Department of State National Advisory Council Files

Minutes of the Twenty-second Meeting of the National Advisory Council, Washington, April 25, 1946

[Here follow a list of participants and a discussion of proposed credits to France, printed in volume V, pp. 431434.]

2. Billion Reserve for U.S.S.R. Negotiations

Mr. Clayton said that the State Department has reconsidered the earmarking of $1 billion for the Russian loan negotiations and now feels that the billion should be available for other loans. There are no other funds available. There has been nothing in the conversations with the Russians to indicate that the funds will be held for them. Discussions have gone on with the Soviet Union for a year, the negotiations will apparently be long and the outcome is doubtful. The French need prompt action, and therefore it has been decided not to continue earmarking the billion dollars. Mr. Collado added that he was doubtful about the outcome of the Russian negotiations as the note requests an impressive list of concessions from the Russians on commercial policy, Manchuria, Eastern Europe, etc. Under the circumstances, with no other funds immediately available and with an immediate French need, the billion held for the Russians should be used for the other countries.

Mr. Martin asked whether the State Department would issue a press release embodying this decision. Mr. Clayton replied in the negative. Mr. Martin then stated that there was wide public interest in the Russian loan negotiations, that the press had given the note wide publicity, and telephone calls to the Bank were coming in constantly. The public knew how much the Bank had available for lending and know about the billion held for the Russians. If loans are made out of this billion, the NAC should make this fact public.

Secretary Vinson pointed out that when the Export-Import Bank went to Congress before, while the war with Japan was still going on, it was with the full knowledge that a billion of the increased funds was to go to Russia. Congress appropriated the funds with this understanding. If now, $1.25 billion is requested, of which a billion is to go to Russia, what will be the reaction? Mr. Collado said that Congress would have the same reaction whether the billion was held out or was to come from the new funds. Secretary Vinson disagreed, as with the new proposal Congress would in effect be asked to appropriate $1 billion for Russia, and this may affect what Congress will do. Mr. Eccles agreed with Secretary Vinson that if the Russian billion is used, the request for an additional $1.25 billion may have difficulties.

Secretary Vinson asked whether the State proposal meant that the [Page 1431] Council would have to revoke its action. Mr. Clayton thought not, Mr. Eccles said that this matter had been discussed repeatedly and each time the State Department had been strong that there was a commitment to hold this money for Russia and that it was not available for loans to other countries.

Secretary Vinson concluded that the course of the discussion made it clear that a very careful examination of all statements and actions on the billion would be necessary before action. Mr. Coe asked and it was agreed that the State Department prepare the material requested, giving a complete documentation of the statements made by the various members of the Administration to Congress, to the public, and to the Russians on this subject.

3. Revised Allocation of Funds

Mr. Martin said that the bank now has $964 million (see NAC Doc. 119). After taking into account private participation in the Netherlands credit and anticipated repayments and cancellations, as of June 30, 1946, the bank might have $1,164 million. The Bank has never engaged in negotiations without funds to lend, but the time is fast being approached where the integrity of negotiations will be jeopardized.

Mr. Clayton said that all members knew we were not negotiating with the French about $300 million but about $500 million or more and the Bank knew of the funds problem.47

Mr. Martin replied he had thought that $500 million had been the top limit. Mr. Martin added that when the funds in the Bank are as low as at present the views of the Bank as to the speed of commitments must be seriously considered. Sufficient advance information must be given to the Bank if any deadlines have to be met.

Secretary Vinson pointed out that the Export-Import Bank table of illustrative allocations (see NAC Doc. 119) had been based on the assumption that $1.5 billion would be requested from Congress. Mr. Martin said that was the only table on allocations which had been prepared by the Staff. Mr. Eccles suggested that the Staff Committee should re-do these tentative allocations on the basis of $1.25 billion. Mr. Eccles and Mr. Collado agreed that the preparation of the new table should be based on the assumption that the $1 billion would still be needed for the Soviet Union. Mr. Collado added that the new information on loan requests since the last table was prepared would need to be taken into account. The representatives of Czechoslovakia [Page 1432] are now back and say they are empowered to talk nationalization and will be expecting funds.

Secretary Vinson concluded that based on the discussion it was clear that the Staff Committee should make a new study of allocations based on the $1.25 billion request and taking into account all new information since the last study.

  1. This has reference to the full-dress financial negotiation with the French Government that had just been launched in Washington; for documentation on this matter, see vol. v, pp 399 ff. It may be noted that the National Advisory Council was functioning in these discussions as the United States Top Committee just as it had for the loan negotiation with the British Government in the autumn of 1945.