Evening star., 1947-05-26
The World Fund in Action

Following closely on the initial activity
of the World Bank, the World Fund is
now in action. Thus, the twin organs set
up in principle under the Breton Woods
agreement, back in 1914, are both per-
forming the functions for which they were
designed.
Though complementary in purpose, the
fields of activity of these two international
entities are quite different. The World
Bank concerns itself with long-term loans
to member states for reconstruction and
development purposes. The World Fund
tits technical title being the international
Monetary FUND.- is designed to stabilize
national currencies for the purpose of bal
ancing rates of foreign exchange thereby
promoting world trade and general inter
national financial stability The funds
transactions are thus of a necessarily
shortterm character: Indeed, they are
not technically loans. What the fund does
Is to purchase" currencies of member
applicants at fixed rates of exchange with
the currencieS of other nations. The un-
derstanding is that the fund will be repaid
within reasonable time, in terms of the
What this means in practice is illus
trated by the transactions which the fund
has just concluded. France wanted the
sum Of $25, 900, 900 in dollar exchange, while
Holland requested $4,000, ,000-half in
American currency and half in British
pounds. In return for these advances, an
earmarked deposit of French francs has
been placed to the funds account in the
Bank of France, with a similar deposit of
Dutch guilders in the Bank of Holland. In
return for this the applicants have paid
the fund service charge in gold amount
ing to three-fourths of ] per cent, and will
pay interest charges starting at one-half
of per cent and increasing according to
the length of the loan" and the amount
involved
What now happens is that France has
Immediately available its full $25 600 900
in the Federal Reserve Bank of New York,
while the Netherlands has a drawing
account of $6,00e,000 in the same bank,
plus 100000 sterling in the Bank of
England
The justification for those applications
are, in the case of France, the heavy dam
age to its wheat crop last winter, which
necessitates the importation of s90,000O 900
worth of wheat, mostly from the United
States; in the case of Holland, war damage
at home and in the East Indies which has
gravely reduced Dutch capacity to export.
In both cases, the fund has investigated
the applicants economic situation, to de-
tern,ine whether the application should be
granted
For it should be understood that, while
member nations have fixed quotas within
which they may borrow" they are not
automatically entitled to the loans" for
which they may apply. The decision rests
with the fund. It's director, Camille Quit,
emphasized in a public statement that the
fund intends to keep itself constantly in
formed of economic conditions in every
member country (now A in numberl, so
it will know in advance whether an appli-
cant really needs help and can repay
within reasonable time You can be
assured" he stated, "that there is no
danger that the fund will throw its money
Sway. The officials Of the fund are aware
that its enormous resources ts7.4oo,ooo,ooo)