countries, pay only the 10 percent portion in gold or freely convertible currency. The 90 percent portion of the part II members is to be paid in their own national currencies. These latter currencies may be used by the IDA in connection with projects within the territory of the subscriber. In addition, these currencies may be used, to the extent agreed by the subscriber and the IDA, for projects located in the territories of other members.

I have prepared, for insertion into the record at this point, a table which shows the breakdown of the subscriptions, to be paid by the part I and part II members, respectively.

IDA initial subscriptions, by membership group and by currencies
[Data in thousands of dollars]

Subscriptions are to be paid in by the membership in five annual installments. The 90-percent portion is payable in equal installments. The payment schedule requires, however, that one-half of the 10-percent portion be paid in the first installment; the remaining half of this portion is to be paid in equal installments over the following 4 years. The IDA may provide financing from these subscribed resources only in the form of loans.

The U.S. subscription obligations will, as I have said, require the payment of about $74 million as the first installment. I should like to emphasize here that this is a fixed amount, established in the articles of agreement, as are the subscriptions and the installments on the subscriptions of all members. It is essential that the full amount of our first installment be appropriated to enable us to become a member.

The agreement specifies that the first installment is to be paid within 30 days after the date on which IDA begins operations, or on the date on which the original member becomes a member, whichever shall be later. For the United States, this payment will undoubtedly be timed with the beginning of operations, since there is little likelihood that the IDA could begin operations without U.S. membership. The agreement remains open for signature until December 31, 1960, although if it has not entered into force by that date the executive directors of the Bank may extend the period by not more than 6 months.

The agreement permits any member to issue nonnegotiable, noninterestbearing notes in place of any part of that member's 90 percent subscription portion. These notes are to be payable at par value on demand to the IDA when required for its operations.

Favorable action on the appropriation item now before this committee will complete the legislation necessary for the United States to join the IDA. However, as I have noted earlier, it would then be necessary in the future to request additional funds to be appropriated to be able to complete the payment of the $320.29 million U.S. subscription.

Periodically during the course of IDA's operations, the adequacy of its resources will be reviewed and consideration given to the desirability of general increases in subscriptions, that is, beyond the $1 billion of initial subscriptions. The first such review will be undertaken about 5 years after the beginning of operations. In addition, individual increases in subscriptions may be considered at any time, but only at the request of the member involved. No schedule for future subscriptions or any terms and conditions under which such subscriptions would be paid are established in the agreement. Neither the United States nor any other member of the IDA would be committed to increase its subscription. The agreement expressly requires, however, that in connection with any additional subscriptions, each member shall be given an opportunity to subscribe an amount which will enable it to maintain its relative voting power. Further legislative authority would be required before the United States could make any subscription beyond the $320 million currently to be authorized.

In addition to the schedule of initial subscriptions, there are specific provisions under which IDA may receive "supplementary resources" from one member in the currency of another member. We anticipate that the United States will, under these provisions, make available to the IDA small portions of the foreign currencies accruing from the sales of surplus agricultural commodities under Public Law 480. Separate legislation is now before the Congress for an amendment to Public Law 480 which would make explicit authorization for the transfer of some of these currencies to the IDA.

In urging the favorable consideration of the appropriation request covering the first installment on our subscription to the IDA, I wish to emphasize the importance to the United States and to the free world generally of this new institution. Moreover, I wish to stress the importance of early action by the United States as an evidence of continued leadership in an endeavor so thoroughly and carefully worked out in cooperation with the great majority of the free nations. A significant aspect to the United States is that the IDA will rely upon funds to a great extent provided by the other industrial countries. The IDA will represent the first cooperative approach by the important capital exporting nations to assist the economic development of other nations by providing finance on flexible terms. Dependence for such assistance has up to now been upon the United States alone.

The importance of the objectives of the IDA is well known. As President Eisenhower has said, "The peoples of the world will grow in freedom, toleration, and respect for human dignity as they achieve reasonable economic and social progress under a free system. The further advance of the less developed areas is of major importance to the nations of the free world and the association provides an international institution through which we may all effectively cooperate toward this end."

1 In terms of U.S. dollars of the weight and fineness in effect on Jan. 1, 1960.

EXHIBIT 33.-Statement by Secretary of the Treasury Anderson as Governor for the United States, September 28, 1960, at the discussion of the Annual Report of the International Monetary Fund

In many ways the past year has been one of continued economic and financial progress. As the Annual Report has stated, world industrial production and trade have increased and there has been broad success in sustaining expanded output and real income within the framework of reasonable price stability. These gains have not been shared by all countries, however, and continued relative weaknesses in the markets for some primary products and foodstuffs have presented serious problems for a number of the less developed countries. Even in these cases pressures have been eased by sharp recovery in industrial countries in 1959 and continued high levels of economic activity in 1960.

The work of the Fund during the year focused on several matters which are of great interest to the United States. We welcomed the Executive Board's decision on discriminatory restrictions last October, which recognized that progress toward general convertibility of currencies had very largely eliminated the basis for discriminatory restrictions on payments. In the past two years we have come much closer to the end of the postwar period which in the field of international finance was characterized by widespread discrimination, especially directed at the dollar area. The Fund deserves a great deal of the credit for the concerted and successful effort which has been made to reduce restrictions and eliminate discrimination. Some discriminatory restrictions still remain, however, and we hope that the Fund and the members will devote attention to rapid completion of the task of doing away with them.

In another important decision foreshadowed at the last annual meeting the Executive Board in June agreed on the guidelines which might be useful to members as they consider undertaking all of the obligations of Article VIII. We can anticipate that during the coming year a number of additional countries will take that action, which will be especially important as a formal evidence of the approach to full convertibility of currencies.

In the past year, Fund members in very large part completed the process of increasing the resources of the Fund, which had its inception in the resolution adopted by this Board at the New Delhi meeting in 1958. Scarcely half a dozen members have not yet consented to quota increases, and some of them are in the process of taking the necessary legislative and administrative action. We may therefore anticipate that very nearly all Fund members will in the end consent to quota increases. This near-unanimity of action is another important recognition by members of the great usefulness of the Fund. The increase in resources has put the Fund in a much better position to deal with the exchange shortages which from time to time confront individual countries, and with broader difficulties in the field of foreign exchange.

To my mind, one of the most heartening and important aspects of the work of the Fund is its patient, close, and intensive collaboration with members in efforts to achieve financial stabilization. Countries have long needed an impartial and reliable ally in the struggle against financial instability and the inflation which accompanies it. The Fund has demonstrated that it is such an ally and we can draw great encouragement from the fact that members from all parts of the world continue to turn to the Fund for support and technical advice. There has been evident and encouraging progress in stabilization during the year, and we have reason for much satisfaction that so many countries-industrial and less developed alike-have participated in these vital efforts to establish and maintain sound and reliable currencies. Substantial completion of the task of dealing with excess internal liquidity inherited from World War II and resulting from inflationary practices, and the advent of much wider convertibility, have helped create the more favorable conditions for success which have emerged in the past few years.

I agree with the general conclusion in the Annual Report that the policies of the Fund relating to the use of its resources continue to be appropriate and beneficial. They comprise a successful merging of two important considerations. On the one hand, members must have assurance that Fund resources are available to them when need arises. On the other hand, the Fund must have assurance that members are taking reasonable and effective steps to deal with the causes of imbalance and to maintain or re-establish internal and external stability. The wide range of members which have drawn on the Fund year by year, and the great variety of circumstances under which they have drawn, serve as good