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BOARD OF GOVERNORS

DF THE

FEDERAL RESERVE SYSTEM
September 27, 1946.
Xo

Chairman Beoiaa

Frnm

Subject: Danish and Chilean loan requests

Mr. Knapp

Aside from matters relating to the Bretton Woods Institutions,
the National Advisory Council considered at its meeting on Thursday,
September 26, two loan requests which hare been filed with the ExportImport Bank.
The first loan request was "by Denmark, which asked for a 50
million dollar long-term loan to coyer general import requirements during
the next six months to a year. The Staff Committee had studied this
proposal carefully with a view to determining whether Danish needs were
so urgent that Denmark couLd not wait for an International Back loan,
which they might be able to negotiate during the month of November or
at least before the end of this year. Although not all of the relevant
facts were available, the Staff Committee felt that no such urgency
could be established. The Council accepted this view and passed an
action recommending that the Danish request be referred to the International Bank and not be considered by the Export-Import Bank.
Chile had also made application to the Export-Import Bank
for a 40 million dollar loan to finance the importation of machinery,
equipment and supplies for a large variety of development projects, including railway and hydro-electric projects. In this case there was
clearly no urgency and there was a strong tendency to treat this request
in the same manner as the Danish request. However, it was pointed out
that a number of the projects for which Chile required funds had already
been financed to some extent by the Export -Import Bank or had been developed over a period of years with technical assistance from the U. S.
Government. Therefore the Staff Committee recommended, and the Council
agreed, that not more than 15 million dollars of the Chilean loan request should be handled by the Export-Import Bank in order to wind up
existing T . S. Government projects. The Council recommended that the
J
remaining 25 million dollars be sought by Chile from the International
Bank.