180. Minutes of the 225th Meeting of the National Advisory Council on International Monetary and Financial Problems, Washington, March 1, 19551
[PARTICIPANTS]
- Mr. W. Randolph Burgess (Acting Chairman), Treasury Department
- Mr. George H. Willis
- Mr. Henry J. Bittermann
- Mr. Elting Arnold
- Mr. Jack C. Corbett, State Department
- Mr. Marshall M. Smith, Commerce Department
- Mr. George Wythe
- Gov. M.S. Szymczak, Board of Governors, Federal Reserve System
- Mr. Lewis N. Dembitz
- Mr. Lynn U. Stambaugh, Export-Import Bank
- Mr. Glenn E. McLaughlin
- Mr. Jack F. Bennett, Foreign Operations Administration
- Mr. Robert M. Macy, Bureau of the Budget, Visitor
- Mr. E. C. Hutchinson Bureau of the Budget, Visitor
- Mr. Virgil Salera, Council of Economic Advisers, Visitor
- Mr. C. Dillon Glendinning, Secretary
- Mr. C. L. Callander, NAC Secretariat
1. Proposed Export-Import Bank Loan to Argentina—Steel Mill
The Chairman2 recalled that in its previous consideration of the Argentine steel mill credit, the Council had agreed that the Export-Import Bank would consider the loan further and refer it again to the Council before final action (NAC Document No. 1711 and Council Minutes No. 221).3 The Export-Import Bank was now requesting approval of the credit in a somewhat larger amount than had been previously considered.
Mr. Stambaugh briefly reviewed the history of the Argentine steel mill project. The Bank estimated that on the contemplated scale of output the production costs of the mill would be slightly under the cost of imported steel in Argentina. He noted that construction of the mill has already begun and that completion of it is a matter of Argentine national pride. Therefore, it will go forward whether or not the loan is granted. The Bank now asked for National Advisory Council approval of a credit of up to $61 million, to clear the way for further negotiations.
[Page 354]Mr. Corbett informed the Council that the Acting Secretary of State4 was in accord with the present proposal of the Bank. He noted the evidence of improvement in the position of United States investors in Argentina, and commented that negotiations between Argentina and United States oil companies are progressing favorably. The Department of State feels that conditions in Argentina on matters of concern to the United States are such as to provide a basis for approval of the loan.
Mr. Smith 5 indicated that the Department of Commerce had considered the proposal with great care, and would not oppose the loan as a purely financial proposition. It was felt, however, that in view of the problem of the United States investor in Argentina and the question of building up foreign industries competitive with United States industries, the loan raised broader policy questions. He therefore raised the question whether the loan proposal might appropriately be referred to the Council on Foreign Economic Policy.
The Chairman replied that the loan proposal is clearly within the statutory jurisdiction of the NAC, and that the broader questions of policy had already been dealt with in the Argentine case. He referred, in this connection, to the trip of Assistant Secretary Holland to Argentina in the fall of 1954 and to the progress that has been made since then with respect to the position of the American investor in Argentina. He therefore felt that the Council now has a basis for approval of this loan that had not previously existed.
Mr. Szymczak agreed that progress had been made in the treatment of United States investors, and he was willing to accept the judgment of the Export-Import Bank as to the prospects for repayment. Although he had entertained some doubt on the economic justification for a steel mill in Argentina, he indicated that the Federal Reserve Board would not object to the loan, since the Argentines would proceed with the mill in any case. Mr. Bennett indicated that on the basis of the views of State Department, FOA did not object to the loan.
The Chairman announced that the majority favored approval of this loan in principle, and requested the Bank to keep the Council informed of the details as negotiations proceed.
The following action was taken (Action No. 762):
“The National Advisory Council advises the Export-Import Bank that it offers no objection to consideration by the Bank of a loan of up to $61 million to the Sociedad Mixta Siderurgica Argentina to finance, in participation with United States suppliers, a portion of the United States costs of steel producing facilities in Argentina. [Page 355] It is understood that the credit would be for a period of approximately 19 years, including a grace period of approximately 4 years, and would bear interest at 5 percent.”
[Here follows discussion of proposed Export-Import Bank loans to Guatemala and Brazil.]
- Source: Department of State, NAC Files: Lot 60 D 137, Minutes. For National Advisory Council Use Only.↩
- W. Randolph Burgess, Under Secretary of the Treasury for Monetary Affairs.↩
- Neither printed, but see footnote 4, supra .↩
- Herbert Hoover, Jr. ↩
- Deputy Assistant Secretary of Commerce for International Affairs.↩