292. Memorandum of a Conversation Among the President, the Secretary of State, and the Secretary of the Treasury (Humphrey), October 3, 19561
Secretary Humphrey and I discussed with the President the matter of the Export-Import Bank loan to Israel for water development. Secretary Humphrey felt that this was very difficult to do because it did not involve the financing of US exports and it was almost ultra vires for the Bank to make this kind of loan. He added also that he thought the credit risk was excessive.2
[Page 628]He said that Israel had virtually no dollar earning power but depended almost always for dollars upon gifts from the US and US subscriptions to Israel bonds. He said that CD. Jackson3 had suggested that this loan be tied in with the proposal for Israel to pay off the refugees. If this element were added, it would merely make the credit risk greater.
The President felt nevertheless it was useful to continue to look into this matter. I suggested that before making a negative reply the Bank should send their technicians to Israel to satisfy themselves on the spot as to the feasibility of the project and its productivity. Secretary Humphrey thought this could be done.
[Here follows discussion of unrelated subjects.]
- Source: Eisenhower Library, Dulles Papers, Meetings with the President. Secret; Personal and Private. Drafted by Dulles. According to the record of the President’s Daily Appointments, Dulles and Humphrey accompanied the President to New York to attend a World Series baseball game. Presumably this conversation took place during the trip. (Ibid.)↩
- At a meeting with officials from the Department of State, the Department of the Treasury, and the International Cooperation Administration, President of the Export-Import Bank Samuel C. Waugh indicated that the Bank would not consider the proposed loan to Israel unless the Department of State asked for such consideration on the grounds of overwhelming political factors. Waugh informed the group confidentially that an independent audit of the Bank’s accounts, arranged by the Chairman of the NAC, had raised serious doubts as to the wisdom of the Bank’s earlier loans to Israel. While acknowledging that the Bank did not need to accept the audit in toto and that Israel had repaid part of its borrowing, Waugh also noted that Israel’s indebtedness was very substantial. Israel had borrowed $135 million from the Bank in 1949 and 1950 and still had $120 million outstanding in principle. (A summary of the statements made by Waugh during the meeting is in a memorandum from Prochnow and Rountree to Dulles, October 2; Department of State, Central Files, 884A.10/9–656.)↩
- Former Special Assistant to the President.↩
- Macomber initialed for Dulles.↩