Foreign Relations of the United States, 1955–1957, Western European Security and Integration, Volume IV

167. Minutes of the 244th Meeting of the National Advisory Council on International Monetary and Financial Problems, Washington, April 20, 1956¹

Washington, April 20, 1956

Mr. W. Randolph Burgess (Acting Chairman), Treasury Department

• Mr. Andrew N. Overby
• Mr. Elting Arnold
• Mr. Henry J. Bittermann

Mr. Herbert V. Prochnow, State Department

• Mr. Jack C. Corbett
• Mr. Roger Dixon

Mr. Marshall M. Smith, Commerce Department

• Mr. George Wythe

Mr. Arthur W. Marget, Board of Governors, Federal Reserve System

• Mr. Frank M. Tamagna

Mr. Samuel C. Waugh, Export-Import Bank

• Mr. Lynn U. Stambaugh
• Mr. Carl Cass
• Mr. Glenn McLaughlin

Mr. Walter Schaefer, International Cooperation Administration

• Mr. Halte T. Shenefield

Mr. Frank A. Southard, Jr., International Monetary Fund

Mr. John S. Hooker, International Bank

Mr. Edmond C. Hutchinson, Bureau of the Budget, Visitor

Mr. George H. Willis, Acting Secretary

• Mr. C.L. Callander, NAC Secretariat

I. Proposed Export-Import Bank Credit of $10 Million in Germany

The Council considered a proposed Eximbank credit of $10 million to the German steel firm of Thyssen-Huette (NAC Document No. 1917²). The Chairman asked Mr. Waugh for comments on the proposal. Mr. Waugh referred to the objections which had been raised by State Department representatives in the Staff Committee on the cartel aspects of the proposed credit (see Staff Committee Minutes No. 482³ and NAC Document No. 1927⁴). He commented that the proposed loan had been discussed with the Department of State during the summer of 1955, and that no objection had been raised at that time. Meanwhile negotiations with the Thyssen Company had proceeded actively. Mr. Waugh noted that the Eximbank had been attempting for some time to enter the German market. He felt that in the context of the European steel industry the proposed loan was too small to offer an effective means of raising objections to the European steel export cartel.

Mr. Prochnow stated that the Department of State had no objection to the credit itself, but wished to bring the cartel question to the attention of the Council. State understood that the German Government was attempting to take action against the cartel, and would not be likely to object to denial of this loan. He commented that national cartels are illegal under the Coal and Steel Community treaty, and that while the High Authority of the CSC had indicated its disapproval of the export cartel, it had only limited authority to act against this sort of arrangement.

The Council discussed the proposed credit and the questions raised with respect to the cartel aspects. It was pointed out that the Thyssen firm was exporting very little steel and that the credit would assist in the expansion of the production of types of steel for which there was great demand within Germany rather than for export. For this reason and because of the small amount of the credit in relation to the magnitude of the European steel industry, the possible cartel implications of the credit had not appeared significant to the Eximbank.

The negotiations with the prospective borrower were described in considerable detail. The Council agreed that while it would have been desirable for the cartel question to have been considered early in the negotiations, under the existing circumstances no objection should be raised to the credit.

It was also agreed that the Bank should inform the Thyssen firm that the cartel aspects of the credit had created considerable difficulties within the U.S. Government, and that it would be appropriate for the U.S. Embassy in Germany to make it clear to the German Government that the United States hoped that the German Government’s anti-cartel efforts would be successful and that the credit was granted solely to promote the modernization of German steel producing facilities.

The following action was taken (NAC Action No. 875):

“The National Advisory Council advises the Export-Import Bank that it offers no objection to consideration by the Bank of a proposed credit of $10 million to August Thyssen-Huette, A.G., of Duisburg-Hamborn, Germany, to finance the purchase in the United States of steel mill and electrical equipment required in the restoration of its Rhine steel plant. It is understood that the credit would bear interest at 5 percent per annum and would be repayable over a period of approximately 15 years, including a grace period of approximately 4 years.”⁵

[Here follows discussion of a proposed Export-Import Bank loan to Mexico.]

1. Source: Department of State, NAC Files: Lot 60 D 137, Minutes. For National Advisory Council Use Only.
2. See Document 163.
3. Not printed. (Department of State, NAC Files: Lot 60 D 137, Staff Minutes)
4. Reference is to a Department of State memorandum entitled, “CSC Steel Export Cartel and Its Relation to Proposed Eximbank Loan to August Thyssen-Huette Steel Plant” forwarded to the NAC on April 19 under cover of a letter from Corbett to Glendinning. (Ibid., Documents)

5. In a memorandum of April 20 to Hoover, Prochnow summarized the decision on the loan as follows:

   “After we heard the whole story on the proposed loan to the August Thyssen-Huette Steel Plant I came to the conclusion that a moral commitment on this credit had been made and Randy Burgess agreed. Consequently we felt the credit had to be made despite the objection on the cartel situation. However, the Eximbank will explain to the borrower the difficulty we had in extending this credit because of the possible cartel implications.” (Ibid., Central Files, 103.XMB/4–2056)

   On June 28, the Export-Import Bank approved the loan of $10 million to August Thyssen-Huette; a public announcement was issued on July 17. Luxco A–1, July 24, explained the loan decision of the Bank, as well as the Department of State’s position, to the CSC Mission. (Ibid., 850.33/7–2456)