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Dear Mr. Martin: Reference i s made to Public La* 39 - SOth Congress, to Act "So provide for the reincorporation of Export-Import Bank of Washington, and for other purposes", approved June 9» 19^7* Section 2 of t h i s Act amends the bsport-Import Bank Act of 19^5» as amended, with respect to the i n t e r e s t r a t e on the Bank's obligations by deleting the provision t h a t such obligations shall bear such r a t e of i n t e r e s t as may be determined by the Board of Directors of the Bank, with the approval of the Secretary of the Treasury, and s u b s t i t u t i n g i n l i e u thereof a provision t h a t each such obligation s h a l l bear i n t e r e s t at a r a t e determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the united States as of the l a s t day of the month preceding the issuance of the obligation cf the Bank, I t appears t h a t t h i s provision for changing the r a t e of i n t e r e s t to obligations issued by the Ksport-Import Bank to the Treasury lias been enacted in l i n e with the recommendation of the President in his Budget Message of January 3» i9^7» The I-resident recommended t h a t Government corporations engaged in revenueproducing programs be required to reimburse the Treasury for the f u l l cost to i t of money advanced to then and s t a t e d t h a t i n t e r e s t paid on borrowings from the Treasury be based upon the current average r a t e on outstanding marketable obligations of the United States. In accordance with my l e t t e r of October 24, 1946, the Treasury has been purchasing premie scry notes of the Isbqaort-Import Bank mat u r i n g on December 31» 1951t bearing i n t e r e s t at the r a t e of one per cent ner annum. However, in accordance with the terms of that l e t t e r the Treasury's agreement to purchase subsequent issues of notes issued pursuant to the re3oliition adopted October 2, 1946 by the Board of Directors of the Export-Import Bank may be terminated upon notice to the Bank. Accordingly, you are advised that the Treasury w i l l not purchase any further notes of the lixportIm-ort Ban': after June 30, Iffrf with i n t e r e s t at the r a t e of one per cent per annua and w i l l purchase additional notes p r i o r t© June 30, 1947 solely for the purpose of enabling the Bank to meet i t s net cash disbursements during the period ending on that d a t e . - 2 - Th* t r e a s u r y w i l l be glad to purchase notes of the KsportInnort 3ank subsequent to June 30, 19^7» • • • § • § • r a t e of i n t e r e s t in l i n e with the current average r a t e of i n t e r e s t on the outstanding marketable obligations of the United States as of the l a s t day of the month preceding the issuance of the obligations of the Bank, ihe current average r a t e on o u t stnncling marketable obligations of the United States as of May 3 1 , 19^7 was I.863& I t i s suggested t h a t such obligations bear i n t e r e s t a t a r a t e equal to the aversge r a t e on outstanding marketable o b l i gations of the United Staton as of the l a s t day of the nonth preceding the i s guanos of such obligations; exeeot that where such average r a t e i s not a multiple of one-eighth of one per oentum, the r a t e of i n t e r e s t of such obligations sliall be the multiple of cne-eighth of one per centum next lower than such average r a t e . On the b a s i s of an average r a t e of l.S63$ as provailed on Hay 31, 19^7t t a e r &* d °* i n t e r e s t to be borne by the Bank's obligations purchased by the Secretary of the Treasury would be l«3/ l! -^ # This would avoid frequent changes in r a t e s of i n t e r c a t borne "by the Bank's o b l i g a t i o n s , and i n the opinion of the Treasury w i l l comply with s t a t u t o r y requiromjnts, X s h a l l be glad to discuss t h i s matter with you or t o consider any comments which your Bank may d e s i r e to submit vdth respect to the i n t e r e s t r a t e on obligations to be purchased b t tho ireasury subsequent to June 30, 13%7» She obligations of the Bank which may be held by the Treasury °r» t h a t date w i l l , of course, continue to bear t h e i r present r a t e of i n t e r e s t , namely one per cent, u n t i l maturity on December 31» ^95^ or u n t i l t h e i r e a r l i e r retirement* Very t r u l y yours, (Signed) JOFr » . SFYT1 R Secretary of the Treasury Honorable William HcC. Martin President, Sxport-Import Bank of Washington Washington 25, D. C»
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