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

811.516 Export Import Bank/7–1745

Statement of Honorable Leo T. Crowley, Chairman Board of Trustees, Effort-Import Bank of Washington Before Senate Banking and Currency Committee, July 17, 1945

July 17, 1945

I appreciate this opportunity to appear before your committee to recommend an increase in the lending authority of the Export-Import Bank.

The United States is approaching an extremely critical period with respect to the financing of its foreign trade. Furthermore, the problem has the most profound implications for the reconversion of war industries at home. There has been during the war an enormous expansion, in manufacturing capacities in the United States, and this expansion has been concentrated very largely in heavy industry. Unless foreign markets for the products of American heavy industry can be found during the period which lies immediately ahead, many war-expanded industries will be obliged severely to curtail their operations and, accordingly, to reduce their employment of labor.

Fortunately, potential foreign demands for our products in connection with the reconstruction of war-devastated countries and the economic development of countries whose progress has been retarded by the war will be concentrated principally on the products of heavy industry. Moreover, the United States will be practically the only immediate source of supply for many of the commodities involved.

What is required in order to join our need for foreign markets and the needs of foreign countries for our products is financing. We hope and believe that a large part of the necessary financing will be provided by private financial institutions. However, there are certain types of risks and certain large risks which private banks sire not in a position to assume without government assistance and other risks which they are not prepared to assume at all. This would apply particularly to the financing over a period of years of exports of capital equipment, which must be sold on terms which take account of the time required to put it into productive use. It would apply also to long-term loans to governments whose credit is for one reason or another not established to the satisfaction of private investors.

We believe that the necessary financing of our foreign trade during the crucial period of reconversion at home and reconstruction abroad should be provided, to the extent that private credit is not available, through an expanded Export-Import Bank. In performing this role, the Export-Import Bank will be carrying on a function which it has successfully performed over a period of more than eleven years. As private banks and bankers have frequently testified, its operations have supplemented rather than replaced private capital and in this way have not only facilitated the foreign trade of the United States but have also materially assisted in the financing of foreign trade through private channels.

There should be no confusion regarding the fundamental differences between the proposed increase in the lending authority of the Export-Import Bank and other measures relating to our foreign trade which have been approved by Congress or which are under consideration by Congress. The measures which I have in mind include the appropriation for UNRRA, lend-lease, and the pending Bretton Woods legislation.

The appropriation for UNRRA is strictly for relief and has no relation to the financing on a commercial basis of our foreign trade.

With respect to lend-lease, as I and other spokesmen for the Administration have repeatedly stated, lend-lease will be provided only in connection with the defense of the United States and the effective prosecution of the war to final victory. It will not be furnished for purposes of relief, rehabilitation, or reconstruction in Europe or elsewhere. Assistance to the liberated countries of Europe, which is one of the immediate problems facing us, must be provided in some other manner.

In accordance with this recognized principle, the appropriation authorized by Congress for lend-lease for 1946 was based explicitly on the assumption that Congress would increase the lending authority of the Export-Import Bank in order that it could finance portions of the so-called 3(c) agreements for the delivery to certain European countries of industrial equipment and supplies which are not required for the prosecution of the war.

In rendering such assistance to the war-devastated countries, we would proceed on the assumption that these countries must accept the prime responsibility for their rehabilitation and must depend primarily upon their own resources in the process. Nevertheless, there is not only an inescapable obligation on the United States to help the liberated countries help themselves but also a strong element of self-interest; for, by financing their purchases of our products on a sound basis, we are greatly benefiting our own economy.

The International Bank for Reconstruction and Development is intended, it is true, to be a major source of large-scale and long-term credit for the rehabilitation of the war-torn countries and the building up of economically underdeveloped countries. Our participation in the International Bank has now been approved by the House and by this Committee and will be approved shortly, I trust, by the Senate. At best, however, the International Bank cannot be in effective operation for a year or eighteen months. A strengthened Export-Import Bank is therefore urgently needed during the period just ahead to provide the necessary financing of our exports in connection with reconstruction and development projects abroad. There will be no other governmental source of dollar credits for this purpose.

In the longer run, the coordination of the operations of the Export-Import Bank with the policies of the representatives of the United States on the International Bank and Fund will be achieved through the National Advisory Council provided for in the Bretton Woods Agreements Act. The Chairman of the Board of the Export-Import Bank, as a member of the Council, will keep it fully informed of the Bank’s activities and will be guided in turn by its policy decisions applicable to the Bank’s operations.

[Here follows description of the provisions of the proposed legislation.¹²]

12. Congress approved the Administration’s legislative proposals and the new Export-Import Bank Act became law on July 31, 1945 (59 Stat. 526). Essentially this Act “made possible the extension of large-scale credits to foreign countries for the purchase of United States goods by increasing the lending authority of the Bank from $700 million to $3.5 billion and by removing the prohibition on loans by the Bank to countries in default on their obligations to the United States Government.” (Export-Import Bank of Washington, Second Semiannual Report to Congress For the Period January–June 1946, p. 9).