Help for the U.S.

When the finance ministers and central bankers of 68 nations gathered in Washington last week for the annual meeting of the World Bank and International Monetary Fund, they got a stern if fatherly lecture from U.S. Treasury Secretary Robert Anderson. Anderson underscored what the delegates already knew: the U.S. is suffering from a deficit in its balance of payments that is causing an outflow of gold from the U.S., steadily raising the amount of U.S. gold earmarked for European nations. The time has come, said Anderson, for the rest of the world to give a helping hand to the U.S. Said he: "There must be a reorientation of the policies of the earlier postwar period."

Dollar Discrimination. One policy that Anderson wants changed promptly is the discrimination by European nations against dollar imports. Such restrictions may have been necessary in the early postwar years, when these countries had a shortage of dollars. But now, said Anderson, prosperous European nations with big stocks of gold and short-term dollar assets (see chart) no longer "have any balance-of-payments justification for discriminatory restrictions." Unless Europe cooperates by eliminating such restrictions, Anderson hinted, the U.S. may have to take action--perhaps a cut in foreign aid--to correct the balance.

Anderson got strong backing from Per Jacobsson, managing director of the International Monetary Fund, who charged that dollar restrictions are now being used as "protectionist devices" to keep down foreign competition. To Anderson's great satisfaction, Jacobsson virtually signed the death warrant for dollar discrimination by promising that the fund would act on a tougher policy "in the very near future," thus launching a major new step for a freer world trade.

Not Too Soft. Bob Anderson had other complaints. European nations and Japan, said he, are not doing their share to bear the cost of help to the world's underdeveloped nations; they should take over a greater share of the burden from the U.S. To this end Anderson had a pet U.S. project on hand: the establishment of an International Development Association (TIME, Aug. 19) to lend to underdeveloped nations from funds contributed by nations now belonging to the World Bank. The loans would be made on more liberal terms than the World Bank's.

The governors of the World Bank unanimously endorsed Anderson's proposal, voted to set up the IDA as a billion-dollar affiliate that will make most of its loans in hard currencies, the rest in soft currencies. The U.S. plans to provide about a third of the total in dollars, hopes to contribute another chunk in soft currencies it now holds abroad. The world's finance ministers generally endorsed the move, but there was still doubt about how many countries would join and contribute. Many delegates had reservations about IDA's features, particularly about the fact that the loans could be repaid in soft currencies by borrowing countries. World Bank President Eugene R. Black reassured delegates that while IDA will make "soft loans," it will not be a "soft lender." Said Black: "I regard it as essential that IDA shall support only sound projects of high development priority, and only in countries that follow sound economic and financial policies. IDA will operate in accordance with the same high standards of the bank."

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