Finance, Investment and Risk

The best scheme of finance is, to spend as little as possible; and the best tax is always the lightest.

Investment of capital, to yield its fruit in the future, must be based on expectations, of opportunities in the future. When I put this to Hayek, he told me that this was indeed the direction in which he had been thinking. Hayek gave me a copy of a paper on 'intertemporal equilibrium', which he had written some years before his arrival in London; the conditions for a perfect foresight equilibrium were there set out in a very sophisticated manner.

The intention of the US found its feature through a clear formulation in the Agreement for the IBRD. The “purposes of the Bank” were defined as follows: “To promote private foreign investment by means of guarantees or participations in loans and other investments made by private investors; and when private capital is not available on reasonable terms, to supplement private investments by providing, on suitable conditions, finance for productive purposes out of its own capital, funds raised by it and its other resources”