Department of State National Advisory Council Files

Minutes of the Twenty-fourth Meeting of the National Advisory Council, Washington, May 6, 1946

[Here follows a list of participants (25) at the meeting.]

The Chairman asked that the action on the Russian loan be reviewed. Mr. Coe read the draft action from the minutes of the preceding meeting.48 It was agreed to substitute the words “adequate additional” lending authority in the last paragraph for the expression “further” lending authority. The action as amended was approved unanimously.


The following action was taken:

Action No. 16 of Meeting No. 4, September 27, 1945 which reads:

“The Council approves the recommendation of the Chairman of the Export-Import Bank that a credit of up to $1 billion shall be extended by the Bank to the U.S.S.R. for the purchase of reconstruction goods, on such terms and conditions as may be decided by the Council and the Bank.

“Negotiations on this credit shall not go forward until the Secretary of State has been consulted. The credit shall not be concluded until the U.S.S.R. has agreed to an exchange of notes on commercial policy which is satisfactory to this government.”

is amended by the following language at the end of the second paragraph:

“The approval of the above-mentioned loan is conditioned upon negotiations not being completed by the Export-Import Bank until adequate additional lending authority is conferred upon the Bank by Congress.”

[Discussion of the French loan request then began. The Council noted the results of a constituent election which had just been held [Page 1433] in France in which a proposed constitution had been rejected by the French electorate.]

Political Considerations.—Mr. Eccles said he believed that this loan should be considered on economic grounds. This Government is interested in political outcomes in other countries but he would dislike to have the Government accused of undertaking to buy a foreign election. He did not want a record which was susceptible of this interpretation. He pointed out that we are very critical of the Russians for influencing elections.

The Chairman emphasized that there are political considerations in every loan and referred to the Russian loan. Mr. Eccles thought that in making loans we are concerned with getting the countries back on their feet rather than as to whether the government is socialist, communistic or a capitalistic democracy. We made a loan to Poland because we wanted to help Poland distribute coal.49 The Chairman referred to the condition attached to the latter loan that Poland have an election and pointed out that it is not a question of exerting pressure to change ideologies.

Secretary Wallace said it would be unfortunate if word got out that we had in mind major political considerations in making loans.

The Chairman said the political question came up in connection with the time we would conclude the loan in relation to the June 2 elections. If the loan is negotiated in the very near future there is no doubt the conclusion will be drawn that it was made for that purpose. Secretary Wallace said we had sufficient economic reasons for concluding this loan. If the Export-Import Bank does not think so we should go slowly.

The Chairman pointed out that the Chinese loan of $500 million was a political loan and had been made on the basis of General Marshall’s plea. Secretary Wallace said that if he had been present he would have voted against the loan.

Mr. Eccles added that there were many strings attached to the Chinese loan. In France conditions are orderly but the question is whether the Constitution and Assembly to be chosen would be right, left or middle. It would be unfortunate to make a loan to influence an election in a particular direction. Also we can have no assurance that a loan made before an election will have the effect we want. The French people might resent the fact that we were trying to influence the election. We have found that to be true in Latin America.

The Chairman pointed out that the State Department had raised the political matter the previous week. Mr. Clayton agreed but said [Page 1434] there was sufficient basis for acting without it.50 The Chairman inquired whether there was any difference in the position of the State Department today as compared with the previous Thursday. Mr. Clayton replied that there was none whatever. The Chairman stated that he felt he must depend on the State Department for political guidance and advice.

Mr. Eccles asked whether, assuming the constitution had been adopted and the loan had not been completed before June 2nd elections and at the elections the Socialists and Communists had a majority, we would refuse to give financial aid to the French Government if that government were willing to carry through the same kind of a program as here presented.

Mr. Clayton said that the answer to Mr. Eccles’ question is that we did make the Polish loan and it is hardly conceivable that France would go further to the left than Poland. He had great difficulty in separating political from economic considerations in thinking about Europe. If he thought that country X was in danger of economic and social chaos he would favor a loan if it were reasonable in amount and there were a reasonable chance of repayment. Assuming that we had not made the loan before the election, Mr. Clayton thought that he would favor going through with it, no matter how the election turned out, so long as the elected French government would respect its obligations.

Secretary Wallace inquired whether Mr. Clayton would favor an economically “bad” loan for the purpose of “stabilizing” conditions. Mr. Clayton said no emphatically. Secretary Wallace concluded that there was no fundamental disagreement between them. He proposed that political references be deleted from the Council’s record of these discussions. Mr. Clayton said that was agreeable.

Mr. Martin said he was agreeable but noted that his position had concerned the short time being allowed the Bank for consideration rather than the political aspects.

Mr. Eccles observed that, aside from the questions of the election, immediate action was not required. Mr. Clayton argued that prompt [Page 1435] action was necessary. We had been talking about this problem for six weeks. In the final analysis decision would be made on the basis of the overall picture and not on this detail or that. He admitted that the fiscal situation bothered him but he had decided it will get worse if we do not help. If we do help them we can hope they will be able to build up their economy and balance the budget.

[Lengthy discussion of the French loan question followed, at the end of which the Council entertained action favorable to the French request.]

  1. Reference is to the meeting of the Council on May 22 (23rd meeting). Inter alia, the Council reviewed the history of the Russian loan request from August 1945 to date. There was discussion of priorities as between the Russian and French loan requests, and after extensive review of the French loan situation the Council unanimously agreed that approval of the Russian loan “is conditioned upon negotiations not being completed by the Export-Import Bank until further lending authority is conferred upon the Bank by Congress.”
  2. This refers to a $40 million credit to Poland which the National Advisory Council approved for consideration by the Export-Import Bank in a meeting on January 29, 1946, diplomatic consummation of which was still pending.
  3. In the Council’s meeting on May 2, Secretary Wallace had raised the question “… whether there was a general policy in this Government of making loans to influence foreign elections”. The Chairman (Vinson) had replied “that there was not, but there were political aspects to almost all the foreign loans this Government was making. There was no question but that the Polish loan approved recently by the Council had had a political aspect. Further, we had said repeatedly that one of the purposes of our reconstruction loans was to stabilize conditions abroad.” Subsequently Mr. Clayton indicated that “the State Department considered the economic situation in France was serious and that we should extend substantial financial aid to France as quickly as possible. … The political situation of any country had many aspects and he certainly believed that in the consideration of foreign loans attention should be given to economic stagnation and disruption abroad which, if allowed to continue, might well result in serious political and social disturbances in a foreign country.”