Evening star., 1951-07-01

For many months Spain had been
Uncle Sans Eximbank, as it's
called, which had consistently re-
garded the applicant as economi-
cally uncreditworthy. McCarran
expressed himself as encouraged
by the meeting in his Office and
stated his intention to press for
another $100 million for the
Madrid government.
Congress set up the Export-Im-
port Bank as an independent agen-
cy. with the injunction to make
only loans likely to be repaid. The
McCarran episode reflects one kind
of pressure to which the officers OF
the agency may be subjected. An
other type is pressure from the
State Department, as happened
after World War II in connection
with China and Italy, to name
Just two cases. While Gen. Mar
shall was the Presidents pacifier
in China, he insisted on $500
million loan to the Chang gov
ernment. The bank earmarked
that amount, but never lent the
money.
Instrument of Policy
In the State Department, the
Eximbank has in practice been
viewed as an adjunct. During the
war Eximbank loans to Latin
America were almost dictated by
Undersecretary Sumner Welles,
among them some not-too-sound
ones to Bolivia. Similarly. Secre-
tary of State Byrnes pressured
the Eximbank to lend to Italy,
Greece, Turkey and Iran for in
ternational political reasons.
The bank didn't think it should
be compelled to go along on this
policy basis and the whole board,
along with top State Department
officers, marched to the White
House for a. showdown. MIR. Byrnes
and viii Clayton urged the State
Department view, but the fellow
who won that bout was William
McChesney Martin, then Exim-
banks head and now Federal Re-
serve chairman. Since then the
bank has had less trouble.
Foreign borrowers also have
ways Of putting pressure on the
Eximbank by playing with the
International Bank for Recon-
struction and Development, IA
miliarly called the World Bank.
There have been several instances
where the borrower, turned down
by one of these banks, has OBJ
tanned a loan from the other.
Some borrowers apply simultane-
ously to both banks. One Latin
American country did this and at
the same time sought loans from
the Federal Reserve Bank of New
York and from Wall Street bank
ers. Either the embassy con-
cerned was amazingly ignorant of
the functions of the National Ad-
visory Council. which the Treas
ury Secretary heads, or it believed
in luck. These lenders all con-
suit the MAC before making loans.
Even the Wall Street houses
wouldn't dream Of making a for
eign loan without checking the
MAC.
With very minor exceptions,
what the World Bank has to lend
is what the Eximbank lends:
American dollars. After exhaust
ing the dollars the United States
put into it, the World Bank must
get more dollars by floating its
bonds among American investors
such as savings banks and insur-
ance companies. With the credit
of the United States behind them
the World Bank bonds are not toe
hard to sell. The Eximbank gets
its dollars by congressional appro-
priation in the last analysis. So
the two institutions, both lending
dollars and both. in fact, controlled
by the United States Government
are competitors. This is a situation
which the Congress presumably
sought to avoid when, in the Bret
ton Woods Agreements Act of 1945
it created the MAC as co-ordi-
mating body. AS a private line
into the World Bank the MAC has
the United States executive direc-
tor. The latter sits in board meet.
ings of the World Bank and ir
MAC meetings. But he is not al.
ways fully informed as to what il
going on in the bank, relative tx
an applicant for loans from bott
the Eximbank and World Bank.
To Expand Eximbonk
The pending foreign aid pro
gram which the President sent II
Congress in May devotes 81 billiol
of its $9.5 billion to an expansion
of the Eximbank. The latter thu
would become a $4.5 billion loal
institution. This prospect is viewe'
with some reservation within tn
World Bank. In Washington f1nan
cial circles 1t is said that tn
World Bank would like Eximbanl
to keep out of World Bank membe
countries. And, one hears, tn
World Bank has objected in MAJ
meetings because Eximbank doe
not keep out of the field Of de
velopment loans opened to tn
World Bank at Breton Woods
Because ECA has been pouring bill
lions into Europe, the Internationa
Bank for Reconstruction and De
velopment had to step out Of tn
reconstruction" business severs
years ago. and it sees the Exim
bank as Threatening its REMAINING
assignment.