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Calendar No. 489


1st Session






No. 490


JULY 19 (legislative day, JULY 9), 1945.—Ordered to be printed

Mr. MURDOCK, from the Committee on Banking and Currency,
submitted the following .

[To accompany H. R, 3771]

The Committee, on Banking and Currency, to* whom was referred
the bill (H. R. 3771) to provide for increasing the lending authority of
the Export-Import Bank of Washington, and for other purposes,
having considered the same, report favorably thereon without amendment and recommend that the bill do pass.


The bill lays down the policy of Congress with respect to the loans
of the Export-Import Bank; reorganizes the management of the bank;
establishes it as an independent agency of Government; increases the
lending authority of the bank and changes the method by which it
obtains its funds; and removes certain restrictions on its operations.
The increase in the lending authority of the Export-Import Bank
proposed in this legislation is necessary to, enable the bank to expand
the assistance it gives in facilitating the foreign trade of the United
States through the financing of exports and imports and development
projects abroad, and also to undertake part of the urgent new task of
financing reconstruction in Europe and other devastated areas.
The testimony presented to the committee shows that the ExportImport Bank has virtually exhausted its loanable funds. As of June
30, 1945, the bank had outstanding loans of $214,000,000 and undisbursed commitments of $336,000,0(30. The sum of these amounts,
$550,000,000, was only $150,000,000 less than the maximum amount
of loans wiiieh it may have outstanding under existing legislation.
Applicatians presently under consideration involve amounts sufficient
to exhaust this remaining balance.
In the face of this shortage of funds, heavy demands are being made
upon the bank for the extension of credit. These demands come principally from two directions. On the one hand, American exporters,



perceiving the opportunities for increasing their export business on a
commercial basis because of the accumulated foreign demand for our
products and the partial relaxation of export controls in the United
States, are actively soliciting business in foreign countries. They
find themselves, as before the war, under the necessity of selling on
terms appropriate to the type of commodity involved, the ability of
the foreign buyer to pay, and the competition offered by competing
suppliers. Under these conditions, exporters are applying in increasing numbers to the Export-Import Bank for credit assistance which is
not obtainable from private banks. The bank should be in a position
to meet these demands.
At the same time, governments of foreign countries and their
agencies are coming to the bank seeking financial assistance for the
purchase of American equipment and materials to be used in connection with reconstruction and development projects. Insofar as the
Latin-American countries are concerned, this is a function which the
Export-Import Bank has performed for a number of years on an
increasing scale and one which it should be in a position to continue
in the interest both of creating immediate markets for our products
and of so strengthening the economies of the Latin-American coui^tries
that they will be steadily growing markets for American goods.
The problem with respect to the liberated countries of Europebecomes daily more urgent. These countries cannot expect, under
the established policies of this Government, to receive, via lend-lease
equipment and materials for the restoration of their economies. Although some of the countries have limited resources of their own which
can be used to finance purchases in the United States in part, their
requirements are large and there are other claims upon these resources
which must be satisfied. Furthermore, it will naturally be some
time before they are in a position to export goods and services as a
means of paying currently for what they buy from the United States
and other suppliers.
The demands upon the Export-Import Bank both from our own
foreign traders wanting to reopen markets abroad and from foreign
countries wishing to renew their purchases from the United States can
be met, provided only suitable financing is available. In view of the
fact that it is an established operating agency of Government with
11 years of successful experience behind it, the Export-Import Bank
would seem to be the obvious vehicle for the financing on a sound
basis of our foreign trade to the extent that private financing is not
It cannot be emphasized too strongly that the maintenance of
foreign markets for our products through adequate private and
governmental financing will materially ease the problem of reconversion in the United States. This follows from the fact that the
products which are most in demand by foreign countries are the
products produced by the very industries which have been most
expanded during the war. Domestic manufacturers applying to the
Export-Import Bank for assistance in financing their foreign sales
have repeatedly indicated that, unless markets for their products can
be found in foreign countries, they will be obliged because of the
decline in domestic demand for war purposes to curtail their operations
or in many instances to close down altogether.
The committee has considered the relation between the past and
future operations of the Export-Import Bank and other activities



authorized to about to be authorized by Congress with a bearing on
the financing of foreign trade. These other activities will not remove
the necessity for the operations of the Export-Import Bank contemplated under this legislation.
Funds of UNRRA are to be used strictly for relief purposes and
not for the financing of our foreign trade during the period of reconstruction which lies ahead. Lend-lease will not be used for recon-f
struction in Europe or elsewhere, and therefore does not in any sense
meet the rehabilitation problems of the liberated countries. It
might be noted that the present bill will permit the Export-Import
Bank to carry but the President's recommendation that it finance
portions of the 3 (c) lend-lease agreements.
So far as the Bretton Woods institutions are concerned, vit should
be recognized that, although the proposed International Bank may
eventually be the principal avenue for dollar credits to foreign countries
for reconstruction and development, it will not be in effective operation
for many months. Furthermore, even after the International Bank
is in full operation, there will undoubtedly be a need for a strictly
national agency in the field of foreign trade financing. This is partly
because there are certain types of financing in which the International
Bank will not engage and partly because there are certain national
purposes to be served through an institution such as the ExportImport Bank. The operations of the Export-Import Bank and the
policies of our representatives in the International Bank will be coordinated by the National Advisory Council already provided for in the ,
Bretton Woods legislation.

The Export-Import Bank of Washington was established in 1934
by Executive order to help promote the recovery of our foreign trade.
The Congress continued the bank as an agency of the United States
in January 1935 and gave it, in addition to its powers in the charter,
certain additional powers to be exercised for *the purpose of aiding in
the financing and facilitating of exports and imports and the exchange
of commodities between the United States and other countries.
Through subsequent legislation, the Congress continued the bank until
January 22, 1947,
When the bank was created there was no limitation imposed by law
upon its lending authority. In 1939, the Congress provided that
loans outstanding at any one time should not exceed $100,000,000.
The limit was increased to $200,000,000 in March 1940 and to $700,000,000 in September 1940.
From 1934 until July 1939 the bank operated as an independent
agency. In 1939 the b#nk was made a part of the Federal Loan
Agency under Reorganization Plan I and in 1942, the bank was
placed by Executive order under the Office of the Secretary of Commence. In July 1943 it was transferred to the Office of Economic
Warfare and later in the same year to the Foreign Economic Administration. The operations of the bank have continued to be administered by its president subject to the direction of the Foreign Economic
Administrator and the board of trustees of the bank under the chairmanship of the Administrator.



The bank has presently outstanding $1,000,000 of common stock
issued jointly to the Secretaries of State and Commerce and $174,000,000 of preferred stock sold to the Keconstruction Finance Corporation. The bank has obtained all of its fuiids from the Reconstruction
Finance Corporation with the exception of the original $1,000,000
from the Secretaries of State and Commerce and such funds as it
derived from its earnings.
Under its charter, the bank is controlled by a board of 11 trustees
elected annually by its shareholders subject to the approval of the
President of the United States In the interim between board meetings the powers of the board are exercised by an executive committee
of 7 trustees, Loans are ,made only after formal authorization by
the board of trustees or the executive committee.
The bank has engaged in a wide variety of transactions to carry
out the fundamental purposes of Congress of promoting the export
and import trade of the United States either directly or indirectly.
It has extended short-term loans to finance United States agricultural
and industrial exports and medium- and long-term loans to other
countries for development projects, has guaranteed export credits,
has underwritten letters of credit, and has extended lines of revolving
credit to small United States exporters and importers. The activities
of the bank have been limited to financing of a character or an amount
not obtainable solely from private sources, to avoid competition with
private institutions.
From its organization to June 30 of this year, the Export-Import
Bank had authorized loans aggregating $1,269,000,000. Of these
total authorizations, $429,000,000 were canceled either because the
applicants found they did not require them or arranged to obtain
necessary credits from private sources. Actual disbursements have
amounted to $504,000,000, of which $290,000,000 have been repaid.
Returning a profit is not the major objective of the bank. Nevertheless, it is the policy of the bank's management not only to meet
all administrative expenses out of ^earnings, but also to accumulate a
reasonable reserve against possible losses and thus keep the agency
self-sustaining. The earnings of the bank from its organization to
date, after payment of all administrative expenses, have amounted
to approximately $42,000,000. The bank has paid dividends of over
$18,000,000 on the present stock held by the Reconstruction Finance
Corporation. This leaves undivided profits of about $24,000,000.
The committee is not aware of any substantial opposition to the
proposed increase in the lending authority of the Export-Import Bank.
It is especially notable that the legislation has the active support of
the private banking community.

- Section 1 provides that the act may be cited as the "Export-Import
Bank Act of 1945."




Section 2 deals with the powers of the bank and states the policy of
Congress with respect to loans to be made by the bank.
Subsection (a) continues the existing Export-Import Bank of Washington, a banking corporation organized under the laws of the District
of Columbia, as an agency of the United States. I t continues the
existing powers under the bank's charter and restates and clarifies the
powers conferred upon the bank by statute to make loans, to discount,
rediscount, or guarantee notes, drafts, bills of exchange, and other
evidences of debt or to participate in the same for the purposes of promoting the foreign trade of the United States.
Subsection (b) provides that it is the policy of the Congress that the
bank in the exercise of its functions should supplement and encourage
and not compete with private capital, and that loans, so far as possible
consistently with carrying out the purposes of subsection (a), shall generally be for specific purposes, and in the judgment of the Board of
Directors, offer reasonable assurance of repayment.

Section 3 provides for the management of the Bank.
Subsection (a) (1) establishes by law the Board of Directors of the
bank which is to consist of the Foreign Economic Administrator as
Chairman, the Secretary of State, and three persons appointed by the
President with the advice and consent of the Senate. *The Secretary
of State may, to such extent as he deems it advisable, designate to act
for him in the discharge of his duties as a member of the Board any
officer of the Department of State who shall have been appointed by
and with the advice and consent of the Senate.
Subsection (a) (2) provides that if the Foreign Economic Administration ceases to exist in the Office for Emergency Management in the
Executive Office of the President, the Administrator of the Foreign
Economic Administration will no longer be a member of the Board,
and the President is to appoint a member to take his place. In that
event the Chairman of the Board will be designated by the President.
Subsection (a) (3) requires that not more than three directors may
be members of any one political party. The term of each of the
appointed directors is to be 5 years and the salary $12,000 per annum
unless the director is an officer of the bank in which event he may elect
to receive the salary of such officer.
Subsection (b) provides that a majority of the Board of Directors
shall be a quorum.
Subsection (c) empowers the Board of Directors to adopt such bylaws as are necessary for the management and functioning of the bank.
"Subsection (d) establishes &ri advisory board with the same composition as the National Advisory Council on International Monetary
and Financial Problems provided for in the Bretton Woods Agreements Act, except that the Chairman of the Board of Directors of the
bank serves as Chairman in lieu of the Secretary of the Treasury.
Subsection (e) provides that until October 31, 1945, or until two
of the appointed members of the Board of Directors have qualified,
whichever is the earlier, the affairs of the bank shall continue to be
managed by the existing board of trustees.



Subsection (f) establishes the bank as an independent agency of the
United States Government and provides that its functions, powers,
and duties shall not be transferred or consolidated with any other department, agency, or corporation of the Government unless the Congress shall otherwise by law provide;

Sections 4 and 5 provide for the capital structure of the b^njk.
A capital stock of $1,000,000,000 is authorized. Outstanding
common and preferred stock is to be surrendered to the bank and
canceled. The Secretary of the Tieasury is to pay the Reconstruction Finance Corporation the par value of the preferred stock which
the Reconstruction Finance Corporation will surrender. Of the authorized amount of capital stock of $1,000,000,000, payment for
$175,000,000, equivalent to the par value of the outstanding preferred
and common stock, will be made by the surrender of such stock. Payment for the balance, $825,000,000, will be made by the Secretary of
the Treasury at the call of the Board of Directors of the bank. Authorization is giVen to the Secretary of the Treasury to finance these
payments as public-debt transactions.
s Section 6 authorizes the bank to issue obligations for purchase by
the Secretary bf the Treasury in an amount not to exceed 2% billion
dollars. The Secretary of the Treasury is authorized to finance these
purchases as a public-debt transaction.


Section 7 provides that the bank shall not have outstanding at any
one time loans and guaranties in an aggregate amount in excess of
three and a half times the authorized capital stock of the b$,nk.

Section 8 provides that the provisions of the existing charter relating
to the term of existence of the bank, its management, and to its capital
stock are superseded by this legislation, and exempts the bank from
complying with any law relating to the amendment of certificates of
incorporation or to the retirement or increase of stock of District of
Columbia corporations and from the payment of fees or taxes to the
District of Columbia in connection with the capital stock of the bank.

Section 9 requires the bank to transmit semiannual reports of
operations as of the close of business on June 30 and December 31
of each year.




Section 10 repeals existing legislation pertaining to the bank
contained in section 9 of the "act of January 31, 1935, as amended.

Section 11 relieves from the prohibition against loans to foreign
governments in default on their obligations to the United States
Government as of April 13, 1934, contained in the Johnson Act, any
person, including any individual, partnership, corporation, or association, who acts for or participates with the bank in any operation
or transaction or acquires any obligation issued in connection with
any operation or transaction engaged in by the bank.