Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

191. Minutes of Meeting 60–1 of the National Advisory Council on International Monetary Financial Problems⁰

January 5, 1960.

[Here follow a list of participants and a table of contents.]

1. Financial Support for Private Home Ownership in the Less Developed Countries (NAC Document 59–296)¹

The Council considered the problem of certain means of providing financial support for private home ownership in the less-developed countries, which had been referred to the National Advisory Council by the Council on Foreign Economic Policy. The Secretary of the Council reviewed the background and summarized the Staff Committee discussion of the matter, and noted that the Staff Committee had prepared a draft action for consideration by the Council.²

The Chairman commented that there was wide agreement on the desirability of encouraging the expansion of private home ownership abroad, and that it was important to consider carefully the various means of doing so. He noted that the first question before the Council was whether legislation which would permit U.S. Federal savings and loan associations to invest in foreign savings and loan associations would be desirable from the foreign financial policy point of view. He asked the representative of the Federal Home Loan Bank Board for comments.

Mr. Hallahan said that the Federal Home Loan Bank Board would not support legislation of the type appended to the paper, but would support the chartering of a single private central organization that would undertake the investments in foreign savings and loan associations as a form of “seed capital”, in modest amounts, possibly amounting to $3 million-$5 million within a few years. The Council discussed the proposed legislation particularly with respect to the character and extent of the risks involved in such investments abroad, the current U.S. credit situation, the current balance-of-payments problems of the United States, and the problems that would be involved in attempts to apply standards of price stability with respect to such investments. The Council did not reach agreement on whether support by the Executive Branch of such a legislative proposal would be advisable, and took no action in this regard.

The Council discussed and agreed that there would be no objection to the use of U.S. local currency holdings on a modest basis for promoting home ownership in less-developed countries through loans or investments to help establish foreign savings and loan associations. It was noted that such use of local currencies should take into account the alternative uses for the currencies and the economic development priorities in the countries concerned.

The Council also discussed the possibility of U.S. Government dollar loans and guarantees of repayment of private investments to help establish savings and loan associations in the less-developed countries. It was agreed that such loans and guarantees would not be generally desirable. It was suggested that in exceptional cases in which it appeared to be in the national interest, such loans and guarantees might be considered, and that the conditions relevant to the consideration of such exceptional cases should include the following:

1) that U.S.-owned local currencies were not available for the purpose;

2) that the country concerned was not undergoing severe inflation;

3) that the loan or guaranteed investment would be only a small proportion of the total investment in the project; and

4) that the loan or guarantee would be undertaken only in order to begin the project and not as a continuing investment.

The Council also discussed the possibility of investment guarantees covering expropriation, non-convertibility and war damage, for private U.S. investments in foreign savings and loan associations, and for other forms of investment in housing abroad. It was agreed that any proposals for such U.S. Government guarantees of housing investments abroad would need to be considered carefully, and that the method of handling such proposals would be discussed further by the interested agencies.

0. Source: National Archives and Records Administration, RG 56, Records of the Department of the Treasury, NAC Minutes. For National Advisory Council Use Only.
1. Dated December 3, 1959. (Ibid., NAC Documents)
2. The Council on Foreign Economic Policy discussed this issue on October 8, 1959. (Minutes of the 94th Meeting of the Council on Foreign Economic Policy; Eisenhower Library, CFEP Chairman Records, Papers Series, CFEP Minutes, 1959) The draft action prepared by the NAC Staff Committee was incorporated into NAC Document 59–296.