Minutes of Meeting No. 171 of the National Advisory Council on International Monetary and Financial Problems, Held at Washington, March 28, 1951
[Here follow a list of those persons present (22) and a table of contents.]
1. Proposed Export–Import Bank Loan to Cuban Electric Company
Mr. Glendinning2 recalled that in June 1950 the Council had advised the Export-Import Bank that it perceived no objection to the Bank’s advising the American and Foreign Power Company that the Bank would consider on their merits loan applications for financing Latin American subsidiaries of American and Foreign Power (NAC Action No. 406.)3 This was the first case under the ensuing Export-Import Bank negotiations with American and Foreign Power. It called for a 12-million dollar loan to the Cuban Electric Company which would provide part of the financing for a total program of about $33 million. In considering the problem the Staff Committee was satisfied the power was required in Cuba and would make a contribution to the development of the Cuban economy in this period.
Allocating machinery had not been set up with respect to this type of equipment, although it was in process of being established. Approval of consideration of the credit would carry no commitment with respect to making equipment available should the allocating authority later conclude other programs had priority.
The interest rate would be approximately 4½ percent and maturity of the loan 20 years (NAC Document No. 1115).3[Page 1336]
Mr, Szymczak4 said that he had no objection to the loan and thought it was a good one. He was, however, concerned with the problem of coordination of development financing. He recalled that there had been meetings of the Staff Committee, of the International Bank, and of the Export-Import Bank, on this problem but so far as he knew nothing as yet had come out of these meetings. His question related to the overall issue of coordination of development financing as between the Export-Import Bank and the International Bank.
Mr. Gaston5 commented that so far as this particular loan was concerned it was one the International Bank could not make since it was a private loan and not guaranteed.
Mr. Martin6 observed that papers on the other problem had been distributed to the Council (NAC Document No. 1107).7 It was contemplated there would be a meeting of the principals and Mr. Harriman’s8 office in the near future to discuss this general matter and get something up to the NAC for action. He added that it was not an easy problem and that ECA also was concerned with the general problem of lending operations.
Mr. Szymczak inquired whether the International Bank had sent the Truslow Mission9 to Cuba. Mr. Hasenoehrl10 said that the Mission had been made up at the request of the Cuban Government. So far it had made no report other than on the railroad situation.
Mr. Szymczak observed that the International Bank was not in the Cuban picture as yet since it had loaned nothing to that country. He understood, however, that the Export-Import Bank had made some loans to Cuba. Mr. Hasenoehrl said that these loans had been paid off.
Mr. Szymczak commented that this loan appeared to be the kind of loan that would pay for itself. Mr. Gaston said that it was a profitable company and that the only thing that disturbed him was that rates were rather high, and the cost of operations high due to a high wage and salary schedule and the fact that much of the equipment was outmoded. The proposed loan would take care of part of this problem. [Page 1337] However, the company had a large proportion of small services that did not pay their costs. Mr. Szymczak observed that if prices continued to go up in the United States the company might find it could not buy all of the necessary equipment and would have to ask for a further loan. Mr. Gaston commented that that was their problem.
[Here follows discussion of matters relating to general problems of foreign lending and the availability of materials and resources.]
Action. The following action was taken (Action No. 457):
The National Advisory Council advises the Export-Import Bank that it approves consideration by the Bank of a credit not in excess of $12 million to the Cuban Electric Company to aid in financing the dollar costs of its construction program. It is understood that the interest rate will be approximately 4½ percent, that the credit will be repayable within 20 years, and that the funds advanced will be secured by collateral in excess of 100 percent of the amount of the loan.11
[Here follows additional discussion and action on matters unrelated to Cuba.]
- Master file of the documents of the National Advisory Council on International Monetary and Financial Problems (NAC) for the years 1945–1958, as maintained by the Bureau of Economic Affairs, Department of State, and preserved as item 70 of Federal Records Center Accession 71A 6682.↩
- C. Dillon Glendinning, Secretary, National Advisory Council.↩
- Not printed.↩
- Not printed.↩
- M. S. Szymczak, Board of Governors, Federal Reserve System.↩
- Herbert E. Gaston, Chairman, Board of Directors, Export-Import Bank of Washington, and Acting Chairman, National Advisory Council.↩
- William McChesney Martin, Jr., Assistant Secretary of the Treasury.↩
- Not printed.↩
- W. Averell Harriman, Special Assistant to the President.↩
- This mission (so-called after its chairman, Francis Adams Truslow) had been organized in mid-1950 by the International Bank for Reconstruction and Development at the request of the Cuban Government for the purpose of making a comprehensive survey of the Cuban economy and recommending specific proposals for the country’s development. For further information, see International Bank for Reconstruction and Development, Sixth Annual Report to the Board of Governors 1950-1951 (Washington, 1951), pp. 35 ff. For the mission’s final report, see International Bank for Reconstruction and Development, Report on Cuba: Findings and Recommendations of an Economic and Technical Mission Organized by the International Bank for Reconstruction and Development in Collaboration with the Government of Cuba in 1950 (Washington, 1951).↩
- Victor F. Hasenoehrl.↩
- On March 29, 1951, the Board of Directors of the Export-Import Bank approved a credit of $12,000,000 in favor of the Cuban Electric Company, Inc., to assist the company in financing a construction program in Cuba. For further information, see Export-Import Bank of Washington, Twelfth Semiannual Report to Congress for the Period January–June 1951 (Washington, 1951), pp. 12–13, 36.↩