Department of State National Advisory Council Files

Minutes of the Fifteenth Meeting of the National Advisory Council, Washington, March 4, 1946

[Here follow list of participants (19) and discussion of certain topics. The Council then commenced discussion of an Italian request for a loan of $940 million from the Export-Import Bank to purchase reconstruction materials, presented to this Government on February [Page 1426] 14. The Chairman of the Export-Import Bank (Martin) stated that the Bank objected to the proposal that the loan would be on a 30-year term basis, saying that the Bank preferred 20 years. Mr. Harry D. White of the Treasury Department “said he would regret any tendency toward a shorter term for such loans. … (He) pointed out that in countries which are badly off, a short-term loan diminishes credit for other loans. …”]

Political Loans. Mr. Martin said he would like to discuss the proposed loan on the basis of consistency in Export-Import Bank operations. He realized loans are not being made strictly on a business basis, although in the discussions with the Dutch securities were required to be put up as a guarantee and similar terms will probably be demanded of the Belgians. Mr. White answered that in this case our foreign policy requires assistance to a country, even though it is a bad risk. Mr. Eccles agreed with Mr. White that in the world as it is today the question of foreign credits is largely one of foreign policy.

Mr. Collado stated that the political officers in the State Department feel that Italy of all places in Europe is the country where a certain amount of aid will make for the kind of a government we want. Mr. Clayton observed that a loan to Italy will be a political loan and he wondered whether the Export-Import Bank should make a political loan which none of the Council’s members believe will be repaid.

The Chairman said that if the money provided by the Export-Import Bank is to fill in for the International Bank and the International Bank can make loans which have a high degree of risk of [if] a loan of this kind could be defended, particularly since this Government is interested in strengthening and stabilizing conditions. However, he did think a loan should not be made if we do not think it will be repaid. Mr. White pointed out that the Export-Import Bank has already made loans where there are such risks that the loans are only justified because of political considerations.

Mr. Clayton suggested that, when Mr. Martin or the Chairman go to Congress to testify on the increased lending authority of the Export-Import Bank, the statement should be made that some loans will be made concerning which there is not a reasonable expectation that they will be repaid with interest. Mr. White believed that this in essence had already been said in conjunction with the establishment of the World Bank, but he agreed that it should be repeated. Mr. Gaston did not think anything in the record permits the Export-Import Bank to make loans for political purposes only.

[After further brief discussion, the Council decided to approve postponement of consideration by the Export-Import Bank of the proposed loan to Italy pending further study of the questions involved.]