The Eximbank Exports for Empire
Boyer, Mary Helen
INTRODUCTION In recent months, the Export-Import Bank (Eximbank) has been subjected to scrutiny by corporate leaders, the U.S. Congress, and the media. Traditionally eschewing public notice,...
...76,512 General Motors...
...Ibid...
...Responding to these pressures, the Polish government hastily agreed to U.S...
...Export Import Bank, Eximbank Programs, p. 21-32...
...These loans are an integral part of the U.S...
...interests, in the Soviet Union and Egypt it is striving to open up state-controlled economies to U.S...
...Refineries, pipelines and ports also are in an advance stage of consideration...
...manufacturing exports in 1970...
...taxpayer, a close scrutiny of its sources of funds reveals that it is heavily dependent upon the public for support...
...20,115 Bucyrus-Erie...
...Under the terms of this program, known as Participation Financing, the Eximbank provided 45 percent of the loan, the private bank an additional 45 percent, while the recipient corporation or government put up 10 percent of the cost of the project as a down payment...
...Beginning in 1969 and 1970, however, the Eximbank moved to involve private banks...
...The Several Roads to a U.S...
...During the course of the negotiations over the expropriations the Eximbank withheld credits from Mexico, but when a settlement was reached the Eximbank extended loans to the country...
...5 2 In 1942, however, the issue surfaced again...
...In view of the more than $1.25 billion which benefited five aircraft companies alone in 1972 and 1973 (35 percent of total Eximbank loans), a division of the Eximbank might well be titled "Ministry of Air Transportation, *The twelve are General Motors, Ford Motors, General Electric, Westinghouse, Boeing, Bethlehem Steel, McDonnell Douglas, Lockheed Aircraft Corp., General Tire & Rubber, Allis Chalmers, Koppers, and Foster Wheeler...
...Through these operations and others, Chemtex Fibers has gained control of stock in over a dozen textile plants abroad...
...When a corporation or foreign government came to the Eximbank for long term financing22 THE BANKERS WHO GOT AWAY The presidency of the Eximbank is a political prize for faithful friends of the administration in power...
...But although non-U.S...
...In similar situations, individuals generally spread the risks among themselves...
...For corporate and congressional leaders bent on prolonging the armaments race and the Cold War, and for those concerned with the Soviet Union's migration policies, the Eximbank has become a focal point for criticizing the policy of detente...
...economy at an early date...
...Among those now under active consideration are copper development projects in Poland, Panama, Iran and Zaire...
...industry at home and operate subsidiaries abroad...
...6 In accordance with this policy, the Eximbank focused its attention on Latin America, authorizing approximately $600 million in loans for the region between September 1940 and the end of 1944.7 The Surplus-Goods Peddler The end of the war signified another abrupt shift in the needs of the U.S...
...332, 338...
...28,682 Lang Engineering Corp...
...15, 1974...
...When the Czech government requested a $50 million loan from the Eximbank in mid-1946, the State Department outlined the following reasons for withholding the loan: The present disposition in the Department is to accord credit to the Czechoslovak Government only after it shows concrete evidence of friendship towards the United States, which would include some reorientation in its general foreign policy as well as an agreement on compensation and commercial policy questions...
...44...
...May 3, 1972...
...This study places the Eximbank in the context of the country's economic structure...
...cit., p. 6.32 48...
...Economic policy makers in the late 1960's foresaw that the situation would worsen in coming decades, thereby throwing the American balance of trade into an even more precarious position.12 In response to these changes in the worldwide economy, U.S...
...Since 1945, policy for the Bank has been coordinated by the National Advisory Council composed of the Secretaries of State, Treasury, Commerce, and the presidents of the Federal Reserve System and the Eximbank.19 ies of challenges that required the attention of the Eximbank...
...6 0 The Eximbank loan continued, apparently for strategic reasons: it covered the purchase of locomotives and freight cars to ship coal to the economies of Western Europe, thereby denying these resources to the Soviet Union.61 By late 1947, however, Poland and the rest of eastern Europe were shut off to further Eximbank loans...
...banks through their branch banks are major beneficiaries...
...Export Import Bank, 1971 Annual Report, p. 5, "The Chairman's Statement on FY '71...
...One other factor also contributed to the adverse trade situation for the United States -the increased need for raw materials from abroad...
...Composed of the Secretaries of State, Commerce, and the Treasury, along with the Chairmen of the Eximbank and the Federal Reserve System, the Council rules on all important loans made by the Eximbank...
...surance companies and the Eximbank, the FCIA provides international bankers and exporters with insurance against loan defaults for commercial reasons, or for political factors, such as "rebellion, revolution" and "expropriation...
...February, 1973, pp...
...Thus even in a program which is supposed to promote U.S...
...23, 1969, "Evolution is not Only for Monkeys...
...industry imports such essential inputs as steel and chrome, while consumers enjoy Brazilian coffee, Japanese Toyotas, and German Volkswagens...
...copper companies, the Eximbank notified Chile that a) it would no longer be eligible for loans, b) Eximbank loan guarantees to U.S...
...The search for overseas markets for U.S...
...Seeking to limit the role of foreign capital in the country, the new government laid plans for nationalizing two foreign-owned oil distributing companies -- Standard Oil of New Jersey, and the Royal Dutch Shell Oil Company -- and for gaining control of the administration of an electric company run by the American and Foreign Power Company...
...In accordance with this imperial philosophy, the Eximbank assisted corporate expansion in two ways: 1) by providing direct loans to corporate subsidiaries abroad, and 2) by making infrastructure loans for the building of roads, port facilities, and electrical power systems, all of which are essential for the growth of private foreign investment...
...But for the American commercial system, the threat of war brought forth a new ser*The U.S...
...2 8 Through this program, the Eximbank assures the private banks of a constant availability of funds for financing exports, even though capital may be difficult to obtain in the domestic money market...
...Copies of the Statement of Active Loans are available at the regional offices of the Federal Reserve System...
...But because of the very malaise affecting the system, it becomes increasingly difficult for the corporate community to act in concert...
...The aircraft industry is the leading example of a "necessary-but-unsuited-industry...
...9 In the mid-1950's, some capital goods exporters complained about the meager assistance which the Eximbank extended to them,.- 0 For the corporate system as a whole, however, large scale Eximbank financing was not necessary...
...20,101 Fuller Company...
...Ibid., p. 3. 32...
...See also Hearing before the Committee on Banking and Currency U.S...
...With electric power lines for Zaire, irrigation equipment for Algeria, and cement plants for Taiwan, Korea and the Dominican Republic, the construction companies are helping to create the infrastructure necessary for the growth of other sectors of the economy...
...Although the United States still dominated the trade routes of the capitalist world, by the end of the 1960's there were several indications of an erosion of U.S...
...businessmen with an introduction by John T. Connors, Secretary of Commerce under President Johnson...
...5 With the outbreak of hostilities in Europe, German commerical competition in Latin America subsided...
...Although Bechtel is not on the list of the 25 largest contractors for Eximbank loans, it did rank 27th...
...trade...
...Its involvement in recent Eximbank loans indicates that it will rank much higher in 1974.26 Eximbank financing for the multinational construction companies is often solicited due to the heavy financial stakes involved...
...Foreign governments that eschew direct foreign investments often turn to the construction companies because they possess the engineering technology necessary to undertake large industrial and mining projects...
...In 1938, Chile elected a Popular Front government under Pedro Aguirre Cerda which was committed to socio-economic reforms...
...1 4 Kissinger's use of Eximbank credits as bargaining chips for gaining access to Egyptian and Soviet markets, plus a 50% increment in the Bank's lending authority in 1974 leave no doubt that it continues to play a key role in American commercial strategy.21 II...
...As early as 1947 in eastern Europe, the World Bank was being used as an instrument of credit diplomacy almost as frequently as the Eximbank...
...imperium, the growth and recent activities of the Eximbank reveal a great deal about the needs and structure of U.S...
...In effect the private banks receive a double benefit: potential borrowers are enticed by the lower, blended interest rate, while the private banks collect interest payments at the commercial interest rate of 10 percent...
...industrial corporations...
...commercial interests...
...The petroleum corporations proved to be especially sacred investment cows, requiring frequent assistance from the Eximbank to protect their foreign interests...
...He could even travel from place to place in Iran on U.S.-made aircraft, similarly financed, and stay at a hotel in Tehran financed in part by Eximbank, where the room would be illuminated by power from Eximbank-financed generating units...
...State Department, the First National City Bank, the Eximbank1and U.S...
...Be it Participation Financing, the Cooperative Financing Facility, the Discount loans, or PEFCO, the Eximbank works with the private banking interests to insure them a profit while shifting the risks of foreign credit operations to the public sector...
...3 3 Many of these same companies, through foreign subsidiaries, shape the destinies of countries around the world...
...FINANCING% iri W II1 orV I1AN In FY 1973 the Shah of Iran ranked as the largest recipient of Eximbank loans...
...Boeing and McDonnell Douglas are important units in the military-industrial complex...
...17,280 McKee, Arthur G., & Co...
...Fortune, April, 1974...
...According to the Bank, a four million dollar loan went to Cuba "to reestablish its economy on a sound basis and thus to restore and expand a diminishing but important trade between the two countries...
...In 1971 (for the first time since 1888), the United States imported more goods and commodities than it sold abroad...
...1 9 Although important, these early activities pale next to the series of programs that the Nixon Administration created to subsidize the private banks...
...Foremost among these changes was the resurgence of Western Europe and Japan...
...A20 The creation of other lending institutions also alleviated the need for a strong Eximbank...
...The Johnson administration first tried to limit the outward flow of dollars through spending limits on the American tourist and temporary constraints on private U.S...
...Congress, House, Committee on Banking and Currency, Increasing the Lending Authority of the Export-import Bank of Washington, Hearings, on H.R...
...In the end, the Popular Front, rather than face the retaliatory actions of the Eximbank and the U.S...
...Why then do they need Eximbank financing in their drive for foreign markets...
...Thesis, Dept...
...In Senate subcommittee hearings in 1951, the chairman of the Eximbank testified that if representatives of the State Department "say to us that it would be a very good thing for the United States to make a loan . . . we look very carefully at their repayment capacity to see if we can find it...
...In its purchase of the Hartford Insurance Company, ITT engaged in illegal stock practices which the SEC was in charge of prosecuting...
...Further, Casey assisted ITT by hiding its activities from Congressional committees...
...The Eximbank soon began using its financial power to deal with one of the major threats to American commercial expansion abroad -- the expropriation of the subsidiaries of multinational corporations...
...Even when private lenders are interested in financing exports, the uncertainties of trade create the desire to pass the risk onto someone else...
...AID alone cannot provide all the infrastructure assistance needed by business interests...
...In Chile the Bank initiated the economic assault on the socialist government of Salvador Allende...
...Fora more complete discussion of this debate, see Carl Parrini, op...
...Composed of a consortium of private in*Mr...
...We look at it hopefully...
...Even The Wall Street Journal, in an editorial on June 28, 1974, joined the critics of the Eximbank when it suggested that the requested increase in the Bank's spending limit should be delayed for a couple of years while a thorough analysis is conducted of its lending programs...
...He helped found the Siam Kraft Paper Co...
...loans...
...As the official history of the Eximbank acknowledges, "in addition to its contribution to the foreign trade of the United States, the Export-Import Bank has served often as an instrument of foreign policy...
...The Eximbank could have chosen to provide loans and credits directly to the exporters, thereby bypassing the commercial banks...
...He recently purchased 25 percent of the equity in Krupp, a well known German steel industry, and he is offering Grumman, an American defense contractor, a sizeable loan to help bail it out of its financial difficulties...
...Senate leaders such as Vance Hartke argue that the Eximbank, by financing the sale of entire manufacturing plants abroad, contributes to the phenomenon of "runaway shops" and the increase in unemployment in the United States...
...Eximbank Advance Release, Remarks by Henry Kearns on the Occasion of his Receipt of the Annual International Achievement Award of the World Trade Club of San Francisco...
...Symbolically, Nixon signed the Trade Expansion Act into law on August 17, 1971, two days after announcing the New Economic Policy and the devaluation of the dollar...
...In 1947, the World Bank entered into full-scale operation, making loans to European nations and to less-developed countries for the importation of capital goods and other essential commodities...
...The Eximbank entered the Cuban picture by making its first loan to help stabilize the Batista government...
...For if a borrower defaults, it is defaulting not only against the private bank but also against a U.S...
...In 1933, a popular revolt in Cuba overthrew a military dictatorship and installed Ramon Grau San Martin as President...
...Its raison d'etre is to encourage exports...
...See Export Import Bank of the United States, Statement of Active Loans, and Journal of Commerce, August 22, 1973, p. 5. 43...
...exporters...
...According to Congressional testimony in 1940, the Eximbank needed additional funds "to assist in the development of the natural resources of these [Latin American] countries .. ." The resources mentioned were "rubber, tin, tungsten, chrome, manganese, iron ore . . . which do not conflict with our own...
...825.6325/103...
...Changes were occuring in the world economy, changes that the United States fully recognized only in the late 1960's...
...capitalism.18 I. Export or Die Why must all nations export...
...20,397 Allis Chalmers...
...And in 1949, in an *Of course the Eximbank was careful to send to Europe only those goods in oversupply in the United States...
...The European nations, with their war-decimated economies, and their need for capital goods and food, provided an outlet for the surplus...
...economy, the country's corporate leaders are looking to the Eximbank for help in alleviating some of the problems they face...
...This precipitated a quick U.S...
...10361, 76th Cong., 3rd seas., 1940, p. 30...
...5 5 The U.S...
...Welfare for the Bankers Credit is the basis for international trade...
...The Discount loan program, mentioned above, grew dramatically unaer the Nixon admi'nistration...
...According to the U.S...
...economic system and in the activities of the Eximbank...
...6 5 These measures had an immediate impact on Chile...
...goods and investments...
...and the country's trade surplus which for so long had enabled the United States to undertake military and non-commercial commitments abroad, dwindled to precarious levels...
...Thanks to the huge increment in Iranian oil revenues, the Shah is now becoming an international investor...
...While helping the Shah build up the country's infrastructure, Eximbank loans to Iran are actually going for te purchase of armaments: between June 1970 and June 1974, the Shah received $620 million from the Eximbank to buy U.S...
...Experienced in employing the Eximbank to mold the political and economic policies of other governments, the United States used these new lending institutions in a similar fashion...
...4 5 The very first loan of the Eximbank was used to pressure Cuba -- at the time one of the United States' main economic satellites...
...32,856 Eastern Airlines...
...strategists reasoned correctly that the spread of direct investments abroad would carry in its train the growth of exports since foreign investors needed plant equipment, spare parts and semi-processed materials from the United States...
...A few business groups even began to argue for the abandonment of the free trade system which had been the cornerstone of American foreign economic policy throughout the twentieth century...
...The strategy of detente, and of reliance on subimperial powers like Brazil and Iran, is needed partly because of growing financial insolvency brought on by the effects of the Vietnam war and by the difficulties faced in international commerce...
...The Cooperative Financing Facility, established in 1970, attracts overseas banking facilities to the financing of American exports...
...equipment...
...VI, 1942, p. 530...
...2 However, the dream of Soviet markets for depression-idled industries never materialized...
...during the last two years...
...commercial hegemony: balance of payment figures moved increasingly into the red year after year...
...If he wants to telephone his office in Los Angeles, his call might go through earth satellite ground stations financed by Eximbank in Iran and Thailand...
...commercial banks and exporters doing business in Chile would be terminated, and c) disbursements of direct loans negotiated by the previous government would be cut off...
...The World Bank, the International Monetary Fund, the International Development Association, and the International Finance Corporation, although nominally under the control of a group of nations, responded largely to the will of the United States...
...Congress, Senate, Committee on Banking and Currency, Works Financing Act of 1939, Hearings, on S. 2759, 76th Cong., 1st sess., 1939, p. 219...
...The Peterson Report to the President in 1971 came about largely because of the need that was felt at the end of the 1960's to deal with the export crisis...
...In some instances the multinational construction firms even emerge as direct foreign investors in the projects they undertake.* *The Bechtel corporations recent efforts to obtain the contract for the Egyptian oil pipeline is a classic example of how a construction company operates...
...business leaders are again turning to their state trading bank for timely medicine...
...In these instances the Eximbank provides 42.5% of the loan, and the private banks the same amount...
...cit., p. 122...
...The study went on to state that "the U.S...
...Prior to 1969, all of Eximbank's long term loans were made without the involvement of the commercial banks...
...Ibid., pp...
...Senate...
...Export Import Bank, Advance Releasq May 17, 1973...
...commercial expansion...
...Within a month after the Popular Unity government, backed by the Chilean Congress, officially expropriated the U.S...
...yet the large commercial jets must be produced in quantity if the benefits of the industry's size of scale are to be realized...
...Accordingly, AID and the IDB served as the main economic instruments for pressuring the countries of the region...
...And in Mozambique and Mexico, the General Tire and Rubber Company used Exinmbank financing to send tire manufacturing equipment to companies in which General Tire held equity...
...In 1972 and 1973, the 25 largest corporations accounted for $2.9 billion, or 83 percent of the Eximbank loans...
...The dependence of the economy on imported raw materials, dramatically highlighted by the Arab oil boycott, makes the United States even more aware of the need to push exports to pay for the rising cost of imports...
...As the 1940's ended, the United States turned to other institutions to assume some of the Eximbank's tasks...
...A similar situation emerged in Chile in 1945 when a publicly owned company, ENAP, discovered oil...
...government...
...Like many other Nixon appointees, Casey comes from a background of shady and corrupt business practices...
...In 1973, the Eximbank lent its money at 6 percent while the private banks extended their part of the loan at the going commercial rate, usually around 10 percent...
...Among the top 25, all of whom benefited from authorizations in excess of $16 million, twelve ranked among the 300 largest indus-25 trial corporations in 1973.* One other corporation, Mitsubishi,** is a leading Japanese corporation with subsidiaries in the United States...
...Even more important, Western Europe, and especially Japan, penetrated the large consumer markets of the United States...
...See Charles J. Olson & Ray C. Ellis, Export or Die (Chicago: 1966...
...This centralization of international finance and marketing is a big step forward over the administrative roles assigned to the Washington regulatory commissions, which seek only to stabilize market relations among potentially competing firms...
...Pacific Basin Reports, Jan...
...Henry Kearns, an old Nixon cohort from southern California who presided over the Bank from 1969 to 1973, used the prize to enrich himself and his friends...
...In the case of Vesco, Casey at the behest of John Mitchell met with one of the financier's lawyers on the same day that Vesco made a $200,000 contribution to Nixon's reelection campaign...
...Seeing the stiff competition faced by U.S...
...Although the project ultimately fell through, the State Department's use of the Eximbank to manipulate Egypt raised more than a few eyebrows...
...The nuclear reactor industry also falls into the category of the necessary-but-unsuited industry...
...Because the Eximbank is backed by the Federal Government, and thus the taxpayer, it can float bonds in the private money market at highly favorable terms...
...825.5151/502...
...News & World Report, "Helping U.S...
...when the publicly owned oil monopoly of Mexico, PEMEX, requested a loan from the Eximbank to expand its operations, the State Department tried to use the loan negotiations to "reverse the 1938 expropriations" and "replant American oil companies in Mexican fields...
...President appoints the president and the board of directors of the Eximbank...
...as resources grow scarcer, and as market outlets become more limited, the corporations are forced to turn upon each other...
...This program seeks to involve foreign-based lenders in the drive to augment American exports...
...2 6 (The breakdown for recent years is not reported by the Bank...
...government agency...
...in Chile the Bank moved directly to defend American corporations against expropriation threats...
...2 4 The private banking community is taking full advantage of Participation Financing: in the past two years, every single long term loan made by the Eximbank involves Participation Financing...
...Eximbank Advance Release, Statement by William J, Casey before the University of Virginia School of Law, March 16, 1974, "The Means of Regulation of Multinational Corporations: Their Potential Force and Effect...
...Some corporate leaders became afraid that the demand of some businessmen for protective tariffs would cause foreign countries to respond with similar measures, thereby leading to restrictions on U.S...
...Many of these controversies reflect the deeper ills that are afflicting the entire corporate system...
...Although the top 25 did not themselves take out the loans, they were the direct beneficiaries since they received the contract for supplying commodities to the loan recipient...
...And in mid-1973 the Eximbank outlined its plans to assist the quest for raw materials: The appetite of the industrial world for minerals continues to increase...
...In their search for mammoth projects such as large refineries, industrial complexes, and irrigation networks, the construction companies bring together foreign governments, private banks, and multinational industrial corporations.38 These multinational construction companies are crucial to the advance of the American commercial empire...
...government has been promoting exports of nuclear plants for some time...
...Under monopoly capitalism, the dominant private banking and corporate interests must turn increasingly to state institutions for assistance in consolidating and expanding their financial power...
...Under the terms of cooperative financing, the Eximbank finances half of a loan arranged by a foreign-based financial institution for the purchase of American commodities...
...Ibid., Vol...
...Business Sell More Abroad," Interview with Henry Kearns, July 19, 1971...
...As a precondition for Eximbank credits, the Roosevelt administration demanded that the Soviet Union agree to repay the debts of Tsatist Russia...
...government used its power in other lending agencies, such as the IDB, to force them to follow the lead of the Eximbank, denying all loan requests from Chile...
...Now, the United States, seeing the need for huge stocks of raw materials for its war-related industries, looked to Latin America as a source for these precious metals, and used Eximbank loans to augment the region's production...
...Jerome Levinson & Juan de Onis, The Alliance that Lost Its Way (Chicago: Quadrangle Books, 1970), p. 1;4...
...An immediate cause was the Vietnam war...
...with Eximbank assistance, promoted the growth of foreign textile operations at a dizzying pace in 1972 and 1973: Taiwan received a nylon filament plant, the Phillipines a polyester plant, and Thailand a nylon filament plant, while Korea and Indonesia obtained equipment for expanding existing textile mills...
...And the Eximbank, aware that such investments in infrastructure are often too expensive or insufficiently profitable to attract private enterprise, is willing to provide the required financing...
...The Chilean request for a $21 million credit to purchase three Boeing passenger jets was quickly rejected...
...3 1 Eximbank assists PEFCO 1) by guaranteeing the principal and interest on its loans, 2) by extending it a $50 million revolving line of credit, and 3) by guaranteeing the interest payments on PEFCO's own debt...
...cit., p. 119...
...See Peter G. Peterson, The United States in a Changing World Economy...
...The table on this page shows the leading 25 corporations that benefited from long term Eximbank loans in 1972 and 1973...
...Empire...
...By financing these large projects, the Eximbank helps the multinational construction firms capture some of the most lucrative projects for American exporting interests...
...Moreover, the technology is government-developed and war-related...
...33,517 Epstein, A. Companies...
...Report to the Committee of Finance of the U.S...
...Finally, the study looks at how the Eximbank has waged economic war in some countries to protect U.S...
...New mining and processing undertakings are identified with increasing frequency...
...The Eximbank occupied a secondary position at best: from 1961 to 1969, the Bank issued less in new loans than the amount it receiv2 in old loan repayments from Latin America...
...The vice-president of the Standard Oil Company of New Jersey protested strongly against this loan request, claiming in a letter to the State Department that "private capital is available to do this job...
...Mary Helen Boyer-31 References - Eximbank The author wishes to thank Jan Jacobson for her assistance in preparing the portions of this article dealing with the history of the Eximbank...
...of Wisconsin, 1957, p. 104...
...The new president of the Eximbank, William J. Casey, stated in a recent speech, "foreign direct investment, largely through multinational corporations, is becoming the most important mechanism for U.S...
...Expo-t Import Bank, 1971 Annual Report, p. 39...
...Export Import Bank, 1973 Annual Report, p. 19...
...As the Eximbank noted in its 1968 Annual Report: On occasion the Bank has been able to increase its commitments in countries being phased out of econonomic assistance under the AID program . .. these have included such countries as Iran, Taiwan, Korea and Israel...
...ambassador to Cuba, Sumner Wells, "our own commercial and export interests in Cuba cannot be revived under this government...
...Eximbank Amendments of 1974...
...The Eximbank pays interest on these loans, but by extending these funds to the Eximbank, the Treasury makes it that much more difficult for other government agencies such as the Federal Housing Administration to obtain funds...
...Unable at first to obtain compensation for the Standard Oil interests, the United States government finally used the Eximbank credit lever to apply pressure to Bolivia...
...At the Eximbank Kearns bestowed favors upon both companies...
...Beyond the need for export markets, the United States has a special stake in a healthy trade sector...
...this sum provides the basis for the Bank's credit...
...Congress, Senate, Committee on Banking and Currency, To Continue the Functions of the CQomodity Credit Corporation, The Export-Import Bank of Washington, and the Reconstruction Finance Corporations, Hearings, on S. 1084 and S. 1102, 76th Cong., slt seas., 1939, p. 44...
...Commercial jet aircraft are more a spin-off of military hardware than of consumers' preferences...
...of Wisconsin Press, 1964) 3. Ibid., pp...
...When these committees tried to get the SEC files on ITT, Casey responded by sending the files, unsolicited, to the Justice Department where executive privilege could be evoked to keep them from Congress...
...No military contractors are included because the Eximbank does not list the suppliers for its military loans: this represents about 10 percent of Eximbank spending...
...In its early years, Congress appropriated a total of $1 billion for the Eximbank...
...7. History of Operations and Policies of the Export Import Bank of Washington, ed., Hawthorne Arey (Washington, D.C., 1953, p. 55 8. Ibid., p. 73...
...Due to the tremendous increase in productive capacity during the war, peace brought the threat of overstocked domestic markets and insufficient demand...
...First the Inter-American Development Bank (IDB), founded in 1959, and then the Alliance for Progress and the Agency for International Development (AID) provided "developmental assistance" loans to Third World countries...
...5 7 Conversely, the Bank sometimes goes out of its way to make loans at the suggestion of the State Department...
...In a number of instances, timely loans by the Eximbank enabled the United States to keep German interests from gaining access to Latin American markets...
...investments abroad, and the closing of the world economy to United States expansion...
...without foreign markets, corporations would be unable to sell all of their produce, which in turn would lead to industry slowdowns, declines in profits, unemployment, and eventual depression...
...banks and their subsidiaries abroad...
...exports...
...Thus, the borrowing party is not paying 10 percent, but rather a blended interest rate of around 8 percent for the entire loan package...
...Accordingly, when Chile began to consider carrying out its projected measures against foreign capital, U.S...
...demands for compensation, and by April 1946 the United States had approved a $40 million Eximbank loan and a $50 million surplus property credit...
...As the Eximbank stated in 1953, "it made loans only when satisfied that private capital was not available on terms that would be reasonable in the circumstances...
...6 6 While in Chile the Eximbank acted to defend existing U.S...
...investments abroad...
...36,068 Ford Motor Company...
...Although the Bank does not require large annual outlays from the U.S...
...Although not an exceptionally visible institution in the U.S...
...Infrastructure projects undertaken by the construction companies also draw Eximbank financing...
...The tables were now turned, as the United States found itself becoming a market for the surplus industrial production of the other capitalist nations of the world...
...Domestic demand is insufficient to absorb production...
...corporations to control raw materials and to extract profits would be menaced.29 Elb% i aliU _ YU'IhLll 1' 1 1 E lA i & The Eximbank as a Cold Warrior In 1945 the use of the Eximbank as an instrument of foreign policy was formalized with the establishment of the National Advisory Council...
...Department of Planning, Finance and Sales...
...60,195 Bethlehem Steel...
...The recent cry over Nixon's promise of nuclear power to Egypt is rather belated...
...21...
...Capital shortages are inherent in capitalism due to cyclical instabilities, temporary declines in profits, and the system's insatiable drive to expand...
...in the end the Eximbank failed in its first quest for foreign markets...
...government and the business interests that it serves...
...No multinational corporation or capitalist nation-state could long survive in the international market place without the use of credit...
...Of course, the privileged position of the aircraft industry must also be viewed in the "national security" and political context...
...3 4 While indicating a high degree of concentration, this does not tell us whether or not the multinational corporations are active in the export trade...
...According to Barron's, a national business and financial weekly, the Eximbank under Kearns' direction, guaranteed 37 loans by commercial banks to Mitsui, and lent $18 million to a group of Japanese banks which included the Mitsui bank...
...SOURCES OF EXIMBANK Loan Repayments Interest & Fees on Loans Insurance Premiums & Guarantees Fees Funds Owed to the Private Money Market Funds Owed to the U.S...
...leaders turned to an old, time-tested institution of the empire -- the Eximbank...
...42 The Export Import Bank argues that the flow of plant equipment abroad will lead to even more exports...
...3 9 As part of the project agreement, the Eximbank extended to Algeria a $157 million loan -- one of the largest in Eximbank's history of operations...
...Nixon's two appointees follow this pattern...
...5 9 Poland also felt the brunt of the Eximbank's financial weight in 1946...
...cit., p. 71...
...5 1 Public hostility towards Standard Oil prevented the Bolivian government from making an immediate settlement, but Bolivia eventually paid compensation to Standard Oil, and in 1942 it received a loan from the Eximbank in return for settling with the U.S...
...Developments in Latin America in the 1960's illustrate this trend...
...The composition of the company's stockholders in 1973 had not changed since its foundation...
...businessmen in the region, the Eximbank extended large loans to Latin American countries to purchase U.S...
...Aside from obtaining a new influx of capital to carry on its operations, the private bank continues to earn around 1 percent interest on the loans that the Eximbank purchased from it...
...Massive iron ore projects are contemplated in Brazil and Mexico...
...commerce, the State Department employed the credit lever to exert pressure...
...These measures had little or no impact, however, as tourists continued to travel abroad in ever increasing numbers, and the multinational corporations fought the measures directed at them by arguing that a curtailment of their foreign investments would lead to a long-range decline in the American position abroad...
...In Latin America in the late 1930's, Germany tried to usurp U.S...
...Sources: Eximbank Annual Reports...
...Eximbank's twenty-five year credits to purchasers of aircraft, granted under all sorts of economic conditions, are a strong inducement to buy, especially for Third World governments lacking foreign exchange...
...PEFCO, 1st Annual Report 1971, p. 5. 30...
...The large outflow of war materials and resources to buoy up the dictatorial regimes in South Vietnam had a detrimental effect on the U.S...
...leaders adopted several different policies in the late 1960's and the early 1970's...
...An additional 10 percent of the loans are not included because the Bank failed to list the principal contractor for the project...
...What Simon neglected to note is that the militaristic interests of the "Nut" of Iran have been carefully nurtured by U.S...
...The fulfillment of this goal, however, has caused the Bank to serve as an overseer for various aspects of U.S...
...Soon pushed to its spending limits, the Bank received a boost from the 1971 Trade Expansion Act which increased its lending authority from $13.5 to $20 billion and freed it from the budgetary constraints imposed on other government spending programs...
...In 1971, the private commercial banks and the Eximbank founded an entirely new credit institution -- the Private Export Funding Corporation, of PEFCO, whose announced goal "is to mobilize additional private capital to assist in financing U.S...
...the Eximbank must also be called upon to help mold the economies of other countries into forms complimentary to U.S...
...Armed with increased financial powers, the Eximbank once again became a major diplomatic instrument for defending American corporate interests abroad...
...economy is the rising cost and potential scarcity of essential raw materials...
...balance of payments throughout most of the 1960's...
...Wall Street Journal, Dec...
...Secretary of State Cordell Hull instructed the American ambassador to inform the Chilean government that "action of such character would almost necessarily affect prospects of financial cooperation . . .49 By "prospects of financial cooperation" Cordell Hull peant loans from the Eximbank for Chile...
...Through this "discount" loan program, the Eximbank extended blocs of capital to the private banks which they in turn used to expand their short and medium term loans to exporters...
...corporation is eli- gible for a loan because it is purchasing plant equip- ment from the United States...
...In the post-war period, the ascendancy of exports over imports provided the United States with funds to cover the costs of military expenditures, foreign aid, and overseas investments...
...FCIA (New York: Foreign Credit Insurance Association, 1962...
...6. U.S...
...The Eximbank even began to compete with these international lending agencies...
...The recent debate surrounding the Eximbank is only one of the many controversies that are engulfing the institutions and leaders of the corporate world...
...17,128 General Tire...
...for half a million dollars -- ten times the stock's value in 1969 before the company ran into severe financial problems...
...72-85...
...XI, 1946, p. 624...
...The list of the top 25 was obtained by adding together the loans according to the principal contractors for the years 1972 and 1973...
...The six leading shareholders mentioned all own equal blocs of shares...
...economic involvement in the world economy...
...23, 1974.30 While failing to establish Pax Americana in eastern Europe, the United States in the postwar period exercised financial hegemony in the capitalist world through an array of lending and monetary institutions...
...See also Wall Street Journal, August 27, 1973...
...Ibid...
...In the midst of this imperial crisis, U.S...
...When in 1939 the Bolivian foreign minister made known his government's interest in securing a loan from the Eximbank, the U.S...
...The continued socialization of the region, plus the growth of Soviet power, effectively closed the area to U.S...
...Treasury FUNDS IN FY 1973 1,128,698,073 368,322,314 7,644,714 2,220,129,005 1,887,664,594 The Eximbank claims that it is not "burdening the public" through its lending operations...
...5 6 Like Mexico, Chile chose to go it alone in developing its petroleum resources, although it did call in two American corporations for technical advice and assistance, Each of these cases demonstrates that behind the doors of the Eximbank lay more than a simple desire to increase the flow of exports...
...To the dismay of American business interests, Grau San Martin promised a series of deep-seated reforms based upon a platform of "nationalism, socialism, and anti-imperialism...
...Confronted by a world increasingly hostile to U.S...
...Founded in 1934, the Bank has helped guide the United States through a number of challenges and crises in the international market...
...In its long term loans, however, the Eximbank concentrates upon aiding specific corporate industries, industries that desperately need foreign markets, but cannot compete in them under existing conditions...
...industries most active in production abroad also are the heaviest contributors to U.S...
...Export Import Bank, 1973 Annual Report, p. 3. 45...
...Lectures and proceedings at the 25th International Banking Sumer School (Washington, D.C.: The American Bankers Association, 1972), p. 51...
...Because of the array of new government lending institutions that emerged in the 1940's, '50's, and '60's, the Eximbank declined in importance...
...Recognizing the shortage of European funds to purchase these surpluses, Congress in 1945 increased the Eximbank's lending authority from $700 million to $3.5 billion...
...The financial plum of a large loan at a low interest rate certainly played a crucial role in enabling the Chemical Construction Corporation to obtain the contract from the Algerian government...
...The four principal recipients -- Boeing, McDonnell Douglas, Westinghouse, and G.E...
...As Eximbank president Henry Kearns declared, if a borrower "is in trouble with us, there's literally no private institution in the U.S...
...2. Lloyd C. Gardner, Economic Aspects of New Deal Diplomacy (Madison: Univ...
...On the other hand, their prime rating as borrowers, their intimacy with the major international banks, indicate the accessibility of private loans...
...Balance of Trade Surplus," May 17, 1973...
...They are "necessary" for the survival of the corporate system as a whole, but "unsuited" to operate on their own in the open market place...
...It begins by tracing the Bank's role in the search for foreign markets, and then goes on to analyze the Bank's relationship with private banks and the industrial corporations...
...Because of the interlocking interests of the Eximbank and the private banks in financing international trade, the decision of the state bank to cut off its relations with Chile made it difficult or impossible for the private banking community to do business in Chile...
...Senate, Committee on Banking and Currency, ExportImport Bank Act Amendments, Hearings, S. 2005, 82nd Cong., let seas., 1951, p. 16...
...It is perhaps a fitting speculation that America may have been discovered on credit...
...In 1973, the 500 largest industrial corporations accounted for 65 percent of all U.S, corporate output and employed 76 percent of the industrial work force while capturing 79 percent of the profits...
...522,338 Westinghouse...
...Department of State, Foreign Relations Papers, Vol...
...In Algeria, the Chemical Construction Corporation won the contract for building a huge liquid natural gas facility which involved the importation of over $349 million of equipment...
...Furthermore, increased domestic deficit spending due to the Vietnam war touched off a domestic inflationary spiral...
...The 1929 crash precipitated a drastic cutback of investment in new plants and machines, and industrial production plummetted...
...For the economy as a whole, the Eximbank has acted to help rid the system of excess production, to meet the challenges of foreign competitors, and to keep the international trade routes open and accessible for American businessmen...
...34,650 Chemtex Fibers, Inc...
...Only the products produced in U.S...
...The guarantee of sales resulting from ready Eximbank credits steadies the nerves of aircraft industry executives, and allows them to plan production with the long-term horizon their industry requires...
...27, 1971...
...Before joining the Nixon administration as Chairman of the Securities and Exchange Commission (SEC) in 1971, Casey was involved in three major court cases: one for deceiving a fellow stockholder in a small firm, another for violating stock securities laws, and a third for business fraud...
...The Bank's history provides a vivid picture of a state institution aiding the cause of commercial empire in times of war and peace.* The Eximbank was born in the throes of one of the United State's greatest crises-- the Great Depression...
...For the business community, Eximbank infrastructure credits serve a dual purpose: an immediate export of electrical power equipment or cement plants aids corporate sales, while at the same time laying the basis over which future business investments can flow...
...imperialism, strategists will employ the credit levers of the Eximbank in the coming years to punish countries that nationalize American corporations, and to reward those nations that cater to U.S...
...Archives of the Department of State, Internal Affairs Reports, Decimal File no...
...In most cases, the private bank is repaid before the Eximbank, thereby limiting the period that its funds are outstanding...
...2 2 Furthermore, the private banks enjoy the indirect backing of the U.S...
...As seen above, through its credit subsidies to the nation's bankers, the Eximbank assists the general flow of American exports...
...As American industry expanded, so did its thirst for raw material imports due to the limits of domestic mineral supplies...
...strategy to turn Iran into a sub-imperial power to serve as a regional bulwark against challenges to U.S...
...rather than German capital goods...
...Ibid., p. 625...
...3 0 The Eximbank works closely with PEFCO in all its operations...
...For the next two years -before the Marshall Plan began -- the Bank poured large sums of money into Europe, thereby helping prevent a downturn in American industrial production.* Not until the 1970's did the Eximbank again play such a crucial role in the survival and expansion of the American economic system...
...Trade and Labor...
...commercial expansion but on a reduced scale...
...The Bank has thus helped to preserve and increase markets for U.S...
...For example, in Brazil in 1963-64, and in Peru from 1963-66, the United States responded to threats of expropriation by slowing down or halting the flow of funds from AID and the IDB...
...6 3 Bulwark of a Beseiged Empire The changes in fortune of the American empire towards the end of the 1960's led to a resurgence in the power of the Eximbank, Aside from facing a balance of trade crisis, the Nixon Administration found it difficult to employ the financial institutions developed in the post-war period to maintain and expand the U.S...
...Expropriated properties must be returned or paid for, and efforts had to be made to penetrate state-owned petroleum companies, or else the global ability of U.S...
...35,000 Foster Wheeler Corp...
...Henry Kearns once boasted that "An American traveler in Iran can drive on a modern highway maintained with Eximbank-financed equipment, or travel on a railway equipped with new diesel locomotives financed by an Eximbank loan...
...Fully recovered from the destruction of World War II the new, modern industries of these countries began to break into some of the markets controlled by the United States...
...The day before Kissinger left for his first trip to Egypt to arrange a settlement between that country and Israel, the Eximbank announced a $50 million loan to Egypt for building an oil pipeline...
...13-14...
...The five members on the Bank's board of directors combined receive almost a quarter of a million dollars in annual salaries...
...5 5 The department debated the loan for awhile, but in the end, Assistant Secretary of State for the American Republics, Spruille Braden - who argued that he would not give the Chileans "a plugged nickel" for their oil -- carried the day...
...In the end the project fell through, mainly because rising costs for construction materials forced Bechtel to request an increase in the projected budget...
...Facing balance of trade deficits, fearing a loss of an adequate supply of cheap raw materials from abroad, and confronting a downturn in the U.S...
...Ibid...
...Thus when Richard Nixon assumed office in 1969, the trade crisis had reached new proportions...
...Export Import Bank, 1972 & 1973 Annual Reports...
...In 1972 and 1973, the Eximbank financed over $350 million in sales by Westinghouse and General Electric of nuclear power plant equipment...
...For description of Participation Financing, see Export Import Bank, 1973 Annual Report, p. 8. 22...
...Eximbank, Advance Release, Remarks by Henry Kearns Before the Cleveland Committee on Foreign Relations, "No One Escapes the Impact of Foreign Trade -So it had Better be Good...
...2 3 * Another major advantage for the private banks under Participation Financing lies in the "blended" interest rates...
...Why then is this usually inconspicuous institution now in the limelight...
...Export Import Bank of the United States, Statement of Active Loans...
...As a reward for services rendered, Mitsui in 1973 bought up Kearns' stock in the Siam Kraft Paper Co...
...4 The gathering clouds of world war, rather than the Eximbank or the New Deal, ultimately lifted the United States out of the Depression by reactivating factories to produce armaments and war materials...
...In sum, the Eximbank is one more government program subsidized by the public for the benefit of the corporate elite...
...Possessing insufficient capital to meet the demands for credit, the private banks faced a "liquidity crisis...
...Although giants in the corporate world, many of these exporting industries rely heavily on state assistance to compete in foreign markets...
...In Mexico, the Eximbank tried to help American interests breach the 1938 decree expropriating all foreign-owned petroleum companies...
...exports and investments...
...military equipment...
...5. National Archives of the United States, Internal Affairs Reports, Decimal File no...
...in Thailand, and worked as an adviser to Mitsui & Co., a large multinational Japanese firm...
...response: the United States demanded $30-50 million in compensation for American private investments, and fearing the closing of Czechoslovakian markets to U.S...
...11, 1967...
...The Statement lists the outstanding long term loans of the Eximbank, the amount and the recipient of the loan, and the principal equipment contractor for the loan...
...The Eximbank, by denying loans to foreign governments in disputes over U.S...
...Altogether, PEFCO's stock is owned by 55 banks, 7 industrial corporations and one investment banking firm...
...From 1934 to 1939, the Eximbank extended ninety-day credits for the export of agricultural surpluses, especially cotton and tobacco, and one-to-five year credits for the export of capital goods...
...Internews, Aug...
...Of the remaining twelve firms, eight are major multinational construction firms: Chemical Construction Corporation, Morrison-Knudson, Fluor-Ocean, Lang Engineering Company, DRAVO Corporation, Bucyrus-Erie, Fuller Company, and Arthur G. McKee Company...
...However, for the foreign governments, the construction companies frequently turn out to be corporate Trojan horses, for along with the construction companies come foreign manufactured equipment, foreign banks and financial arrangements, and foreign patents...
...Ibid., p. 188...
...Moody's Industrial Manual...
...Defending Corporations The Credit Stick The Eximbank acts as an important economic lever for manipulating foreign states...
...William Appleman Williams, The Tragedy of American Diplomacy (New York: Dell Publishing Company, 1962), p. 174 47...
...Prestigious firms such as Salomon Brothers, the Morgan Guaranty Trust Company of New York, and the First Boston Corporation act as the brokers in selling these bonds...
...V, 1939, p. 313...
...As the corporation noted in its first Annual Report, "PEFCO's existence and the feasibility of its operations emanate from the support of its shareholders and the backing and cooperation of Eximbank - all of which PEFCO has had in full measure...
...3 7 The Imperial Builders It is no accident that 8 of the 25 largest primary contractors under Eximbank loans are construction companies, for their little-publicized activities abroad play a large role in international trade...
...Wall Street Journal, April 2, 1968...
...1 1 What accounted for this trade crisis...
...And even more importantly, are the leading exporters also multinational corporations...
...Casey avoided conviction in the first two cases, but the third is still pending in the courts...
...For the private banks, dealings in distant and less known lands introduce uncertainties more easily avoided in the familiar domestic market: problems of currency conversion, unstable exchange rates, and political revolution make the international bankers an extremely cautious species, especially when it comes to long term export financing...
...The phrase "export or die" 1 reflects this imperative...
...When Henry Kearns resigned as Eximbank president in August 1973 to return to private business, Nixon nominated William J. Casey to replace him...
...The bulk of these loans were tied to the use of American equipment and machinery...
...Because of the tendency of capitalism to produce more goods and commodities than the domestic markets can profitably absorb, the corporations must look abroad for outlets...
...2 9 The list of leading shareholders includes all of the nation's largest banking interests: the Bank of America, Chase Manhattan Bank, Chemical Bank, First National City Bank, Manufacturers Hanover Trust, and the Morgan Guaranty Trust Company of New York are the six largest stockholders...
...But this rational bias against extending international credit, arising out of individual fear, contradicts the system's overall need to export, Only a state trading bank -- such as the Eximbank - can alleviate the contradiction between the fears of the private bankers and the needs of the system as a whole, Up until the early 1960's, the Eximbank helped satisfy the system's credit needs by extending loans that the private bankers were reluctant to make...
...Ibid...
...History of Operations, op...
...system as a whole, it was only one of several factors that contributed to the decline of the country's trading position...
...Without credits the costs of the gigantic jet lines might be prohibitive, even for some European purchasers...
...The International Economic Policy Association, The United States Balance of Payments: From Crisis to Controversy (Washington, D.C., 1972), p. 21...
...Now for the first time commercial banks can engage in long term projects without incurring any of the risks that previously prevented them from being active in the field...
...The textile manufacturers for example demanded higher tariff barriers and special protective measures to keep out foreign imports...
...Like PEMEX, ENAP hoped to obtain Eximbank financing to develop its oil reserves...
...The position of the dollar in the foreign exchange markets continued to deteriorate, and some American leaders argued for the curtailment of military and non-commercial commitments abroad in order to improve the country's balance of payments...
...Sources: Poor's Register of Corporations, Directors and Executives...
...government exerted pressure upon the Popular Front...
...16,250 *figures in 1,000's of dollars This list was compiled from Export-Import Bank, Statement of Active Loans, March 31, 1974...
...Kearns, in a 1973 speech, noted that "200 companies do 52 percent of our exporting...
...Kearns has also come under fire for aiding Mitsui & Co...
...Necessary-but-Unsuited Industries To the extent that these industrial and construction firms make massive sales of bulk articles, their need for large, long term loans is understandable...
...the financing of its empire is heavily reliant on large trade surpluses...
...projects for building petroleum refineries, oil pipelines, and ore crushing plants received sizeable Eximbank credits...
...History of Operations, p. 122...
...Others, concerned over the rapid growth in the lending powers of the Eximbank, believe that tighter controls should be placed over the Bank's lending activities...
...Facing suck a situation, the private banks in 1966 worked out an agreement for obtaining funds directly from the Eximbank...
...financial institutions can participate in the program, the Eximbank reported in 1971 that under the Cooperative Financing Facility "the vast majority of the funds go to U.S...
...exporters to gain complete control of projects through their state trading bank instead of relying on institutions such as the World Bank which do not tie their loans to the purchase of U.S...
...plants by Mitsubishi are eligible for Eximbank financing...
...Incapable of adjusting to the new realities of mineral scarcity through private initiative alone, U.S...
...exports . . . "35 Thus while some exporting is done by firms without foreign plants, the bulk of the export trade is controlled by the same corporations that dominate U.S...
...but in a series of maneuvers Casey let ITT off with an injunction making the corporation promise not to do it again...
...For example, in 1952 the Eximbank fulfilled both objectives at once in Brazil when it loaned over $41 million to seven subsidiaries of the American and Foreign Power Company for expanding the country's electrical power network...
...exports...
...By assisting these corporations, the Eximbank acts as a buffer against the economic downturn of certain key industrial sectors, while contributing to the survival of the corporate system as a whole...
...In Bolivia the holdings of Standard Oil of New Jersey were expropriated in 1937 because the company had refused to cooperate with the government during the Chaco war fought with Paraguay...
...A number of them can be described as "necessary-but-unsuited-industries...
...No limits are placed on the size of loans: the financial needs of each project determine the amount.27 States...
...See for example the report of the Chamber of Commerce of the United States, National Chamber Task Force Report: Competitive Export Financing for the Seventies...
...commercial interests...
...25,444 Lockheed Aircraft Corp...
...372,663 Chemical Construction Corp..........157,410 Morrison-Knudsen....................102,240 Fluor-Ocean...
...When faced with a choice of expanding a given federal program, or subsidizing private corporate interests to do the same job, the Nixon Administration consistently opted for the latter...
...interests...
...received over 60 percent of the total...
...Construction companies received the primary contracts for all of these Eximbank-financed projects in 1972 and 1973...
...And just as these large surpluses once supported the cause of empire, so now the appearance of trade deficits places strong pressure on the United States to reduce its "commitments" abroad...
...Throughout its forty years of existence, the Bank has wielded a big credit stick on behalf of the U.S...
...See Statement of Active Loans, op...
...And the Eximbank, while not a formal "development" agency, is certainly interested in the development of environments receptive to U.S...
...company...
...When the Siam Kraft Paper Company faced bankruptcy in 1970, the Eximbank bailed out the company by postponing repayment of a six year $14 million loan to Siam until 1993...
...Senate, 83rd Congress, 2nd Session on Senate Resolutions 25 and 183, June 14, 1954...
...But although the Vietnam war undermined the U.S...
...Thus a subsidiary of a U.S...
...825.602/14 and 825.5151/502...
...ambassador informed him . . . that it appeared to me very doubtful whether this government would wish to extend credits to the Bolivian Government until that Government had taken steps to clear up certain well known differences with American citizens.5 The Eximbank credit lever soon began to take effect -- the Bolivian foreign minister told the ambassador that he believed "an equitable solution of the pending controversy between the Bolivian Government and the Standard Oil Company is highly desirable from the point of view of Bolivian credit...
...After Poland nationalized its industry in January of 1946, Washington halted all credit negotiations with the country...
...As part of the American overture to Egypt, Bechtel put together an agreement that involved the Sadat government the U.S...
...In Brazil in 1969 and 1970, the Eximbank moved to wrest a $1 billion project from the World Bank for the construction of a steel mill...
...Aside from the private money market, the Eximbank often turns to the Treasury Department for loans...
...4 3 By pushing the exportation of plants, the Eximbank helps the multinationals capture control of local manufacturing markets...
...Based on information obtained in interviews in Washington, D.C...
...Agency for International Development (AID) and the Inter-American Development Bank (IDB) became the main institutions for U.S...
...Most obviously, to accumulate the funds needed to import items either unavailable or too expensive to produce domestically...
...17 The mid-1960's found the private bankers beating on the doors of the Eximbank for additional assistance...
...III, P. 7. 23...
...This reluctance results in a reduced flow of exports as credit becomes tighter...
...Report of the Committee on Banking, Housing & Urban Affairs, U.S...
...Beginning in the early 1960's, the Eximbank moved into a much closer relationship with the private banks...
...5 8 In the post-war world, the United States used the financial powers of the Eximbank in an effort to stem the growth of socialism in eastern Europe...
...He was finally confirmed when Special Watergate prosecutor Leon Jarworski told a Senate subcommittee that he did not have enough evidence to prosecute Casey...
...Although making only a modest contribution to the total flow of exports, the Bank could boast of dramatic assistance in a few areas: Bank president Warren Pierson declared before a Congressional Committee in 1939 that "we assisted in the exportation of every locomotive that has been sold in the U.S...
...At present, the Eximbank has helped finance over a billion dollars in U.S.-Soviet trade, making it the main financial institution upholding the fragile agreements worked out between the two countries...
...History of Operations, op...
...4. U.S...
...Congress refused to appropriate large sums for AID, while international agencies such as the IMF and the World Bank slipped from the monolithic grip of the United States as Western Europe and Japan asserted themselves more forcefully in these institutions...
...During 1972 and 1973, the Eximbank made a number of loans to the subsidiaries of U.S...
...The Eximbank's recent involvement in Egypt also drew public attention...
...25,086 Dravo Corp...
...With American corporations making direct investments to virtually every corner of the globe, the government relied upon these business emissaries to increase exports...
...4 6 By applying a series of threats and pressures, the United States in conjunction with certain Cuban groups managed to oust Grau San Martin and established a government under Fulgencio Batista that proved more amenable to American interests...
...Hauge even suggested that the very discovery of the Western Hemisphere hinged on credit when he noted that "if Queen Isabella did hock the crown jewels, then it was not she, but some unsung banker of the day, who financed Columbus on her collateral...
...In Czechoslovakia in late 1945 and 1946 an elected coalition of leftist political parties nationalized the country's largest industries...
...petroleum companies, in effect hindered the immediate growth of exports...
...These firms EXIMBANK'S TOP 25* Boeing..............................677,977 General Electric....................588,136 McDonnell Douglas...
...History of Operations, op...
...The Eximbank's policies greatly hampered Chile's ability to deal with the American private banking community...
...In FY 1973 (July 1, 1972 to June 30, 1973), the Eximbank extended $1.6 billion to the private banks in the form of Discount loans, more than an eight-fold increase from the $185 million provided in Fiscal year 1969.27 Under the new, liberalized terms of the Discount loans, a private bank in need of capital can take its current outstanding short and medium term loans, turn them over to the Eximbank, and receive the full face value of the loans...
...The most immediate reason stems from the Bank's role in detente with the Soviet Union...
...Staff members at the SEC prepared the case for prosecution...
...Ibid., pp...
...18,695 Mitsubishi...
...Ibid., Vol...
...Quote taken from Joyce and Gabriel Kolko, The Limits of Power: The World and United States Foreign Policy, 1945-1954 (New York: Harper & Row, 1972), p. 190-191...
...With the inauguration of the Alliance for Progress in 1961, the U.S...
...Subsidies for Subsidiaries Aside from the benefits derived from infra- structure projects, American corporations also receive direct assistance from the Eximbank in setting up branch plants abroad...
...These projects will materialize within the next two to three years and, in total, will require $2.2 billion to 3.8 billion in Eximbank-type financing.4 Recent Eximbank credits to the Soviet Union merely dramatize this drive to open up new sources of raw materials...
...that will lend to him...
...corporate investments...
...1. The title of this section comes from a book written in 1967 for U.S...
...Recipients of nuclear reactors with Eximbank financing include Spain, South Korea, Japan, Taiwan, Brazil, and Mexico...
...And the U.S...
...Chamber of Commerce of the United States, 1970...
...exports -- raw materials, components, spare parts and replacements -to support the enterprise...
...Eximbank Advance Release, Oct...
...In times of economic crisis the consensus underlying the corporate community dissipates, and assumptions that were once taken for granted are subjected to questioning and dispute...
...President Roosevelt stated that Eximbank credits to the Soviet Union would "result in immediate orders for American goods...
...As Kearns stated in 1971: We are strengthening our already close relations with the nation's commercial bankers . . . Bankers can and should encourage more active promotion of exports, Eximbank's function is to set this great economic development potential in motion.20 The intermeshing of the operations of the Eximbank and the commercial banks under Nixon is illustrated by the "participation financing program...
...As the Eximbank noted in its 1973 Annual Report, "the development of industrial complexes abroad with Eximbank assistance results in a continuing flow of U.S...
...Sources: Eximbank 1973 Annual Report...
...As chairman of the SEC, he is connected with two different scandals: ITT and Robert Vesco...
...33-35...
...Maintaining the Open Veins The latest threat to the well-being of the U.S...
...10212 superseded by H.R...
...32 In sum, PEFCO is one more credit mechanism through which the Eximbank serves the nation's largest banking interests...
...The drive for export markets is inherent to a capitalist system...
...These, however, are only the most striking instances of controversy over the Eximbank...
...2 5 This is not the only Eximbank program developed by Henry Kearns to assist the private banks...
...In the 1950's, the Eximbank assisted U.S...
...In Cuba the Eximbank had acted mainly to buoy up a new regime friendly to the United States...
...The Trade Crisis The 1960's brought a new crisis for the American commercial system, one which the development institutions could not alleviate, and which ultimately led to the resurgence of the Eximbank...
...The problems of financing the empire are not new to the Eximbank...
...5 4 Refusing to bow to the pressures applied through the Eximbank, the Mexican government decided to develop its oil industry alone without assistance from the United States...
...PEFCO, 2nd Annual Report, 1972, p. 5. 33...
...4 828 Faced with these threats, the U.S...
...Although we have heard of the major American corporations active at home and abroad, little is known about the corporations that engage in direct exports...
...corporations.* In Brazil, the Eximbank granted Ford Willys do Brazil a $25 million loan to import plant equip- ment from the Ford Motor Company in the United *The Eximbank lends to a) Subsidiaries of corporations b) Foreign governments c) Foreign-ovned businesses The common requirement in all three is that the Exim- bank loan be used to purchase U.S.-manufactured equip- mant...
...Egypt then turned to Italian construction firms...
...Without the trade surpluses of the 1940's and 1950's, the United States could not have paid for the garrisoning of troops in western Europe, fought the Korean war, or provided funds to support sympatheti, regimes in Asia, Africa, and Latin America...
...strategy was to deny the loan to PEMEX unless American petroleum companies "could participate in the development of the Mexican oil company...
...of History, Univ...
...corporate and commercial penetration...
...A private bank can also take out insurance on its portion of a loan through the Eximbank...
...For capitalist nations, exports play an extremely crucial role...
...markets...
...16,274 Continental Airlines...
...Traditionally eschewing public notice, the Eximbank prefers to work quietly with the country's business community to finance the flow of U.S...
...The resulting increase in the prices of American commodities made them less competitive in world markets...
...Ramparts, June, 1974, "The Watergate Net: One Who Got Away," by Tom Zeman.23 to export American equipment, the Eximbank began to require that part of the project be financed through private banks...
...The entrenched position of the aircraft manufacturers in the political and military realms means that a threat to their commercial survival jeopardizes key elements in the established order...
...However, the United States suspended the surplus property credit when Poland failed to publicize its trade laws...
...Casey did all he could to assist ITT...
...While unable to comprehend the complexity of the Depression, businessmen did recognize the desperate need to reactivate sales...
...Strategists for the empire realized that long-range imperial goals sometimes require the sacrificing of short-term interests...
...loans to Latin America...
...Like their retired leader in San Clemente, Kearns and Casey know that corruption in high places goes unpunished...
...According to the chairman of one of America's largest banks, Gabriel Hauge of Manufacturerd Hanover Trust, "credit, not steel nor cement is the basic industry of modern civilization...
...Export Import Bank, Eximbank Programs, Vol...
...Pedro Aguirre Cerda had already indicated a strong interest in obtaining funds from the Eximbank to help implement his government's development plans...
...government...
...Report to the President, Dec...
...The low interest loans of the Eximbank are being used astutely by Henry Kissinger to gain access to the resources and markets of these countries...
...In 1969, the Eximbank moved determinedly to increase its assistance to American exporters...
...2 1 The advantages for the private banks under Participation Financing are extensive...
...4 1 In the textile industry, the Eximbank is also financing the export of plant equipment...
...Vesco, of course, had a case pending before the SEC...
...15* In the American drive to dominate the avenues of world trade, the Eximbank has worked closely with the nation's private commercial banks...
...3 Frustrated in the Soviet Union, the Eximbank turned to other regions of the world, leading the state drive for foreign markets to stimulate domestic production...
...V, 1939, p. 322...
...served as primary contractors in fulfilling the machinery and equipment orders placed with Eximbank loans...
...Because the government does not publish the names of corporations in its trade data, the answers to these questions are not easy to obtain...
...According to the Eximbank in 1953, "it has been the policy of the Bank to re- fuse any application for a loan to which the State Department has interposed an objection based on consideration of United States foreign policy...
...But the Eximbank, under the guidance of an old Nixon associate, Henry Kearns, instead decided to work through the private bankers...
...3 6 Like jet airliners, nuclear reactors are very large and expensive items that require long-term financing...
...Do they display the same degree of concentration that characterizes the American economy as a whole...
...Ibid., Decimal File no...
...goods, including capital goods, influenced the Roosevelt Administration's decision to recognize the Soviet Union...
...Chemtex Fibers, Inc...
...goods and services developed as a by-product of AID operations...
...an even better solution is to have the government -- that is, the taxpayers -- assume the risk, The founding, in 1961, of Eximbank's affiliate, theForeign Credit Insurance Association (FCIA), established such a "risk-socializing" public handmaiden...
...Barron's, May 20, 1974...
...As the Eximbank acknowledged, "it followed a policy of restricting or denying the use of the credits for the purchase of items in short supply and of encouraging their use for the purchase of commodities in long supply . . ."8 effort to contain socialism in Europe, President Truman established the Point IV program which provided economic and military assistance to countries "threatened by communism...
...150-53, 194...
...Perhaps he will soon lend money to the Eximbank so it can finance the arming of new sub-imperial powers...
...6 4 Although ultimately unsuccessful, the move reflected the need of U.S...
...The Senate held up Casey's confirmation as Eximbank president for several months because of the Vesco and ITT affairs...
...The country enjoyed large trade surpluses, and the spread of the multinational corporations insured the United States of a large role in foreign markets...
...Over $100 million flowed to eight of the country's largest private banks during the first fifteen months of the discount loan program.1 8 Since the Eximbank extended the funds at interest rates (5-1/8 to 6 percent) lower than those which the private banks charged Cover 6 percent), the banks made a tidy profit from the operation as well as receiving a boost in the amount of funds at their disposal...
...Department of State, Foreign Relations Papers, Vol...
...government, refrained from nationalizing the oil companies or taking control of the electric power company...
...In these times of stress banks are reluctant to tie up scarce funds in foreign trade...
...For several years now, a number of issues have been bubbling beneath the surface at the Bank, drawing attention at times from Congressional and business leaders...
...Just as the United States had relied on the Eximbank during times of economic stress in the 1930's and 1940's, so now many believed that the Bank would alleviate the deteriorating balance of trade by providing an impetus to exports...
...In a recent trip to the Middle East, the Secretary of the Treasury, William Simon, called the Shah a "nut" because of his interest in armaments...
...9. Carl Parrini, "The Export Import Bank and United States Government Foreign Investment," M.A...
...16 Thus the Eximbank concentrated upon extending medium term (1-5 years) and long term (5 years or more) loans that the private banks neglected because of the length of the loan and/or the risk involved...
...Financing Corporations Monopoly, rather than free enterprise, is the dominant characteristic of the American economy...
...In the export trade, this concept of "private enterprise" brought about a close intermeshing of the operations of the Eximbank and the private banks...
...It is Eximbank's function to provide the aircraft industry with the required large, certain, and expanding market...
...See National Chamber Task Force Report, Competitive Export financing for the Seventies...
...However, a recent Tariff Commission study concluded that multinational corporations accounted for 62 percent of U.S...
...In some cases, the borrower has to put down as much as 15% of the cost of the project...
...Many of the loans made in 1972 and 1973 reveal that the Eximbank was aware of this threat to the U.S...
...Gabriel Hauge, "Some Aspects of Banking in Transition," The World Banking Challenge...
...Following the Nixon defeat in 1960, Kearns left his post at the Department of Commerce and returned-to private business where he established interests in Asia that later played an important role in his activities at the Eximbank...
...30,300 Koppers Company...
...The answer varies from industry to industry...
...Who are the major U.S...
...Negotiations between the two countries bogged down over this point...
...Private bankers would certainly agree with Henry Kearns' statement that the "Eximbank can make overseas selling on credit as safe and simple as selling to your own friends and neighbors...
...Recent developments at the Eximbank reflect this economic imperative.24 III...
...Senate and its subcommittee on International Trade by the Tariff Commission, "Implications of Multinational Firms for World Trade and Investments for U.S...
...As the National Export Expansion Council noted, "exports move on credit...
...Ibid...
...Moreover, the costliness of the product demands more secure sales than the free market will guarantee...
...History of Operations, op...
...cit., pp...
...the creation of the Eximbank in 1934 was partly designed to facilitate the opening of the vast Soviet markets for U.S...
...Statement of Active Loans, op...
...Aside from these direct and indirect forms of assistance from the taxpayer, the Eximbank has approximately 400 employees who receive their salaries from the U.S...
...trade by involving foreign-based financial institutions, the U.S...
Vol. 8 • September 1974 • No. 7
