Foreign Relations of the United States: Diplomatic Papers, 1944, General: Economic and Social Matters, Volume II

611.0031 Executive Committee/826

Memorandum by the Secretary of State to President Roosevelt

[Washington,] June 2, 1944.

The Executive Committee on Economic Foreign Policy^60a at its meeting on May 26, 1944 approved the attached recommendations regarding legislation to facilitate the financing of reconstruction, with the understanding that such legislation would be sought at a favorable time—possibly after the invasion has been launched.

I believe that it is necessary and desirable that such legislation be sought as soon as practicable. If you approve, I will request the several agencies involved to draft legislation which might be brought up in the Congress in July or August.^60b

[Annex]

Reconstruction Financing and Related Problems

summary of conclusions and recommendations^60c

(1) It is the policy of the Government of the United States to engage in a properly conceived program of foreign investment to aid in financing the reconstruction of war-torn areas and for related purposes including facilitating the export generally of capital goods from the United States and the economic development and industrialization of the less developed areas of the world.

(2) This policy includes the elimination of unnecessary obstacles to the flow of private foreign investment and the regulation of private foreign investment to the extent necessary to eliminate abuses detrimental to international relations.

(3) Adequate provision does not now exist for financing reconstruction and development programs which it may be anticipated will arise during the next year or until the United Nations Bank for Reconstruction and Development is established. Moreover there exist areas for financing inappropriate to the United Nations Bank but appropriate for unilateral and bilateral arrangements involving United States Government institutions.

(4) In general reconstruction financing should take the form of loans with expectation of eventual full repayment.

Recommendations

1. Export-Import Bank—request immediate Congressional action to extend the powers of the Export-Import Bank:

a. Increase lending powers by one billion dollars or so at this time.

b. Eliminate default (similar to Johnson Act) limitations.

2. Johnson Act—request its repeal, preferably in connection with extension of the powers of the Export-Import Bank, in order to permit private participation in the extension of credits to certain European countries.

3. Securities and Exchange Commission—

a. By amendment of the Securities Act bring all foreign loans and investment, whether publicly offered or privately placed, within the jurisdiction of the SEC, thereby providing a basis for regulatory procedures as to all such foreign transactions through financial institutions. By a similar amendment to the Investment Companies Act, bring the foreign activities of private investment trusts under supervision similar to that already existing with respect to publicly owned investment trusts.

b. Urge the Securities and Exchange Commission to require by administrative ruling or to request on a voluntary basis, if feasible, registered corporations to file with it current reports of loans made to foreign enterprises or foreign governments or of investments in foreign plants or subsidiaries.

1. The Executive Committee on Economic Foreign Policy was established in April 1944 “to examine problems and developments affecting the economic foreign policy of the United States and to formulate recommendations in regard thereto for the consideration of the Secretary of State, and, in appropriate cases, of the President.” See Department of State publication No. 3580: Postwar Foreign Policy Preparation, 1939–1945 (Washington, Government Printing Office, 1949), pp. 218–220.
2. Marginal note: “CH OK FDR’
3. This document, identified in other copies as ECEFP D–5/44, summarizes a longer memorandum of May 24, 1944, by Emilio G. Collado, Chief of the Division of Financial and Monetary Affairs (Lot 122 (Rev) S/S–S, Box 21, not printed). Collado listed the following needs and requests for reconstruction and development financing: “1. Needs of Italian reconstruction. 2. The discussion of Ambassador Harriman with the Russians regarding an initial 500 million dollar credit for exports of capital goods to Russia. 3. Conversations with Ambassador Harriman regarding reconstruction in the Balkans and Poland. 4. The Chinese request for a billion dollar loan. 5. The Dutch request for a 300 million dollar credit. 6. Latin American projects including: a. Railways in Brazil. b. Chilean steel mill. c. Further Rio Negro power projects in Uruguay. d. Further Mexican industrial projects. e. Colombian industrial projects. f. Dominican cement and other projects.”