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itacb 2, Governor Szymcz-ak J. Burke Knapp The H.A.C. meeting which. « M scheduled for today has been canceled but we are asked to vote by telephone on the following propositions: 1. Relief Appropriation for Trieste, /pril 1348-June 1949 The Council is asked to state its view thrt the proposed. relief appropriation of $£0 million for Trieste in the fifteen months April 1948~Jun© 1949 is "appropriate m i justified in the light of the foreign financial policy of the United States'*. The eity of Trieste is at present administered by U«S.-tJ.K, Military Government pending the establishment of a loe&l government under the supervision of the United Nations. Since July 1, 1947, the subsistence needs of the population have bean met by the State Department out of foreign relief appropriations, but these funds will expire on April 1 of this year. The State Department plans to continue aid at the same rats during the next fifteen months| it should be noted that the required Imports eoiae almost entirely froa dollar sources and th*t the British (as in the case of Germany) have declared their Inability to -share in dollar expenditures on behalf of the area. It is pointed out in the attached paper that Trieste is not eligible for aid under the E.1UP. legislation until it becomes • member of C.E.E.C. (Committee of European Economic Cooperation). If end when it does become a member it say obtain frojE E,E,P« funds some further assistance for the promotion of recovery && distinct from straight relief. I have raised the question of whether the relief appropriation should not cover a period of only three months, on the assumption that within that period Trieste could become a member of C.E.E.C, &nd have all of its requirements covered thereafter out of E.R,?, funds, I was informed, however, that both the State snd War Departments are very anxious to have the relief assistance for Trieste provided under separate legislation (as in the ease of Germany) and that this prooedure had already been agreed to informally by Congressional leaders. I would, therefore, recommend approval of the action proposed 2. Role of the Export-Import Bank In E.R.P. Congressmen Herter, in testimony before the House Foreign Affairs Committee lest Fridsy, repeated certain proposals contained, in the Herter Bill as to the role of the Export-Import Bank in E.H.P. These differ very substantially from those contained in the Administration Bill as worked out tar the H.A.C. ana the Strte Department ka* asked the JLA.C. ^•' •• Tos Governor Ssyscsak to reiterate its position in letters from Secretary Snyder to the Cheiraen of the Senate Foreign Relations Committee and the House Foreign Affairs Oommitte©. A draft letter on this subject Is attached with certain changes which I reconvene! for your approval. I think the letter is more or less self-explanatory* aaa Herter proposes to have the Export-Import Bank operate independently in the E,R.P. Program to the extent that the participating European countries can present l i t projects which would meet the Book's standards. In order to provide the Bank with adequate funds he would here the Congress increase tfeft lending authority of tha B?nk by $1,5 billion for use during the first year of £,R.P«, i-ith the proviso tfejut any portion of this siim which the Bank found itself unable to use would "be- turned over to the jiatli rtritT for use by him in making grafts or loans to the B.R.P# countries. Bill Martin hay discussed this proposal et length with Congressman Herter but he h*M been unable to persuade the Congressman. All of the staff feel very strongly that the arrangement proposed ii? the Administration's Bill, under ^hieh the Ixport-Iicpoi't Bank would &,ct as %aat for t-he Administrator a«d use funds supplied by him, is a fit more effective amd workable arrangement. Attachments DRAFT OliKOLDjlrm, 5/1/48 Mr, Congressman? In his testimony before your Gor.a<tee on February 27, Representative Christian A, Kerter recommended that >-I.5 billion froza the first IE months1 e wthori gation for the Ifcrf Mi Recovery Program be made available to the Export-Import Bank of Washington to be loaned by the Bank on its own initiative to participating countries to the extent that they are &ule to present projects qualifying for loans under present Export-Import Bank lending standards and procedures. It was further proposed that an arrangement be establishes whereby if the amount aJJLoeated to tke Export-Import Bank m i not utilised within a specified period the funds should revert to the Administrator for Ecanoaic Cooperation to be MBit aTailable hj him to participating countries on e. I O E B or grent ba^is &s h© might determine. The National Advisory Coxineil believes that en arrangement of this kinci ?/ould be undesirable. Before the Executive Branch of the Governaent submitted proposals on the European Recovery Program to the Congress, the Rational Advisory Council explored varioias possible procedures for the making of loans or credits under the Program. It was agreed that the Export-Import Be.nk should extend the credits because of its experience and facilities and to avoid having two agencies of the Government engaged in foreign lending. At the same |la>j it was recognized that ell considerations called for sn over-all unified program controlled and directed by the Administrator* * t• The problem confronting those who fornulateet the Program, therefore, was to utilize the Export-Import Bamc within the framework of such en over-all unified program* This has been achieved by the logical tad administratively sound device of having the Export-Import Bank: extend the credits as agent of the Administrator. The Katlonal Advisory Council riljli convinced that this is the approach that should be followed. The proposal to authorize the import-Import Bank to make loans under the European Recovery Program independently of the control tad direction of the Administrator woulo Mice for confusion ana controversy. The Administrator would be unable to prepare the careful and well integrated programs for assistance which will be so important to the success of the European Recovery Program, Further, the determination of the amount to be voted to the Bsnk under the proposal would, be largely arbitrary. These objections Ere not metfe§rproviding that unutilized funds revert to the Administrator* The question would always be debatable as to when it could be said that the Bank was unable or unwilling to lend available funds and, therefore, the funds should revert to the Administrator. In sny event, by authorizing the Administrator to ftake credits or loans after the failure of the Bank to do so, the Congress would be creating a situation which it has been the general desire, in both the Executive ?nd Legislative Branches of the Government, to avoid* Two agencies of the Government would be making loans under the Program, rnd, what is equally -S- objeeti©amble, under different standards for determining ths appropriateness Gf the losn&« Copies of this letter are being sent to Represent*tire Kertfei* c.nd to Senator fandenberg as Ohairmaii of the Senate Committee 96 Forei^ i
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