Record of Meeting No. 169 of the National Advisory Council on International Monetary and Financial Problems, December 28, 19502
1. Proposed International Bank Loans to South Africa
Mr. Willis3 pointed out that because of certain unusual conditions the Staff Committee had not submitted a formal recommendation to the Council on this matter. The loans had been under consideration for a considerable period of time, and it was important to note that worldwide economic and military conditions had changed since the original negotiations were begun. He observed that the British were very much in favor of these loans, since most of the goods to be purchased with the proceeds would come from the United Kingdom, and dollars would accordingly flow to the United Kingdom. Mr. Willis stated that the United States’ need for strategic materials seemed a very important consideration to the Staff Committee, and that the lack of adequate transport facilities for such materials could well be a limiting factor in their procurement. He also pointed out that short supplies in the United States must be taken into consideration, although most of the material scheduled for procurement under these loans had been contracted for in the United Kingdom. Mr. Willis also observed that most of the dollar proceeds of this loan would be paid to the United Kingdom, and noted the fact that the United Kingdom had released virtually none of its 18 percent contribution to the Bank’s capital. He pointed out that these loans would probably not completely satisfy the demand of the South Africans for loans, since their development plans envisaged far greater sums. In conclusion Mr. Willis said that the relation of these loans to the total available funds of the Bank ($71 million) had been discussed by the Staff Committee, and that no real problem seemed to exist in that connection.[Page 1845]
Secretary Snyder introduced Mr. Jesse Johnson of the Atomic Energy Commission who spoke unofficially on the subject of the Atomic Energy Commission’s interest in development projects in South Africa. Mr. Johnson stated that the development programs, especially power projects, contemplated through use of these loans were of importance to the over-all operations of the Atomic Energy Commission.4
The Council agreed unanimously to advise the United States Executive Director of the Bank that it approved consideration of the loans.
Action: The following action was taken:
The National Advisory Council advises the United States Executive Director of the International Bank that it approves his consideration in the Board of Directors of a loan to the South African Electricity Supply Commission (ESCOM) of $30 million and a loan to the Government of South Africa of up to $30 million for the South African Railway System.
- Lot 60 D 137 is a master file of the documents of the National Advisory Council on International Monetary and Financial Problems for the years 1945–1958, as maintained by the Bureau of Economic Affairs of the Department of State.↩
- For this meeting of the National Advisory Council, at which Secretary of the Treasury John W. Snyder served as Chairman, 27 persons were present including officials of the Department of State, Department of Commerce, Board of Governors of the Federal Reserve System, Export–Import Bank, Economic Cooperation Administration, Securities and Exchange Commission, and the Department of the Treasury. Two representatives of the Atomic Energy Commission (Jesse C. Johnson, Manager, Raw Materials Operations, and his Special Adviser, Frank W. McQuiston) were also present as “visitors”.↩
- George H. Willis, Director of the Office of International Finance, Department of the Treasury, and Acting Secretary of the National Advisory Council.↩
In a brief memorandum of December 28 to H. Merrell Benninghoff, Officer in Charge of Dominion Affairs in the Office of British Commonwealth and Northern European Affairs (BNA), Norris S. Haselton, Officer in Charge of Economic Affairs in BNA, reported as follows on the National Advisory Council’s consideration of the proposed IBRD loan project for South Africa:
“This case had been discussed two or three times at the staff level in the NAC where a number of questions had been raised. At today’s meeting of the top council a representative of the Atomic Energy Commission made a strong statement in support of the loan on the grounds that the projected expenditures would contribute to an increased production of gold-bearing ores of direct interest to the AEC. There was no discussion following this statement and the transaction was approved.” (398.14/12–2850)↩