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December 20, Chairman Eccles Mr. Knapp In drafting the attached letter, I have doubted the advisability of including President Sproul's point about the close relations between the Treasury and the Federal Reserve Bank of New York. Inclusion of this point might weaken rather than strengthen our case since it would introduce a note.of selfinterest in our argument. I do not think we want to imply in any way that the Federal Reserve Bank is not prepared to develop the closest working relationships with the Export-Import Bank. I have drafted the following paragraph to cover the point, but I hope you will agree that it had better not go ini "Another element in the situation is the fact that the British Government will be utilizing the FederalfeserveBank of New York as depository for the funds drawn under the line of credit. If your Department handled disbursements under the credit, it would be able to utilize to advantage its well-established working relationships with the New York Bank." I have drafted a letter for your signature to President Sproul based on the assumption that this argument is not used. I-Attachments 2. JBKtmU 0ec«iab«r 20, Honorable Fred H* Secretary of the Tre&mtry, I s l i n g t o n 5, ©• C« Dear Freds As I inforeed you by telephone *OR# da/s a$o, I w&a what dicturbod to l<t*m tfe^t <i©n^i<ler^tioii mm beinf fiiwm to hAiidliiif the i r i t i « h credit through the gr^nt of special ^ t b o r i t y t o the Bxpert Import B&ak. I t had been my ia*dor«ta®diiif throoghout mxr di«is^®gion* th&t t h i s credit ^»ould be handled directly by the Tre&aaary and I f e e l that t h i s procedure i^mld b« greatly t« saat autlntftin the tlxm pttttUm that th» Brltldi p I out*—poseiteljf not & unl ;«* e&#e but on« <tl»tlnet fresm th# f«M»r«X ren ®f fortlgn l©sms i s h l ^ ^ay km R&d» by G©T»rraiiflffl!t through th* Bsqsort-Ij^ori S^«k or other *f«n«i«## Thi« l a «®|Ji!a*i^«d If tho TTMMRUT h^iidl^ji th« er»dlt \mfar i t i * blurradl and «l«ost l o e t to »i^ht If the credit p&*®«* through the BAHIC* N vonld bo inrltlJif aay fonfign govoitttont which »*y la th« ftttxtr« fipproftoh th« B&ak for & IOAB I t crito at % precedent Uio fimoro^s tonss #sl<sh tlio S^ak nonld b« oLLowto the British CkiT^nm^at* t h i s i s J'Bst «tiat we vaunt t o avoid. The Export-Iisport B^usik «onl«1 be sctiag eoapletoly out of in htndii&# the British credit* Ae f&n know, i t operate* Coagreaa&os&l masd&tts to «%me«otrat# on financing the foreign tr&de of the Uaited s t a t e s «ad to operate on a ^eoiK^^rei^I^ basis. In both re»pe«te the British credit l i e * f&r ©^it^ide i t * aovoal f i e l d of operations* I t womld, ©f eo\irs«, be p&rtienl«rl]r Inappropriate for the Iso&rd. of Streetsr» M proMBtly coB«tit«t«d to fee eh&rg*d tdth « behalf of this GoT<rrKs«at the provisions of the crodit relfttiaf to eonanltatioii feetwee© the two QorsrflMats o« ren0v«l of B r i t i ^ exehaaf* controls, the relation of the Hoaor&bl* ?r®& Iff, U.S. er«Niit to oth«r Brillsih obligation** ate. I trust that l«fl«l*tion t#iieh 1st pr*»«Qttd to C&Egrsss. will Mte cl^ar that ©a th«s# *ct%4M MIX i i • iSm^tlsiu -of th« V*tion«I Oounoll wid^r tte« eh&i"rr*ansMp of th« S«or»t4r/ t f th« Treasury, dtatt« i t w** th* «Mwib*r« of thi^ bo4y who of «ending e«pi«s ©f thi» letter to Secretary Hr. M&rtla, V«ry truly S. JBKimla . December 20, 1945. Mr. Allan Sproul, President, Federal Reserve Bank of Hew York, New York 7, New York, Dear Allan: The Twork on the enabling legislation for the British credit has not yet coiB&enced in earnest but since I am le&ving toisn for a couple of week®, I have decided to go on record in the National Advisory Council as favoring the handling of this credit directly by the Treasury. I enclose a copy of the l e t ter which I h&ve written to Secretary Vinson on this subject. Ion trill not© that I have oadtted the point based upon the close working relationships between the Treasury and your Bank since this seemed to introduce & note of self-interest in the argument and might be tfcicen to imply that equally close relationships could not be developed between your Bank mti the Export-Import Bank. Sincerely yours, X. S. Sceles, Chairman* Enclosure JBKtaU
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