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July 17, 19U5 - - '10:30 A.M.
The hearings before the Senate Committee on the Export-Import Bank
bill began with the testimony of Leo T. Crowleyf who appeared as Chairman of
the Board of Trustees of the Bank. In his statement Mr. Crowley urged the
Committee approve the bill. He stated that the necessary financing of our
foreign trade during the period of reconversion in'this country and of recon*
struction abroad should be provided, to the extent%tthat private capital is not
available, through the Export-Import Bank, whose lending authority should be
increased. He pointed out that UNRRAfS'funds will be available'only for relief
and that Lend-Lease aid will not be furnished*for purposes of rehabilitation of
liberated countries. He explained the appropriation for Lend-Lease for 1 ^ 946
was based explicitly on the assumption that Congress would increase the lending
authority of the Bank in order that the Bank could finance portions of the
agreements made under Section 3 (o) of the Lend-Lease Act for the delivery to
certain European oountries of industrial equipment. Since the International
Bank cannot be in effective operation for a year or eighteen months, Mr. Crowley
believed the Export-Import Bank is urgently needed in this interim period to
finance United States exports in connection'with reconstruction and development
projects abroad. In the longer run, the operations of the Export-Import Bank
will be coordinated with the policies of the United States representatives on
the Monetary Fund and International Bank through the National Advisory Council
provided for in the Brotton Woods enabling legislations Mr. Crowley then highlighted the provisions of the bill under consideration. He explained that the
increase of $2.8 billion in the Bankfs lending authority would probably suffice
to finance our exports during the present fiscal year. He explained the provisions regarding tho management of the Bank and described the capital structure of tho Bank.
Mr # Crowley assured Senator Taft (R. Ohio) that Lend-Lease would be
discontinued after the conclusion of the war with Japan, He explained that no
contracts were being Blade for goods, to be shipped under Lend-Lease agreements
with Prance and other countries not involved in the Japanese War unless delivery would be completed at the* end of 19U5 • There followed* a disciissioii of
Lend-Lease aid to Russia which was off the record. Mr* Crowley explained to
Senator Wagner (D.1 N.Y.) that t K * Bank would be prepared to finance trade with
Russia on tho same basis as it vtould fitiance trade with other countries. He
estimated that Russia in the next year might be able to use $1 billion to
finance trade with the United States. He did not believe tho requested increase in tho Bankfs lending authority was large onough to take caro of substantial aid to Groat Britain. When askod by Senator Taft if tho increase in
lending authority would be used only to make rehabilitation loans to Europe,
"Mr* Crowley replied that development loans to Latin America would continue to
be granted and that perhaps $100 to $200 million would bo used for that purpose. Direct loans to exporters to finance specific export transactions would
also be made.

• 2 ~

Senator Murdook (D. Utah) expressed the opinion that the Treasuryshould be represented on the Boardr of Directors of the Bank* Mr*- Crowley
stated that he had no objection to the inclusion of the Treasury on the Board
and explained that the provisions in the bill regarding management were the
result of compromise in the House Committee*. Senator Wagner also thought the
Treasury might be represented on the Board*. Senator Buck (R. Del.) believod
that loans should not be granted to countries whose economies and governments
were not stabilized* Mr, Crowloy agreed that loans to countries, for example
Italy and perhaps Poland, would be unwise until stable governments are established* He hoped that the Bank would be able to finance exports to Poland
but stated the lending program would have to be developed slowly*
Senator Buck inquired about the possible maturity which the Bank's
rehabilitation loans might carry* Mr* Crowley said he expected that4 most
loans, would mature over 15 to 20 years but that some might run for as long as
30 years* He anticipated that on those long-term loans, repayment would not
begin for throo to five years from the date of the disbursement* Senator Taft
asked if tho Bank expected to return to Congress for additional lending power
at tho end of ono year to which Mr* Crowloy replied that it was problematical
but that $2.8 billion was a conservative estimate of tho needs for financing*
He did not want to say whether the Bank would lend $2 or $3 billion each year*
Senator Taft did not see why the Export-Import Bank was needed after the International Bank camp into operation* Mr. Crowley explained the Export-Import
Bank was needed to finance United States foreign trade and that if Russia
wanted to buy in the United States market there was no way to finance this
trade except by a loan from the United States to Russia* Senator Taft believed that it was not wise to build up an economy based on lending or to
stimulate export trade by government loans* He thought the Bank could perform
a useful function by assisting United States exporters to get credit on reasonable terms when private capital was not prepared to finance export transactions
but that loans to governments by the Bank wore a duplication of the operations
of the International Bank* Mr* Crowloy felt that tho Bank would perform a
useful service even after the International B^ink is in operation by building
up a market for United States goods* Ho assured Senator Taft that tho Bank
did not exert political pressure on government borrowers although it did
supervise tho use of the funds, the selection of the project, etc* Also,
tho borrower is required to spend -the proceods of an Export-Import Bank loan
in this country* Senator Taft said that tho Export-Import Bank would be a
better bargaining weapon than th£ International Bank and that he thought that
credit should be used for bargaining purposes•

Board of Governors
of the Fedoral Reserve System
Division of Research and Statistics
July 17, l