The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
BOARD OF GOVERNORS or THE FEDERAL RESERVE SYSTEM Office Correspondence Date *™* 6,1946— To Chairman Eccles Stihfect: Allocation of Export-Import Fynm Mr» Knapp Bank Funds f\ Attached i s a memorandum stiggesting a possible allocation of Export-Import Bank f&nds based on the assiampfeion that they obtain from Congress 250 million dollars of additional lending authority for countries other than Russia. While there are many \ancertain quantities i n t h i s pictiare, I think the net concision would be that with good luck the Export-Import Bank could squeeze through fiscal 1947 with t h i s amount of money* As I see i t , the real trouble spot will be Italy* If the International Bank i s not prepared t o take OTer the burden of the I t a l i a n problem in the spring of 1947, we shall face a new situation and on political grounds ^he U.S. may find i t necessary t o consider SOBJB special measures of assistance to that country. The question s t i l l remains of whether or not the 1 b i l l i o n dollars for Russia shouLd be sought at the present time* Perhaps i t is just as well to t r y , while recognizing that Congress may be tmwilling to grant full authority t o the Administration to negotiate the terms of t h i s loan. We should not be too surprised or disappointed if Congress reduces our request for additional lending authority by 1 billion dollars and t e l l s us t o come back t o get the money for Russia when we have a specific loan agreement with Russia t o submit to them. If t h i s path i s followed and the Russian loan becomes subject t o Congressional ratification in the same way that the British loan was, i t may be easier t o give R\assia something like British terms. Attachment JBK:sLLa BOARD DF GOVERNORS or THE FEDERAL RESERVE SYSTEM Office C o r r e s p o n d e n c e To Chairman Eecles Date xun» 6,1946— Subject; Allocation of Export-Import Bank Funds As of June 4* tk© loans and commitments of tlie Export-Import Bask, including the loans to China and France on which no final commitments hare been given, totaled 3,238 million dollars, leaving unused lending authority at the present time of 262 million dollars. This money may be supplemented from two sources—grant of additional lending authority from Congress and release of the Bank from its existing commitments through cancellations, repayments, transfer of loans to commercial banks, etc. I think it would be reasonable to assume that between now and the end of fiscal 1947 tk© Bank will be released from 275 million dollars of its present commitments: 100 million dollars from participation by commercial banks in the Netherlands loan, 40 million from repayment, and 135 million from cancellations. (The Staff Committee has estimated possible cancellations at 200 million dollars, bixfc this allowed for cancellation of 50 million dollars of the Netherlands East Indies loan which I understand the Bank has been unable to woik out.) Assuming that Congress grants the Bank 250 million dollars of additional lending authority for countries other than Russia, the Bank would therefore have the following funds available between now and the end of fiscal 1947 (excluding Russia): (in millions of dollars) Present unused lending authority Releases from present commitments Additional lending authority from Congress Total 262 275 787 A possible allocation of these funds would be as follows (figures in parentheses show amount of Export-Import Bank loans already made to the country concerned): (in millions of dollars) Italy 275 Greece 50 Netherlands *50 Poland 50 Yugoslavia 50 Finland 30 Czechoslovakia 25 Sundry countries (SJurkey, 82 Austria, Hungary, Korea, Liberia, Ethiopia, Siam,etc.) Latin America 75 Exporter etc. 100 106 p r credits, e i t s , etc. (25) (100+200 short-term) Uo) (35) (50) •Already approved by N.A.C: dnd now under negotiation. -2The following comments may be made on this tentative allocation: (1) Tiie figures for Italy and Greece are higher than anything heretofore specifically recommended by the Staff Committee* They would carry these countries into the first months of 1947 > by which time the International Bank might be prepared to take them over. (2) 50 million dollars is allocated both to Poland and Yugoslavia despite our poor political relations with these countries at the present time* As you know, even the existing 40 million dollar Eximbank commitment to Poland has been blocked pending clarification of the situation there. (3) The figure for sundry countries is adequate if no loans are necessary for (a) Belgium, Norway, Denmark (These countries can wait for the International Bank.) (b) India (If the British loan goes through, India will not need a dollar loan in the near future.) (c) The Philippines (This case is now under study and the tentative conclusion is that the Philippines do not need dollars to pay for imports but may need dollars to cover the issuance of pesos in order to meet domestic deficits. Since such a loan could not be made by the Export-Import Bank, some other solution would have to be found.) (d) Palestine (I understand from Richard Gilbert that the move is still active to have Congressional leaders introduce an amendment to the ExportImport Bank Bill providing an additional 250 million dollars for the economic development of Palestine.) (4) The Latin American figure is small by Export -Import Bank standards but I believe ample for all real Latin American needs during the next year. (5) The allocation for exporter credits, etc., is also small by Export-Import Bank standards but again is an ample amount unless the Bank launches a large program of financing exports for exports* sake. JBK:mla
@FedFRASER