Foreign Relations of the United States, 1946, General; the United Nations, Volume I

811.51/6–1545: Circular airgram

The Acting Secretary of State to Certain Diplomatic and Consular Officers

secret

Washington, June 15, 1945—9:10 a.m.

For Chief of Mission. An integrated program of legislation and implementation to carry out the foreign financial policy of the US has been adopted in principle by the Staff Committee,¹ subject to further discussions with the Treasury, FEA, War and Navy Departments.² A memorandum is being drafted for the President reiterating our basic policies as follows: 1) the carrying out of a lend-lease policy adequate for the fullest prosecution of the war against the common enemy, 2) full participation in relief and rehabilitation measures, 3) international cooperation in monetary and exchange management through the International Monetary Fund, supplemented by bilateral arrangements with the UK and perhaps certain other nations, 4) public and private dollar investment in reconstruction and development abroad during the next decade to the extent of $25 to $30 billion.³

These policies must be accompanied by parallel programs on full employment within the US and a sensible commercial policy.

To carry out the basic policies (each covered in separate subject memoranda) certain legislation is required: 1) lend-lease budget, 1946, 2) doubling of UNRRA quotas, 3) expansion of ExImbank lending facilities,⁴ 4) Bretton Woods Institutions,⁵ 5) repeal of the Johnson Act,⁶ 6) settlement of World War I Debts, 7) amendment of SEC Legislation to allow this government to obtain information on private US investments in foreign countries.

Grew

1. This refers to the Secretary’s Staff Committee, at this time the top policy-recommending body in the Department of State.
2. This was done at a meeting of the Secretary’s Staff Committee on June 7 (Minutes of the Secretary’s Staff Committee, Lot 122, Box 13147). The Committee acted on a Staff Committee Document, SC–124, entitled “Foreign Financial Policy”, dated June 5, 1945 (Secretary’s Staff Committee Document, Lot 122, Box 13148).
3. Such an over-all memorandum to the President has not been found, but some of the subjects named here are discussed in annexes to SC–124. The fourth item, regarding reconstruction and development, was described in a draft memorandum to the President written about June 15 by Emilio G. Collado, Deputy for Financial Affairs for the Assistant Secretary for Economic Affairs (Clayton) (840.50 UNRRA/6–1545). An abbreviated version of this draft, unsigned and undated, is printed infra.

4. Originally chartered in 1934 to expedite trade with the Soviet Union, the Export-Import Bank, after the breakdown of Soviet debt negotiations absorbed the commitments of a second Export-Import Bank, created also in 1934 to provide credit to Cuba. The original bank then devoted its energies to supplying exporter-importer credits for Latin American trade, and had played an important role in U.S. relations with the other American Republics during the years of World War II. In general the Export-Import Bank’s “loans” were simply “lines of credit” established in the United States for the dollar needs only of the foreign borrower, that is exclusively for the purchase of U.S. products and services. See 83d Congress, 2d Session, Senate Document No. 85, Legislative History of the Export-Import Bank of Washington (Washington, Government Printing Office, 1954).

   As part of its legislative program, the Administration had proposed to the Congress that the capitalization of the Export-Import Bank be increased from $700 million to 3.5 billion.

   In a memorandum written on June 11, 1945 to the Assistant Secretary (Clayton), entitled “Legislation and Organization to Meet Foreign Dollar Requirements”, Mr. Collado had stated that “It is obvious that U.S. loan activities should be concentrated in one agency and the ExImbank [Export-Import Bank] is ready-made for the purpose. … The present proposal to increase the Bank’s funds to $3.5 billion covers only a first approval to Soviet requirements, nothing for the U.K. and little for China. It should be made clear that more will be required before the Bretton Woods Bank can possibly function.” (840.50 UNRRA/5–1145)

5. Congress enacted the Bretton Woods Act with President Truman approving on July 31, 1945, thereby establishing the basis for United States participation in the International Bank and the International Monetary Fund. For relevant citations to the Bretton Woods Agreements of 1944, the establishment of the two Bretton Woods institutions, and the genesis of U.S. relations therewith, see pp. 1384 ff.
6. The Johnson Act of 1934 (48 Stat. 574) forbade loans by any agency of the United States to foreign governments in default on its obligations to the United States.