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BDARD OF GOVERNORS
or

THE

FEDERAL RESERVE SYSTEM

Office C o r r e s p o n d e n c e

pate Deceiver 12,

Chairman Eeeles
ffrnm

Subject! Excerpts from recent speeches

M^* Eaapp

by National Advisory Council members*

Several National Advisory Codicil members addressed the
National Foreign Trade Convention in New York in the middle of
November and all of them placed great emphasis upon the importance
of imports in our fufctcre economy. The following excerpts from their
speeches are examples:
Will Clayton:




"With a substantial increase in population accompanied by a fifty per cent expansion in domestic economy,
we need more of foreign goods of all kinds. Much larger
imports of raw materials are required to feed our greatly
expanded facilities for the manufacture of producer and
capital goods. Our productive facilities in the consumer
goods field have shown comparatively little increase in
the past decade; hence, our need to import larger quantities of such goods to satisfy the demands of a prosperous
and growing population.
"It will require less than a billion dollars a
year for twenty-five years to completely amortize all the
foreign credits made available by our Government since the
end of the war, including our contributions to the International Bank and the International Monetary Fund. After
a few years, this sum should be provided by the annual
expenditures of American tourists alone.
people still look upon the United States
as nearly self-sufficient. As a matter of fact, this was
never true by any modern standard and it is much less true
today than ever before.
*Due to the serious depletion of our natural resources during the wifr, we must now import many metals and
minerals which before the war we even sometimes exported,
such as copper, lead and zinc. Today we must annually import 150 to 200 million dollars worth of copper alone, whereas
before the war, we sometimes exported copper.
* Indeed we are today net importers of practically
all the important metals and minerals except two—coal and
oil. Who knows how long we can go without importing oil?

-2*In the past, the emphasis in oxer foreign trade
has been on exports; within the near future it will probably
be on imports. This is true because of our shift from
debtor to creditor; because of the depletion in our natural
resources and because of the wants of a growing and pros-*
perous population.11
W. Averell Harriman:
9

Bbw about imports. Historically our national
energies have largely been directed to developing exports.
In this connection I said in a recent speech fNo one makes
himself rich by simply divesting himself of property. It
is true that exports give employment but unless we get
something in return we are the losers. Therefore emphasis
should be given to the expansion of our imports from all
countries of those things which will improve the well being
of our people.1
fact our whole program of fostering world commerce depends upon the success we have in developing imports
and our use of the services of other nations. I hope that
this Council will make it one of its major projects to study
what we can soundly do to foster expansion of imports, travel,
etc.
Department of Commerce will gladly work with
you in this field. We should assist other nations to understand the untapped markets that exist in this country for
products that are peculiar to them—products that can contribute to the welfare and fuller life of our people.
n

It is vital to us that we have assured and adequate
supplies from abroad of certain raw materials in increasing
quantities as our economy expands and our natural resources
diminish. We can use many products of other countries that
are difficult for us to make ourselves. Nothing is more
broadening than foreign travel in the education and in the
development of an informed American people as citizens of
the world.*
Mr. Harriman also remarked elsewhere in his speech that
should recognize the necessity of maintaining import controls for the
time at least in order that with our great ability to buy we do not
inflate world prices unduly and prevent other nations from attaining
their fair share.®




-3Bill Martin:




®The third aspect of the rehabilitation effort,
the necessity for repayment of the long-term dollar credits,
poses one of the most challenging problems this country has
keen called upon to face* If we are ever to be repaid for
these credits it will be essential for the jfemerican people
sooner or later to accept a commodity import surplus as
normal and proper.
'The Board of Directors of the Export-Import Bank
shares the opinion that an increased volume of imports is
one of the essentials of a healthy, thriving United States
postwar foreign trade. The Bank has a very special interest
in this matter by reason of the specific requirement in our
statute that we have reasonable assurance of repayment before
making a loan. It is the opinion of the Board of the Bank
that, if the bfcoad effort to revive world trade and reestablish
an effective multilateral trading system succeeds, all the
countries to whom we have made emergency reconstruction
loans should have no difficulty repaying the loans. It is
our further view that the greatest hope for a revival of
world trade and successful solution of the repayment problem lies in an appropriate expansion of imports into this
eountry; indeed, in the absence of an indefinite continuation
of TJ. S. foreign lending, this is the only way in which the
borrowing countries will be able to meet the service charges
on their obligations and continue to buy the products of
this country essential to their welfare.
this connection we have welcomed the enlightened
discussion of the import problem in recent months by such
informed private bodies as the National Foreign Trade Council,
the Twentieth Century Fund, the Committee for Economic Development, the Aldrich Committee and others. We all realize that
the task of educating American public opinion to the necessity
of an expansion of imports, if U. S. foreign trade is to be
put on a permanently sound footing, is a formidable one; in
my opinion it is probably an impossible one without the continued enlightened leadership of such groups as yours.
*For its part, the Bank has devoted, and will continue to devote, a great deal of attention to the import aspects
of all the loan applications before it. In the case of all the
Bankfs general developmental and reconstruction loans the direct connection of the proposed loan with the creation of
additional foreign exchange has always been studied. The
contribution of any loan to the solutibn at least of its own

-4*foreign exchange problem ha§ always besn a factor present
in its consideration. In its appraisal of loans the Bank
regards financing of the production of commodities suitable
for exports from the foreign country to the United States
as a consideration as important as the promotion of exports
from the United States.*

Mr, Martin made some remarks on other subjects which may be
of interest to you, (1) with respect to relations between the IxportImport Bank and the National Advisory Council:
assistance rendered by the National Advisory
Council to the Board of Directors of the Export -Import Bank
in connection with its emergency reconstruction credit program has been invaluable* Before the Bank actively considers
any loan application from a foreign government the application is referred to the Hational Advisory Council for its
consideration from the standpoint of policy and coordination*
Once a given application or class of applications have been
•approvedfor consideration*, as the action of the Council is
now worded, the Ixport-Import Bank assumes full responsibility
for the final decision as to whether or not the loan should
be made and on what terms and conditions* This use of the
Council mechanism attunes Export-liaport Bank lending to TT*S*
foreign policy while retaining in the Board of the Bank, as
it was obvious Congress intended, the veto power over indiscriminate or unsound loans. In view of the extreme complexity of
the foreign lending problems, and the close inter-relationship
between the foreign loan applications to the Bank and to other
Federal agencies, the Export-I&port Bank would have been faced
with a well-nigh insuperable task in attempting to carry out
its emergency reconstruction program expeditiously without the
assistance of this machinery.*
(2) with respect to private foreign trade financing:




"I am convinced there is a real and continuing need for the
services of the Ixport-Import Bank as an organizer and trail
blazer in financing foreign trade* But our whole purpose will
be defeated if private capital is not better organized than it
is at present to supplement and further our activities* The
Export-Import Bank is pursuing as diligently as possible a
policy designed to return trade to private channels and to this
end is avoiding wherever possible the government-to-government
credit in favor of so-called exporter credits in which domestic




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suppliers participate, The Bank created early in 1946 a
Private Capital Participation Division which maintains close
contact with financial markets and provides information regarding our current portfolio in order that i t s commercially
bankable paper may be made available to private investors
within the limitations of the regulations of the Securities
Exchange Commission. Ultimately, perhaps, we may have private
Export -Import Banks, and then the Export-Import Bank of
Washington can act as a sort of central bank for these
banks of foreign trade. There is much pioneering work to do
in this field and I know we can depend on the National Foreign Trade Council to be a leader in seeing that a sound
course is developed•*