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1962 annual meeting of board of governors of inter bank for recon and dev



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2 7 SEP 1962 V .-? '

STATEMENT BY THE R M S O T rirB A M D HOLT M.P.

AT THE 1962 ANNUAL MEETING OF THE BOARD OF

GOVERNORS OF' THE INTERNATIONAL MONETARY FUND

ON 19TH SEPTEMBER, 1962.

" Once a g a in we a r e in d e b te d to Mr. Per Ja co b sso n f o r

a n o th e r m a s te r ly survey o f th e World Monetary scene.

Each y e a r we s i t r e s p e c t f u l l y a t th e f e e t o f t h i s

b en ig n economic p h ilo s p h e r and d e p a r t w i s e r , we hope, b u t

c e r t a i n l y b e t t e r inform ed.

We c o n g r a t u la te you a l s o , Mr. Chairman, f o r th e

s p le n d id i n t r o d u c t i o n you gave i n th e speech w ith which you

in tro d u c e d o u r d i s c u s s i o n s .

You a r e a v e t e r a n o f th e s e g a t h e r in g s and we a r e a l l

a b le to p r o f i t by th e knowledge and i n s i g h t d is p la y e d i n y o u r

p r e s e n t a t i o n .

I should l i k e to j o i n i n th o se w e ll m e rite d t r i b u t e s

t h a t have been made by o t h e r s to Mr. Cochran on h i s r e tir e m e n t

a s Deputy Managing D i r e c t o r o f th e Fund.

He ta k e s w ith him o u r warm r e g a r d s and b e s t w is h e s .

May I a l s o e x p re s s my p le a s u r e a t th e appointm ent o f

Mr. S o u th ard as h i s s u c c e s s o r .

The g r e a t d i s t i n c t i o n w ith which he has c a r r i e d o u t

h i s d u t i e s as E x e c u tiv e D i r e c t o r f o r th e U n ite d S t a t e s w i l l have

s a t i s f i e d a l l o f us t h a t an e x c e l l e n t choice, has been made.

I welcome th e r e c o g n i t i o n g iv e n i n th e sp e e c h e s, b oth

o f you, Mr, Chairman, and o f Mr. Ja c o b sso n , to th e problems

c r e a te d by u n fa v o u ra b le term s o f tr a d e f o r th e p rim ary p ro d u cin g

c o u n t r i e s .

These c o u n t r i e s have, o v er t h e i r h i s t o r y , been

s u b j e c t to more v i o l e n t f l u c t u a t i o n s b o th i n t h e i r term s o f

tr a d e and i n t h e i r b a la n c e s o f payments th a n th e i n d u s t r i a l i s e d

c o u n t r i e s .

2 .

Most of them h a v e , o v er th e past* glepade, e x p e rien ce d

a s e r io u s w orsening of t h e i r term s o f t r a d e .

I q u e s tio n w hether th e e x te n t and e f f e c t of t h i s a re

f u l l y re c o g n ise d by Governments o f th e more h ig h ly i n d u s t r i a l i s e d

c o u n t r i e s .

F or many th e economic consequences have been s e r i o u s .

T his u n fav o u rab le economic e x p e rie n c e has le d to

u n d e s ira b le p o l i t i c a l r e a c t i o n s .

' I t i s not a good th in g t h a t a sense o f g riev a n ce should

have grown i n th e l e s s developed prim ary producing c o u n t r i e s ,

a sense of g rie v a n c e which w i l l s tr e n g th e n i f th ey b e lie v e

t h a t no s e r io u s e f f o r t s a re being made by th o se more f o r t u n a t e l y

p la ced to fa c e up to t h e i r problem s.

In th e co u rse o f h is speech y e s te r d a y , Mr. B lack , i n

commenting on how th e i n d u s t r i a l i s e d c o u n t r i e s had been fav o u red

by th e swing i n th e term s o f t r a d e , gave us an i l l u s t r a t i o n

th e p o s i t i o n of one European c o u n try , whose e x p e rie n c e he s a id

i s re a s o n a b ly t y p i c a l , which found i t s t o t a l Import B i l l i n

1961 about 8 p e r c e n t l e s s th a n i t would have been had 1956

p r i c e s s t i l l p r e v a i le d .

I can g iv e an i l l u s t r a t i o n running th e o th e r way from

th e e x p e rie n c e of my own c o u n try , »

What th e d e t e r i o r a t i o n i n our term s of tr a d e has meant

to us in l o s s of ex p o rt income i s q u ite d ra m a tic .

L ast y e a r our e x p o r ts t o t a l l e d something over 860

m i l l i o n pounds s t e r l i n g .

I f we had re c e iv e d th e same p r i c e s f o r th e goods we

ex p o rte d i n 1961-62 t h a t we re c e iv e d i n 1953> our e x p o rt income

would have been th e g r e a t e r by 330 m i l l i o n pounds.

In f a c t , our term s o f tr a d e to d a y s ta n d a t 67 as

a g a i n s t 100 i n 1953· .

I am n o t cry in g "p o o r mouth" f o r A u s t r a l i a ,

3

Me have been more f o r t u n a t e th a n many o t h e r c o u n t r i e s ,

i n t h a t we have had a s tr o n g c a p i t a l in flo w th ro u g h th e p a s t

10 y e a r s and in d e ed f o r most of th e p o s t- w a r p e r io d .

Me have a s tr o n g economy and a h ig h s ta n d a r d o f ■

l i v i n g . .

But o u r e x p e rie n c e g iv e s us some i n s i g h t i n t o th e way

t h i s a d v e rse movement has a f f e c t e d o t h e r p rim ary producing

c o u n t r i e s , .

I t i s j u s t not good enough t h a t t h i s problem o f

im balance between th e w e a l t h i e r i n d u s t r i a l i s e d c o u n t r i e s and

th e l e s s d eveloped p rim ary p ro d u c e rs sh ould be p o l i t e l y ig n o re d

y e a r a f t e r y e a r , o r a t b e s t g iv e n mere l i p s e r v i c e . .

I· say t h i s i n no c r i t i c i s m o f th e Monetary Fund o r th e

o t h e r i n s t i t u t i o n s r e p r e s e n te d h e r e .

On th e c o n t r a r y , th e Fund and i t s a l l i e d i n s t i t u t i o n s

have done us a s e r v i c e by k e e p in g t h i s m a t t e r p e r s i s t e n t l y

u n d er n o t i c e . .

I t has f e a t u r e d p ro m in e n tly i n th e speeches o f th e

P r e s id e n t o f th e I n t e r n a t i o n a l Bank and th e Managing D i r e c t o r

o f th e IMF, .

But we F inance M i n i s t e r s cannot c o n tin u e to ig n o re

p o s i t i v e a c t i o n w ith a c l e a r c o n s c ie n c e .

Me a r e a l l men o f some in f lu e n c e i n o u r own governm ents.

Me cannot m erely v o te some a d d i t i o n t o th e r e s o u r c e s

o f th e Fund, th e Bank, th e C o r p o r a tio n o r th e A s s o c ia ti o n , and

th e n wash o u r hands of th e p r o b le m ..

. I do n o t want to go o v e r th e same ground t h a t I

covered y e s t e r d a y , and y e t I f e e l t h e r e i s no more im p o r ta n t

m a t t e r f o r me t o t a l k about a t th e s e m e e tin g s .

Should th e U nited Kingdom e n t e r th e European Economic

Community, a new e r a would commence i n th e p o l i t i c a l and

economic h i s t o r y o f th e w o rld .

I t would seem t h a t th e Commonwealth Prime M i n i s t e r s ,

m eeting i n London, have reac h ed broad u n d e r s ta n d in g on f o u r

main needs s The need to work f o r an ex p a n sio n o f World

T ra d e, th e need to improve o r g a n i s a t i o n of th e World Market

i n prim ary f o o d s t u f f s th ro u g h a f r e s h approach to I n t e r n a t i o n a l

Commodity A g re e m e n ts., th e need to re c o g n is e t h a t o p p o r t u n i t i e s

f o r tr a d e a re no l e s s im p o rta n t th a n a i d . , th e need to r e g u l a t e

d i s p o s a l o f a g r i c u l t u r a l s u r p lu s e s so as t o h e lp p eo p les i n

w ant. '

These a re a l l commendable o b j e c t i v e s . -

How q u ic k ly can th e y be t r a n s l a t e d i n t o p r a c t i c a l

a c tio n ?

We a r e a l l co n scio u s t h a t w h ile n e g o t i a t i o n s a re

p ro ceed in g on B r i t i s h e n t r y t h e r e have been u n c e r t a i n t i e s

c r e a te d w hich, i f u n a v o id a b le , have had t h e i r u n fa v o u ra b le

ec nomic r e p e r c u s s io n s on many economies. .

. I t i s i n th e i n t e r e s t s o f a l l t h a t th e s e u n c e r t a i n t i e s

should be re s o lv e d as s p e e d ily as p r a c t i c a b l e .

. But w h ile th e y rem ain, h ere a re some of th e q u e s tio n s

being asked by th o se c o u n t r i e s which w i l l be o u ts id e such an

e n la rg e d and i n c r e a s i n g l y p ow erful g ro u p in g .

W ill t h e r e be re a s o n a b le o p p o r t u n i t i e s of a c c e ss to

t h i s e n la rg e d European m arket?

W ill t h i s v a s t economic community pursue in w a rd -lo o k in g

p o l i c i e s a t th e expense o f th e i n t e r e s t s o f th o se o u t s i d e , o r

can we re a s o n a b ly hope t h a t th e e n la rg e d community w i l l conduct

i t s e l f as u s h e rin g in a more l i b e r a l t r a d i n g system f o r th e

w orld?

Some u n d er-d ev elo p ed c o u n t r ie s f e a r t h a t th e y w i l l .· .

h e n c e f o rth be reg ard ed as m erely hewers o f wood and d raw ers o f

w a te r .

One o f th e m ajor p u rp o ses o f th e e n la rg e d European

community w i l l be g r e a t e r e f f i c i e n c y and h ig h e r p r o d u c t i v i t y .

W ill t h i s be allow ed to p r e ju d ic e th e growth, i n th e

l e s s i n d u s t r i a l i s e d d ev e lo p in g c o u n t r i e s , o f t h e i r own

m an u factu res?

5.

y * '

F o r many p e o p l e , q u e s t i o n s s u c h a s t h e s e b r e e d

a p p r e h e n s i o n .

We w o u ld welcome a t t h i s m e e t i n g some f o r t h r i g h t

e x p r e s s i o n f ro m spokesm en f o r t h e c o u n t r i e s o f t h e s i x , fro m

t h e U n i t e d S t a t e s and fro m t h e U n i t e d Kingdom t h a t t h e y a r e

d e t e r m i n e d t o work t o g e t h e r f o r a b e t t e r b a l a n c e d econom ic

d e v e l o p m e n t , f o r a w i d e r s h a r i n g o f t h e a b u n d a n c e w h i c h i s

w i t h i n o u r r e a c h , and f o r a w i d e r s p r e a d o f s o c i a l j u s t i c e

c o n t r i b u t i n g t o t h e p e a c e an d h a p p i n e s s o f t h e w o r l d .

A l l o f us h e r e c a n p l a y some p a r t i n t h e c r e a t i o n o f

a b e t t e r w o r l d econom ic o r d e r f o r m a n k i n d . " ·

Commonwealth T r e a s u r y , CANBERRA. A .C .T . 20t h September, 1962.