224. Minutes of the 249th Meeting of the National Advisory Council on International Monetary and Financial Problems, Washington, September 6, 19561
[PARTICIPANTS]
- Mr. W. Randolph Burgess (Acting Chairman), Treasury Department
- Mr. Elting Arnold
- Mr. Henry J. Bittermann
- Mr. Herbert V. Prochnow, State Department
- Mr. Jack C. Corbett
- Mr. Maurice M. Bernbaum
- Mr. Viron P. Vaky
- Mr. Marshall M. Smith, Commerce Department
- Mr. Clarence I. Blau
- Governor M.S. Szymczak, Board of Governors, Federal Reserve System
- Mr. J. Herbert Furth
- Mr. Lynn U. Stambaugh, Export-Import Bank
- Mr. Hawthorne Arey
- Mr. Vance Brand
- Mr. R.H. Rowntree
- Mr. Charles Shohan
- Mr. John B. Hollister, International Cooperation Administration
- Mr. Arthur E. Burns
- Mr. Frank A. Southard, Jr., International Monetary Fund
- Mr. John S. Hooker, International Bank
- Mr. Earl L. Butz, Department of Agriculture, Visitor
- Mr. John H. Dean, Department of Agriculture, Visitor
- Mr. Rulon Gibb, Department of Agriculture, Visitor
- Mr. Oscar Zaglits, Department of Agriculture, Visitor
- Mr. Harry B. Wirin, Department of Agriculture, Visitor
- Mr. Edmond C. Hutchinson, Bureau of the Budget, Visitor
- Mr. George H. Willis, Acting Secretary
- Mr. C.L. Callander, NAC Secretariat
2. Proposed Export-Import Bank Credits in Argentina
The Council considered the proposal for Ex-Im Bank credits of $100 million in Argentina (see NAC Document No. 19852 for original proposal). The Chairman referred to a revision of the Export-Import Bank proposal which had been distributed at the meeting (see NAC Document No. 1985 (Revised)3), noting that the revisions [Page 442] in the proposal had resulted from inter-agency discussions of the problem. He invited the representative of the Bank to comment further.
Mr. Brand referred to the summary in NAC Document No. 1985 (Revised) of the steps taken by the new Argentine Government to provide the basis for its economic recovery program. He commented that the Ex-Im Bank’s proposal was not a response to all the capital requirements of the Argentine rehabilitation program, but covered only what the Bank felt could be done within the limits of Argentine financial stability and the available resources of the Bank, to meet emergency needs, primarily in the field of transportation. Argentina hoped to increase its exports to the prewar level (to about $1.5 billion equivalent), which could not be done without substantial improvement in Argentine railway facilities. If the Council approved the proposal before it, the Bank would send a technical mission to Argentina, and would consider specific credit proposals on the basis of the findings of the Mission. The $100 million would thus be used on a project basis subject to the findings of the Mission. In making credits the Bank intended to take into account the progress made by Argentina toward financial stability and toward satisfactory treatment for private investors. The Bank had had frank talks with the Argentine Mission on the problems of private investors, and was satisfied that there was a beginning of genuine negotiation between Argentina and the principal U.S. investors. The Bank had consulted the International Monetary Fund and the International Bank, and interested U.S. Government agencies, in the development of the $100 million program. He concluded by stating that the Bank did not intend to make public its intent to earmark $15 million for loans in the private sector, because the Bank did not wish to encourage the development of applications for short-term credits and because the Bank wished to leave itself free to undertake projects in the field of electric power if the situation in that field became clarified.
After a brief discussion the Council agreed that it would be appropriate to omit from public statements reference to the $15 million earmark for credits in the private sector of the Argentine economy.
Mr. Hollister commented that ICA was generally interested in the economic progress and development of Argentina, though they had no aid program there at present. He said that the Ex-Im Bank credit, which met only a part of the Argentine request, might be followed by pressure for an ICA program to finance development in Argentina.
The Chairman commented that he would have preferred a limit of $50 million, but that in view of the magnitude of the problem and the safeguards that were contemplated, the proposed $100 [Page 443] million commitment was acceptable as an outside limit. Mr. Hooker informed the Council that the International Bank had been fully informed of the proposed Ex-Im Bank credit; the Chairman commented that the present loan proposal was in effect an emergency item, and that the IBRD’s approach to the Argentine problem would involve a more leisurely investigation. In response to a question about the prospective Argentine reaction to a credit of $100 million after requesting aid totalling $1.2 billion, Mr. Brand explained that the Bank had brought the problem to the Council early in the negotiations in order to have in hand a final U.S. Government decision to communicate to the Argentine delegation.
After a brief further discussion the Council agreed on a revision of paragraph 3, page 3, of the paper (see NAC Document No. 1985, Second Revision), and on a revision of the draft action. The following action was taken (Action No. 915):
“The National Advisory Council advises the Export-Import Bank that it offers no objection to consideration by the Bank of a line of credit of $100 million to Argentina to assist in financing the purchase of U.S. equipment and services required for projects of an urgent nature in the private and public sectors of the Argentine economy, including transportation, industry and agriculture. In making specific loans under this line of credit the Bank will give due consideration to the progress which Argentina continues to make in attaining monetary and financial stability and in according satisfactory treatment to private investors. It is understood that at least $15 million of the line of credit would be utilized in the private sector. It is also understood that credits authorized in the public sector would bear interest at the rate of 5 percent per annum and would be repaid over a period of approximately 18 years, including a waiting period on repayments of principal of approximately 4 years.”
4[Here follows discussion of matters unrelated to Argentina.]
- Source: Department of State, NAC Files: Lot 60 D 137, Minutes. For National Advisory Council Use Only.↩
- Not printed. (Ibid., Documents)↩
- Reference is to a letter of of September 6 from Edward S. Conger, Assistant Secretary of the Export-Import Bank, to C. Dillon Glendinning, Secretary of the NAC, in which the Export-Import Bank expressed its willingness to authorize a credit of $100 million to Argentina to assist in the purchase of U.S. equipment and services, with the understanding that at least $15 million of this credit would be utilized in the private sector. (Ibid.)↩
In telegram 233 to Buenos Aires, September 10, the Department informed the Embassy that the Export-Import Bank had formally approved a line of credit of $100 million to Argentina. The Bank would send a mission to Argentina headed by one of its directors during the first part of October to make studies in the public and private sectors. Allocations would then be made by the Bank after the return of the mission. (Ibid., Central Files, 835.10/9–1056)
In telegram 253 to Buenos Aires, September 14, the Department informed the Embassy that it had communicated the Export-Import Bank’s decision to Coll Benegas on September 11. The telegram reads in part: “Coll critical of amount and urged serious consideration adjustment to 125 or 130 million. Argued that latest official estimates placed minimum transportation requirements to move increased crops at 112 million dollars, to which 15 million for private sector could be added. Bank informed him that not feasible change figure already agreed on by interested US agencies.” In conversation with Coll, the Department pointed out, U.S. officials have stressed the following points: “US considers Coll mission very successful; establishment of 100 million earmark is very favorable action and note should be taken of almost unprecedented procedure establish line of credit before specific projects evaluated; US considers this step as only beginning period close cooperation Argentina; joint discussions with Argentine Government on economic recovery program to continue.” (Ibid., 835.10/9–1456)
Telegram 254 to Buenos Aires, September 14, transmitted the text of the joint announcement regarding the Export-Import Bank credit which was released on September 17 in Buenos Aires by the Argentine Government and in Washington by the Export-Import Bank. (Ibid.)
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