20061 FIRST ANNUAL MEETINCG of the BOARD OF GOVERNORS of the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT FIRST ANNUAL REPORT by the EXECUTIVE DIRECTORS Wasbington, D. C. September 27, 1946 ( '.D1r@ INTERNATIONAL BANK FOR RECONSTRUUrION AND DEVELOPMENT September 27, 1946 My dear Mr. Chairman: In accordance with Section 10 of the By-Laws of the International Bank for Reconstruction and Devel- opment, I have the honor to submit to the Board of Governors the Annual Report of the Executive Direc- tors, and, in accordance with Section 19 of the By-Laws, a financial statement, based on an audit of the ac- counts of the Bank, together with a statement on the annual administrative budget. Sincerely yours, Eugene Meyer, President. lIonorable John W. Snyder, Clhairmnan, Board of Governors, International Bank for Reconstruction and Development, Washington, D. C. Contents PACE Establishment of the Bank ...........................................1 Election of the President ...........................................2 Formal Commencement of Operations and Calls of Capital .... 2 Investment of Funds Received by the Bank in Payment of the First 2% of the Subscriptions ........................................3 The Scope of the Bank's Lending Operations ..........................4 Organization of the Executive Directors ...........................5........S Proposed Amendments to the By-Laws of the Bank ............... 6 Organization of Bank's Staff ...........................................7 Recruitment Policies ...........................................8 Procedure on Loan Applications ........................................... 9 Marketing Policies ........................................... 10 Cooperation with Other International Organizations ........... ... 10 Membership .......................................... 12 Interpretations .......................................... 12 Advisory Council .......................................... 13 Financial Statement .......................................... 13 Statement on Administrative Budget .......................................... 14 Conclusion .......................................... 16 Appendix A .......................................... 17 Appendix B .......................................... 19 Appendix C .......................................... 20 Appendix D .......................................... 21 Appendix E .......................................... 22 Appendix F .......................................... 28 Appendix G .......................................... 33 FIRST ANNUAL REPORT TO THE BOARD OF GOVERNORS OF TIHE INTERINATIONAL BANIK FOR RECONSTRUCTION AND DEVE LOPM1ENT (As of September 20, 1946) This first annual report. of the Executive Directors comes at the threshold of the Bank's operations. During the few months which have passed since the Executive Directors held their first meeting in May, substantial progress has been made in establishing the Bank's structure, securing staff personnel, and developing working procedures and relationships. The policy and operational questions which lie ahead have been examined and preparations have been made to meet them when they arise. As the Board of Governors' meeting convenes, the Bank stands ready to play the important role in reconstructioin and develop- ment which has been assigned to it by its 38 member Govern- ments. Establishlment of the Bank Under the By-Laws adopted at Savannah by the Board of Gov- ernors, the principal office of the Bank has been established in Washington. In accordance with a resolution adopted by the Board of Governors, the first meeting of the Executive Direc- tors was held on May 7. The Executive Director representing the United States acted as Temporary Chairman and continued so to act until the election of the President. The seven Executive Directors elected by the Board of Gov- ernors at the Savannah meeting took office on May 7, as did four of the appointed Executive Directors. The fiftlh appointed Executive Director, representing the United Kingdom, served in a temporary capacity until the larrival of the permanent Exec- utive Director for the United Kihgdom on May 29. The oinly subsequent change in the membership of the Executive Direc- tors was caused by the resignation of Mr. Camille Gutt, of Bel- gium, to become Managing Director of the International Mone- tary Fund. Mr. Gutt was succeeded as Executive Director by Mr. Hubert Ansiaux, who was elected on June 14 by votes of the Governors representing Belgium, Iceland, Luxembourg and Norway. Ten permanent Alternate Directors have been appointed and two vacancies exist. l~~~~~~~~~~~~~~~~ A list of the Governors and their Alternates appears as Ap- pendix "A" and a list of the Executive Directors and their Alter- postponed for a period of five years under Article II, Section pendix "A", and ,, list of the Executive Directors aiid their Alter-8 (a) (i) of the Articles of Agreement, wlichl provides for nates appears as Appendix "B". such postponement in the case of a member whose metropolitan Election of the President territory suffered from enemy occupation or hostilities during the war. These postponements amount to $5,165,000. On the agenda of the first meeting of the Executive Direc- (2) Czechoslovakia and Yugoslovia have requested a post- tors was the election of a President of the Bank, but considera- ponement with respect to the remaining 11/2% of their subscrip- tion of this item was postponed until June 4, when Mr. Eugene tions, amounting to $1,862,500 and $596,000 respectively, under NMeyer was nominated and unanimously elected. Mr. Meyer took Article II, Section 8 (a) (ii) of the Articles of Agreement, which office on June 18. provides that an original member which cannot make payment of the 2% of its subscription, payable in gold or United States For mal Commencentent of Operation4 and Calls of Capital ! dollars, because it has not recovered possession of its gold re- The Executive Directors fixed June 25, 1946 as the date serves which are still seized or immobilized as a result of the war, upon which the Bank would formally begin operations. The may postpone all payment of such 2% until suclh date as the member Governments were advised that such date had been Bank may decide. These two requests are under consideration fixed and that, under the Articles of Agreement, the balance by the Executive Directors. of the first 2% of their capital subscriptions, payable in gold In addition to the amount received by the Bank from pay- or 'United States dollars, would be due within sixty days. The ments of 2% of the members' subscriptions, the United States members also were advised of an additional call of 3% of their has paid the call for 3% of its subscription, amounting to $95,- capital subscriptions, payable on or before November 25, 1946, 250,000, and payments have been made by Chile and Costa Rlica in their local currencies. They were notified at the same time of the calls for 3% and 5% of their subscriptions, amounting to that the Bank would make another call, as of September 25, for $2,800,000 and $160,000, respectively. These payments, made a furtlher 5%o of their subscriptions, payable in their respective in the local currencies of the members, aggregate $98,210,000 currencies, by November 25. This further call has now been in value, making the total amount received by the Bank to date autlhorized. At the time this September 25 call is made, notice equivalent to $241,996,883.70 at the time of payment. will be given of the Bank's intention to make two snore calls, Of the total, $14,072,258.62 was received in gold, of which each for an additional 5% of the subscriptions payable in the $9,395,758.64 is held by the Federal Reserve Bank of New York local currencies of the members by FebrLary 25, 1947, and May and $4,676,499.98 is held by the Bank of England. A list of the 26, 1947, respectively. depositories of the Bank, designated by the members, appears in in response to the call for the balance of the first 2% of Appendix "C". the capital subscriptions of members, the Bank received $143,- 786,883.70° of a total of $153,400,000. The unpaid amount is Investmenlt of Funds Received by the Btank in Payment of accounted for as follows: the First 2% of the Subscriptions (1) Payment of 1/2% of the subscriptions of China, Czecho- The question of the investment of the Bank's funids lhas been slovakia, Denmark, Greece, Norway, Poland and Yugoslavia was under consideration by the Executive Directors for some time. They have recently authorized the President or the Vice Presi- s Tciis figure includes the payment of the 1/100 of 1% of the stib- dent to invest, at current market prices, in bills, notes and certifi- sCription of each member made at thle time of its acceptance of the Articles of Agreement, buit it does not include that portion ($1,989,616.30) of the cates of the United States Treasury, maturing not more than payment of $1,990,000 due from the Union of South Africa, represented by twelve months after the date of purchase, the United States gold whliel was reported to have been shipped on Augiist 24, 1946 and to be in transit to the Federal Reserve Bank of New York at the time of the dollars received by the Bank in payment of the first 2% of the preparation of this report. Bank's subscribed capital. 2 3 The Scope of the Bank's Lendirng Operations When the tide of war ebbs, the physical devastation and other physical changes caused by the war are there for all to see. What The purposes of the Bank are clearly set out in Article I is not so obvious are changes in economic and social structure as of the Articles of Agreement as follows: well as the destruction of administrative systems and of the nec- "(i) To assist in the reconstruction and development of essary mechanisms of commerce and industry. On the one hand, territories of members by facilitating the investment of capi- this makes it more difficult to devise plans for a long-run recon- tal for productive purposes, incliding the restoration of econ- struction of the countries concerned; on the other hand, it leads omies destroyed or disrupted by war, the reconversion of inevitably to whole peoples having to preoccupy themselves with prodluctive facilities to peacetime needs and the encourage- 'the mechanics of avoiding starvation. It is not surprising, then, ment of the development of productive facilities and re- sources in less developed countries. ~~~~that there bas been in so many couintries a period durinig wbichi sources n less develope countrines. relief on a large scale has been necessary before there could be "(ii) Togpromote prt rivate foreign investments any thought of preparing major programs of reconstruction. In of guarantees or participations in loans and other investments made by private investors; and when private capital is not this sphere UNRRA provided magnificent assistance and pre- available on reasonable terms, to supplement private invest- vented serious disasters. But the period of relief must come ment by providing, on suitable conditions, finance for pro- to an end, and it is vital that well articulated and productive ductive purposes out of its owA capital, funds raised by it programs of reconstniction and development should be ready and its other resources. against that time. Such programs are the raw material of the "(iii) To promote the long-range balanced growth of Bank's business. The Bank is equipped now to consider appli- international trade and the maintenance of equilibrium in bal- cations for loans to cover such programs aid to investigate themii ances of payments by encouraging international investment with reasonable dispatch. Indeed, the Bank is prepared to con- for the development of the productive resources of members, sider furnishing teclnical assistance in the preparation of loan thereby assisting in raising productivity, the standard of liv- applications. The Articles of Agreement of the Bank prescribe img and conditions of labor in their territories. .,iv) Tonarrang th laoan mer or g b i the standards which it must apply in the consideration of sucl "(iv) To arrange the loanis made or guaranteed by it in relation to international loans through other channels so applications. It is obvious, therefore, that in order to avoid that the more useful and urgent projects, large and small unnecessary delay in the consideration of applications for loans, alike, will be (lealt with first. they must be supported by adequate data whichi will enable "(v) To conduct its operations with due regard to the the Bank to determine whether or not they confonn to the pre- effect of international investment on business conditions in scribed standards. the territories of members and, in the immediate post-war years, to assist in bringinig about a smooth transition from Organization of the Executive Directors a wartime to a peacetimne econiormiy." It might have been expected that with the fonmal com- By action of the Executive Directors, the respective funi>- mencement of operations on the 25th of June, applications for i tions and duties of the Executive Directors and the officers of the loans would have been presented to the Bank in large numbers. Bank have been detennined and the pattern of the Bank's oper- Nevertheless, the Bank has so far received only two letters from ations has been outlined. its mernbers requesting loans. It is expected that these letters Matters of policy determination are the responsibility of thie will soon be followed by properly documented loan applica- I Executive Directors, while operational, administrative, and or- tions, and in the meantime preliminary discussions are taking ganizational questions are the responsibility of the Presidenlt, sub- place. ject to the general direction and control of the Executive Di- The absence of loan applications may be surprising at first rectors. The President is the presiding officer of the Executive sight. But a little reflection will indicate some of the reasons Directors and is entitled to a deciding vote in the case of an why applications have not been received in larger numbers. equal division. 4 5 The Executive Directors are constantly available for con- Organization of Bank's Stag sultation with the administration of the Bank. Formal meetings Although the organizational pattern of the staff must neces- of the Executive Directors are held frequently, and they also sarily remain to a large extent flexible in the present formative meet with the senior members of the staff for informal discus- stage of the Bank's development, the following offices and de- sions concerning the Bank's operations. partments have been established on a tentative basis to carry on the work of the Bank: The Executive Directors established a number of commit- tees even before the selection of the President, and valuable Ofce of the President discussions on various aspects of the Bank's structure and work Ofrice of the Secretary took place in the early months of the Bank's existence. In the Office of the Treasurer sphere of policy the deliberations of the Executive Directors have I Legal Department been carried to the point where provisional conclusions now need Loan Department to be checked and developed by reference to specific and de- Research Department tailed loan applications. Personnel Office Office Services The committees of the Bank have been consolidated into The committees of the Bank bave been consolidated into(1) Office of the PreAident .-In addition to the Presidenit, this standing committees on membership, financial policy, interpre- Office consists of the Vice President and two Assistants to the tation, information and liaison. These committees are composed solely of Executive Directors, but the President has designated President. The Vice President is Mr. Ilarold D. Smith, formerly members of the staff to meet with each of them. The member- Director of the Bureau of the Budget of the United States Gov- ship of the existing standing committees appears in Appen- emment. dix "D". The Bank and the Fund have also agreed that there (2) Office of the Secretary.-Mr. Morton M. Mendels, of shall be a joint standing committee to consider matters of com- Canada, has been appointed Secretary of the Bank. In addi- mon concern to the two institutions. Ad hoc committees have tion to his duties as such staff member, he acts as Secretary of the been and will be established from time to time to consider and Executive Directors and of the Board of Governors. Ile is also make recommendations to the Executive Directors on specific responsible for providing secretariat service for the committees matters referred to them. - of the Executive Directors. Ruls o poceurdenngndreglaingmetins f >Prior to the appointment of Mr. Mendels, Mr. John S. Hooker, Rules of roceduredefiningand reguating metings ofof Chevy Chase, Maryland, acted for several montlis as Tenm- the Executive Directors, the agenda for meetings, voting, commit- ofCey chase m tees, minutes, notices, publicity and amendments, have been porary Secretary. adopted by the Executive Directors. The text of these rules (3) Office of thte Treasurer.-Mr. D. Crena de Iongh, of the of procedure is being submitted separately to the Board of Gov- Netherlands, now an Alternate Executive Director, has been ernors for review pursuant to Section 16 of the By-Laws of the appointed Treasurer. Bank. I The Bank was fortunate in receiving the temporarv assist- ance during July and August of representatives of the Board Proposed Amendments to the By-lawvs of ihe Bank of Governors of the Federal Reserve System of the United States, Po who developed, in conjunction with members of the Bank's staff, Certain amendments to the By-Laws of the Bank will be a chart of accounts for the Bank. proposed to the Board of Governors for their approval. These (4) Legal Department .-This Department is headed by the are being submitted separately for consideration. General Counsel, Mr. Chester A. McLain, of New York, who is responsible for the legal staff of the Bank. 6 7 (5) Loan Department.-Pending the appointment of a per- Bank is in a position to assemble additional personnel as soon as manent Loan Director, Mr. J. W. Beyen, of the Netherlands, it is required. has been acting as Temporary Loan Director in addition to his In recruiting the Bank's staff, two principles have been con- duties as Executive Director. sistently followed: first, that appointees shall have a higlh order For the time being, it is contemplated that the engineering of competence; and second, that the staff be recruited with due and technical staff of the Loan Department will be kept to a regard to geographical representation. minimum and that, to the maximum extent practicable, the tecli- rgr ogorpiaersnain The success of the Bank's operations depends to a large ex- nical services required by the Bank will be secured on a con- tent on the character of its personnel, and it is believed that suiting basis. To this end, discussions have been held with the policy of careful selection will, in the long run, pay large divi- various technical groups for the purpose of enabling the Bank dends in theform of efcient and sound operation. Where neces- to be in a position to call upon technlical experts in the United sary, positions have been filled on a temporary basis pending per- States and elsewhere to advise on lon applications which may manent appointments. By care in the selection of competent be presented. personnel and by the use of expert consultants in connection witli (6) Research Department.-The Research Department is special problems as they arise, the regular staff will be smaller responsible for economic, statistical and other research required than otherwise would be necessary, with resulting benefits in both in connection witlh the operations of the Bank. Mr. Leonard efficiency and economy. B. ftist, of France, formerly an Alternate Executive Director, has been appointed Research Director. Procedare on Loan Applications Discussions have been conducted with the research depart- The Executive Directors and the staff have been engaged in ments of the International Monetary Fund and of the United continuous study of the loan policies to be pursued by the Bank. Nations with the view of arranging for cooperation in the ex- These studies have necessarily been preliminary in nature, since change of statistical and other infonnation and research serv- development of definitive policies in substantial detail can only ices. As a result it is hoped to keep the research staff of the be intelligently undertaken in the light of loan applications which Bank confined to a small group of highly qualified economists shall be received. and statisticians. The Executive Directors have agreed as to the method of (7) Personnel Office.-The Personnel Office is responsible handling loan applications. The procedure will consist of three for personnel matters in connection with the Bank's staff. Mr. stag es William Howell, of Washington, D. C., formerly Personnel Direc- stg tor of UNRRA, is serving as Acting Director of Personnel. After preliminary conversdtions with the applicant, the Presi- (8) Offic Services-Office Srvices isresponsibe for alldent will bring the application before the Executive Directors, so (8) Ofsce Services.-Offince Services is responsible for all that they may decide whether the Bank should proceed with the supply, space, housekeeping, transportation and similar admin- negotiations. If the Executiveo birectors determine that the Bank istrative services. should continue the negotiation>, they will authlorize the President The Bank has been fortunate in receiving, during the past so to proceed and a Loan Committee will be appointed ad lhoc for few montlhs, the assistance of representatives of the Bureau of the the study of the particular application in accordance with the Budget of the United States Government in connection witli the Articles of Agreement. developmenlt of its administrative procedures.| Each Loan Committee will include an expert selected by the member in whose territory the project to be financed is located Recruitment Policies * and one or more members of the technical staff of the Bank. Pending the receipt of loan applications, the Bank has not The Loan Committee will study the proposal and submit attempted to build up its organization beyond its needs, but the a written report to the President with its recommendations con- 8 1 9 ceming the merits of the proposal. The Loan Committee will and that cooperation with the Economic and Social Council of not participate in the actial negotiations, but it will maintain tho United Nations, as well as with other specialized agencies of close touch with the negotiators in order that they may coor- the United Nations, is necessary in the light of the problems of dinate the negotiations with the findinigs of the Loan Committee. mutual concern which arise. Througlhout the procedure the Executive Directors will be A joillt standing committee of the Executive Directors of the kept continuously informed about the progress of the negotia- tions. Bank w the Executive Directors of the International Monetary tions. ultimate proposal of the President, togetlier wit theFund is being created to consider matters of common interest. accompanying report of the Loan Committee, will be brougw t This will serve as a bridge between the two institutions in those re- before the Executive Directors for their final decision. spects in which they should complement each other. The Secre- taries of the Bank and the Fund have also been charged with the Mlarkeititg Policies responsibility of informing each other of new subjects of mutual interest to be considered by the Executive Directors of each in- Preliminary investigation has indicated that most of the funds stitution, and they have been authorized to exchange documlentls required by the Bank in addition to its capital must, for the pres- stituto attey of joit conern. excban ofmts ent, be obtained in the United States. Informal diseussions have pertinent to matters of joint concern. The llChiCiman of the Ex- accordingly been held with representatives of leading invest- ecutive Directors of each of the two institutions will invite a ment bankers, commercial banks, savings banks and insur- representative of the other to attend meetings at which matters ance companies in order to familiarize them with the nature of of common interest are to be discussed, and the two Chairmen the Bank's operations and to obtain their views. will maintain close touch with each other and will propose to In most important states, legislative action will be required the respective Executive Directors additional measures necessary before the Bank's securities can legally be purchased by insur- to insure close cooperation. ance companies or savings banks, or by trustees who are limited The Bank has had representatives in attendance at meetings to investments which are legal for savings banks. Measures have of the Food and Agriculture Organization in Washinigtonj dur- been taken by the United States authorities and by represeiDta- illg the spring and in Copenhagen during the summer, and a rep- tives of institutional investors looking toward the introduction of resentative from the Bank attended meetings in London of the the requisite legislation to pernit such purchases, but most of the Sen-ativsfom the Eankmattend meeing iondon of e Stae lgisatues re ow n rces an wil no mee aginuni Sub-Commission of thle Economic and Social Council on Eco- State legislatuires are now in recess and Will not mteet agaim uintil after January 1, 1947. An encouraging first step was taken by nomic Rleconstruction of Devastated Areas. Observers from the the New York State Legislature at its last session, when it Bank were also in attendance at meetings of the Economic and authorized savings banks in the State of New York to pur- Social Council during June and September. chase securities issued or guaranteed by the Bank. Pursuant to the instructions bf the Board of Govemnors at Preliminary study of the marketing possibilities in Canada their Savannah meeting, a number of discussions have been held has also been undertaken, and studies will be made, as cir- with representatives of the United Nations concerning arrange- cumstances develop, of the possibilities of selling in markets, ments for cooperation, particularly with the Economic anid So- other than the United States and Canada, securities issued or cial Council. The Executive Directors have felt that, pending guaranteed by the Bank. further development of the Bank's activities, it would be premna- ture to attempt to define the exact scope and nature of such co- Cooperation with other International Organizations operation in a written agreement. They believe that the (level- The Executive Directors recognize that the Bank must opment of practical working relationships will be facilitated maintain close relations with the International Monetary Fund, rather than delayed by the absence of a formal agreement. 10 11 Membership Advisory Council Recommendations with respect to the admission of coun- Recommendations in respect of the Advisory Council are tries which have applied for membership in the Bank are being being submitted separately to the Board of Governors in accord- submitted separately to the Board of Governors in accordance ance with iesolution No. 5 of the Board of Governors. with Section 20 of the By-Laws of the Bank. Interpretations Financial Statement By Resolution No. 6, adopted on March 18, 1946, the Board The accounts of the Bank have been audited as of June 30, of Governors referred to the Executive Directors the request of 1946, by Price, Waterhouse & Co. in accordance with Resolu- the Governor for the United States, pursuant to Section 12 of i tion No. 19 adopted by the Board of Directors on September 10, the Bretton Woods Agreement Act, for an interpretation of the 1946. The Auditors' Report appears as Appendix "F". Finan- Articles of Agreement with regard to the authority of the Bank cial statements, as of August 31, 1946, prepared by Office of the to make or guarantee loans for programs of economic reconstruc- Treasurer of the Bank, appear as Appendix "G". tion and the reconstruction of monetary systems, including long- Summary information relating to the Bank's financial con- term stabilization loans. As has been set out in a separate report dition as of August 31, 1946, is given below. to the Board of Governors, to which reference should be made, Total assets were $385,157,513.64. Gold amounted to $14,- the Executive Directors have agreed that such loans are within 072,258.62, of which $9,395,758.64 was held by the Federal lBe- the authority of the Bank. This separate report appears as serve Bank of New York and $4,676,499.98 by the Bank of Eng- Appendix "E". land. Deposits with banks totalled $227,729,955.32, of whiclh The Executive Directors have also rendered two other de- $224,730,887.11 was on deposit with the Federal Reserve Bank cisions with regard to the interpretation of the Articles of Agree- of New York and $39,068.21 with the American Security and ment of the Bank, as follows: Trust Co., Washington, D. C. The account at the American Se- (1) In accordance with Resolution No. 7, adopted by the curity and Trust Company is used for the payment of the Bank's Board of Governors on March 18, 1946, the Executive Directors, operating expenses. $2,960,000, the U. S. dollar equivalent at at their meeting on May 9, 1946, decided that, under Article V, exchange rates in effect at the date of deposit, was in the Cen- Sections 4 (b) (i) and 4 (d) of the Articles of Agreement of tral Banks of Chile and Costa Rica. These deposits in Chile the Bank, any member of the Bank, having one of the five largest and Costa Rica represent payments of the 3%7o stock subscrip- subscriptions to the capital of the Bank at the date of a regular tion call made as of June 25, 1946 and due on or before No- election of Executive Directors or at any date between regular veaber 25, 1946, and the No call made as of Septe4ber 25, 1946, elections of Executive Directors, shall be entitled to appoint an also due on or before November 25, 1946. Executive Director who shall hold office until the next regtular Calls on subscriptions to capital stock outstanding as of election of Executive Directors, without prejudice to the right of August 31, 1946 amounted to $143,353,116.30, includiing outstand- a subsequently admitted member of the Bank to appoint an Ex- ing balances of $9,613,116.30 on the 2% call payable on or before ecutive Director if it has one of the five largest subscriptions to August 24, 1946, and of $133,740,000 on the 3% call payable the capital of the Bank. on or before November 25, 1946. The subscription calls and (2) At their meeting on June 20, 1946, the Executive Direc- payments thereon are discussed in detail in the section of this tors decided that, under Article IV, Section 2 (a) of the Articles Report entitled "Formal Commencement of Operations and Calls of Agreement, the United States does not have power to control of Capital". the use of United States dollars paid to the Bank in lieu of gold Miscellaneous assets of $2,183.40 include travel and other ad- pursuant to Article II, Section 7 (i) of the Articles of Agreement. vances and service deposits. 12 13 Total liabilities of $1,939,676.77 include accounts payable is still in the process of developing its organization and this of $73,948.35, a reserve of $15,728.42 for estimated liability for rate of expenditure will necessarily increase. income taxes on salaries paid through August 31, 1946, and de- Small staffs have been recruited for the offices of the Exec- ferred credits of $1,850,000, the last item representing the ad- utive Directors and their Alternates, the offices of the Presi- vance payments by Chile and Costa Rica of the 5% stock sub- dent, the Secretary, the Treasurer, the General Counsel, the scription call which was not actually made until after August Personnel Office and Offce Services. The Director of the Loan 31, 1946. Department is serving in that capacity on a temporary basis, and Capital stock of $383,500,000 represents the 2%o call of $153,- the Director of the -Research Department only recently assumed 400,000 and the 3%o call of $230,100,000. the duties of his office. The staffs for these departments will be de- The deficit of $282,163.13 is the total of the operating ex- veloped in the light of their requirements. All the operational penses of the Bank to August 31, 1946. uinits will have to be expanded substantially when the Bank be- penses~~~~ ofn the Bank toan Augus 31,rak 1946.ing The accounting system that has been established will reflect gins to make loans and undertake financing. at all times the various member currencies held by the Bank, as Consideration is being given to the development of a re- well as the sources of the funds. tirement system and the provision of various provident funds for employees, consistent with actions being taken by other inter- national organizations. These, if adopted and put into effect, Statement on Administrative Budget will add a further undetermined amount to the cost of operations. Paragraph 4 of Resolution No. 2, adopted by the Board of It would not be difficult to develop an administrative bud- Governors on March 16, 1946, authorized the Temporary Secre- get, based on numerous arbitrary assumptions, which would tary of the Bank, until permanent procedures should be estab- present a forecast purporting to reflect the anticipated ex- lished, to expend up to $200,000 to meet salaries and other admin- pense of operations of the Bank for a given period. I-Iowever, istrative expenses of the Bank, including transportation expenses the many assumptions whichl would have to be made would re- of Governors and their Alternates. The Temporary Secretary sult in figures that could not be accepted as having any founda- made disbursements under such authority until July 15, 1946. tion in fact. 'Ihere is no indication as to the number or com- Tlhereafter, disbursements were made by the President or Vice plexity of the loan applications which will have to be considered, President of the Bank. Total disbursements through July 15, or as to the rapidity with which tlhey will develop. There is 1946 amounted to $75,703.40. no experience on which to estimate the extent of the staff work The expenses of the Bank to August 31, 1946 totaled $282,- which will be required, either in Washington or in the field, 163.13, including accrued expenses and provision for estimated before loans can be approved. Work-load information is com- liability for income taxes on salaries and expenses of Execu- pletely lacking, both as to lending and financing activities, and tive Directors, their Alternates and the staff. Of the total, $33,- there is no similar public or private financing institution witlh 086.50 represented expenses of the Governors and their Alter- which comparison can be made. Any assumptions whicil might nates in attending the meeting at Savannah, Georgia, and $8,- be made, at this stage, therefore, would be extremely speculative. 407.73 represented expenses of the Executive Directors and their The minimum function of budgetary planning should be to Alternates in moving to Washington. furnish to management an intelligent control over operations. At the date of this Report, in addition to the Executive Di- To be useful a budget must be based on anticipations that can rectors and Alternates, the staff and secretarial force of the Bank be reasonably justified. A budget prepared on any other basis totaled 72. Operating expenses, on the basis of the present staff would be useless. and office space, are accruing at a rate of approximately $100,000 Under existing circumstances, it would not be possible to a rnonth, or at an annual rate of $1,200,000. However, the Bank prepare an estimate of operating costs that would be useful. 14 15 However, within a few months sufficient operating experience APPENDIX "A" will have accumulated to justify the development of an ade- Governors and,4lternates of the International Bank quate budgetary control well in advance of the next fiscal year. for Reconstruction and Development Conclusion During the three months since its formal commencement of Member Government Governor Alternate operation, the Bank has attempted to prepare the ground for those tasks of reconstruction and development which will be its I Belgium jean Vauthier Maurice Frere responsibility in the years ahead. If we build skillfully and well Bolivia Rene Ballivian Cald- jaime Gutierrez an international organization to perform those tasks, the Bank eron Cuerra will be able to contribute, as the Member Governments of the Bank intended it should, to the structure of a secure peace. Brazil Francisco Alves dos Edgard cle Mel]o Santos-Filho Canada James L. Ilsley Graham F. Towers Chile Arturo Maschke Luis Davila China 0. K. Yui T. L. Soong Costa Rica Julio Pena Morua Angel Coronas Guar- dia Cuba Joaquin E. Meyer Czechoslovakia Alois Kral Joseph Ilane Denmark Carl Valdemar Erling Sveinbioern- Bramsnaes sson Dominican Republic Jesus Maria Troncoso Jose Ramon Rodri- guez Ecuador Esteban F. Carbo Sixto E. Duran- Ballen Egypt Ahmed Zaki Bey Ahmed Selim Saad El Salvador Federico Vides S. Manuel Melendez V. Ethiopia George A. Blowers France Robert Schuman Pierre Mendes-France Greece Athanase Sbarounis Nicholas. B. Kaskarelis Guatemala Manuel Noriega Mo- Leonidas Acevedo rales 16 17 APPENDIX "B" Executive Directors and Alternates of the International Bank for Reconstruction and Development Honduras Julian R. Caceres Jorge Fidel Duron Iceland Magnus Sigurdsson Thor Thors Member Government Executive Director Alternate India Sir Chintaman Desh- N. Sundaresan United States Emilio G. Collado John S. Hooker mukh United Kingdom Sir James Grigg Maurice ,. Hutton China Yuen-Ting Shen . . Iran A. H. Ebtehaj Mocharraf Naficy L France Pierre Mendes-France 1 Guy de Cannoy Iraq Ali Jawdat A. M. Gailani India N. Sundaresan JaganadhVis:,Wanat c Luxembourg Pierre Duporig Hugues Le Callais Netherlands J. W. Beyen D. Crena de loiigh Mexico Antonio Espinosa de Luciano Wiechers Union of South Africa (Netherlands) (Netherlands) los Monteros Belgium Netherlands P. Lieftinck A. M. de Jong Norway Hubert Agsiaux Thomas Basyn Luxembourg (Belgium) (Belgium) Nicaragua Guillermo Sevilla Sa- Rafael A. Huezo Iceland casa Brazil Norway Gunnar Jahn Ole Colbjoernson Chile A' Panama Joaquin Jose Valla- Phlilippines Victor Moller Femando Illanes rinio Bolivia Vco olrFnad lae--:'-L Costa Rica (Chile) (Chile) Paraguay Harmodio Gonzales Ruben Benitez Guatemala Paraguay Peru Carlos Montero Ber- Jose Barreda Moller Panama nales Czechoslovakia Philippine Republic Joaquin M. Elizalde Poland Leon Baranski Alois Kral Poland Konstanty Dabrowski Janusz Zoltowski Yugoslavia (Poland) (Czechoslovakia) Union of South Africa Jan lIendrik Hof- M. H. de Kock Mexico meyr Cuba (J. H. Elolloway, act- Peru ing) Uruguay Ecuador Dominican Republic Luis Machado Aramis Alvarez l United Kingdom Hugh Dalton Sir James Grigg El Salvador (Cuba) (Cuba) United States John W. Snyder William L. Clayton Honduras Uruguay ~~~~~~~~~~~~~~~~~~Nicaragua Uruguay Hugo Garcia Canada R. B. Bryce J. F. Parkinson E Yugoslavia Lavoslav Dolinsek Ivan Randic Greece Iran Kyriakos Varvaressos Mocharraf Naficy Iraq (Greece) (Iran) Ethiopia 18 19 APPE;NDtX "C" APPENDIX "D" List of Depositories Membership of Standing Committees Member Government Depository Designated Canada Banik of Canada Committee on Financial Policy Chile Banco Central do Chile Leon Baranski J. W. Beyen, Chairman R. B. Bryce Chinia Central Bank of China in Emilio G. Collado Shanghai Sir James Grigg Luis Machado Costa Rica Banco Nacional de Costa Rica Committee on Interpretation El Salvador Central Reserve Bank of El Sal- C vador Hubert Ansiaux Victor Moller France Banque de France Yuen-Ting Shen N. Sundaresan Grecce Bank of Greece Kyriakos Varvaressos, Chairrna Committee on Me-mbersitip India The Reserve Bank of India Hubert Ansiaux Iran Bank Melli Iran Leon Baranski B. B. Bryce Iraq Rafidain Bank Victor Moller Yuen-Ting Shen, Chairman Mexico Bank of Mexico Committee on Liaison Netherlands General Treasury of the Depart- Sir James Grigg, Chairmnan ment of Finance Pierre Mendes-France Victor Moller Nicaragua The Emission Department of the N. Sundaresah National Bank of Nicaragua Kyriakos Varvaressos Republic of the Philippines Bureau of the Treasury Committee on Information Poland Narodowy Bank Polski J. W. Beyen Emilio C. Collado United Kingdom Bank of England Sir James Grigg Luis Machado Pierre Mendes-France, Cbairr! jan United States Federal Reserve Bank of New York 20 21 APPENDIX "E" | The Committee, having carefully examined the question in the light of the provisions of the Articles of Agreement of the Report of the Executive Directors to the Board of Governors Bank and of statements and memoranda which have been sub- on Interpretation of the Articles of Agreensent mitted to the Committee with regard thereto, presents the follow- ing report and recommendations to the Executive Directors: Pursuanlt to Resolutionl No. 6 of thle Board of Governors, the 1. The question presented by Section 12 of the Bretton Executive Directors lhave interpreted the Articles of Agreement Woods Agreements Act rclates to the general purposes for which with respect to the authority of the Bank to make or guarantee the Bank is authorized to make or guarantee loans and the scope loans for programs of economic reconstruction and the recon- of the authority of the Bank to make or guarantee loans. struction of monetary systems, including long-tenm stabilization loans, by approving the following report of their Committee on 2. Article I of the Articles of Agreement of the Bank sets Interpretatioin, forth the purposes of the Bank as follows: (i) To assist in the reconstruction and development of ter- IIEPORT OF TIIE COMMvIITTEE; ON INTERPRETATION ritories of members by facilitating the investment of capital for Section 12 of The Bretton Woods Agreements Act of the productive purposes, including the restoration of economiiies dIe- United States of America provides as follows: stroyed or disrupted by war, the reconversion of productive facilities to peacetime needs and the encouragement of the de- poinTedby thvernUnitd Statesutae herebydirec tf toe oBtaink velopment of productive facilities and resources in less devel- pointedl by the United States are hereby directed to obtain oped countries. promptly an official interpretation by the Bank as to its au- thority to make or guarantee loans for programs of economic (ii) To promote private foreign investment by means of reconstruction and the reconstuction of monetary systems, guarantees or participations in loans and otlher investmenits made including long-term stabilization loans. If the Bank does by private investors; and when private capital is not available on not interpret its powers to include the making or guaran- reasonable terms, to supplement private investmcnt by pro- teeing of such loans, the Governor of the Bank representing viding, on suitable conditions, finance for productive purposes the United States is hereby directed to propose promptly out of its own capital, funds raised by it and its other resources. and support an amendment to the Articles of Agreement (iii) To promote the long-range balanced growth of inter- for the purpose of explicitly authorizing the Bank, after national trade and the naintenance of equilibrium in balances of constultation with the Fund, to make or guarantee such paymen loans. The President is hereby authorized and directed to payments by encouraging international investment for the de- accept an amendment to that effect on behalf of the United velopment of the productive resources of members, thereby as- States. sisting in raising productivity, the standard of living and condi- tions of labor in their territorieS. Resolution 6, adopted by the Board of Govennors of the Bank on NMarch 18, 1946, provides as follows: (iv) To arrange the loans ttiade or guaranteed by it in rela- That the Executive Directors of the International Bank tion to interuational loans through other channels so that the for Reconstruction and Development are invited, at theBi more useful and urgent projecb, large and small alike, will be request of the Govenmor for the United States of America, dealt with frst. to interpret the Articles of Agreement, pursuant to Article (v) To conduct its operations with due regard to the cf- IX (a), as to the authority of the Bank to make or guarantee fect of international investment on business conditions in the loans for programs of economic reconstruction and the territories of members and, in the immediate postwar years, to reconstruction of monetary systems, including long-term sta- assist in bringing about a smooth transition from a wartime to bildzation loans. a peacetime economy. The Executive Directors of the Bank have referred the matter The Bank shall be guided in aU its decisions by the pumposes to this Committee. set forth above. 22 23 3. The relevant provisions of Article III of the Articles of schedule for repayment of principal are appropriate to the project. Agreement of the Bank with regard to the making or guarantee- (v) In making or guaranteeing a loan, the Bank shall pay ing of loans by the Bank are as follows: due regard to the prospects that the borrower, and, if the bor- Section 1. Use of Resources rower is not a member, that the guarantor, will be in position Section 1. Use of Resources to meet its obligations under the loan; and the Bank shall act (a) The resources and the facilities of the Bank shall be prudently in the interests both of the particular member in used exclusively for the benefit of members with equitable con- whose territories the project is located and of the members as sideration to projects for development and projects for recon- a whole. struction alike.e struction alike. (vi) In guaranteeing a loan made by other investors, the (b) For the purpose of facilitating the restoration and recon- Bank receives suitable compensation for its risk, struction of the economy of members whose metropolitan terri- (vii) Loans made or guaranteed by the Bank shall, except tories have suffered great devastation from enemy occupation or in special circumstances, be for the purpose of specific projects lhostilities, the Bank, in determining the conditions and terms of of reconstruction or development. loans made to such members, shall pay special regard to light- ening the financial burden and expediting the completion of such Section 5. Use of loans guaranteed, participatedl in or restoration and reconstruction, made by the Bank. Section 3. Limitations on guarantees and borrowings of the Bank (a) The Bank shall impose no conditions that the proceeds The total amount outstanding of guarantees, participations in of a loan shall be spent in the territories of any particular member loans and direct loans made by the Bank shall not be increased or members, at any time, if by such increase the total would exceed one (b) The Bank shall make arrangements to ensule that the hundred percent of the unimpaired subscribed capital, reserves proceeds of any loan are used only for the purposes fur which and surplus of the Bank. the loan was granted, with due attention to considerations of Section 4. Conditions on which the Bank may guarantee or economy and efficiency and without regard to political or otller make loans non-economic infltuences or considerations. The Bank may guarantee, participate in, or make loans to (c) In the case of loans made by the Bank, it shall open an any member or any political sub-division tlereof and any busi- account in the name of the borrower and the amount of the loan ness, industrial, and agricultural enterprise in the territories of shal he credited to this account in the currency or currencies a member, subject to the following conditions: in which the loan is made. The borrower shall be perrmitted by (i) When the member in whose territories the project is lo- the Bank to draw on this account only to meet expenses in con- cated is not itself the borrower, the member or the central bank nection with the project as they are actually incurred. or some comparable agency of the member which is acceptable 4. The expression "loans for programs of economic recon- to the Bank, fully guarantees the repayment of the principal struction and the reconstruction of monetary systems, including and the payment of interest and other charges on the loan. long-ten-n stabilization loans," Is not defiined either in the Bretton (ii) The Bank is satisfied that in the prevailing market con- Woods Agreements Act or in the above-quoted Resolutioni No. 6. ditions the borrower would be unable otherwise to obtain the There is no reason to doubt, however, that loans of the kinds in- loan under conditions which in the opinion of the Bank are rea- tended to be included in such expression fall within the general sonable for the borrower. t purposes for which the Bank is authorized to make or guaranltee (iii) A competent committee, as provided for in Article V, loans. With regard to any particular loan the only question Section 7, has submitted a writen report recommending the would be whether or not it complied with the conditions speci- project after a careful study of the merits of the proposal. fied in the above-quoted provisions of Article III of the Articles (iv) In the opinion of the Bank the rate of interest and of Agreement of the Bank. Such conditions apply generally to other charges are reasonable and such rate, charges and the all loans made or guaranteed by the Bank. 24 25 Among those conditions is the condition set forth in para- tors, the Committee recommends that this report be transmitted graph (vii) of Section 4 of Article III that "Loans made or guar- to the Board of Governors as the decision of the Executive Direc- anteed by the Bank shall, except in special circumstances, be tors in accordance with the above-quoted Resolution No. 6 of the for the purpose of specific projects of reconstruction or develop- Board of Governors. ment." It is obvious that many of the loans referred to in Sec- tion 12 of the Bretton Woods Agreements Act would be "for Committee on Interpretation the purpose of specific projects of reconstruction or development," [Signed] Kyriakos Varvaressos (Chairman) within the meaning of the above-quoted provision of Section Hubert Ansiaux 4 (vii) of Article III of the Articles of Agreement of the Bank. T Victor Moller But without at this time attempting to determine what would con- Yuen-Ting Shen stitute a specific project of reconstruction or development within N. Sundaresan the meaning of that Section, it is sufficient to point out that under such Section the Bank is authorized "in special circumstances" to make or guarantee loans other than for purposes of specific projects of reconstruction or development, provided, of course, that such loans come within the general purposes of the Bank I as set forth above. It follows, therefore, that, under Article III, Section 4 (vii) of the Articles of Agreement, the Bank, while primarily expected to make or guiarantee loans for specific proj- ects of reconstruction and development, does have authority to make or guarantee loans for programs of economic reconstruc- tion and the reconstruction of monetary systems, including long- term stabilization loans, even if such loans are not for specific projects of reconstruction or development within the meaning of such Section. 5. In determining whether or not to make or guarantee any such loan, it is, of course, for the Bank to decide whether or not such loan conforms to the conditions specified in the above-quoted provisions of Article III of the Articles of Agreement of the Bank, and, in the case of a loan which is not for the purpose of a specific project of reconstruction or development, it is for the Bank to decide whether special circumstances exist which jus- tify it in making or guaranteeing such loan. 6. The Committee is, therefore, of opinion that, under the Articles of Agreement, the Bank has authority to make or guar- antee loans for programs of economic reconstruction and the reconstruction of monetary systems, including long-term stabili- zation loans, and the Committee recommenids that the Executive Directors so decide. 7. If this report shall be approved by the Executive Direc- 26 27 APPENDIX "F" Exhibit A Auditors' Report INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PRICE, WATERHOUSE & CO. Statement of Menbers' Subscriptions to Capital Stock and( APRICEWAT ERI-IOUS B Co. Balanes Duie on Calls-June 30, 1946 AMEnlCAN SECURI11r BUILDING Washington 5, D. C., September 19, 1946 (Expressed in U. S. Dollars) Amounts Amounts Balances receivable called received ___at June 30,_1946 To The Executive Directors, Member Country Subscription to to Due Due June 30, June 30, Total Auig. 24 Nov. 25 International Bank for Reconstruction Shares Amount 1946 1946 1946 1946 and Development, Belgium - . 2,250 $225,000,000 $11,250,000$22,500 $11,227,500 $4,477,500 $6,750,000 Washington, D. C. Bolivia ___ 70 7,000,000 350,000 700 349,300 139,300 210,000 Brazil - , - . 1,050 105,000,000 5,250,000 10,500 5,239,500 2,089,500 3,150,000 We have examined the accompanying financial statements Canada -- 3,250 325,000,000 16,250,000 32,500 16,217,500 6,467,500 9,750,000 of the International Bank for Reconstruction and Development Chile. --- 350 35,000,000 1,750,000 3,500 1,746,500 696,500 1,050,000 as of June 30, 1946. Our examination was made in accordance China .- - 6,000 600,000,000 30,000,000 60,000 29,940,000 11,940,000 18,000,000 with generally accepted auditing standards applicable in the eir- Costa Rica --- 20 2,000,000 100,000 200 99,800 39,800 60,000 cuinstances, and included such tests of the accounting records and Cuba-- _ 350 35,000,000 1,750,000 3,500 1,746,500 696,500 1,050,000 other supporting evidence and such other procedures as we con- Czechoslovakia -- 1,250 125,000,000 6,250,000 12,500 6,237,500 2,487,500 3,750,000 sidered necessary. Denmark -- 680 68,000,000 3,400,000 6,800 3,393,200 1,353,200 2,040,000 In our opinion, the accompanying financial statements pre- Dominican Republic ------- 20 2,000,000 100,000 200 99,800 39,800 60,000 sent fairly the position of the Bank at June 30, 1946, and the re- Ecuador _ _ 32 3,200,000 160,000 320 159,680 63,680 96,000 sults of its transactions from December 27, 1945 (the date when Egypt .-.-_- - _ 400 40,000,000 2,000,000 4,000 1,996,000 796,000 1,200,000 the Articles of Agreement establishing the Bank entered into El Salvador --- 10 1,000,000 50,000 100 49,900 19,900 30,000 force), to June 30, 1946, in conformity with generally accepted Ethiopia - - 30 3,000,000 150,000 300 149,700 59,700 90,000 accounlting principles. France - -. 4,500 450,000,000 22,500,000 45,000 22,455,000 8,955,000 13,500,000 Greece - - 250 25,000,000 1,250,000 2,500 1,247,500 497,500 750,000 Guatemala -- 20 2,000,000 100,000 200 99,800 39,800 60,000 Honduras . - 10 1,000,000 50,000 100 49,900 19,900 30,000 Iceland - 10 1,000,000 50,000 100 49,900 19,900 30,000 __________________ .____ _ India ._ 4,000 400,000,000 20,000,000 40,000 19,960,000 7,960,000 12,000,000 Iran _ - _ 240 24,000,000 1,200,000 2,400 1,197,600 477,600 720,000 PnlCE, WATERHOUSE & CO. Iraq _ 60 6,000,000 300,000 600 299,400 119,400 180,000 Luxembourg 100 10,000,000 500,000 1,000 499,000 199,000 300,000 Mexico -650 65,000,000 3,250,000 6,500 3,243,500 1,293,500 1,950,000 Netherlands___ 2,750 275,000,000 13,750,000 27,500 13,722,500 5,472,500 8,250,000 Nicaragua-- 8 800,000 40,000 80 39,920 15,920 24,000 Norway-- - - 500 50,000,000 2,500,000 5,000 2,495,000 995,000 1,500,000 28 29 l~~~~~~~~~~2 INTERNATIONAL BANK FOR Exhibit A (cont.) RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT BALANCE ShEET-JUNE 30,1946 Statementt of MIembers' Subscriptions to Capital Stock and Balances due on Calls Jutne 30, 1946 SExpressed in (Expressed in U. S. Dollars) ASSETS Due from banks (United States currency) --. . $159, 136, 919 Amounts Amounts Balances Receivable Receivable from members for calls on called received at June 30, 1946 subscriptions to capital stock: Subscription ~~to to Due Due I usrpin ocptlsok Member June 30 June 30 Aug 4 Due -Due August 24, 1946.__ __ $89,450, 500 Country Shares Amount 1946 1946 Total 1946 1946 2 Due November 25, 1946 -- 34, 850, 0000 $224,300,500 Panama . 2 200,000 10,000 20 9,980 3,980 6,000 Paraguay-=. 8 800,000 40,000 80 39,920 15,920 24,000 Other assets $383,- . _ - - --- -- -- -- 483 Peru 175 17,500,000 875,000 1,750 873,250 348,250 525,000 Philippines._ 150 15,000,000 750,000 1,500 748,500 298,500 450,000 Poland .----- 1,250 125,000,000 6,250,000 12,500 6,237,500 2,487,500 3,750,000 Union of LIABILITIES AND CAPITAL Union of _ _ _ _ _ _ _ _ _ _ _ _ _ _ Southi Africa - 1,000 100,000,000 5,000,000 10,000 4,990,000 1,990,000 3,000,000 Accounts payable and accrued expenses - _ . . 63, 061 United Kingdom-. 13,000 1,300,000,000 65,000,000 130,000 64,870,000 25,870,000 39,000,000 Capital stock: United States Authorized-100,000 shares of America. 31,750 $3,175,000,000 $158,750,000 $158,750,000 ...... . of $100,000 par value each --- -. $10,000,000,000 Uruguay _ 105 10,500,000 525,000 1,050 523,950 208,950 315,000 Yugoslavia.__ 400 40,000,000 2,000,000 4,000 1,996,000 796,000 1,200,000 Subscribed but not issued-76,700 i shares _ _ _ - --_ $7,670,000,000 Totals - 76,700 $7,670,000,000 $383,500,000 $159,199,500. 224,300,500 $89,450,500 $134,850,000 ___________________ _________ _________ Less-Uncalled portion of sub- Notes: scriptions --_ - 7,286,500,000 Notes: ............................ I - 383,500,000 (A) The amounts of subscriptions called to June 30, 1946 comprised- Deduct: One one-hundredth of one percent, payable by members Organization and other initial at the time of signing the Articles of Agreement_ _-_-_- $ 767,000 expenses from December 27, Balance of the first two percent, payable on or before 1945 to June 30, 1946 __ 125,159 August 24, 1946 - --- ....----- - _ - _ _-_-_-_-__ 152,633,000 19438353o4un 30 46841 Three percent, payable on or before November 25, 1946 230,100,000 ,3, Total, as above. ___.___._.- _$383,500,000 $ 383,437,902 (B) In August 1946, the Executive Directors authorized deferment until June 25, 1951 of amounts equal to one-half of one percent of subscriptions with. respect to calls payable by certain members, as follows: China $3,000,000; Czechoslovakia $625,000; Denmark $340,000; Greece $125,000; Norway $250,000; Poland $625,000; Yugoslavia $200,000; (total $5,165,000). Additional deferments have been requested by Czechoslovakia and Yugo- slavia with respect to the remainder of the balances due August 24, 1946 from those members, $1,862,500 and $596,000, respectively. Action on these two requests was still pending at the date of this report. 30 Exhibit A APPENDIX "G' Financial Statements as of August 31, 1946 Exhtibit C INTERNATIONAL BANK FOR RECONSTRUCTION AND D)EVELOPMENT INTERINATIONAL BANK FOR Balance Sheet-A ugasd 31, 1946 RECONSTRUCTION AND DEVELOPMENT AST GOLD (Valued at $35 per fine troy ounce) Federal fleerve Bank o Ne --York -- $9,395,758.64 Stntermenfe of Organtizatioit and Other ltuitial Expenses FeerlReeveBnko_NwYok4 _7_4998_4_7_26 From Dpeee,,sler 27, 1945, to June 30, 1946 1ako nln ---- _----- -- --- DUE FRIOM BIANKS Member Currency- Expressed in United States: U. S. dollars Federal Rleserve Bank of New Yok--.-.---.. $224,730,887.11 Salaries ad expense llowances ~ Executiv DirectorsAmerican Security Salaries and xpense allowaces (it Execuive Directorsand Trtust Co., and Alternates-...._ ....------ -----$28,372 Washington, D. C.- 39,068.21 $224,769,955,32 Member Currency- Other salaries- Othier than United States--Note A 2,960,000.00 227,729,955.32 Officers .......................-- 821 CALLS ON SUBSCRIIPTIONS TO CAPI- TAL STOCK-Note D Staff------- - - --- ------- ---- 7,478 2% Cal: Payment Provision for reimbursement of income taxes on salaries in process-...... ---$1,980,616.30 and expense allowances (smae) 3,308 Pending requests for deferment -- ----------- 2,458,500.00 Payments Deferred Travel- until June 25, 1951 ------5,165,000.00 $9,613,116.30 3% Call: 133.740,000.00 143,353,116.30 Governors and Alternates-...-..... - --- -- __ 33,086 MISCELLANEOUS ASSETS 2,163.40 TOTAL ASSETS 35T?1R4 Other ........ ...............____----------------------- ,364LIABIL MT ES AND) CAPITAL RIentIal of office -q-a-t- --.- ------------ 4,772 LUABELITIES Accounts payable and accrued Stationery and( supplies 5262--- -----expenses $73,948.35 - ---------- - 52 Reserve for estimated liability1,284 for income tax on salaries15284 Postage, telephone, telegraph and cal . 2,209 Deferred credits-advance paymoents on stock subscrip- MisceUaneous expense 2,410 tion _________ $000,67.7 Office furniiture anid cqimn...~30,077 ITOTAL LtABILITIES CAPIfAL - $125,159 Capital, Stock $100,000 par value ________ ~~~~~Authorizedl 100,000 shares tlnsubseribedi 23,300 shares Subscribed ~ 76000000 L-ess: Subscriptions not Called 1 7 286,500,0~00.001 $383,500,000.00 Deduct: Deficit (Exhibit B) 282,163.13 $383,217,836.87 TOTAL LIAB3ILITIES AND CAPITAL $385,~157,513.6 Note A-Converted to U. S. dollars at rates of exchange in effect 32 at date of deposit. Note B3-As of June 25, 1946, 2% and 3%7 capita] stock subscrip- tion calls were mnade, payable on or befor-e August 24, 1946 and November 25, 1946, respectively. 33 Exhiibit C Exhibit B INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT RECONSTRUCON AND DEVELOPMENT INTERNATiONAL BANK FOR Statement of Receipts and Disbursements From July 1, 1946 to August 31, 1946 I FUNDS DERIVED FROM 2% CALL ON STOCK SUBSCRIPTIONS DEFICIT JUNE 30, 1946 BALANCE JULY 1, 1946 $63,886,919.33 Operating Expenses from RECEIPTS the beginning of operations Payments on call $79,837,383.70 of the Bank (including Deduct: expenses of the inaugural DISBURSEMENTS meeting of the Board of Operating Expenses: Governors in Savannah, (Exhibit B) - $ 157,004.77 Ga.) $125,158.36 Deduct: Expenses Unpaid as of Add: Aug. 31, 1946. _- 75,043.44 OPERATING EXPENSES FOR TIIE Payment of Expenses$ 8191.33 PERIOD FROM JULY 1 TO AUGUST Unpaid at June 30, 1946- $ 48,427.76 31, 1946 Miscellaneous Advances 1,700.00 132,089.09 79,705,294,61 Salaries BALANCE AUGUST 31, 1946 $ ,592,2i3.94 Executive Director and REPRESENTED BY: Alternates __ __ _ __ .$ 42,447.72 Federal Reserve Bank of Officers ---------------------------- ._..... 15,647.99 New York - ___ $ 9,395,758.64 Othiers ---------------- - 15479 Bank of Enln.---- 4,676,499.98 $14,072,258.62 Others _~ - _ _ _ _25229.97 $83,325.68 MEMBER CURRENCY- Expense Allowance- UNITED STATES Executive Directors Federal Reserve Bank of and Alternates 2,006.46 New York Provision for Incorne Account B ____ __-$lZ9,480,887.11 Taxes on Salariesnc American Security and Taxes on Salaries ~~~~~~~~~~12,420.36 Trust Co., Wash., D. C- 39,068.21 $129,519,955.32 Transportation and Moving Total $143,592,213.94 to Seat of Bank 1,388.52 U FUNDS DERIVED FROM 3% CALL Travel: AND ADVANCE PAYMENT ON 5% Executive Directors and CALL ON STOCK SUBSCRIPTIONS Alternates - - $ 70.23 BALANCE JULY 1, 1946 $95,250,000.00 Others - __- 1-103 29 1,173 RECEIPTS Xental0of3OfficeQuarters79546 1132 Payments on 3% call $1,110,000.00 Rental of Ofrice Quarters 7,546.11 Advance payment on 5% Furniture and Equipment 37,175.61 call 1,850,000.00 2,960,000.00 Stationery, Printing and BALANCE AUGUST 31, 1946 $98,210 000.00 Supplies 4,577.05 REPRESENTED BY; Telephone and Telegraph 285.38 Federal ccount A-,$ 95,250,Rr00 00 Cable Charges 3,412.89 Currency Depositories of Handling, Shipping and Members other than Storage of Gold 52.10 United States - - 2,960,000.00 Books and Periodicals 241.11 III COMBINED FUNDS Rental of Equipment 36.50 BALANCE JULY 1, 1946 $159,136,919.33 Repairs, Maintenance and RECEIPTS Alterations: Payments on 2% call on Rented Quarters - __-- $ 3,257.36 i Stock Subscriptions $79,837,383.70 Payments on 3% call on Furniture and Equipment_ 45.50 3,302.86 Stock Subscriptions 1,110 000.00 Mtiscellaneous 60.62 157,004.77Advance payments on 5%10 Mi s 60.62 157,004.77 call on Stock Subscriptions 1,850,000.00 82,797,383.70 DEFICIT, AUGUST 31, 1946 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~$241,914,303.03 DEFIcIT, AUGUST 31, 1946 $282,163.13 DISBURSEMENTS 132,03909 34 (From Item I above) BALANCE AUGUST 31, 1946 $241,802,213.94 35 Exhibit D INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT STATEMENT OF CAPITAL STOCK-AUGUST 31, 1946 SUBSCRIBED CALLS ON SUBSCRIPTIONS 1/ PAYMENTS UNPAID BALANCES ON CALLS AMOUNT ON CALLS 2/ 2% Call 1/100 of1% Balance of 2% 3% Total Deferrents S/ Other 4/ 3% Call 1/ TOTAL Belgium _ __$225,000.000. $ 22,500. $ 4,477.500. $ 6,750,000. $ 11,250,000. $ 4,500,000. $ _ $ __ $ 6,750,000. $ 6,750,000. Bolivia _ 7,000,000. 700. 139,300. 210,000. 350,000. 140,000. ____ _ 210,000. 210,000. Brazil - - - 105,000,000. 10,500. 2,089,500. 3,150,000. 5,250,000. 2,100,000. _ 3,150,000. 3,150,000. Canada _____3 325,000,000. 32,500. 6,467,500. 9,750,000. 16,250,000. 6,500,000. ___ 9,750,000. 9,750,000. Chile 35,000,000. 3,500. 696,500. 1,050,000. 1,750,000. 1,750,000. China _ __. ___600,000,000. 60,000. 11,940,000. 18,000,000. 30,000,000. 9,000,000. 3,000,000. 18,000,000. 21,000,000. Costa Rica . 2,000,000. 200. 39,800. 60,000. 100,000. 100,000. _ ______ Cuba __ ___ _ 35,000,000. 3,500. 696,500 1,050,000. 1,750,000. 700,000. ___ 1,050,000. 1,050,000. Czechoslovakia __ 125,000,000. 12,500. 2,487,500. 3,750,000. 6,250,000. 12,500. 625,000. 1,862,500. 3,750,000. 6,237,500. Denmark ___ 68,000,000. 6,800. 1,353,200. 2,040,000. 3,400,000. 1,020,000. 340,000. _ 2,040,000. 2,380,000. Dominican Republic 2,000,000. 200. 39,800. 60,000. 100,000. 40,000. _- _ ___-60,000. 60,000. Ecuador - _ - .3,200,000. 320. 63,680. 96,000. 160,000. 64,000. . 96,000. 96,000. Egypt 40,000,000. 4,000. 796,000. 1,200,000. 2,000,000. 800,000. --- _ 1,200,000. 1,200,000. El Salvador __ -1,000,000. 100. 19,900. 30,000. 50,000. 20,000. 30,000. 30,000. Ethiopia - -- _ 3,000,000. 300. 59,700. 90,000. 150,000. 60,000. _ 90,000. 90,000. France _ .450,000,000. 45,000. 8,955,000. 13,500,000. 22,500,000. 9,000,000. _-_-__-__ 13,500,000. 13,500,000. Greece 25,000,000. 2,500. 497,500. 750,000. 1,250,000. 375,000. 125,000. 750,000. 875,000. Guatemala __ _____2,000,000. 200. 39,800. 60,000. 100,000. 40,000. _ 60,000. 60,000. Honduras A______1,000,000. 100. 19,900. 30,000. 50,000. 20,000. ___ 30,000. 30,000. Iceland _ 1,000,000. 100. 19,900. 30,000. 50,000. 20,000. _ 30,000. 30,000. India _- ____400,000,000. 40,000. 7,960,000. 12,000,000. 20,000,000. 8,000,000. _ 12,000,000. 12,000,000. Iran __ ________ 24,000,000. 2,400. 477,600. 720,000. 1,200,000. 480,000. 720,000. 720,000. Iraq - ------6,000,000. 600. 119,400. 180,000. 300,000. 120,000. _ __ __180,000. 180,000, Luxembourg _ __10,000,000. 1,000. 199,000. 300,000. 500,000. 200,000. _ 300,000. 300,000. Mexico _ _65,000,000. 6,500. 1,293,500. 1,950,000. 3,250,000. 1,300,000. _ 1,950.000. 1,950,000. Netherlands _____ 275,000,000. 27,500. 5,472,500. 8,250,000. 13,750,000. 5,500,000. _.__ 8,250,000. 8,250,000. Nicaragua __ __ 80,000. 80. 15,920. 24,000. 40,000. 16,000. -_-_-_- 24,000. 24,000. Norway __ __ ___50,000,000. 5,000. 995,000. 1,500,000. 2,500,000. 750,000. 250,000. 1,500,000. 1,750,000. Panama -- 200,000. 20. 3,980. 6,000. 10,000. 4,000. _ _ 6,000. 6,000. Paraguay _.________800,000. 80. 15,920. 24,000. 40,000. 16,000. _ - 24,000. 24,000. Peru __ ____17,500,000. 1,750. 348,250. 525,000. 875,000. 350,000. .------ 525,000. 525,000. Republic of the Philippines___ _ 15,000,000. 1,500. 298,500. 450,000. 750,000. 300,000. _ __ _____ 450,000. 450,000. Poland _ 125,000,000. 12,500. 2,487,500. 3,750,000. 6,250,000. 1,875,000. 625,000. 3,750,000. 4,375,000. Union of S. Africa _ 100,000,000. 10,000. 1,990,000. 3,000,000. 5,000,000. 10,383.70 -- 1,989,616.30 3,000,000. 4,989,616.30 United Kingdom _ 1,300,000,000. 130,000. 25,870,000. 39,000,000. 65,000,000. 26,000,000. ___ _ 39,000,000. 39,000,000. United States __..3,175,000,000. 317,500. 63,182,500. 95,250,000. 158,750,000. 158,750,000. _______ Uruguay - ..- - ___. 10,500,000. 1,050. 208,950. 315,000. 525,000. 210,000. --_ - 315,000. 315,000. Yugoslavia - _-- 40,000,000. 4,000. 796,000. 1,200,000. 2,000,000. 4,000. 200,000. 596,000. 1,200,000. 1,996,000. $7,670,000,000. $767,000. $152,633,000. $230,100,000. $383,500,000. $240,146,883.70 $5,165,000. $4,448,116.30 $133,740,000. $143,353,116.30 1/ 2% of the subscriptions to the capital stock of the Bank was payable in gold or United States dollars, 1/100 of 1% of the subscription being payable at the time the agreement was signed and the balance being payable on or be- for August 25, 1946, 3% of such subscriptions payable in the currencies of the respective members of the Bank was called, as of June 25, 1946, for payment on or before November 25, 1946. 2/ Balances of the 2% on subscriptions were paid in gold by Belgium, Chile, Ethiopia, Luxembourg, Mexico, Nether- lands, Nicaragua and Poland. 3/ Deferments of 1/2 of 1% of subscriptions granted pursuant to Art. II, Sec. 8(a)(i). 4/ Czechoslovakia and Yugoslavia have requested deferment of the balance of 11 2% of their subscriptions pursuant to Art. II, Sec. 8(a)(ii). These requests are still under consideration. The Union of South Africa is reported to have shipped gold on August 24, 1946, in payment of balance.